Tech. Analysis vs. Value Investing vs. Growth Investing vs. Narrative Economy

[as.exchange]

The main character of Treasure Island, pirate John Silver, is my example of how to manage personal finances. 

He adheres to the principle of investment diversification. 

He invested part of his capital in his own small business (the "Spyglass" tavern). 

The second part he invested in commercial banks at interest.  At the same time, he divided the deposits between several banks (so as not to attract the attention of regulators). 

In addition, he reserves a third of the capital for investments in HYIP (investment projects with high risk and high potential profit).  Captain Flint's Treasure Expedition is an example of such a project. 

At the same time, John Silver is a conservative investor.  His main principle: "The main thing is not to make money, the main thing is to save."

You just wrote a plan that if followed by common people would make them at least 50-80% more wealthy than they are now Yet, only few ones will actually follow and succeed.

[1714653345]

1714653345

[1714653345]

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[jostorres]

The main character of Treasure Island, pirate John Silver, is my example of how to manage personal finances. 

He adheres to the principle of investment diversification. 

He invested part of his capital in his own small business (the "Spyglass" tavern). 

The second part he invested in commercial banks at interest.  At the same time, he divided the deposits between several banks (so as not to attract the attention of regulators). 

In addition, he reserves a third of the capital for investments in HYIP (investment projects with high risk and high potential profit).  Captain Flint's Treasure Expedition is an example of such a project. 

At the same time, John Silver is a conservative investor.  His main principle: "The main thing is not to make money, the main thing is to save."

I would have never guessed I would see a long john silver message related to investing on bitcointalk, specifically not about investment considering how pirates were reckless at the time and this is just a book about them and a novel, not reality, which could mean you meant the author and not the pirate himself All jokes and shock aside, I do agree that this is a great deal of diversification when we are talking about bulk amount of gold, but that doesn't really apply to what we have in real world do we?

For example, if you have 1000 dollars, you can't diversify like that, so you have to end up with buying some stocks, a bit of gold, maybe some crypto like btc and eth, and you are already out of money, but you already spent maybe 50 bucks on the diversification process as well, and you just wait for it. Whereas Long John Silver didn't had anything like that, he had business' and expeditions, those are very different from buying btc and waiting.

[Latviand]

One more think caught my attention:

Effectively it means - if you can identify good story that would be appealing to other prospective investors, and able to invest in that story early enough, you can outperform others.

Doesn't it change the investing into "gambling on Ponzi scheme"? You don't earn from profit that undervalued asset generates and share with investors (old era investing), you earn only if more and more investors believed in the story you spot before them.

Although it does look like a Ponzi scheme, I think this is the current reality: no matter how good your asset can be you are going lose the competition to those who attracted more investors. So, apart from being a good project, attracting investors is very important.

At the end of the day, best competitors will win no matter you flex your assets so bad.

There are also stories who are not even real and can still be effective that's why there are investors who are getting baited by Ponzi schemes.

But on the other hand, making good project will really help each individual to learn, to understand, and to engage more about the market and economics. This will help you become more wise and business-minded that will help you make another strategies to attract future successful investors.

[Betwrong]

One more think caught my attention:

Effectively it means - if you can identify good story that would be appealing to other prospective investors, and able to invest in that story early enough, you can outperform others.

Doesn't it change the investing into "gambling on Ponzi scheme"? You don't earn from profit that undervalued asset generates and share with investors (old era investing), you earn only if more and more investors believed in the story you spot before them.

Although it does look like a Ponzi scheme, I think this is the current reality: no matter how good your asset can be you are going lose the competition to those who attracted more investors. So, apart from being a good project, attracting investors is very important.

At the end of the day, best competitors will win no matter you flex your assets so bad.

You are right, if a project was bad from the very beginning, it is going to fail no matter how hard you hype it. But let's forget about those doomed bad projects, and talk about good ones, among which hard to say which is better. Take these from the OP, for example:

~ Tesla, Zoom, Bitcoin, BioTech, COVID19 vaccine developers, cannabis stocks, ~

I agree that we are entering the era of narrative-based economy, when a good story behind an asset can be crucial for its success.

[as.exchange]

I don't agree that the bad projects will always fail. If they are hyped well - they can last for prolonged periods of time. Yes, of course everything in the end will die and fail (even the good ones - that's just the nature).

The only perfect example of that probably would be - the United States Dollar I guess nobody would argue that it's not such a good "project" at least nowadays, yet it's the only dominant financial power around the globe, and is lasting for pretty long. It certainly started not out of narrative, but it continues its success on it too (US gov is too cool to fail, US gov will never default, etc., etc.). So here's an example of a bad, partially (or entirely) narrative-based project that is not failing

[Karartma1]

2010-onwards: we are observing an emergence of narrative economy and narrative investing. It is well documented and currently being popularised theory by Robert J. Shiller, where charts don't matter anymore, fundamental data doesn't matter anymore, future growth doesn't matter anymore. All what matters is the narrative (i.e. story) around the particular asset / stock / etc. If it got a good story which is able to spread like a virus, no matter how good or bad the stock/(asset) is - it will deliver substantial returns (read more here: https://www.ft.com/content/5ba0adf6-ec3c-11e9-85f4-d00e5018f061). Effectively it means - if you can identify good story that would be appealing to other prospective investors, and able to invest in that story early enough, you can outperform others.

It may be true that, in the case of bitcoin, a some kind of narrative played a very important role but I believe after 12 years it's not about the narrative anymore. Bitcoin grew as a protocol, as a groundbreaking technology, as a new alternative financial layer to build next-gen fintech apps on top of it (LN being the most important to me). Its fundamentals have never been healthier than ever: hashrate growth, daily txs, value transferred, new users etc.
To me, there's no competitor in this sense for bitcoin after 2010. History is proving satoshi was right from the start.

[as.exchange]

It may be true that, in the case of bitcoin, a some kind of narrative played a very important role but I believe after 12 years it's not about the narrative anymore. Bitcoin grew as a protocol, as a groundbreaking technology, as a new alternative financial layer to build next-gen fintech apps on top of it (LN being the most important to me). Its fundamentals have never been healthier than ever: hashrate growth, daily txs, value transferred, new users etc.
To me, there's no competitor in this sense for bitcoin after 2010. History is proving satoshi was right from the start.

I think you are making good points about the current state of Bitcoin, however I don't agree that much about how it began. Maybe it's good narrative played the role of making it good and bringing it where it is now? Just like I described before that it's self-reinforcing mechanism where good narrative plays to improve the fundamentals, which play to improve good narrative, and it goes on like this. And that could work with alternative assets like Bitcoin, and with traditional ones as well, such as stocks.

[Betwrong]

I don't agree that the bad projects will always fail. If they are hyped well - they can last for prolonged periods of time. Yes, of course everything in the end will die and fail (even the good ones - that's just the nature).

The only perfect example of that probably would be - the United States Dollar I guess nobody would argue that it's not such a good "project" at least nowadays, yet it's the only dominant financial power around the globe, and is lasting for pretty long. It certainly started not out of narrative, but it continues its success on it too (US gov is too cool to fail, US gov will never default, etc., etc.). So here's an example of a bad, partially (or entirely) narrative-based project that is not failing

Well, in this case, we have to define what is "failing". Here's the graph of purchasing power of one USD in every year from the start up to 2020:

(The purchasing power of 1 USD in 2020 is 1 on the y-axis)

If it's not "failing", what is it, then?

Yes, USD is a narrative-based project, with a strong story behind it, created by Alexander Hamilton & Co. And that's why it has lasted for a long time. But as you rightly said, few people would consider it a good "project" nowadays. So, it's time to start switching to Bitcoin, I guess.

[as.exchange]

Well, in this case, we have to define what is "failing". Here's the graph of purchasing power of one USD in every year from the start up to 2020:

(The purchasing power of 1 USD in 2020 is 1 on the y-axis)

If it's not "failing", what is it, then?

Yes, USD is a narrative-based project, with a strong story behind it, created by Alexander Hamilton & Co. And that's why it has lasted for a long time. But as you rightly said, few people would consider it a good "project" nowadays. So, it's time to start switching to Bitcoin, I guess.

You are right, that before arguing about it, we need to define the "falling" Because, declining purchasing power is the issue certainly, but mostly for non-elites. But the "not-falling", which I was referring to, is the below one:

Global Reserve Currencies in Use & Their Share


OTC FX Currencies Turnover Share


But, sadly or gladly (depends on the side the one picks to be), we have BitcoinBTC now, and the recent events with GME, AMC, etc. showed well that the "negligible people" (as seen by those hedge funds) can be a driving force all together that costs those billionaires their jobs, wealth, status and reputation.

[jaysabi]

I don't agree that the bad projects will always fail. If they are hyped well - they can last for prolonged periods of time. Yes, of course everything in the end will die and fail (even the good ones - that's just the nature).

The only perfect example of that probably would be - the United States Dollar I guess nobody would argue that it's not such a good "project" at least nowadays, yet it's the only dominant financial power around the globe, and is lasting for pretty long. It certainly started not out of narrative, but it continues its success on it too (US gov is too cool to fail, US gov will never default, etc., etc.). So here's an example of a bad, partially (or entirely) narrative-based project that is not failing

Well, in this case, we have to define what is "failing". Here's the graph of purchasing power of one USD in every year from the start up to 2020:

(The purchasing power of 1 USD in 2020 is 1 on the y-axis)

If it's not "failing", what is it, then?

Yes, USD is a narrative-based project, with a strong story behind it, created by Alexander Hamilton & Co. And that's why it has lasted for a long time. But as you rightly said, few people would consider it a good "project" nowadays. So, it's time to start switching to Bitcoin, I guess.

Using a timeline far longer than any human being lives is pointless and purposefully deceptive. Nobody lives long enough to see dollars depreciate on that magnitude, so this graph is meaningless for practical purposes because not a single person in history has ever suffered anywhere near the depreciation the graph depicts. Second, people generally don't hold a significant amount of dollars for a significant amount, further diminishing the effects of the depreciation shown.  Wealth is invested into assets in search of yield.  The whole depreciation argument has always been grossly overstated.

[sana54210]

Using a timeline far longer than any human being lives is pointless and purposefully deceptive. Nobody lives long enough to see dollars depreciate on that magnitude, so this graph is meaningless for practical purposes because not a single person in history has ever suffered anywhere near the depreciation the graph depicts. Second, people generally don't hold a significant amount of dollars for a significant amount, further diminishing the effects of the depreciation shown.  Wealth is invested into assets in search of yield.  The whole depreciation argument has always been grossly overstated.

Are you defending US dollar right now? I mean why would anyone really defend dollar on bitcointalk? But let's talk about how you are wrong just so we could maybe reel you back into the crypto world and remind you that fiats are horrible and that is why we are in crypto. You said "using a timeline longer than any human lived", so your point is that dollar didn't dropped that much in one life time and I sort of understand your logic there, if it was true that would have made sense.

Let's put the last 80 years as one life span? 80 years ago was 1941 closest to that we have is 1935 and 1947, both of which are pretty close to 1 dollar of that day having purchasing power of 20 dollar today. That is just one life span. Want to see second? 80 years before that was 1860, it was literally the EXACT SAME 80 years before that. You see, dollar lost its power, it was consistent and powerful, 80 years ago it was beautiful, so beautiful that it kept its power for 150 years, what happened? It went down horrible in the last 40-50 years.

[jaysabi]

Using a timeline far longer than any human being lives is pointless and purposefully deceptive. Nobody lives long enough to see dollars depreciate on that magnitude, so this graph is meaningless for practical purposes because not a single person in history has ever suffered anywhere near the depreciation the graph depicts. Second, people generally don't hold a significant amount of dollars for a significant amount, further diminishing the effects of the depreciation shown.  Wealth is invested into assets in search of yield.  The whole depreciation argument has always been grossly overstated.

Are you defending US dollar right now? I mean why would anyone really defend dollar on bitcointalk? But let's talk about how you are wrong just so we could maybe reel you back into the crypto world and remind you that fiats are horrible and that is why we are in crypto. You said "using a timeline longer than any human lived", so your point is that dollar didn't dropped that much in one life time and I sort of understand your logic there, if it was true that would have made sense.

Let's put the last 80 years as one life span? 80 years ago was 1941 closest to that we have is 1935 and 1947, both of which are pretty close to 1 dollar of that day having purchasing power of 20 dollar today. That is just one life span. Want to see second? 80 years before that was 1860, it was literally the EXACT SAME 80 years before that. You see, dollar lost its power, it was consistent and powerful, 80 years ago it was beautiful, so beautiful that it kept its power for 150 years, what happened? It went down horrible in the last 40-50 years.

I'm not defending the dollar, I'm attacking horrible logic.  Using even your paired down examples, you're still grossly overstating the effects of depreciation any person experiences. The max depreciation any person could possibly experience is if they were born with all the money they'll ever have and then just hold it in fiat for their entire lives. If you can't see why that's such a faulty premise, I don't think I can break it down for you further.  But to summarize the most easily identifiable faults in this logic:  1) the majority of wealth is not held in fiat, it's held in other assets; 2) fiat is not held for significant amounts of time in significant amounts; 3) people are not born with all the money they'll ever have, they're constantly earning new money throughout their lives.  You're not having an honest discussion about what the depreciation of the dollar actually is, that's all I'm pointing out.  The chart that I was responding to is a joke for anyone looking for an honest discussion and not a circle jerk about crypto, which is largely what this board is; more of a cult where everyone just shouts down people who aren't in the cult rather than a bastion of intellectualism.