Tag Archives: bitcoin

What Annoys Jeff this Week?

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1. Crypto. I hold a vanishingly small position in Bitcoin. Of course, that position has grown even smaller over the last week. The collapse of Bitcoin has been met with the expected gnashing of teeth. Crypto was billed as a lot of things – including the future of online transactions as well as a hedge against inflation and the vagaries of traditional stocks. It was going to be the New Gold. Its behavior in the current downturn hasn’t proven any of that out. I mostly bought in wanting to learn about this new technological wonder, rather than execting Bitcoin would pop to $1,000,000 and I’d make my fortune. Crypto, for all its hype, has an astonishingly unproven record of being useful in the broader economy outside of being an item of curiosity. At best, it’s felt like even more of a casino than your run of the mill investment opportunities, so as they say, “don’t gamble with funds you can’t afford to lose.”

2. People. After attempting to resolve my ants in the well issue last summer by working with well and water experts and meeting with only temporary success, I turned to a local exterminator this spring to get a second opinion. I’m not sure whether I should be insulted or not that the first thing he said to me was “Yeah, don’t dump any poison down the well.” I suppose just the fact that he said that so quickly implies that there’s a non-zero number of my fellow residents of Cecil County who do respond to similar issues by actually running out and poisoning their own water source. I assured him that I had no intention of emptying a bottle of Terro into my drinking water supply and that I was consulting him for alternative approaches that wouldn’t result in potentially killing myself. The more unsettling part of this whole conversation is that the people who do have to be cautioned against drinking poison are also the people we encounter on the roads each day. They’re the people we encounter while we’re getting groceries. They’re the ones who sit in judgment of us as jury members. They’re the people who go to the polls to elect our leaders. Honestly, the fact that such a warning needed to be said explains a lot about why things are the way they are.

3. An unnamed online brokerage. On a lark, I opened an online brokerage account years ago. I threw a few dollars in it and attempted to teach myself a bit about the exciting world of penny stocks. Believe me when I say that didn’t go anywhere beyond giving me a solid lesson that I have no business spending time being a stock picker. As the market began its fall back around the first of the year, I dug out my log in and set up a small weekly buy order for a broad index fund. It was a chance to use the falling knife to begin capturing some shares outside what’s locked up, sacrosanct and untouchable, in my retirement accounts. I try very hard to be a set-it-and-forget-it investor. In fact, going weeks or months between looking at things isn’t uncommon. The fact that this particular broker has somehow managed to bungle my last two automatic transactions, though, has me double checking all their work to this point. Add in the apparent impossibility of getting authoritative answers from customer service and I’m left to wonder if it’s not time to decamp for an alternative platform. That’s its own flavor of pain in the ass, so I’m begrudgingly staying the course for the time being. If the next transaction inexplicably goes wonky, I’ll have to try elsewhere for my own sanity.

On crypto…

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Scan the big news sites and it won’t take long to find an article where someone is decrying cryptocurrency as some kind of scam that swindled poor unsuspecting victims out of their life savings and now the bank will inevitably foreclose on the farm while Ma and Pa are tossed out to the ditch.

It makes an attention grabbing headline, but doesn’t garner any sympathy from me. It’s safe to say that most people don’t know the basics of how the Federal Reserve “creates money.” I’d wager that far fewer know with any kind of precision how an asset like Bitcoin really works, but here we are with scads of people wondering how they suddenly lost so much value, even when they didn’t know how it was generated in the first place.

You can almost hear the outcry now, begging for the government to place increasingly restrictive regulations on cryptocurrency and save the ill- and under-informed from themselves. Letting people live or die with their own decisions doesn’t play well in front of the cameras, I suppose.

In the interest of full disclosure, I hold a very small position in crypto. Mostly it’s a hedge against fear of missing out rather than any expectation of it ever shooting the moon. With much of it picked up back in 2017, I guess you can say I’m long on this brave new frontier of finance. I think some interesting things will come of it, even if no one seems quite sure what any of those will be yet.

It’s sort of like going to the casino…

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I know enough about the stock market to realize I need miles and miles of education before I’d consider managing my own account beyond throwing a few dollars here and there at penny stocks and hoping one of them turns out to be a runaway winner. What I’ve learned from occasionally gambling for small dollars is that letting me pick for myself is no better or worse than taking those same dollars to the casino. If I walk away eventually breaking even, it’s a good day. Usually, those penny stocks leave me with far fewer pennies than I started with, though. Overall, I’m happy letting a professional load any money I might actually want to have in the future into market-following funds and taking a very small commission for his trouble… comfortable knowing that in any 30-year period you’d like to name, the market has always been higher at the end of that period than it was at the beginning. 

Three or four years ago, when Bitcoin was making a big name for itself, I threw $100 in the pot. Like penny stocks, it was pure casino gambling. I still don’t know a damned thing about Bitcoin or how the crypto-currency market really works. As far as I can tell, you input things into the computer, witchcraft happens, and bitcoins fall out. That original $100 bet is now banging around between $350-$400. If I had any sense, I’d take my winnings off the table and walk away happy. That’s exactly what I tell myself I should do after I’ve had a good run on a slot machine, too. 

What I’m probably going to do is take those winnings and spread them around the crypto world in $25 or $50 increments in hopes one of those becomes the next big thing – another chance to double my money. If buying Bitcoin was a slot machine, this feels more like covering as many bets as possible at the roulette table and hoping the ball drops on just the right place.

It’s no better or worse than whatever “strategy” guides me during a day at the local horse track… and the only money that’s really at risk is my original $100 bet that I considered lost years ago when I plugged it in to a crypto exchange. If it goes bust, no great loss… but if it happens to go to the moon, I’d hate for it to be the lottery ticket that I didn’t buy.

I guess all of this is a long way of saying I’m starting to miss my periodic trips to the local casino and I’ll be replicating the experience, less the bells, flashing lights, and geriatrics as far as the eye can see, as much as possible from right here in my own living room. I can’t help but wonder if it wouldn’t be a better use of my bitcoin winnings to buy my own slot machine and cut out the middle man (and the accompanying downside risk).