Topic: Securities Newbie. HELP ME INVEST! (Read 4372 times)

Big thing to keep in mind when looking to invest. Do the Research on the company before you buy.

It is easy to get suckered into buying garbage stock that hasn't been traded in weeks and people are praying someone comes along and buys their worthless bids.

All of this is IMHO and IANAL

This was not me...someone usurped my account via hacking!  Watch your butts people...use Escrow for trades!

Shameless plug for my Sandstorm Investment Fund:

It's been running successfully for over a month. It's going live on the Havelock platform this Friday with the remainder of the IPO being sold on there. 

Obviously I have a vested interest in this project. I'm just letting people know that it exists Cheers

If you will not deleted my post , I will be much happy to debate my assumption with you ,but however reality is better than any arguments , please just go check the price on BTCT.CO and the trading volume....

For the record, and not to spark any further flame wars, the mistake that SOSLOVE made was assuming that a growth of X% reduces dividends by X% too.

This is not the case, and to show this, imagine what would happen if the difficulty rose 100%. With SOSLOVE's math, this would wipe out all future dividends, when the correct result is that dividends would be reduced by 50% if difficulty doubled.

.b

Bump for other new investors / speculators.

Wow, talk about going off on a tangent. That was a whole lot of useless bickering and name calling, and I am still not sure what they were arguing about? Please don't answer that question, I am better of not knowing.

Anyway, back to the original topic...

Did everybody see how Mircea Popescue just raised something like 1.2 Million Dollars (worth of bitcoins) for his new "Ministry of Games" game developing company? That was pretty amazing how quickly that got funded. That seems like a stock to keep an eye on, sort of an experiment to see if bitcoin financing can result in real development.

Guys, get a room!

Thread re-railed & useful again in 3... 2... 1...

Never mind , 5btc is the cost to pay for what I have learned .
Only I pray for you the shares you bought today will far decrease its value.i hope you will shorting out them in the future or waiting for another fish coming. Only one person will benefit from this game is the issuer.I am totally ok for what I loss .since AM price was double since last month which account for 80%of my stock.

So that buyer was you. How fun, I was the seller on a lot of what you bought on May 12. Now I bought the shares back at close to half the price.



Sucks to not do your homework, doesn't it?

Next time you haphasardly head into an investment, like I offered previouisly, just send me the money directly, I'd be happy to save your from the public embarassement.

.b

Check out copy from my trading.... I made a mistake in the begin I bought someone's option 227 at 0.1125, but I really only loss 5.7 in total sell...
10%...which I noticed their is not future for holding it. I did step by step calculation for you ,why you still not understand it?? Please convince me which part of my calculation went wrong ? Mr.doctor for PAJKA BOND or PMB....

only net loss 5.3 below is my transaction I do not know how to upload picture ...but I am not liar.....if you think you are right then time will tell...

2013-06-07 21:25:34   PAJKA.BOND   sell   16   0.06   0.00192   0.95808
2013-06-07 21:25:33   PAJKA.BOND   sell   4   0.0605   0.000484   0.241516
2013-06-07 21:25:32   PAJKA.BOND   sell   4   0.061   0.000488   0.243512
2013-06-07 21:25:31   PAJKA.BOND   sell   15   0.07   0.0021   1.0479
2013-06-07 21:25:29   PAJKA.BOND   sell   1   0.072   0.000144   0.071856
2013-06-07 21:25:25   PAJKA.BOND   sell   1   0.072   0.000144   0.071856
2013-06-07 21:25:23   PAJKA.BOND   sell   3   0.0721   0.0004326   0.2158674
2013-06-07 21:25:22   PAJKA.BOND   sell   10   0.073   0.00146   0.72854
2013-06-07 21:25:22   PAJKA.BOND   sell   6   0.073001   0.00087601   0.43712998
2013-06-07 21:00:38   PAJKA.BOND   sell   1   0.089631   0.00017926   0.08945173
2013-06-06 21:19:23   PAJKA.BOND   sell   10   0.095   0.0019   0.9481
2013-06-06 21:19:21   PAJKA.BOND   sell   8   0.095   0.00152   0.75848
2013-06-06 11:48:31   PAJKA.BOND   sell   10   0.101   0.00202   1.00798
2013-06-06 06:55:26   PAJKA.BOND   sell   1   0.101   0.000202   0.100798
2013-06-06 04:52:51   PAJKA.BOND   sell   25   0.099   0.00495   2.47005
2013-06-06 04:52:49   PAJKA.BOND   sell   10   0.0991   0.001982   0.989018
2013-06-06 04:52:48   PAJKA.BOND   sell   1   0.099101   0.0001982   0.09890279
2013-06-05 22:38:36   PAJKA.BOND   sell   1   0.106001   0.000212   0.10578899
2013-06-05 18:06:01   PAJKA.BOND   sell   1   0.10897   0.00021794   0.10875206
2013-06-05 04:56:28   PAJKA.BOND   sell   5   0.10897   0.0010897   0.5437603
2013-06-05 01:41:59   PAJKA.BOND   sell   26   0.10897   0.00566644   2.82755356
2013-06-04 00:11:39   PAJKA.BOND   sell   10   0.099   0.00198   0.98802
2013-06-04 00:11:37   PAJKA.BOND   sell   20   0.099   0.00396   1.97604
2013-06-04 00:11:34   PAJKA.BOND   sell   2   0.0991   0.0003964   0.1978036
2013-06-03 23:29:36   PAJKA.BOND   sell   1   0.109498   0.00021899   0.109279
2013-06-03 22:45:04   PAJKA.BOND   buy   2   0.109499   0.00043799   0.21943599
2013-06-03 21:25:22   PAJKA.BOND   sell   100   0.102   0.0204   10.1796
2013-06-03 21:25:14   PAJKA.BOND   sell   21   0.102001   0.00428404   2.13773695
2013-06-03 21:25:09   PAJKA.BOND   sell   5   0.1035   0.001035   0.516465
2013-06-03 21:25:05   PAJKA.BOND   sell   25   0.105   0.00525   2.61975
2013-06-03 21:25:01   PAJKA.BOND   sell   1   0.105   0.00021   0.10479
2013-06-03 21:24:56   PAJKA.BOND   sell   1   0.105   0.00021   0.10479
2013-06-03 21:10:22   PAJKA.BOND   sell   13   0.1084   0.0028184   1.4063816
2013-06-03 21:10:19   PAJKA.BOND   sell   10   0.1086   0.002172   1.083828
2013-06-03 21:10:18   PAJKA.BOND   sell   4   0.10861   0.00086888   0.43357112
2013-06-03 21:09:42   PAJKA.BOND   sell   9   0.1087   0.0019566   0.9763434
2013-06-03 21:03:39   PAJKA.BOND   sell   21   0.109   0.004578   2.284422
2013-06-03 21:03:35   PAJKA.BOND   sell   9   0.109   0.001962   0.979038
2013-06-03 19:50:47   PAJKA.BOND   sell   40   0.1098   0.008784   4.383216
2013-06-03 19:45:05   PAJKA.BOND   sell   1   0.1098   0.0002196   0.1095804
2013-06-01 22:45:04   PAJKA.BOND   buy   1   0.1099   0.0002198   0.1101198
2013-05-30 22:45:07   PAJKA.BOND   buy   1   0.11   0.00022   0.11022
2013-05-28 22:45:06   PAJKA.BOND   buy   1   0.10901   0.00021802   0.10922802
2013-05-26 22:45:06   PAJKA.BOND   buy   1   0.109989   0.00021997   0.11020897
2013-05-24 22:45:08   PAJKA.BOND   buy   1   0.1099   0.0002198   0.1101198
2013-05-22 22:45:05   PAJKA.BOND   buy   1   0.108987   0.00021797   0.10920497
2013-05-21 10:44:08   PAJKA.BOND   buy   1   0.108989   0.00021797   0.10920697
2013-05-20 12:10:18   PAJKA.BOND   buy   1   0.10899   0.00021798   0.10920798
2013-05-17 22:45:05   PAJKA.BOND   buy   1   0.1049   0.0002098   0.1051098
2013-05-16 06:39:35   PAJKA.BOND   buy   1   0.105   0.00021   0.10521
2013-05-13 21:29:08   PAJKA.BOND   buy   1   0.1059   0.0002118   0.1061118
2013-05-12 00:50:24   PAJKA.BOND   buy   104   0.109998   0.02287958   11.46267158
2013-05-12 00:48:53   PAJKA.BOND   buy   107   0.1098   0.0234972   11.7720972
2013-05-12 00:46:22   PAJKA.BOND   option-buy   228   0.07   0   15.96

No, you are not, and saying the same wrong thing a lot of times doesn't make it right.

When I told you that an issuer would never want to increase the payments, you were as stubborn and wrong then too, until I wrote an article to explain it to you, at which point you completely freaked out and sold at up to a 45% loss.

.b

I calculate fully for you...actually I really do not want to do...it really cost me time ...but you are really stupid and stubborn enough.

Expected dividends to be paid by the issuer(after 6 months): use conservatively 15% increase of difficulty and increase each 12 days. (last time difficulty went up 26%) :  During the 6 months difficulty will adjusted by 180 days/12 =15 times
1:(12 days each): Current dividend is 0.46541752 per day for total 4814 shares. 15%increase of difficulty equals roughly 15% decrease of dividend.
2:                                                0.46541752*0.85=0.395605
3:                                                0.395605*0.85=0.33626425
4:                                                0.33626425*0.85=0.2858246125  
5:                                                0.2858246125*0.85=0.242950
6:                                                0.242950*0.85=0.2065
7:                                                0.2065*0.85=0.1755
8:                                                0.1755*0.85=0.1492
9:                                                0.1492*0.85=0.1268
10:                                              0.1268*0.85=0.1078
11:                                              0.1268*0.85=0.09163
12:                                              0.09163*0.85=0.07788
13:                                              0.07788*0.85=0.0662
14:                                              0.0662*0.85= 0.056
15:                                              0.056*0.85=0.04783    
Accumulated total dividends paid by the issuer: =2.831358*12=33.97 .gives it 35....OK? assume that issuer sold all contracts at 0.1 total 4841 equal to 481 BTC.
 the first half year you will have 7.06%(and continued decrease ) ROI on this asset....No capital gain or loss been calculate so far.....

Assuming half years later , if you are the issuer of this bond, what decision will you made ? continuing this bond and pays on needless dividend to those bond contract holder or pays 110% of market price to buying it back? .. assume the contract is still worth 0.1 half year later .what will you do ? If I am the bond holder I will absolutely continued my contracts because in the future I will pay less dividend . as the time goes, difficulty will continue growth....almost zero cost for the issuer to continued the contract . Am I correct?  
We assuming all investors are rational, they will only investing in the project which will maximize its profit... and this will caused another problem I want to sold out my bond contract , but no one will buying it ,because they have better opportunity.(TAT.V for example) (Logically right ?)
As a bondholder like you what is you decision ? you will selling your contract today to prevent future lose , or hold it wait for fools to buying it?

My calculation could be wrong ,but I still happy about my decision...and hope you will good luck on your bond contract...there are premium advantage been taken by the issuer, I do not have better choice to prevent future lose !!!

You do realize that the price of PAJKA has been fairly steady for months prior to your stupidity, right? It's been hovering between 0.1 and 0.11 for a very long time and guess what's been happening to the difficulty during that time? That's right, Sherlock, it has been going up, rapidly. The network hashrate and difficulty has gone up 500% over the previous couple of months. Your 25% panic is a sign that you have absolutely no shread of knowledge about what you're saying. That's why I attack it because you insist on repeating the same nonsense again and again. Low volume is the reason your panic managed to drive the price down a bit temporarily, not that everyone has been completely oblivious to what's been going on in mining over the previous months.

And when you clearly lie, I point that out. Someone who paints is a painter, somone who bakes is a baker, and someone who lies is a liar.


You have no idea what calculations I use. Your math sucks because you don't understand what you're investing in and thus have no idea how to apply that math. If I say that 2+2=4 and not 6 then I'm right, but that doesn't mean squat in terms of investing unless you know where to apply those numbers, something you've clearly demonstrated that you don't.


I attack your stupidity and lies and failed attempts at FUD. Whether you exhibit those behaviors is up to you, not me. You can stop being an idiot at any time you choose but instead you're stubborn, act like a child, and start lying.

This may be a culture shock to you, that someone confronts your attutide and behavior in this way. You may expect to get away with market manipulation, but that's not how it works in the real world. It's time to grow up, look yourself in the mirror, and think whether your feelings of hurt is really relevant to anyone but yourself and your mother.

Maintaining a stupid behavior when the stupidity has been clearly pointed out is a sign of fundamental stupidity. Your choice, not mine.

.b

We will see after two weeks what the price of PAJKA bond will be.......I do not calculate anything I just use the calculation provides by the web-site. It use the formula compound the decline rate at 10 % increase of difficulty at each 12 days...I know it is unfair advantage because all the calculator your uses ignoring the factors that difficulty will increase after time...therefore You assume my math is suck...
http://mining.btcfans.com/
The website is above anyone who know Chinese ,or willing to do a translate of the website(you could found out by yourself by putting 3/Mhash rate   per cost of 0.1 btc paid) if anyone think 4500 days is acceptable...... I am alright...then I made a mistake...I never think a investment repays me for 10 years time is a safe investment......!
I think sooner you will start worry about your contracts.... the market will tells everthing, before the market make their own judgement, please do not attack my knowledge and my perception...you can argue and debate with me ,but not personal attack...thanks

No you didn't. Remember that all trades are public. You are a liar either now or before, but you just revealed yourself to be undeniably a liar.

Earlier, you wrote:

Since that date, only 72 bonds have been traded at above 0.1. Even if I give you the benefit of the doubt because you may have meant 'I held' (I know English is not your primary language), I'm fairly certain that I can easily see when your panic started, which was on June 3 around 21:00 BTCT time. Since then, only 232 bonds have been sold above 0.1.

320 bonds have been sold below 0.9, though, so if you sold all your 500 bonds, that means someone else sold 52 bonds either below or above 0.1. In other words, you alone sold 90% of the bonds, and roughly 50% of your holdings were sold below 0.1.

You cannot possibly have sold 'most [your] PAJKA bonds at 0.1 something' because there hasn't been that many sales. Either you lie about your trades or your holdings, but you are undeniably a liar, and now you ask newbie investors to trust you. *tsk*

You shame yourself!

Further, someone, and I strongly suspect you been manipulating the prices by doing a 1-bond sale at market just after a market buy. That may be someone else looking to pick up your shares, so I won't hold that against you, but it's clear that you are the only one in a state of panic. When the rest of the world does not think the same thing you do, it is more often than not you who are wrong.


Your math sucks and your investor-foo is weak.

Go away, troll!

.b

I sell my most PAJKA bonds at 0.1 something..only small amount of it at 0.6-0.99...I only made 5 BTC lose there...
You can hold your PAJKA bonds...I think three months later You will believe I am right...
under current difficulty PAJKA bond will take 4500 days to recover what you have invested now....(based on 10% difficulty increase each 12 days)
Please, you think you are right...let's say if after two week ,you still can sold you asset above 0.1,I mean market average selling price over last week) then I will accepted I am wrong...

Based on your recent experiences in PAJKA, don't you think you should refrain from giving advice to anyone, given that your statements are so far off reality that you just voluntarily threw away 40% of your investment based on erroneous math?

You're a troll spreading FUD across the board. To anyone else, please do not listen to this character for a second.

.b

AM is the only asset can make dividend for you and you can sell it without capital lose(may be capital gain)...other asset, do not buy!!!! you will get burning yourself...

Interesting thread.

What you should absolutely figure out before you begin investing

I am a Van Tharp student when it comes to creating your own investment strategy. As he says, you should have 3 things written down before you begin investing:

1. Entry strategy. What will you buy? Why? When will you buy it?

2. Exit strategy. When will you sell? Why?

3. Position sizing. How will you manage your portfolio so that no single investment can fuck you up?

Besides this, you need to know your risk appetite. Do you have low or high risk taking appetite?

Once you know your answer to these above points, you can begin investing.

My personal thoughtprocess

Now to my thought process and a bit of my investment strategy and outlook.

I try to allocate 10% of all my money to very high risk investments. When I first read about bitcoins, I started buying it with my 10% money. Over time, because of the very fast bitcoin price rise, share of bitcoins today in my total investments is more than 10%. But I feel comfortable with it and don't plan to re-balance my portfolio until a few exit trigger points are hit.

With bitcoins itself, I had planned to divide the pie into 3 parts (and each pie would have its own entry and exit strategy and trigger points).

i. Holding bitcoins.
ii. Holding bitcoin mining equipment.
iii. Holding other assets that pay returns in bitcoins.

I had thought of keeping these pieces of the pie about equal.

Unfortunately - the 3rd piece of the pie hasn't done so well. S.Dice. Bitbet. Ziggap. Bitpride. Btcquick. Investments on BTCjam. Loaning BTC on the forum. I've looked into all of this at one time or another. And they have been disappointing.

Btcquick is the only one I'm slightly optimistic about - because of its high upside if the promoter takes care of 3-4 risks that kind of a business faces. But others are over valued. Or the opportunity cost vs its risk is too poor. For ex: S.Dice may not be over valued. But it has a poor opportunity cost compared with other investments I can make.

Loans - I just don't have the time to do the due diligence.

I had looked into coinlender too - and I think its a pretty good investment vehicle. I would jump on placing my bitcoins over there if I knew what is TradeFortress's personal insurance providing capacity limit - and if it is backed by any thing.

Anyways, because the 3rd pie doesn't do so well, my position sizing strategy isn't working. If tomorrow the govt of China busts ASICMiner, my portfolio would crash beyond my risk taking appetite. So I am looking at doing a few things to keep things in balance for me. One of these things has been creating my own asset (Win.Avalon). But thats not enough to balance the ASICMiner going bust risk. So I'm doing a few other things, but too soon to talk about it.

Anyways, moving on. A bit about my entry and exit strategies in the bitcoin world.

Bitcoins.

My (long term) theory is that bitcoin price is backed by the miners profit margin. If bitcoin prices don't give miners a fair profit, they won't sell - which would make the bitcoin prices rise. And if miners make insane profits, more miners will get in. So I buy or sell bitcoins based on the miners profit margin chart on blockchain. I do glance at moving averages but bitcoin is too volatile to make them effective to fine tune the buying or selling time - like they are if you buy shares on the stock market. So right now, my entry or exit strategies can't be setup automatically via an exchange API.

Bitcoin investments.

My entry strategy for which assets to buy depends on the following: is the upside big enough? Is the issuer trustworthy, smart, capable and motivated (needs to be all 4)? Whats the business side risks? And most importantly - volume check - how much can I buy to safely sell without crashing that asset - if I need a quick exit?

My exit strategy deals with my upside calculations I do when deciding what to buy. I try to calculate how much a business would make and based on that, I determine my sell number. I will sell as soon as that number hits. And won't wait for a peak. Or I will sell if the asset issuer doesn't execute as well, or as I've learned from Bakewell - takes on any external risk.

"When" exactly to buy / sell trigger points are still not as fine tuned. There is no "technical" data you can run to fine tune the exact buying or selling trigger points because of low volumes and very few traders. So you have to rely on your gut more than any movement of the stock - as one trader looking for a quick exit can depress the price.

Hope this post helps the beginners. Let me re-iterate the most important investment lesson: don't begin investing before you have your entry, exit, and position sizing rules written down. (And once you have them written down, be disciplined with them.)

Bumping this for other securities Newbies.

Asicminer should be the safest stock to invest in, but the current price is quite high, I would not recommend you to go all-in.

And BTC is not a currency. Moving right on to more Captain Obvious contributions of great value and import. Head still inserted firmly up ass.

Thank God for you, Peter.   

Ok, you asked for my opinion, so:

First, as others have so helpfully said, "read, read, read." Read everything you can about the principals and history of a particular "company," before doing anything. Unless- you have a highly risk oriented speculative bent. (Also as others have suggested about me.)

I really don't know anything about VMC, except that from my point of view it's AMC, and AMC has had a really poor start.

Here's something else I experienced:

I'm highly technically oriented, so I wanted to mine BTCitcoin. After considering the hardware for a while, I could see that the ASIC based miners would blow the doors off anything else you could put your money into. In addition to that good hardware is difficult to come by because miners don't want to part with the golden goose.

So, round about mid January 2013, while looking into hardware, ButterflyLabs popped onto my screen possibly dozens of times. No other ASIC offering did. I looked into the price, calculated potential return, thought a bit about hardware development times (I'm an engineer), noticed they were claiming to ship in mid March, noticed they probably began working on it probably in May-June 2012, thought it was possible, and bought one.

It doesn't matter which one. No, that's not true. Thank goodness I didn't buy a Mini-Rig! The way I calculate it, you'll need a heat sink the size of a room and a power supply for a large home for that baby. You won't be on a normal 15 Amp outlet circuit, or even 4 of them. You will be calling your electricians. It won't be UL listed.

What really matters is that the advertising worked great, but the performance has been irritating at best. I notice that AMC/VMC may be on that path...

Here's the deal though, I could be wrong. I often am. I sure was about ButterflyLabs.

And because of that, I look again at things that I've chosen not to invest ("speculate" for those of you with softer stomachs) in. Sometimes I just buy a little (very little) to have some "skin in the game." I'm glad I did that with BTCitcoin itself. It's been great! 



PS, A note about "investing" vs "speculation":

You are kidding yourself that there's any difference, except: The idea that "investing" portrays is that you can predict the future.
Really, "invest" is the word that your broker uses to sell you something and "speculate" is the word your dad uses to let you know you're on your own!

As I've said before, the future is so much easier to predict after you see it.

Who, me? Does anybody actually look at signatures?

One word of advice: Read through some of MPOE-PR's posts, there is some good advice in there (but there are some times when she is an idiot, so be careful)

Thanks for all of the advice, everyone. I am also looking into BTC investing and this has give me a good place to start my research.

very good peace of writing....I agree with you..  there are a lot of people buying VMC in those days, what you think of VMC..I found they put a normal desk computer's picture to use as demonstration of their product... Do you think they will be another scam?

So where are the financial statements? Those are not it. There is no balance sheet or income statement that I can see. And that is not a company either.

This would be completely false, and a clear illustration as to why we don't encourage noobies making judgement calls.



Locate ass. Retract head. Breathe in.

My goodness things are complicated enough without you guys going off on an tangent about bitcoins vs. fiat as a metric.

@OP: The only thing I'd like to say is that non of the companies here are actual companies nor do they publish financial statements. Essentially you are relying on the honesty of a few people and the security of sites like btct.co. So it's not investing. It is speculation.

This x1000.

If you are asking internet strangers how you should 'invest' your volatile bitcoin into non-regulated volatile bitcoin securities, you are asking to get burned.

I like to look at it this way: sometimes people don't see clearly what's ahead for a particular security, which can be different from what's ahead for the company or the issuer. That can give me the opportunity to profit.

Often it's like being out in the woods: some days you get the bear, some days the bear gets you.    Just make sure you get away before it eats you.  


Thanks Deprived!

This however has pronounced macrostabilization effects, especially as the size of the economy grows. Two years ago BTC denominated securities were epsilon, and the BTC went from 30 to nothing when MtGox fucked up. This spring BTC denominated securities were over 1mn BTC (S.MPOE like 750k, S.DICE like 500k etc) and when MtGox fucked up again the price went temporarily to 50 then bounced back within days.

So it's not merely a case that the values of BTC securities are set by the exchange-rate. There's some significant effect, and as MPEx grows and as it extends its influence on Wall Street the situation will likely reverse, and we'll have exchange rates set by the performance of BTC securities. As it should be, after all.

My thoughts are that the vast majority of investments sold on BTC exchanges are in practice tied to fiat (exceptions being securities which don't hold significant physical assets or trade in physical assets - e.g. shares in exchanges themselves and trading funds).  It's pretty much inevitable that this is the case - as nothing of any note has a price that's actually fixed in BTC so the value of BTC itself is entirely driven by speculation/confidence.

As a result the performance of the vast majority of BTC securities will continue to be predominantly set by the exchange-rate.  When BTC rises profits (in BTC) will fall and price will fall - and vice-versa.  Which is why I continue to stick to trading rather than investing - it's easier to make profit from the bad judgment of other investors than from the actual securities.  Most investors' idea of valuing a security is to look at what the bid and ask are at and the value is somewhere in between.  Which is often correct if determining book value - but useless when evaluating something as an investment or trying to make a decision on whether to buy, hold or sell.

Hey, one other thing:

Technically, everything in BTCitcoin here has exposure to fiat. However, the activity here is a concerted effort to remove that as a problem. There are attempts to switch away from fiat being made.

Really, all I'm trying to do is find good ways to measure profitability without converting back and forth to fiat. Predictions become very difficult when you do, mainly because of the extreme volatility of the exchange rate.

As someone keeps in their signature: The Volatility Monster is gobbling up all my BTCitcoins!

Didn't you also say that there's a form of timing involved?

This is what I learned from you:

When the supply is available for the demand in ASICs, the mining companies become heavily fiat biased.

I looked at that in a different way:

When the difficulty grows beyond the predicted rate of increase (of difficulty), the miners become unprofitable (in terms of BTCitcoin).


However, in either case, there's a timing involved. And I also claim that it can be exploited currently (opportunity!)

There's also risk, and in fact I believe that risk can be quite high. Especially if we don't pay attention.

And you are right. Miner prices have dramatically changed, with the exchange rate. Those who bought earlier have been rewarded both with easier difficulty and with lower miner prices. And that's exactly my point about your A vs B example. Timing of mining gear matters. And it especially mattered from Feb to now. I think that may continue and even accelerate for a while, making it quite difficult   to predict profitability.

Still, the best of the best is ASICMiner. Mining, equipment production, sales, early mover in the market, plans for the future.  

I also think that when things begin to settle down a bit, the BTCitcoin securities market companies may perform better than anything else for a while.

What are your thoughts there?

Maybe we're just using 'denominated' for different purposes - you meaning the currency they're traded in and me meaning the currency in which their value is defined in practice.

So let me reword our difference.

You claimed mining securities have low fiat-exosure.  I disagree - they have as high fiat-exposure as you can get.

Just because you buy something with BTC doesn't make it BTC-denominated.

If you buy a Dollar bill with BTC the bill is still denominated in USD.  Same with mining securities.  Their value is pegged to USD not BTC - no matter what the issuers pretend or which currency trades are transacted in.  If BTC rises vs USD their value falls.

Given that mining securities have 100% exposure to fiat it's hard to see how your claim they have less exposure than some other investments could be correct.  Are there securities whose value is more than 100% tied to fiat?  If BTC double vs USD do you honestly believe S.DICE bet volume more than halves (S.DICE being something you claimed had more exposure to fiat than mining securities)?

Your claim that they were priced in BTC was made when you stated that hash power was priced in BTC.  Hash power is pretty much ALL that mining companies have - so rather obviously their price is denominated in whatever hashing power is priced in.  Which you said was BTC - but it's usually fiat (even if transacted in BTC).  Try finding somewhere that sells hashing power priced in BTC - and keeps same BTC price if BTC moves majorly in either direction vs USD.

Where did I say that?  

Are you putting words in my mouth again?  Don't do that. I might have to eat them later.  

I'm pretty sure I suggested they had lower exposure to fiat than some other investments. And I also suggested that right now (and I think usually) you can ignore the power use and look only at the predicted return in BTC given the current predicted increase rate of difficulty, in order to compare mining companies.

However, the securities I buy at BitFunder and btct.co are BTCitcoin denominated. That means they are listed in BTCitcoin.
Is there a fiat based stock exchange where you can buy them in USD?

I guess you did put words in my mouth after all. Dang it. I'll probably have to eat them now!  

I didn't gloss over those points - they were irrelevant.  My example was looking at two companies with identical hardware/hashpower - only difference being when they bought it.  They have identical future outlooks (other than a potential minor difference in that company A's equipment is older and so likely to fail sooner).



Plans to expand/reinvest/keep up with changes are a red herring.  Mining companies talk about reinvestment as though it somehow increases profitability.  It doesn't - profitability as a percentage of capital over the lifetime of an investment is unaffected by reinvestment.  If a business model is unprofitable then reinvestment won't change that - it'll just increase losses as a percentage of invested capital (but delay the point at which the losses become unavoidably obvious).

Where reinvestment serves a useful purpose is in maintaining the capital value of an investment - which is something you only want done on investments that are profitable in the first place.

In any event, until mining companies stop defining profit as "anything I mine" and instead define it as "the excess value of our assets over their initial value" reinvestment is the wrong word.  Most mining companies that claim to reinvest aren't actually doing so - they're just not dividending out as much of their capital as ones that make no such claims.  And they won't change because they like to define profit as "anything I mine" so they can then claim their management fee is taken from profit - when in reality its taken at the expense of eroding the asset base which isn't really profit at all.



Not all securities are created with the primary intent of passing risk on to investors.  Obviously there's always SOME risk in investment but it doesn't have to be the one-sided transaction that it is in most mining securities.  Some securities are issued to raise capital - with little risk to investors.  But to do that means the issuer needs to be confident of making profit - which doesn't apply to most mining securities.

There's absolutely nothing wrong with passing risk on to investors.  What's wrong is the amount of cream some issuers want to skim off the top risk-free without any realistic likelihood of investors making any profit in return for all the risk being passed to them.  That's by no means unique to mining securities - just look around and you'll find plenty of other 'businesses' that have made trivial profit, have modest epectations, yet want a fat chunk of cash up front as a reward for exposing investors to high-risk, low-potential securities.



No.

You claimed mining securities are BTC denominated.
I pointed out they're fiat denominated.

That's in no way the same thing.  They're about as opposite points of view as you can get.

Excellent.

I agree with most of what you state.

I think you glossed over the important facts of time, changing cost of hashpower and need for greater hashpower later in your A vs B company comparison, but as you say in the long run it doesn't matter.

However opportunity is now. There are opportunities for good and sometimes high profit in some of these companies, where in others there aren't.

And I agree with you that miners are not to be held for the long run, especially if they have no plan to keep up with the changing difficulty (or network hashrate if you prefer). This is one of the reasons ASICMiner has captured the investment of so many. It's a miner, it's a mining equipment producer, it looks like they are still looking to the future and it's one of the first movers in that market.

Most miners in the long run will become unprofitable. I came to that conclusion long ago, while looking at the idea of investing in large amounts of mining hardware. That's why it's so important to predict when that will become true for a particular miner during this transition and opportunity time. It may be true from the beginning. It may become true later. For some (a few), they may actually make it through the tough time to longer term profitability. There will probably always be new blood to give it a try and make it harder for those already mining.

And I agree about mining companies passing risk from the issuer to the investor. However, that's always the case with any security and issuer and is the reason for creating the security in the first place. The trick is to discover which ones also pass along the reasonable profit that should go along with it. If you don't find the reasonable profit, don't put your hard earned BTCitcoin there.

Basically we are saying the same thing in different ways:

As ASIC supply rises to meet demand (or as difficulty rises beyond the predicted rate of change), a particular miner who is not keeping up with equipment renewal (difficulty or network hashrate) will become unprofitable. The fact that ASICs have costs in terms of fiat certainly does enter into the profit equation at that time, and so does the cost of power (also in fiat).

Emboldened is where you're going wrong.

As soon as supply of ASICs is sufficient to meet demand their price will NOT be in BTC it'll be in USD.  Same as was the case with CPUs, GPUs and FPGAs.  That's unavoidable because the manufacturing costs are in USD not BTC.

Once hardware reverts to being priced in fiat then mining shares/bonds also end up being effectively valued in fiat.  You don't need to do any complicated math to demonstrate it either.  All you need to do is consider the following:

Company A starts operations and sells shares in BTC.
BTC doubles in value vs USD.
Company B starts operations with same hashpower as company A.
Company B can raise the capital for half the BTC it cost company A (same USD).
How can company A's shares now be worth twice that of company B's?  They can't - they've fallen to same BTC value.

Mining companies aren't like most companies when it comes to valuing shares.  There's a minimal barrier to entry and no real benefit for being in operation first.  If I produced a website with all the functionality of Facebook, share in my company would be worth nowhere near those of Facebook - as I wouldn't have the billions of existing customers.  No such issue exists with mining - just buy the hardware, set it up and you generate same revenue as an existing company.

The only way to value mining companies is on hashing power - and so they have to be valued in the currency hashing power is priced in.  And that's fiat other than briefy, as now, when demand supasses supply and pricing is whatever they ask for with no meaningful denomination.

In general when BTC rises vs USD more miners come online (as it makes sense for them to mine) increasing difficulty and reducing BTC earned per hash (but not necessarily USD earned per hash).  Difficulty follows exchange-rate - not the other way round (as some mistakenly think).  And that makes actual earnings tend to be inline with USD not BTC anyway - even discounting my earlier point.  Where supply meets or exceeds demand then profitability of mining will tend to zero - meaning only those with cheap power make any profit at all - which is why, other than in short-term supply shortages - mining in general is a horrible investment, especially if the issuer takes their cut as a percentage of revenue rather than of profit.

There may be other factors impacting the traded price of specific securities - e.g. reliability of issuer - but those are entirely independent of the BTC/fiat denomination discussion and generally serve to ensure that if you want a reliable issuer you make a larger loss.

Mining companies are all about an issuer passing the risk to investors whilst getting some income whether or not investors ever get their original money back.  If BTC rises then it's pretty much a certainty other than in exceptional circumstances (e.g. investment has early ASICs) that an investment in mining is worse than just holding BTC.  There's plenty of 'reliable' mining comapneis around.  But take a look at their dividend history and see how reliable they've been at getting investors back their initial investment - it's not a pretty picture.  Right now mining securities is all about late-batch Avalons etc being resold by purchasers to investors so as to lock in their profits and leave investors with the risk of never making their investment back if either BTC rises a lot OR another manufacturer starts mass shipping.

By all means consider mining as a BTC-denominated investment - but you're wrong if you do so (once ASIC supply rises to around demand or higher).

Wow, thanks for the info guys!  To be honest I was expecting more of a troll and useless feedback 

I've got a bit of a starting point now. No point leaving my bitcoins just sitting there doin nothin.

THANKS!

Agreed on ZigGap. Given as an example. Could have given ianbakewell as a fiat exposure example also, but that's not really about a security, it's about an issuer.

I think one of the best examples of fiat exposure in S.DICE is price decline as exchange rate climbs. We can beat the causes and effects to death here, but that effect is what to avoid.

As far as miners are concerned, I tend to believe that most of the field can be eliminated by making a simplifying assumption: power cost is close enough to the same for profitable ventures. After that it's basically price in BTC per hashrate, with some possible toss-outs for "unable to pay fully" due to difficulty rate of change.  There seem to be lots of "opportunities" to buy a miner with the idea of holding long enough to get a  > 100% total dividend. However, when you look closely at it in terms of BTC price and the predicted increase in difficulty, they just don't fly.

They might actually be a short term buy as JAH was when it went from 0.1 to 0.32 while paying a nice dividend, but that had much more to do with people not seeing and understanding the offering being made.

Comparisons between miners are most often in the double or triple digit percentages, when done in this way. I really think a miner that isn't putting aside at least 10% for new equipment is really a mining bond, and should be thought of as a (possibly slowly) dying business.

However, you have a way of looking at them that ties them to fiat. Tell me about that, please.

Invest about 20% in each of these Bitfunder assets:

DMC, MININGCO, G.ASICMINER-PT, CRYPTO.LTC, AMC

That's what I'm doing and it's working great so far! 

That's what I have this for.  Sorry to hear.


No need, you're exactly right.

You're wrong on your fiat exposure definitions.

Most mining operations usually have massive fiat exposure.  Right now that's not the case - due to scarcity of ASIC supply - but as soon as supply catches up with demand mining investments become effectively fiat-denominated.  I'll let a few people claim that's not the case before I explain (again) why mining bonds/shares are effectively fiat-denominated (hint: consider how you'd value a new mining secuirty.  Now consider how you'd value an existing one with same hardware.  Now look at how that value varies with exchange-rate).

S.DICE isn't massively exposed to fiat - it's only exposed to whatever extent you believe volume of bets declines when BTC rises in price.  The jury's still out on what evidence there is for that being signifiant.

ZigGap (in your list) was a scam and collapsed a few months back (it only lasted a few weeks before issuer vanished).  As such it no longer has any fiat exposure - as its value remains at zero no matter what happens with the exchange-rate.

^^^ This

I have an interesting story:

I first discovered BitCoin near mid November 2013. After reading a bit I felt that mining probably wasn't a way to have much income. ASICs were being developed, FPGAs had been shuffled to the side, except for those already with them.

Sometime in late Nov, early Dec I bought my first BTC. Coinbase was just starting & I found I could buy straight from my bank account. Cool!

But what to do with it? I'm a fairly decent businessman and investor. Invest!

Where? How do you find where? Trial and error is what I tried. But who & what sites can you trust?

I ended up losing lots of BTC at BTCJam.com, thinking that loans are "safe". That's a holdover from the physical, regulated banking world. Not true here. I'm actually a fairly good judge of "character", so I didn't lose all, as I saw that many did there. But I did lose about 30% of what I loaned out. The site itself is fairly good, but the "borrowers" are often not...

While making that mistake, I discovered btct.co (bad name! - I still sometimes forget it) and BitFunder.com (great name!). Both seem to be good places to make investments.

Round about Mar 1, 2013 is when I made my first investments. SDICE, ZigGap, JAH and BAKEWELL. I realized that everything would be thinly traded, so I looked to the securities with the most activity. At the time I knew nothing about ASICMiner and Avalon, I could only see BFL mainly due to their advertising.

When ASICMiner popped up for me was a few days or so later, I think. I bought a share at about BTC0.7. I thought it was way too high. I found an auction where shares had gone for about 0.42 max. After I received my first dividend from it, I bought as much as I could. In fact the biggest mistakes I've made so far have had to do with selling ASICMiner. When I sell it, I seem to end up buying it again at a higher price down the road.

I do think there are other good investments. I like RTM, Cado.AvalonB3, BTCINVEST, and Win.Avalon. Those are all at BitFunder. I also have an account at btct.co, but haven't made any investments there. The obvious heavyweight in the investment world in BTCitcoin is ASICMiner. I do think that there will come a time soon when that is less the case, but right now you get steady income coupled with price growth for your money there.

ASICMiner - Mining Rig production & mining. Currently the worlds largest miner. Shipping rigs to customers profitably.

BTCINVEST - Fund that targets BitCoin growth without Fiat exposure.

JAH - Mining Bond with daily dividend (straight Hashrate based)

RTM - Mining Bond with daily dividend (straight Hashrate based)

Cado.AvalonB3 - Mining BTC with possible growth (currently not yet mining)

Win.Avalon - Mining BTC with possible growth (currently not yet mining)


When I look at an investment based in BTCitcoin, I ask myself these really important questions:

Does it have fiat exposure?  Big exposure: SDICE, ZigGap, btcQuick, BitPride; low exposure: see list above. Fiat exposure means that you will lose BTCitcoin as the exchange rate goes up. You are better to just hold BTCitcoin than have that.

Can I trust the Issuer? This one just takes time. Spend it on these forums. Sometimes it takes a small investment for a time.

What is the expected mining return? The answers here are more difficult   than you think.

Am I being offered a reasonably good deal for my investment? Put yourself in the Issuer's shoes. When the security was created, did they try to set it up so that the share owner would make a good profit, or did they just think of themselves?


Hope this helps.

Enjoy,

-MikeMark

http://bitcoin-assets.com/

A lot more reading is probably the only good advice.

Check out:

ASICMiner for Dummies

Direct vs Passthru Shares

I been doing ok with bitcoin based stocks - Satoshi dice, bitbet, mpoe - have really tried options.

Hello Gentleman!

I'm a soon to be ex-miner who would like to invest the BTCBTC now into something that will still produce me some income in the future. I've had it with making future plans with most of the hardware out there (or not out there). Had it up to here with waiting for my BFL orders

I'm completely baffled at who is selling what in here! I understand Asicminer is one of the best right now, but I'm having trouble finding out where to buy, how much, how much it pays out, historical costs etc.

any other investments pointers guys?