Topic: Why going all-in is not financially responsible. Capital is your Security. (Read 4233 times)
sr. member
Activity: 294
Merit: 250
This bull will try to shake you off. Hold tight!
April 02, 2013, 03:57:28 PM
just thought it's a good time to bump this thread
March 30, 2013, 12:58:09 PM
I'll check this again later but I actually checked and Interactive Brokers does not own my shares I do. If I goes bankrupt I lose my balance in fiat (USD and Euro) but keep my stocks as they cannot be seized by creditors.
Am I totally wrong in this?
Am I totally wrong in this?
I asked about it once, and IB indeed does not own the shares, it's a specialized firm that holds it for them. On the other hand apparently that firm can loan out the stocks for shorting too, so actually its not really safe either. At least that is how I understood it.
The last portion I am certain is inaccurate. I joined their "Stock Yield Enhancement Program" 1.5 years ago. This program gives IB the right to loan out my shares to people willing to short and IB and me split the fees. When stocks in my portfolio are loaned out collateral is placed in my account matching the value of the stocks exactly (which is corrected every night) and I receive payments in lieu of dividends which match the dividends exactly. Without me joining their program they could not loan out my stocks (otherwise, why pay me for the privileged?)
Well, I don't have a direct IB account, but through a local 'middle-man' company for IB, maybe that is the difference. (I am willing to provide you the emails in pm if you are interested).
I am interested so please do. Thank you.
March 30, 2013, 12:47:44 PM
I'll check this again later but I actually checked and Interactive Brokers does not own my shares I do. If I goes bankrupt I lose my balance in fiat (USD and Euro) but keep my stocks as they cannot be seized by creditors.
Am I totally wrong in this?
Am I totally wrong in this?
I asked about it once, and IB indeed does not own the shares, it's a specialized firm that holds it for them. On the other hand apparently that firm can loan out the stocks for shorting too, so actually its not really safe either. At least that is how I understood it.
The last portion I am certain is inaccurate. I joined their "Stock Yield Enhancement Program" 1.5 years ago. This program gives IB the right to loan out my shares to people willing to short and IB and me split the fees. When stocks in my portfolio are loaned out collateral is placed in my account matching the value of the stocks exactly (which is corrected every night) and I receive payments in lieu of dividends which match the dividends exactly. Without me joining their program they could not loan out my stocks (otherwise, why pay me for the privileged?)
Well, I don't have a direct IB account, but through a local 'middle-man' company for IB, maybe that is the difference. (I am willing to provide you the emails in pm if you are interested).
March 30, 2013, 12:13:03 PM
I'll check this again later but I actually checked and Interactive Brokers does not own my shares I do. If I goes bankrupt I lose my balance in fiat (USD and Euro) but keep my stocks as they cannot be seized by creditors.
Am I totally wrong in this?
Your understanding what the law says is correct but you still don't get it.Am I totally wrong in this?
The law doesn't matter in "exigent circumstances". And every situation is exigent when following the law would benefit you instead of someone with more political clout.
March 30, 2013, 11:53:39 AM
I'll check this again later but I actually checked and Interactive Brokers does not own my shares I do. If I goes bankrupt I lose my balance in fiat (USD and Euro) but keep my stocks as they cannot be seized by creditors.
Am I totally wrong in this?
Am I totally wrong in this?
I asked about it once, and IB indeed does not own the shares, it's a specialized firm that holds it for them. On the other hand apparently that firm can loan out the stocks for shorting too, so actually its not really safe either. At least that is how I understood it.
The last portion I am certain is inaccurate. I joined their "Stock Yield Enhancement Program" 1.5 years ago. This program gives IB the right to loan out my shares to people willing to short and IB and me split the fees. When stocks in my portfolio are loaned out collateral is placed in my account matching the value of the stocks exactly (which is corrected every night) and I receive payments in lieu of dividends which match the dividends exactly. Without me joining their program they could not loan out my stocks (otherwise, why pay me for the privileged?)
March 30, 2013, 09:33:58 AM
I'll check this again later but I actually checked and Interactive Brokers does not own my shares I do. If I goes bankrupt I lose my balance in fiat (USD and Euro) but keep my stocks as they cannot be seized by creditors.
Am I totally wrong in this?
Am I totally wrong in this?
I asked about it once, and IB indeed does not own the shares, it's a specialized firm that holds it for them. On the other hand apparently that firm can loan out the stocks for shorting too, so actually its not really safe either. At least that is how I understood it.
March 30, 2013, 07:51:10 AM
I'll check this again later but I actually checked and Interactive Brokers does not own my shares I do. If I goes bankrupt I lose my balance in fiat (USD and Euro) but keep my stocks as they cannot be seized by creditors.
Am I totally wrong in this?
Am I totally wrong in this?
March 30, 2013, 06:31:22 AM
Today's events in Cyprus make it kind of financially irresponsible in some countries to have any non-trivial amount of money in a bank account.
it's going to happen to every country, and it's irresponsible to hold any assets which can be plundered in this way. They'll do it to bank accounts, stock portfolios, retirement accounts, and bonds. The only thing safe is something they can't remotely seize.Stocks are pieces of a company. How could they seize entire stock portfolio's? I know companies can be nationalized but that happens on a individual company basis not a stock portfolio one. Even if my stock broker goes bankrupt I still own all my stocks as they aren't part of the inventory of the stock broker.
March 16, 2013, 07:01:12 PM
Today's events in Cyprus make it kind of financially irresponsible in some countries to have any non-trivial amount of money in a bank account.
it's going to happen to every country, and it's irresponsible to hold any assets which can be plundered in this way. They'll do it to bank accounts, stock portfolios, retirement accounts, and bonds. The only thing safe is something they can't remotely seize. 
March 16, 2013, 06:47:54 PM
Today's events in Cyprus make it kind of financially irresponsible in some countries to have any non-trivial amount of money in a bank account.
March 13, 2013, 07:27:15 PM
One of the beautiful things about buying bitcoin right now is that there is NO NEED to go all in! It is such an asymmetric bet, that in a truly ridiculous upside scenario, investing even a small amount at today's prices will make you very very wealthy. If you invested 5% of your net worth, and bitcoin went up 100x, you'd be 84% in bitcoin at THAT point, but at that time, it would actually be a much safer holding by virtue of the implications of its successful history.
There are a lot of unknowable risks still lurking out there. At this time, unless your net worth is extremely low compared to your salary (i.e. you're young and you basically haven't saved much), going all in is just a recipe for panic-selling when the inevitable volatility rears its head. In general, if you can't sleep at night because of your bitcoin holdings, you have too much invested.
There are a lot of unknowable risks still lurking out there. At this time, unless your net worth is extremely low compared to your salary (i.e. you're young and you basically haven't saved much), going all in is just a recipe for panic-selling when the inevitable volatility rears its head. In general, if you can't sleep at night because of your bitcoin holdings, you have too much invested.
I fully agree with first part. I might be wrong but I think it is not responsible for a young adult with a job and without any savings, neither. Because that's his primary goal is to build up savings/secure capital. Going all-in in bitcoin means he will also lose all his capital if it fails. Why do you make an exception for such person? I also have a part that wants me to go all in so part of me would be very happy if you could give good reasons why it does not apply to such person.
Maybe people dont want to support the current system at all as they see it as life destroying for the planet ?
Even gold mining causes devastating environmental issues. The best investment you can make is learning how to grow your own food etc.
March 13, 2013, 07:16:41 PM
This "Permanent Portfolio" thing seems like just another buzzword, waiting on copyright approval and the rights to it sold off to a gaggle of lawyers.
Look... people are different. Situations are different. Nothing works for everyone.
If you're a healthy twenty-something with a secure job, going all in and giving it a year or two makes perfect sense. Perfect.
Even at my age (50+), if you're healthy and calm and not particularly risk-averse, putting a majority of assets into it isn't an entirely stupid play. The upside is ferocious; and the truth of it will play out quickly. Odds...
But hey dude... you gotta try to sell your shit, right?
Look... people are different. Situations are different. Nothing works for everyone.
If you're a healthy twenty-something with a secure job, going all in and giving it a year or two makes perfect sense. Perfect.
Even at my age (50+), if you're healthy and calm and not particularly risk-averse, putting a majority of assets into it isn't an entirely stupid play. The upside is ferocious; and the truth of it will play out quickly. Odds...
But hey dude... you gotta try to sell your shit, right?
He is not selling anything except for an idea...
March 13, 2013, 06:32:27 PM
This "Permanent Portfolio" thing seems like just another buzzword, waiting on copyright approval and the rights to it sold off to a gaggle of lawyers.
Look... people are different. Situations are different. Nothing works for everyone.
If you're a healthy twenty-something with a secure job, going all in and giving it a year or two makes perfect sense. Perfect.
Even at my age (50+), if you're healthy and calm and not particularly risk-averse, putting a majority of assets into it isn't an entirely stupid play. The upside is ferocious; and the truth of it will play out quickly. Odds...
But hey dude... you gotta try to sell your shit, right?
Look... people are different. Situations are different. Nothing works for everyone.
If you're a healthy twenty-something with a secure job, going all in and giving it a year or two makes perfect sense. Perfect.
Even at my age (50+), if you're healthy and calm and not particularly risk-averse, putting a majority of assets into it isn't an entirely stupid play. The upside is ferocious; and the truth of it will play out quickly. Odds...
But hey dude... you gotta try to sell your shit, right?
March 12, 2013, 09:15:03 PM
I only got to where I am by going all in. Before bitcoin I had no savings.
I diversify when my bitcoin holdings get too large due to price increases. I buy the same dollar amount every time I get a paycheck. It's not so complicated.
Happy for you that it worked out so well. I mean that.
Looking back on it do you think that it was a good strategy of you to go all-in? I'm asking honestly. I'm conflicted about it. Do you think you would have gone all-in if you had considerable amount of savings when you discovered bitcoin?
Now I understand but isn't that unnecessary work. If you need to sell bitcoin due to price increases from time to time. Why not simply stop buying more btc with your paycheck?
If I had significant savings, I probably would not have gone all in, but I probably would have dumped any extra fiat (or bonds) I had sitting around. Selling hard assets to buy bitcoin would be harder to do, although some people have done fantastically doing just that. (see cypherdoc's "Gold collapsing, Bitcoin UP" thread).
Sure, it is unnecessary if you are buying and selling at the same time. However, I usually buy twice a month and I buy some gold/silver/copper or sell some to fund my IRA only every few months. For the metals, I buy directly with bitcoin, but if my objective is to get fiat to buy stocks, I will just skip a buy or two.
sr. member
Activity: 294
Merit: 250
This bull will try to shake you off. Hold tight!
March 12, 2013, 09:07:29 PM
I only got to where I am by going all in. Before bitcoin I had no savings.
I diversify when my bitcoin holdings get too large due to price increases. I buy the same dollar amount every time I get a paycheck. It's not so complicated.
Happy for you that it worked out so well. I mean that.
Looking back on it do you think that it was a good strategy of you to go all-in? I'm asking honestly. I'm conflicted about it. Do you think you would have gone all-in if you had considerable amount of savings when you discovered bitcoin?
Now I understand but isn't that unnecessary work. If you need to sell bitcoin due to price increases from time to time. Why not simply stop buying more btc with your paycheck?
March 12, 2013, 08:56:14 PM
Because you described exactly what I've been doing. All the metals I now have and most if my IRA came from bitcoin profits, but keep telling people not to buy. I'm still dollar cost averaging, and will continue to do so until I finish my masters degree and go back to freelance programming. Then, I will work for bitcoin only (or fiat with a 10% surcharge), and continue to diversify when my holdings get too large. The slower the price grows, the more bitcoin I will end up with.
Are you suggesting that I am telling people not to buy bitcoins?
You seemed very anti my message to not go all-in and to diversify bitcoin profits, but in your actions you did exactly that?
Also, how can you diversify away bitcoin profits, and at the same time aquire more bitcoins?
I'm confused.
I only got to where I am by going all in. Before bitcoin I had no savings.
I diversify when my bitcoin holdings get too large due to price increases. I buy the same dollar amount every time I get a paycheck. It's not so complicated.
sr. member
Activity: 294
Merit: 250
This bull will try to shake you off. Hold tight!
March 12, 2013, 08:53:23 PM
Because you described exactly what I've been doing. All the metals I now have and most if my IRA came from bitcoin profits, but keep telling people not to buy. I'm still dollar cost averaging, and will continue to do so until I finish my masters degree and go back to freelance programming. Then, I will work for bitcoin only (or fiat with a 10% surcharge), and continue to diversify when my holdings get too large. The slower the price grows, the more bitcoin I will end up with.
Are you suggesting that I am telling people not to buy bitcoins?
You seemed very anti my message to not go all-in and to diversify bitcoin profits, but in your actions you did exactly that?
Also, how can you diversify away bitcoin profits, and at the same time aquire more bitcoins? That would be like Bill Gates saying, yes I sell Microsoft shares, but I also dollar cost average to acquire more shares!?!
I'm confused.
March 12, 2013, 08:36:58 PM
So maybe the best strategy is, go a lot in now, so that you can start selling ASAP?
What do you mean with the wink?
Because you described exactly what I've been doing. All the metals I now have and most if my IRA came from bitcoin profits, but keep telling people not to buy. I'm still dollar cost averaging, and will continue to do so until I finish my masters degree and go back to freelance programming. Then, I will work for bitcoin only (or fiat with a 10% surcharge), and continue to diversify when my holdings get too large. The slower the price grows, the more bitcoin I will end up with.
March 12, 2013, 08:19:45 PM
OP's suggestion looks good in retrospect, seeing what had happened. There are unique problems with bitcoin as with any other investment, so diversification most probably can't go wrong.
sr. member
Activity: 294
Merit: 250
This bull will try to shake you off. Hold tight!
March 12, 2013, 08:07:54 PM
So maybe the best strategy is, go a lot in now, so that you can start selling ASAP?
What do you mean with the wink?
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