The bull and the bear are the two animal spirits of Wall Street. The bull is the hard-charging optimist, pushing markets higher and higher with unrelenting stamina, while the bear is the hibernating pessimist, the force of market declines.
These two animals form the superstitious core of fiat markets, that is, those defined by boom and bust cycles.i
Most investors, due to their naiveté of options trading and their wholesale consumption of every piece of pointy-haired investment advice out there,ii bow to the altar of the bull, imagining that their 10-bagger lottery ticket is just around the corner. This, of course, is also a function of inflation, which your investments and income need to consistently beatiii if you don’t want to lose your purchasing power over time. As such, the average
fleeced sheep investor loves optimistic economic projections because these offer a glimmer of hope that the rising tide might lift their boat a bit, maybe even a bit more than ‘average.’iv
In any event, last June, in the bullish footsteps of the 1,000 BTC wager against Berkshire Hathaway, and like a n00b, I bet that BTC would rise enough to cover my health club membership. Well, today I’m here to announce that my Gedankenexperiment bore fruit!
That’s right, buying 5.93107779 BTC for CAD$ 3,712.80 turned out to be a raw deal, much less a free lunch! Had I been paying my dues in BTC purchased at the outset of the wager, I would’ve already run out of coins last week with another four months to go in the year, to say nothing of ending up with coins worth >CAD$ 3,712.80.v Not that timing markets is the sanest thing to attempt, but my summertime bullishness, like that of Mircea Popescu, turned out to be unfounded in the face of the dumping charade.
Chalk one up for the bears.
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- Note that Bitcoin’s predictable currency base does away with this. Booms and busts are not economic phenomena per se, but rather monetary phenomena. As such, Bitcoin “price spikes” are in fact sharp accelerations of fiat outflows rather than sharp appreciations in the value of Bitcoin. A bitcoin is always worth a bitcoin. It’s less clear what a dollar is worth but Voltaire’s words come to mind when considering what it will eventually be worth. [↩]
- Currently, for your investments to beat inflation and for you to actually advance your lot in life, you need to be seeing a rate of return of 8% per year by some estimates and closer to 30% per year by others.
If you’re shy of even this lower estimate, guess what, you’re being shorn to pay for ungrateful government employees to sit around derping about how “If we were in the private sector we’d be better off blah blah.” ‘Tis a fact. [↩]
- As if economic statistics weren’t woefully manipulated by the state to persuade vast swathes of people that they’re doing better than average when in fact they’re losing ground… [↩]
- Conveniently, the exchange I was using to calculate the monthly dues is set to close its doors next month so this saves me from having to find an alternative ticker price! [↩]