Genjix + Bitcoins

dat genjix

On August 14 2012 15:31 Arirang wrote: dat genjix

avg return @ financial markets is 12%??? how

edit: sry only glanced over it and didnt realise u lost so much.. thats horrible and its no good saying this now but how come u had so much value in bitcoin in the first place? surely bitcoin makes ftp look legit

@Ket : Yes. This is long time average (50y+) for most market, CAC, NASDAQ, DOW JONES, NIKKEI etc.

The nasdaq has higher average (because a little more risky) but most of the main indices are surprisingly near 12% over long term.
Edit : actually I am a bit off, it seems like it is closer to 10%

Anyway, right now the average should be more around 15%, given the financial crisis we are in.
Excluding markets growth, the average return is closely linked with the average P/E of a given market :
http://en.wikipedia.org/wiki/Price%E2%80%93earnings_ratio

This should be kinda intuitive : If the P/E is 5, that mean in 5 years the value of a company double via profit, which in turn means that you are doing around 20% a year.

Right now, there is a lot of reasonably solid companies with P/E around 7-8 so that mean the expected return should be somewhere around 15% or so.
And again, that excluding growth, that can add another 5-15% on top of P/E.

Given all that, and the fact that the exchange variance is ridiculous given you guys are poker professional (lol at 20% annual variance or so... That's just NOT sick ), I am still wondering why you guys dont invest more.

I am vastly poorer than you yet made around +170% investing just BEFORE the first crisis (donkey luck lol). Of course I know my shit but investing randomly should yield around 12% a year. And given that we are in a crisis, the timing is perfect, you can expect reasonably 20% or something in this context.
Imagine that this is set mining happy hours with -50% on calling cost, because that the market we are in

Thanks for the support Ket, you are one of my fav poster as well :D
as a life nit, I kinda share your views on the world :-)

Anyway, I only invested 20k or so, which is reasonable considering my "investment bankroll" and how much I believe in the growth potential of bitcoins.

Those 20k turned out to be 60k right now and no more reasonnable, and it actually hurts a lot more knowing that I made the good bet then getting robbed than making a bad one.

thanks for the love mate : )
sorry to hear u lost so much with that bitcoin thing, really reaally gay : (
teach me to beat stock markets for 12pct yearly? (im kind of serious lol maybe we can work out a deal if ure interested in learnin PLO)
If you have book recommendations Id def like to hear em !
cheers

Hello & thanks MiPwnYa,

Actually as a self-taught geek with interest in investing most of my knowledge comes from thinking on my own and internet sources (like wikipedia ).
Kinda like you must do in poker, except I think there is even more trahs in financial guide than in poker guide

However, most of my own conclusion are similar to those of Warren Buffet, and he inspired me a lot. Any of his quote is great knowledge.
http://en.wikipedia.org/wiki/Warren_Buffett

His mentor is Benjamin graham
http://en.wikipedia.org/wiki/Benjamin_Graham

So if you agree with this school of thought, which I do,
there is a book that is insanely good and that I would greatly recommend :
http://en.wikipedia.org/wiki/The_Intelligent_Investor

But actually most of investing is understanding basic accounting (what are ratio like P/E, P/B and what do they mean), why does random investing in "buy and hold" beats 75%+ of the found, stuff like that.

At heart, I remain a value investor :
http://en.wikipedia.org/wiki/Value_investing

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I think that great investors are mainly people that use "common sense" kinda like you do in poker. It is common sense to shove when you have good equity & fold equity for example, it is common sense to set mine when you have odds and to fold when you dont, it is common sense to 3b for value when the fold% to 3bet is higher than a certain margin etc. etc.

Same goes with investing. If a company has 2 billions in asset and is valorised in 1 billion, there is like a "free 1 billion" waiting to be made.
If a stock is valued 10$ and makes 2$ a year of net revenue on a stable basis, then that is a 20% investment etc.

If what you want is advice, buy random stocks and HOLD them for a long time (I do not joke, random is good) and invest step by step like 10k a month for many month.

This protect you against :
- stock variance (picking the bad stocks)
- market variance (if you buy at the wrong time you can buy badly priced assets)

Now why random is not that bad ? we all know random sucks in poker !
Because all stocks pricing reflect the "consensus" of the funds, hedge fund manager and investors, and thus you are buying at the price they ageed on. You can not get "riped off". If a stock is overpriced some fund will short it, if a stock is underpriced some other analyst will buy it.

why holding stocks and not being very active is good ?
As rake is basically fee on sell & buy, If you dont know exactly what you are doing and are active, you end up burning your positive EV with fee, kinda like rake is doing. By just keeping stock and not doing anything, you are basically rake-free.

Now this should yield you random market average with minimun variance. If you want better, you'll need skill, but think of it as a great "newbie guide". Someone applying this will beat most of the funds as if you invest in a fund you'll have to pay 1-2% of fee each year, thus lowering your EV from 10% a year to 7-8%.

Nice blog mate. No offense, but why did you think investing into something as shady as bitcoins would be a good idea? I'm assuming you love risk, but it just seemed like a horrible idea in terms of an investment.

I think bitcoins are a bit like set mining on steroids, ie maybe 10% chance of succeeding but in the case they succeed they can be worth like *50 what they are.

In short, it seems like a hugely +EV bet to put a small part of an investment bankroll.

I wont list all the reasons why I think it is worth it.
Of course I am so angry now that there is no way I ll buy some again, especially since my average is around 4.5 and the current market price is around 12

In some weird way I hope for them to go to 0 now

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As well I read the initial paper and found it truly awesome. And the maths behind is razor sharp, the system works.

The problem is see with bitcoins is that theft is kinda too easy, thats like internet cash

On August 14 2012 17:12 Emi wrote: If what you want is advice, buy random stocks and HOLD them for a long time (I do not joke, random is good) and invest step by step like 10k a month for many month. This protect you against : - stock variance (picking the bad stocks) - market variance (if you buy at the wrong time you can buy badly priced assets) Now why random is not that bad ? we all know random sucks in poker ! Because all stocks pricing reflect the "consensus" of the funds, hedge fund manager and investors, and thus you are buying at the price they ageed on. You can not get "riped off". If a stock is overpriced some fund will short it, if a stock is underpriced some other analyst will buy it. why holding stocks and not being very active is good ? As rake is basically fee on sell & buy, If you dont know exactly what you are doing and are active, you end up burning your positive EV with fee, kinda like rake is doing. By just keeping stock and not doing anything, you are basically rake-free. Now this should yield you random market average with minimun variance. If you want better, you'll need skill, but think of it as a great "newbie guide". Someone applying this will beat most of the funds as if you invest in a fund you'll have to pay 1-2% of fee each year, thus lowering your EV from 10% a year to 7-8%.

Interesting idea. What about buying low cost index etfs instead so you can keep buying the same thing at regular intervals and have the same benefits?

Well, thats kinda the same thing.
Once you have like 10+ stock or something, you'll basically make almost the same performance than the index. The average is anyway obviously the same.

The thing you have to look for is fee, I know etf have around 1% annual fee (so the EV is ~9% each year) while doing it on your own with good old dices you can probably get much lower fees (like 0.2% or something and ONLY on the year when you buy, so you can make an EV of 10% a year)

So it is all a matter of fees.
If you invest in low amount fees will rape you so ETF are better. If you are a baller you'll probably get a very slighly better EV with doing it yourselves.

thx for the insight mate
I actually did the random stocks buying thing for a while and I always thought it was a rather fishy approach but I didnt know better.
Gonna buy some more random stocks since apparently its not that stupid.
thanks for the recommendations, definitely gonna read the intelligent investor
cheers

no prob

Well it is obvious that buying @ random the expected EV is the average of the market, ie around 10%
By investing at different times during different years you'll minimise as well the different market variance (ie if you put all just before a crisis you can do -50%)

Since all the funds and stuff ARE the one making the market and the prices you'll perform just as well as them on average, without having to pay fees. The fact that random beats 80% or so funds has been proven empirically by several studies.

I however think that there is several way to do better but that requires more work and it cant be really proven in a mathematical kind of way

I dont like giving very specific stock advice (for example, the stock I wanna buy now is "groupe steria" after having bought TF1, CNP assurances and BNP the previous months. You ll notice I buy shitty compagnies : thats because I am a value investor. That means that I try to buy the stock as cheap as possible in regard to their different ratio : benefits and others stuff.

But if you buy facebook for example for 10k of stock the yearly company profit is only 100e.
For 10k of one of the company I listed the yearly profit of the company is 2k.
See the difference ?
Sounds kinda basics but it works for me and it worked for a lot of investor. Of course thats not the ONLY stuff I look but it would be too long to go trough all the financial stuff you can study

And ofc there are tons of other working strats

Ps : any good read or videos for plo ? what would you recommend ?

is there gonna be any legal action?

i may be wrong, but i highly doubt 12% a year returns are the norm. i have a very good friend who works for a prestigious investment company doing PE and they are happy with 7% annual returns

Yes, I actually skipped most of the details, but there is legal action

It is a legal minefield because bitcoin does not yet have a real legal status and because there is tons of country involved

The hacker has been found, he is an asian dude specialised in credit card fraud, but genjix and his co owners did not bother to sue him (WTF...)

So we are suing the company bitcoinica. We cant sue directly the hacker as he did not stole us but the bitcoinica company. Thats shit would be hilarious if no loss were involved

I decided to attack genjix personnal reputation because he and his co owners have shown absolutely no respect and concerns for me and the others guys that lost funds.Some people have more than 200k$ claims.

On August 14 2012 19:44 chris wrote: i may be wrong, but i highly doubt 12% a year returns are the norm. i have a very good friend who works for a prestigious investment company doing PE and they are happy with 7% annual returns

Well I dont remenber where I saw that 12%, it might have been wrong.It was averaged for all exchange. Nasdaq was even significantly higher (maybe 20% ? not sure)

According to this, for the US it was 9.4% or something.
http://observationsandnotes.blogspot....erage-annual-stock-market-return.html

Of course 7% return these last or so 10 years are pretty good since these last ten years it might have been even negative : we went through two financial crisis so 7% when the index does -40% is pretty awesome indeed :D

I would argue that if you can keep making your 120k a year, and you still enjoy it/want to or whatever, you absolutely should. I dont think 1mil capital is ALOT to live off for the rest of your life as your sole income. And even if you can grow your 1mil by 12% per year, if your living off this money, (i dont know if you are spending the 120k a year or only spending like 60k who knows). But for arguments sake if you are living off the return, in the years you only make 5-6% suddenly its alot harder for you, and in times like the GFC and you make no money/lose money for period of like 5 years, and youre still drawing on this capital to live. This is going to be very very pad. And suddenly your 1mil is like only 500k left, because you lost a portion of it, and another portion you kept drawing down to live off.

cliffs: Keep making your income per year for as long as you can while investing and continuing to grow your 'pie'.

*Also would argue it would be really dumb to just randomly pick a share and invest in it - but if you actually meant randomly picking to be doing some research and education and then picking then ok =)