Work Space for Learning How to Research Stocks
Would it be possible for a recreational investor to achieve decent returns from investing in individual stocks instead of an index fund – from home using internet resources, without needing to invest a ton of time?
Warren Buffett believes that if even cats can do it, people should be able to manage
http://time.com/money/4428509/warren...esting-quotes/
On buying individual stocks: “If you like spending six to eight hours per week working on investments, do it. If you don’t, then dollar-cost average into index funds.”
(ScreaminAsian and I were wondering a couple of months ago what was happening with defense stocks - looks like Boeing's doing amazing ... who would have guessed?? And there's Coca-Cola on the list - one of the great American company's of all time )
ULTA ytd: -16.2%
BABA ytd: 95.0%
Google (GOOG) ytd: 20.4%
Facebook (FB) ytd: 47.7%
Amazon (AMZN) ytd: 29.0%
Domino's (DPZ) ytd: 12.4%
Apple (APPL) ytd: 41.0%
Priceline (PCLN) ytd: 23.7%
Visa (V) ytd: 33.0%
guess have always seen entrepreneurs as people with interesting ideas for something new ... although guess people open small businesses like convenience stores that resell stuff. Guess this person is maybe somewhere in between? Something else that's maybe different is that he says he doesn't put in a lot of hours - which sounds like a different experience from what have heard about running a business? It seems like it must take a lot more work than 10 hours a week, not sure?
https://99bitcoins.com/price-chart-history/
Jan 14, 2016: $431
May 24, 2016: $449
June 20, 2016: $750 (increase of 50%) - Bitcoin mining is halved, making it more scarce (http://uk.businessinsider.com/bitcoi...lvening-2016-6)
June 23, 2016: $592 (decrease of 20%) - possibly because of Brexit? (https://www.cnbc.com/2016/06/23/bitc...n-halving.html)
Aug 3, 2016: $551
Nov 9, 2016: $726 (increase of 30%) - Trump's elected, strong US$ expected to be bad news for emerging currencies (https://www.cnbc.com/2016/12/07/bitc...rocketing.html)
Jan 3, 2017: $1020 (increase of 20%) - currency chaos in India as they take paper out of circulation (http://www.bbc.com/news/technology-38415066)
Jan 12, 2017: $784 (decrease of 23%) - China crackdown (http://www.businessinsider.com/bitco...11-2017-2017-1)
As well, sometime in January it appears that Japan makes the announcement that they're going to enact regulations to provide consumer protections for Bitcoin. And the user base for Bitcoin shifts dramatically practically overnight - interest in the US soon follows ...
Here's some pie charts showing trades going from 90% in China in 2015, to a more balanced mix of China, Japan, and the US in present day ...
Mar 3, 2017: $1272 (increase of 50%) - Japan
Mar 25, 2017: $935 (decrease of 26%) - SEC rejects the Winkelvos ETF
Apr 1, 2017: $1085 – Japan declares Bitcoin legal tender
May 25, 2017: $2567 (increase of 250%)
May 27, 2017: $2083 (decrease of 20% in 2 days)
June 11, 2017: $2900 (increase of 50% from lows, increase of 16% from high)
July 16, 2017: $1933 (decrease of 33%) - China resumes withdrawals after 4 months (https://www.cnbc.com/2017/06/15/bitc...-for-june.html)
Also a new pattern of volatility is detected - my bitcoin got sold in the middle of this phase ...
Aug 1, 2017: $2787 (increase of 50%) – split into BTC, BCH
Aug 18, 2017: $4360 (increase of 180%) - rise of institutional investors (https://www.cnbc.com/2017/08/12/bitc...-fourfold.html)
Guess people in China have been using Bitcoin as a hedge against a devalued yuan since the beginning. But the rise in interest in Japan and the US is supposed to be relatively new - found these little bits about the rising interest in Japan and the US ...
Japan
US
Apparently people are actually going to be starting to use Bitcoin in stores in Japan - but guess people are also buying Bitcoin for investing, including highly leveraged day traders ... and any time people buy for investment purposes, guess the swings will tend to be wider as people ride the tide and try to take profits?
Maybe Bitcoin will still be a solid investment, so long as there's an ongoing trend towards increased actual usage, and greater mainstream acceptance? Although 30% swings should be expected, as investors seek to take profits? Possibly more if there's an *actual* reason for the drop, such as a regulatory crackdown?
yawn!!
Guess my investment in Bitcoin is intended to be a bet on the fact that demand will hopefully increase over time?
So to keep track of how my bet is doing, will try to keep track of the three core demand groups, their relative proportion, and any new rises in demand from others?
1. Demand for Usage (seeking ease of use, privacy?)
- Is actual usage growing in Japan? (https://www.coindesk.com/department-...ayments-japan/)
- Other moves towards greater acceptance?
- Increase in consumer protection reguations in other countries - eg Russia, Australia (https://www.cnbc.com/2017/08/17/bitc...c-country.html)
- Ongoing US rejection of Bitcoin ETFs?
2. Demand for Savings (seeking security)
- Is China looking to enact any new crypto regulations?
- Is the US$ getting stronger, and making emerging market currencies worth less?
- Are any big countries having other currency issues?
3. Demand as an Investment (seeking profit)
- See below for futher discussion
More on Demand for Bitcoin as an Investment
So there appears to be *some* evidence that Bitcoin could potentially be *part* bubble?
Everybody seems to believe that the -30% decrease in price in June/July 2017 was due to people profit-taking? And guess if demand for Bitcoin usage is growing, guess the price shouldn't be decreasing (and by that much) unless there's quite a few people only interested in Bitcoin for it's profit potential?
Wouldn't have expected that to be an issue, but guess people have purchased commodities with limited demand for investment purposes in the past - and apparently each time, demand has evolved in a very similar fashion?
The notes in the next graph are from the Prof. who came up with the theory/graph of the bubble phenomena - guess gold and silver post-crash didn't drop down to zero like in the theoretical model, because they have actual worth and demand from users as a product?
From the graphs, guess the 3 main factors to watch would be ...
- the 1000% growth point
- the 10 year point
- and widespread purchase from the general public as an investment product?
It looks like Bitcoin already passed the 1000% growth point ... possibly 2 years ago? So maybe the two factors to keep an eye on might be the other two?
3. Demand as an Investment (seeking profit)One other thing - have come up with a not-very-scientific gauge will maybe try to experiment with ... will maybe watch to see if the market maybe tends to rise when hope>doubt, and falls when doubt>hope? Like if there's lots of encouraging news, but only a couple of bits of only semi-scary news, does the price keep rising?
- Maybe watch out potential approval in the US of a Bitcoin ETF (possibly a double-edged sword - would greatly increase demand, but would be the type to possibly fuel a bubble, thereby increasing the chance of a crash?)
- Is actual demand for Bitcoins to use keeping up with the demand for it as an investment product?
4. Other
- Bitcoin Changes/Updates
- Any discussion of future forks, splits, or halvings?
- Exchange/Brokerage Hacks
- Analyst recommendations?
- The ranges don't seem to converge with nearly the same frequency as they do for many stocks - probably not very reliable?
Buy Point
The stock market's been on fire this year - and 4Q, with the run up to the holidays, is usually the time of year when a lot of stocks rise in price the most?
So if it's possible to make like a 50% return in the stock market for the year - guess would have to achieve the same (or greater?) from an investment in Bitcoin, for it to add something that isn't achievable from just investing in Facebook?
So guess by the time my bank wire clears, if the price of Bitcoin is $5k, will need for it to rise to $7.5k in the next year for it to reach a 50% return? Wonder if that's possible?? An alternative would be to wait and hope for the price to drop down to $4k - then would *only* need for the price to rise to $6k by next year to reach a 50% return?
Guess am buying Bitcoin in the hopes that in the near future the following happens ...
- Actual usage of Bitcoin explodes in popularity in Japan
- More regulations are adopted in other countries, and greater interest in using Bitcoin to make purchases rises
- The US approves a Bitcoin ETF, and it becomes available on a major exchange
DILEMMA: So what to do - wonder if it's more likely the price will go back down to $4k, or if it's more likely the price will rise to $7.5k (wait to buy, or buy now to avoid missing even more gains)? Guess may still have a couple of days to mull things over?
Exit Point
There's always known risk factors to any investment - companies are required by law to list them in their annual report, which makes things nice and easy
Guess the ones for Bitcoin might be ...
- Japan is like the test-case for actual mainstream Bitcoin usage - so if doesn't catch on, and there's little hope of it catching on elsewhere, guess that could be fairly fatal?
- An unsustainable amount of investor demand, that far exceeds actual demand?
Guess one advantage of keeping watch on factors instead of the price graph would be that if both those things were to happen, it might be possible to sell right away and avoid a potential fall down to like $2k or whatever, if usage in Japan doesn't catch on as hoped?
So guess my sell point is factor-based rather than price-based. Although it seems like stuff is never so clear cut - like if only one of those two factors were to become an issue, then maybe it won't be so clear whether to continue to buy or hold? D'oh ...
(stayed up too late ... again )