Marcuse wrote:satan_n_stuff wrote:Marcuse wrote:http://www.bbc.co.uk/news/business-42457983
Bitcoin has lost a third of its value. Pop.
Is anyone at all surprised by this?
We did have a discussion in discord where an argument was made (by whom I won't say because I don't like dragging people into discussions they don't choose to engage in) that Bitcoin would simply continue to appreciate in value because demand would continue to increase.
One of the biggest misconceptions about scarcity is 'buy now, any object can only increase in value as copies get lost (antique vases break) while the total market grows (by account of growing world population)'. But this has proven untrue for stuff like stamps or starwars toys: the price for those rare items has fallen with more then 50% in the last decade as demand lapsed. Only your grandpa collects stamps anymore, and starwars was only insanely expensive when the prequel trilogy was overhyped.
I recall a study of centuries-old houses in Amsterdam that showed that in the very long run their price pretty much moved with inflation. Which goes to show that you shouldn't get obsessed with the whole 'compound interest makes you rich if you have 50 years patience' idea: you can only expect to 'let your money work for you' if you live in a society that pays much more for money then for labor (which was true in the 19th century, but not in times of quantitative easing: money is no longer a limiting factor in production).
As to bitcoin: it has a market with criminals and with people in countries that have high costs of banking. The first will change as law-enforcement gets a grip, the latter will change as low-cost internet-based banks make their way across the globe.
As to long-term investing:
Some ideas from an actuary (not that you should take their word as gospel):
buy risky stuff in your 20s and 30s, in order to get the most out of the market risk premiums. If you get very lucky you may enjoy early retirement, if you are very unlucky there is still enough time to make up for the difference (especially if you expect some salary-increases in your future).
switch to safer bets as you get closer to retirement, you don't want to be the guy that loses his entire pension in the next 'dotcom crash' and needs to keep on working
It doesn't really matter where you invest, be it stocks or bonds or real estate or gold or emerging markets or whatever. Look for low maintenance costs of your portfolio, and make sure you diversify your economic interests as much as possible (never invest in your own employer!)
rule of thumb: in order to get an inflation-adjusted pension you need to save 20% of your gross income during your entire working life (which is generally considered unreasonably much, so instead you can f.i. buy a house and pay of the mortgage so you can live cheap)