Several lads here seem to have a grasp of investments and so on. Do any of you have a regular income outside "earner income"? What kind of category does it fall into, and how did you come into it?
I had a nice image, but brian isn't playing ball today. It's a list of different (very broad) types of income:
1 Earner income : work a job
2 Profit income : buy and sell
3 Interest income: lending money
4 Dividend income: owning stock
5 Rental income: renting out property
6 Capital gains : assets increase in value
7 Royalties: others use your work
>>9441 Is it the investment trusts? The FTSE 250 Index includes in its constituent members, amongst others, the Baillie Gifford Japan Trust plc and the Baillie Gifford US Growth Trust plc, so they'd have a fair bit of overseas exposure.
That tracker is simply composed of the companies in the FTSE 250 index; that is to say the 101st to 350th most valuable companies whose shares are traded on the London Stock Exchange. You don't have to be a British-headquartered company to be listed on the LSE. Some of those foreign companies will be effectively British-based but with a tax headquarters in an offshore tax haven, some will have strong ties to the UK, some will be multinationals with no base in any international financial centre.
Strange as it might seem, a significant number of FTSE 250 companies are themselves investment trusts. For example, Templeton Emerging Markets Investment Trust (LSE:TEM) is based in London, but their sole business is investing in companies in emerging markets like Mexico, India and China.
It's not funny business per se, just the weird nature of modern capitalism.
Looking at the portfolio statement, most of it has a reasonable explanation. Greencore is headquartered in Ireland, but do most of their business in the UK. Likewise with TUI, who are based in Germany but operate across Europe with a strong bias to the UK. XP Power are managed from the UK, but have offices around the world with a major customer service centre in Singapore. 888, Playtech and Plus500 are functionally based in the UK, but registered abroad for the purposes of their gambling license. The rest are obviously UK-based companies who are headquartered offshore solely for tax purposes.
The broader point is that the idea of a "British company" is practically meaningless in 2022. Any company of a significant size is likely to be multinational to some extent, which is precisely why they're so hard to tax. We live in a globalised economy and successful businesses will inevitably straddle borders.
The fund excludes investment trusts, but not REITs.
I've decided to sell all my non-mining punts at a loss to double down on IAG seeing as all our airports are fucked, just over 100 shares bought at £1.2094.
I was on a call earlier this week which suggested investing in things like music royalties as a diversifier. They also suggested going overweight on the UK and taking a punt on the metaverse.
>>9450 I don't understand. Are you expecting some rebirth of holidays to Spain this summer?
>I was on a call earlier this week which suggested investing in things like music royalties as a diversifier. They also suggested going overweight on the UK and taking a punt on the metaverse.
Music royalties is a fad motivated by the recent sell off of artist rights and Metaverse is about 20 years too soon. I would agree that UK is underappreciated at the moment, especially on the small-micro-nanocap scale which has only been gently in burning all my money but would add Japan small-midcap as a decent bet.
>>9453 The news about the queues at the airports has caused a fall in the value of airlines and these drops tend to be exaggerated. IAG is around a quarter of its pre-pandemic share price and even something much better run like Jet2 has almost halved. Seems like a good buying opportunity to me.
>>9454 The one that was specifically mentioned was the Round Hill Music Royalty fund, but they said it'd be better to find an alternative assets fund holding this rather than having direct exposure to it.
>>9455 > IAG is around a quarter of its pre-pandemic share price and even something much better run like Jet2 has almost halved.
I think airlines are a good buying opportunity right now - the other one tangentially in the sector which has been hammered but seems good value is Rolls Royce.
Jet2 is definitely a good shout, they are in a much better position for growth than any similar operator as they are almost entirely self handling - most airlines rely on third party baggage, check in, and ground ops agencies, and that, coupled with increasingly shallow flight crew rosters, is what's causing delays and cancellations.
As you say all airlines are underpriced right now, but Jet2 are in a much stronger position than anyone relying on third party services right now. Additionally, similar operators like TUI and Easyjet are cancelling flights due to simply not having the pilots and cabin crew - Jet2 haven't cancelled anything yet, so it would appear they have plenty of crew to spare.
>Celsius, a controversial cryptocurrency lending platform, said Monday it was pausing all withdrawals, causing more pain in the fragile crypto market.
>Celsius is one of the largest players in the nascent crypto lending space, with more than $8 billion lent out to clients and almost $12 billion in assets under management as of May. The group, which offers users higher-than-average interest rates on their deposits, is essentially the crypto equivalent of a bank — but without the strict insurance requirements faced by traditional lenders.
>>9463 I've mixed feelings, because cryptoheads are the most short-sighted, obnoxious, selfish cretins humanity has ever produced and an angel gets it's wings every time one these bozzos loses their wallet's password or has an NFT collection pinched. But then most of the people actually losing out are just poor saps who've been ground down by fifteen-years of the entire socio-economic system telling them eat shit and die, so of course they want to believe there's a way to trick that system into becoming a money printer.
Just ban this nonsense. The powers that be never will, because the real profiteers from this behavior are the exact same class of bastards who were mugging people off the old fashioned ways, but I fail to see a better solution to this hyper-predatory filth.
It's no accident that cryptocurrencies were both invented and became a force to be reckoned with during an unprecedented period of cheap money and negative interest. In the absence of risk-free or at least very low-risk investment alternatives, it was all silly buggers in the financial markets. Look at what's happening with all those iffy tech stocks in the Nasdaq now that monetary policy is being tightened, and just very mildly so far.
When you talk to people trading in bitcoin and other pretend currencies, first of all, it's like a religion to them. They're like Apple customers on meth. They will tell you this, that and the other why cryptocurrencies are the new paradigm, although few of them actually have much of a clue what they're doing.
What they won't tell you, and that's the other thing, is that volatility isn't a retail investor's friend. It never was, and never will be. It's all well and good that Bitcoin has had periods where it went up tenfold in a relatively short space of time, but it has also gone through portfolio-nuking crashes repeatedly where it went down 80 percent from a high. And because retail investors as a general rule don't get into an asset when there's abject panic but when euphoria is at its peak, their portfolio performance tends to be pretty shit. And even more so when something like a cryptocurrency gets three quarters of its value wiped out from the point where you got in.
It may not be obvious to a lot of investors yet, but I think that crypto very generally will die out. Or it will see drastic outflows of investor money and become even more a playground of trading algorithms which already make up 80 percent of daily trading volume. As gold rushes go, this is another one that will not last when there's going to be some serious money to be earned again just by letting your money collect interest all on its own. It's just another bubble that's about to burst.
>>9465 It crashes every so often. Apparently the cryptocurrency apocalypse of 2018 was a crash of 80%, and then it went up again to even higher numbers. Then it crashed by 60% last year, and I invested £3000 just before then, so I'd like to avoid cashing that out if I can. The recent crash is another 60% one, which is why I'd like to not be in a situation where I need that money until the value has skyrocketed again. Every doomsayer, every time before, has been wrong so far, so even though I freely admit I have no use for cryptocurrency as a product, I've always just treated it as an investment. I can't see why it'll go up again, but I couldn't before either and it always did.
>Given the millions poured into promoting crypto – often with celebrity endorsements – legal action after the crash was inevitable. Class-action lawsuits are already in the works. Kim Kardashian and the boxer Floyd “Money” Mayweather Jr are being sued for alleged false statements promoting the minor cryptocurrency EthereumMax.
Shocker.
I posit that nearly all minor and also-ran cryptocurrencies, both fraudulent and not, will be wiped out and cease to exist. Bitcoin and others of similar magnitude may have a chance in the future, but as I've said before, the crypto market would have been unimaginable without more than decade-long quantitative easing by nearly all the world's central banks. The current crash in the crypto market isn't simply the result of market fluctuations, it's due to a massive outpour of institutional money from crypto as an asset class in its entirety. The fact that they started investing in crypto on an unprecedented scale is almost the whole reason that it climbed from $5,000 in March 2020 to $64,000 last November.
It could be that there will be another Bitcoin bull market in the future. Who knows. But unless unforeseen events cause central banks to shelve their current QT plans again, I think we're in not just for a crypto winter but a crypto ice age. In any case, the big party is over.
The problem with crypto was always that it's still a highly unregulated market. For a stock IPO, you have to comply with absolute shedloads of regulations that are mostly the result of finacial and exchange authorities spending decades, if not centuries cracking down on fraudsters over and over again, in endless chicken and egg cycles.
Cryptocurrencies, for all intents ad purposes, have only existed in a meaningful way since the early 2010s, and it has only been in the last few years that they've become an asset class that institutional money deals in.
Make no mistake, many equity market laws and rules were only drawn up to protect institutional investors from getting ripped off by other institutional investors. They never cared about you as a retail investor in all of it.
But the point with crypto is that any greedy cunt can set up their own cryptocurrency and do an ICO (initial coin offering), with very little in the way of anti-fraud and anti-corruption laws to protect you from them. Yes, in the end, they can be done in for fraud just like any fraudster. But the process to set up your potentially fraudulent cryptocurrency is much more lax and inviting to con artists, who can promise you all kinds of investment returns based on insanely sketchy strategies, and get away with it legally.
My guess is that as a fallout from the recent crypto crash, there will be much closer monitoring by authorities in the future, who will increasingly attempt to catch up at least with the dodgiest cryptocurrency schemes.
>The problem with crypto was always that it's still a highly unregulated market.
Literally the only thing that distinguishes crypto is that it's unregulated. If you take that away, it's just an incredibly inefficient database. Conventional databases can process a transaction in a few microseconds at a cost of a few billionths of a cent. A transaction on the Bitcoin blockchain currently takes about ten minutes and costs $1.72.
Cryptocurrencies cannot ever be integrated into the mainstream financial system, because that renders them completely pointless. They can only possibly succeed by becoming the basis for a new and fundamentally different financial system, but there's absolutely no sign of that happening - almost no legal, non-speculative transactions are conducted using crypto.
Absent that world-changing revolution, cryptocurrencies are just an elaborate Ponzi scheme that have the side-effect of making it slightly easier to buy drugs on the dark web.
>cryptocurrencies are just an elaborate Ponzi scheme that have the side-effect of making it slightly easier to buy drugs on the dark web
In fairness I think you've got that backwards. The way I see it they were only ever the money equivalent of a VPN. In a sane world, fake money you use to buy drugs on the dark web is all they would have ever been, but just like anything, speculation took hold; it just so happens they were very good for speculating on.
Anyway can someone give me a simple answer as to why they've all suddenly imploded at once? I heard something about China banning it that made a massive dent, but is it also connected to real world markets? That is, the prospect of recession, inflation, interest rates shooting up, the landscape has changed quite drastically and suddenly, making ponzi schemes like crypto, sealed copies of Mario 64, and Marvel's The Amazing Spider Man Issue #1 look much less attractive next to a sensible old stock market portfolio.
>Anyway can someone give me a simple answer as to why they've all suddenly imploded at once?
Cryptocurrencies are connected to real-world markets in that loads of institutional money flowed into them from at least March of 2020. In the face of factually zero interest on lower-risk asset classes, it became just one segment of the "everything bubble", in which the big money was chasing ROI.
Now with equity markets under pressure and stock prices receding at the same time that interest rates are rising, institutional investors are reevaluating their exposure to risk assets, and that includes cryptocurrencies. And at some point, as with stock markets, it just becomes a self-fulfilling prophecy or even a mass panic. Where you sell because everybody else is selling. And that can then trigger an asset class-wide crash, and make crypto implode all at once.
And many cryptocurrencies may have performed well while the crypto market itself was running from all-time high to all-time high, but the achilles heel of a lot of them is proving to be the good old bank run, where too many investors want to cash out all at once.
The same was true for Bernie Madoff's Ponzi scheme, which went on unchallenged, or not challenged in a meaningful way, for 40 years. If it hadn't been for the 2008 Financial Crisis and a bank run by Madoff's investors that was stirred up by overall fear in the markets at that time, it could have gone on for much longer still.
>Anyway can someone give me a simple answer as to why they've all suddenly imploded at once?
Simply a crisis of confidence. Financial instruments like shares or bonds can crash due to a lack of confidence, but they have an underlying value that they almost never drop below - the assets of the company or country that issued them. If Shell just couldn't be arsed being an oil company any more, they could still make billions by just selling off all their forecourts, refineries, tankers and offices.
The technical term for this underlying value is the "book value" and it's routinely used to calculate the percentage of a share's value that is based on the expectation of future growth. Excessive confidence in future trends can cause the value of those instruments to become inflated, but they have a fundamental floor price set by the value of the assets they represent. Cryptocurrencies have no such underlying value and their price purely reflects the belief that someone at some point in the future will actually want to use crypto for something useful.
All conventional financial logic says that crypto will collapse, it's just a question of when. Crypto does have some weird features that make it unusually resilient as asset bubbles go, mainly the overwhelming proportion held by retail investors and the weird "hodl/diamond hands/to the moon" memes that insulate a lot of crypto owners from normal rational thinking. There's a lot of dumb money in the world, but it's not infinite and eventually you will run out of suckers.
>Cryptocurrencies are connected to real-world markets in that loads of institutional money flowed into them from at least March of 2020.
That's basically a meme. If you exclude companies that are effectively crypto ETFs like Grayscale and Microstrategy, the amount of institutional money in crypto is basically negligible. Firms like Paypal, Square and Cashapp are often claimed to be "institutional investors" in crypto, but that's not really true - they offer brokerage and wallet services and are buying coins on behalf of their clients rather than with their own money. They're very happy to take a commission, but they aren't taking on any risk exposure. The amount of crypto being held by established, legitimate companies is a rounding error away from zero.
Maybe institutional traders don't rule the crypto market with the sheer amount of capital they had invested in it until recently, but they seem to be doing the majority of the trading now, and therefore they determine price action.
>>9482 That depends on how they're defining "institutional".
The "real" institutional money isn't actually investing in crypto, it's just betting on the market. And it's moving the market significantly because it doesn't take a particularly large sum of money to do so.
Institutional buyers, not institutional money. Grayscale buy shitloads of crypto, but they're buying it on behalf of their customers in exchange for a management fee. They aren't in the business of investing in crypto, they're in the business of offering exposure to crypto to retail investors. They're acting purely as an intermediary and their trades are simply a reflection of market sentiment.
"Publicly traded corporations invest billions in Bitcoin" sounds legit, but it really means "people who can't work out how to open a Coinbase account invest billions in crypto". That spike in volume at the fag end of 2020 was driven by the same kind of people that bet the farm on Gamestonks and AMC.
>>9484 >"people who can't work out how to open a Coinbase account invest billions in crypto"
On the other hand, given how frequently Coinbase shits the bed, having an intermediary who can return your money when you want to exit isn't necessarily a bad thing.
>Is the Celsius freeze a Lehman Brothers moment for crypto?
Interesting thought.
The whole cryptocurrency system is based solely on the hope that you will sell your coins at a higher price than you paid for them, because there will be somebody out there who is a bigger fool than you. Which is true enough for any long investment in any asset class, but if you buy a company's stock, then there is at least some sense that whether or not you will be able to cash out at a profit depends on how that company will be doing economically. There is none of that with crypto assets. It's a system that is simply based on the availability of bigger idiots.
Lehman's demise was the consequence of various big names in the business refusing to save it, by not throwing good money after bad money. The meltdown of the entire financial system that ensued was more than anything a crisis of confidence. If a long-standing big and trusted bank like Lehman wasn't safe from collapsing, then what would happen to all the other big investment banks. At the end of it, nobody was trusting anybody anymore, and the lending market temporarily almost froze up completely.
When people now lose faith in cryptocurrencies on a broad scale, it means they will no longer believe they can sell their coins to a bigger idiot. Coupled with the recent slump in stock valuations that now make many reputable companies a bargain to buy, the outflow of assets from crypto could continue to be dramatic.
>>9488 One thing that occurred to me, though, is that nobody ever spends it like real currency at least partly because you'd be a fool to use something that regularly skyrockets in value to pay for your curried goat from a bearded hipster in a trailer one lunchtime. If everyone gives up on cryptocurrencies as investments, they might increase in value just because they're actually worth using as currency.
It's also worth noting that Bitcoin is designed to be easier to mine when it's worth less. The fact that it's crashing at the same time that electricity bills are at all-time highs will likely harm this, but nevertheless, I can see people start mining it more now, which has not been economically viable for your average person for a long time.
>It's also worth noting that Bitcoin is designed to be easier to mine when it's worth less.
Not quite correct - the mining difficulty changes in proportion to the total amount of mining power available. Mining difficulty has only fallen by about 3% since to the peak in May.
>I can see people start mining it more now, which has not been economically viable for your average person for a long time.
It still isn't. BTC is mined almost exclusively on purpose-built chips that aren't readily available to the public. The older chips that are available to the public are dramatically less efficient. The mining industry used to be heavily clustered around the Three Gorges Dam, but after the government cracked down they've moved out to Azerbaijan. The Chinese miners have started building prefab mines in shipping containers, so they can pack up and move more easily. Unless you're stealing electricity, the average punter simply isn't going to turn a profit on mining.
Bitcoin was supposed to be decentralised, but the owners of the majority of the world's mining capacity can fit in a minibus with room to spare.
>that nobody ever spends it like real currency at least partly because you'd be a fool to use something that regularly skyrockets in value to pay for your curried goat from a bearded hipster in a trailer one lunchtime
One thing that (at least slightly educated) crypto bros and other disciples of cryptocurrencies will not tire to tell you is that, yes, cryptocurrencies have intrinsic value. That they have utility for somebody who wants to pay for goods and services in the real economy with something other than their established national currency or any of the global lead currencies.
But as you said, that's kind of a moot point when your cryptocurrency whiplashes wildly against other established currencies. And whatever utility in an economic sense somebody might gain from using cryptos as legal tender will be eaten away by the loss of utility of spending one of your bitcoins or whatever fraction thereof this week and discovering that it's worth 20 percent more against the Dollar, Pound or Euro than the week before. If in accordance with utility theory you see the main purpose of money for the consumer in the utility they derive from it by purchasing goods and services, then you have to subtract opportunity costs of $, € or £ 0.20 from your real-world currency utility for every money unit of it that you spend, because you could have bought 20 percent more of your goods and services the following week that would have brought you even more utility.
But it's also a moot point during times when cryptocurrencies go down, because if your bitcoin is worth 20 percent less this week than last week, you can only realise 80 percent of the utility you could have had by spending it the week before. You could then say, fine, so I'll just spend all of it this week, but goods and services tend to follow laws of diminishing returns, or diminishing marginal utility in this case. In simple terms, eating ten chocolate bars tonight all in one sitting doesn't give you the same kind of utility as eating one bar a day for the next ten days.
Long story short, the utility aspect is nonsense when a cryptocurrency fluctuates that wildly. You could still say that in the long run, anybody who went in when many cryptos were started is still sitting on absolute oodles of profit, which make any nitpicking utility considerations pointless. But while that may be true for a lucky few, overall these days, it's impossible to predict if that will still be true for people who get in either now or in a few weeks when Bitcoin may trade at $10,000 or less. Which is exacerbated by the fact that nobody knows how cryptocurrencies will behave now that cheap central bank money dries up and retail investors are given a chance to take on safe investments at guaranteed interest again.
>>9491 >eating ten chocolate bars tonight all in one sitting doesn't give you the same kind of utility
Get a load of Mr Motivator over here.
But you have alluded to something I've been wondering about with all the inflation: deflation is meant to be awful, because nobody spends any money this week when their money will be worth more next week. So surely, if inflation is out of control, it would make sense for everyone to spend their money now rather than only be able to afford 10/11 as much in the future. I've certainly done that a bit. So I guess it's possible that if inflation suddenly stopped, this wouldn't be good news at all for the economy because shops would find people spending less money.
That's why most central banks aim to keep inflation at a small but steady rate, typically around 2%. Even a small amount of deflation is dire because it tends to be self-reinforcing, so aiming for zero inflation is just too much of a gamble and doesn't leave you with room to manoeuvre.
Deflation is bad from many different angles. Consumers will hold off on purchases if they think they will be cheaper in the near future, while companies who make long-term profit projections for their investments in products are faced with diminishing revenue that goes beyond what can normally be expected from an eventually aging product. It can make an entire investment as such in a new product unprofitable. Which will in turn mean fewer people need to be hired, who will then have less money to spend, driving down prices for products even more.
A bit of inflation is almost always healthy, because it will give suppliers of goods and services confidence that their investments will appreciate, they will be more optimistic about hiring people, and that workforce will then have the money to buy those products.
Too much inflation will kill off consumption both in the present and in the (near) future. Especially when prices rise much faster than wages. Not only will consumers reduce their spending in the present, but in times of increased uncertainty, even if they still earn decent money, they will save more of it and not spend it because they will worry that they will not be able to afford goods and services from their work incomes in the future.
>>9490 >Bitcoin was supposed to be decentralised, but the owners of the majority of the world's mining capacity can fit in a minibus with room to spare.
Fun fact: You can often hit the 50% of the hashpower required to make changes to the network with fewer people than it takes to overturn abortion rights in the US.
I'm starting to think gs is a reliable indicator: whenever Bitcoin has fallen sufficiently for the nocoiners here to have smug gloat it's the perfect time to take a punt on it.
I think the DOW is in for a bit of a multi-day relief rally. Trying to find something like a leveraged ETF on the index to ride it for a couple of days.
>Another crypto lender Vauld pauses withdrawals as market crash takes its toll
No, it's not a massively bonkers idea to take out loans that are collateralised against insanely volatile assets like a cryptocurrency. And then, as a "crypto lender", either letting customers buy more volatile cryptocurrency with the loan, or loaning the deposited crypto coins out to third parties.
A lot of this financial alchemy just always deserved to fail. It's making Lehman look like a bunch of schoolboys.
