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by dragontamer 1603 days ago
US equity doesn't pretend to be a low risk investment vehicle resistant to inflation worries.
4 comments

Except it does
How?
It's common financial advice if you invest in the US equity market index you will get a 7% return a year
Over long periods, on average, historically - no one is saying you will always get that in any given year.
Same with crypto. We have 10 years of data so far.
It historically has grown reliably overall at the market level, but individual equities are not that at all. BTC specifically was supposed to be that, and it isn't.
There is no cryptocurrency in the top 10 pretending to be low-risk. There are probably way more financial advisors claiming that US equity is low-risk than there are people claiming the same for any cryptocurrency.
Neither does crypto. Out of all things that's about the least "low risk" I've seen yet.
Store of value.

US money printer.

Inflation hedge.

Do you think we forget what the crypto-bros said just a few months ago?

Bitcoin isn't pretending to be any of those (which is essentially what the claim is). Do you see any of that on bitcoin.org, anywhere in Bitcoin Core, or in the Bitcoin Whitepaper? Or in any of the top cryptoassets by market cap?

Don't conflate people talking about something with the thing itself.

> Don't conflate people talking about something with the thing itself.

Bitcoin doesn't have a HN account. Listening to people talk about it is the only way to get information about it.

Bitcoin proponents have been semi-continuously yammering about all of those for over a decade. If anyone seriously disagreed, there'd be a disclaimer on bitcoin.org.
None of those necessarily imply low risk / volatility, and on the long term chart crypto has satisfied all 3
You can't be a store of value if your value drops randomly.

You especially can't be an inflation hedge if you drop while inflation goes up.

Although obviously not as dramatic as crypto, gold has had huge drops and multi year bear markets, but it's still considered an inflation hedge. The housing market has had huge dips too.

Neither is as volatile as crypto, but my point is no asset has a guarantee that its value won't "drop randomly", simply not possible. Inflation was positive during the real estate crash of '08 and during multiple gold bear markets. If your time horizon is long enough, a volatile asset can still be a good inflation hedge.

2008 was a period of deflation. Of course inflation hedges would drop, when inflation was negative.

Oil, housing, car prices all dropped at that time. Prices dropped so low that companies like General Motors went bankrupt.

-------

We face an opposite problem today. Prices are going up. Old established companies love this, they can sell their stuff at higher prices. Aka, inflation. Turns out crypto was terrible at hedging this scenario.

did you just said that crypto pretends to be a low risk investment?