The Online Investing AI Blog

Bitcoin has gone through its second bubble, and it is interesting to see how it survives. Although many people thought that the price would crash to a small fraction of its high of $262, it seems to have stabilized in the $100 to $120 range.

Image courtesy BitcoinCharts.com

The popularity of Bitcoin has exploded over the last 6 months, and it was clear that the bubble would burst. However, it seems that Bitcoin has gained enough traction to make it survive through the price crash. The chart looks quite strong at the moment, but only time will tell if Bitcoin continues to rise in value.

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Bitcoin has had an interesting history. Launched in 2009, it was revolutionary in combining cryptography with money. Perhaps the motivation for this idea was to create a system that distributes financial resources to those who have computing power.

Image courtesy of BitcoinCharts.com

We may never know the motivations behing Bitcoin. The mysterious creator, Satoshi Nakamoto, cut off communication in 2011. The name appears to be a pseudonym and he has never been identified. It has been theorized that he is not even a single person, but a group of people who have opted for anonymity. If this is the the case, they have succeeded.

Has Bitcoin revolutionized the way that humans use money?

Consider the following 4 phases of money:

1. Barter
2. Money
3. Fiat Currency
4. Cryptocurrency

The first phase of human exchange predates the first villages. It was simply the exchange of x amount of one good for y amount of another good. For example, “I’ll give you 3 apples for 2 pears”. Although this worked, it was cumbersome because there was no simple way to value a given good.

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It has been quite interesting to watch Bitcoin as it has gone through one bubble, and consistently risen since. Many people thought that Bitcoin was finished after its stratospheric rise in 2011, and it’s subsequent collapse to $3. Can Bitcoin survive such a massive devaluation?

Image courtesy Bitcoin Charts

Recently Bitcoin has achieved quite a bit of attention, because of WordPress.com announcing that they will accept payment in Bitcoin. More recently, Reddit has decided to accept Bitcoin. The more interesting (and perhaps) exciting development is that you can now buy pizza with bitcoins.

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There’s been a conversation about how people become wealthy on a few blogs the last couple of days..

A guest post on Financial Samurai offers an untraditional roadmap to financial success. This is a response to a previous post on making a six-figure salary.

There is no one true path to building wealth. There are a lot. You can earn it. You can invest it. You can win it. Someone can give it to you.

There seems to be no consensus on who gets rich, either. The rich get richer, they say. But do the poor become richer? Do the smart become richer? Do the religious become richer? Do the well-educated become rich? Do the pretty become rich?

What I would like to do is pull in the scientists and see what they have to say about the rich — how they became rich and, maybe, how you can become wealthy, too.

You don’t have to be smart to be rich. According to a study in the journal of Intelligence, there’s no correlation between IQ and how much money you have.

But, you should have a high SAT score, according to this study.

But, you should still have been popular in high school. Popular kids tend to earn more later. *My two cents: Now, they just need to have a study on how to be popular AND be a nerdy, high-SAT student.

Owners of electric vehicles are richer (and smarter), according to this US News story. *My two cents: It may mean that the rich can withstand the economic impact of what are currently inefficient vehicles.

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You should all be ashamed of yourselves — you and your “level playing field” exhortations.

The rich and their children are hopelessly outmatched in so many ways by working- and middle-class folks that it’s not even fair.

OK, so maybe the rich do have certain advantages. They can send their kids to great schools. When they compound their money, a little is a ginormous sums. They can network and hobknob with contacts that can open up new opportunities.

But…

For the non-rich investor or entrepreneur, making money may actually be easier than the rich.

The Rich Are Lazy
Rich people become comfortable and their interests move toward other activities. They, essentially, become lazy and pampered. That’s a very noncompetitive stance.

The Rich Are Stupid
Stupid is a mean word. Uninformed? Yeah. That sounds better. But, despite the access to the finest institutions of higher learning, the rich are saddled with “Yes-sir-or-ma’am” thinking. They surround themselves with people who always agree with them — and that cuts them off from learning valuable lessons, both practical and academic. You’ll notice that the rich who make their money in one economic condition, rarely lead the next.

The Rich Have Lazy Money
The rich pass on money to their managers and handlers. Their managers may or may not have their best interest in mind and, so, can make mistakes or poor investments with the money.

The Rich Are Attached
Rich people are terribly loathe to give all the good things they have up (“loathe” — that’s what rich people do instead of  ”hate.”) Since they become attach, they fail to move out of bad opportunities and are slow to seize good opportunities.

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Bitcoin is the first and most popular crypto-currency. It has some very interesting characteristics that make it similar to a commodity and a fiat currency. It even has had a history of a typical bubble.

Image courtesy Bitcoin Charts

As you can see from the chart above, Bitcoin has undergone a typical bubble. Does that mean that Bitcoin is dead? I don’t think so. It has stabilized since November 2011. In addition, there are thousands of companies that accept Bitcoin as payment has been growing steadily. (Apparently the site is having an issue with its SSL certificate, so you may get a warning).

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Well… The rich just keep getting richer.

According to recent statistics, the wealthier members of society are making more money faster than the rest of us.

And that’s bad. Or is it?

It should come as no surprise that the wealthy get rich faster.

They have access to wealth-building opportunities that we don’t, like venture capital. These are high risk, but really high reward investments. While you and I are earning single-percentage returns — if we’re lucky, rich folks can make double, triple their initial investments. That’s just the beginning.

Rich folks also get a chance to connect with other rich folks. That increases the chances they’ll be able to connect with more money-making opportunities.

For those who are not happy with rich people — the one percenters — this is more than enough reason to shout about the injustice of the system. But, this fails to take in account some some important points.

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So, the Fed is trying to give another bolt to the economy.

Great.

It didn’t seem to work before, but if there’s one thing that we have all learned is that if a tactic continually fails, you should keep doing it until it works.

Sort of like smashing your head into a wall repeatedly if you need to make a household repair.

Well, here are some lessons I have found around the internet. Just like the Fed knows they can always print more money, I know people will always publish more posts.

So relax! These do not require you to smash your head into the wall. Just give them a read.

Wall Street Journal — Management Secrets of the NFL

Dumb Little Man — 13 Warning Signs That What Your Delegated Won’t Get Done

Financial Samurai — A Day Job is Much Easier Than Entrepreneurship

Finance Fox — Do You Need a Career Change?

Invest It Wisely — You Don’t Need to be Born an Entrepreneur

Untemplater — What is eHealth Insurance?

The Digerati Life — Skip Commercial Banks! How Cash Only Living Can Work

Business Strategy, Internet, Investing, Money, Success blogs, economy, fiscal policy, government, insurance, Investing, Money, news, newspapers

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No. Not that those types of models!

We look at the world through patterns, or models. That’s how we look at the market, too.

Typically, we define our investing by our models. For instance, some investors define themselves as value investors, or trend investors, technical investors, or fundamental investors. To arrive at a decision, investors take information about the market — maybe, let’s say, the company’s PE — and try to discern a pattern that might allow them a glimpse of how the price of the company’s stock will develop in the future.

We see patterns and cycles of patterns.

The market is a simple machine.

But, it’s not a machine, exactly. It’s more of an organism. Those elements of investing information — technical, fundamentals, etc. — are like cells that can affect other cells within the body.

Think about a football team. A receiver can have a poor performance — maybe he’s not running as fast, or catching the ball. That can impact the quarterback’s performance. And that can impact the offensive line’s performance. Maybe the QB is back in the pocket too long and gets sacked more times. This, can have an effect on the defense. The defense is on the field more times and gets tired.

The performance of the entire team can suffer from one person’s problems.

Couldn’t other elements of the market be affected — positively or negatively — by one indicator, as well?

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I’ve followed the success of 50 Shades of Grey with a mixture of jealousy and indignant jealousy. In case you haven’t heard, this book is the latest literary sensation that’s turned a writer of fan fiction, E.L. James, into an overnight majillionaire.

No. I haven’t read it. In fact, I thought it was about the Civil War. And, in a sense, it is. (Insert bondage joke here.)

But, I’ve heard a few people talk about it. And, it’s not that good, in a literary sense. It’s just fun, in a sick-twisted-kind-of-way… my friends’ words, not mine.

So, I guess those who aren’t inclined to write bondage tales are out of luck when it comes to making money. Right?

James’ success isn’t so much a story of literary success as it is the success of the internet. The book started out online as fan fiction on a Twilight website.

So. Hang on.

Here’s a thought. Maybe there are more ways to make money–more ways that are fun, exciting, and perhaps will not require an inordinate amount of blushing.

Think of it as an easy way to get out of bondage. (Insert second bondage joke here.)

Here we go…

1. Invest. Seeking Alpha’s a good place to start.

2. Long-term it. Become a value investor. Here’s a good place to learn about it.

3. You can trade options. You can try this book.

4. Trade stocks on the short term. Check out this site for some insights.

5. Follow trend-following techniques for big money. Michael Covel’s an expert.

6. Buy into a great start-up (coming soon) Here’s a post about the details.

7. Win the lottery.

8. How about blogging?

9. How about blogging like a copy writing?

10. You could try autotrading at Collective 2!

11. Make money with Google ads.

12. Make money with Twitter.

13. Make money with Facebook. Check out the video.

14. Make money with Pinterest–a post on Squidoo.

15.  Speaking of Squidoo, here’s a Hubpage about making money on Squidoo.

16. Speaking of Hubpages, here’s a post on how to make money there.

17. Earn cash selling content.

18. Sell your crafts.

19. Hell, sell your art!

20. Make money on Cafe Press. Here are some hints from Noobpreneur.

21. Or, try Zazzle.

21. Sell your eBooks. You can see some ways some successful eBook writers did it.

22. Publish through Createspace.

23. Publish through Lulu.

24. Become a Yahoo Contributor.

25. Become a Helium Contributor.

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Automated Trading, Business Strategy, Dreams Come True, Great Books, Internet, Investing, Money, Online Investing AI, Success 50 shades of grey, green, Money