# Bubble?



## MrMatt (Dec 21, 2011)

Okay, the last few days have been insane, many of my top picks have gone up susbstantially.

This is both in tech and utilities (financials too)

Is this based on the expectation that things will be stable, with long run low interest rates, or just overenthusiasm.

I'm seriously thinking of paring down, but then part of me says I'm market timing.


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## Pluto (Sep 12, 2013)

Heck no. 

They are probably near pre covid crash levels. Were you thinking of selling pre covid crash? 

You are not a trader so why would you sell your best stocks? 

If you are selling, you should sell your worst ones first anyway.


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## Rusty O'Toole (Feb 1, 2012)

Now you are thinking like a trader not an investor. If you are an investor you have to hold on through thick and thin, it should be easy to hold on when your stock is going up, when it drops by 50% we find out who has the courage of their convictions.

If you are a trader I suggest you raise your stoploss to just below the last support area on the chart. That is what I do. I have no reason to sell a rising stock, when it is going up in a steady stair step fashion I am happy, when it starts going down stairs I get out.

As an investor the quick rise must be nice, but you should not be disturbed by a 50% retracement. That is par for the course in a lot of stocks. Look back over the daily or weekly chart and you will probably see similar occasions.


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## MrBlackhill (Jun 10, 2020)

Depends of your timescale.

This is how I see the market.

On a log scale, a line represents an exponential growth.

This is NASDAQ. I expect a correction in the upcoming years. But if it's the start of a bubble, it can last a few years.









This is S&P 500. I don't expect a correction.









This is TSX which is much more volatile and it has less long-term data so it's harder to see the long-term trend. I don't expect a correction on TSX but the volatility makes it hard to predict. I don't expect a correction in the coming year.









By "correction", I mean a -30% to -50% crash or worse that would take at the very least one year to recover.

And I agree with @Pluto, you are not a trader so don't try to time the market.


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## MrMatt (Dec 21, 2011)

Rusty O'Toole said:


> Now you are thinking like a trader not an investor. If you are an investor you have to hold on through thick and thin, it should be easy to hold on when your stock is going up, when it drops by 50% we find out who has the courage of their convictions.


I'm the opposite, when they double, I wonder if it's overvalued. (AMBA specifially)

I've been holding Ford for years, there is a stock that's chronically unloved, despite IMO a great investment thesis.
If you've been able to hold F, that's courage.


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## Tostig (Nov 18, 2020)

Don't worry. Nobody can predict when a correction will arrive or when the percieved bubble will burst.

1) Reserve 1 year of living expenses in case the worse recession ever arrives and you lose your job;
2) In your investment portfolios have 20% in cash to buy when the markets dip, 5%, 10%, etc as far as you have. On average markets dip 5% about three times a year, 10%, three to five years and big ones 20% or more about ten years.

What are the big bubbles I remember in my own lifetime?
1987
2001
2008
2020

And then there's the 20% drop that occurred on the fall of 2018. I jumped in buying January 2019 but missed the 6% panic during May 2019 triggered by Trump's trade war tweets against China.


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## MrMatt (Dec 21, 2011)

Tostig said:


> Don't worry.
> 
> 1) Reserve 1 year of living expenses in case the worse recession ever arrives;
> 2) In your investment portfolios have 20% in cash to buy when the markets dip, 5%, 10%, etc as far as you have. On average markets dip 5% about three times a year, 10%, three to five years and big ones 20% or more about ten years.


I've had a ridiculous emergency/reserve fund for years. when I renewed my mortgage the Financial advisor was incredulous that so much was in cash.
They were probably dreaming of the bonus.

The point of this thread is really a discussion on how crazy is it, and if things have really changed so much that stocks might be worth 50% more in Jan2020. 
For example lets say a stock that I valued at $100 in Jan, was trading for $70, so that's a pretty good inveestment, but now it's at $140... so is it overvalued, or am I thinking wrong?
Maybe 2 years of 0% interest makes $140 ok.

I'm just trying to sort out my thoughts, so I'm spewing them out and seeing what makes sense.


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## MrBlackhill (Jun 10, 2020)

Nothing wrong in reassessing the current valuation of your stocks. Though there's nothing wrong with stocks jumping +50% in a year and still be at fair value. Look at HDI.TO, do you think it's overvalued? I don't think. Yet, it had years of +50%.


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## james4beach (Nov 15, 2012)

Does feel like a bubble to me in the short/near term, but since we're all long term investors, this shouldn't matter. Also shouldn't matter as much if you're well diversified between different asset classes.

Today, bought 10K of the TSX 60 (XIU) and S&P 500 (ZSP) adding to 40K in new purchases of bonds (XBB) and gold (CGL.C)

Notice that bond yields are up recently so not a bad entry to bonds. If bonds remain weak, we should see GIC rates go higher soon too.


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## james4beach (Nov 15, 2012)

Geez why is TSLA only up 7% today? The market must be weakening


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## MrBlackhill (Jun 10, 2020)

TSLA will be the reason for the next market bubble and crash.


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## KaeJS (Sep 28, 2010)

Tesla makes me want to kill myself.
Musk is a douche and his cult following makes no sense.

Tesla is way overvalued by every metric. I almost shorted at $640 because I thought that was a ridiculous price. Silly me. Good thing I chose not to.

I promise if it hits 1000 I will short.

Has anyone looked at the option chain for this trash?

A March/21 900C on Tesla costs $80.

People are paying a 10% premium because they think the stock will rise AT LEAST another 22.5% in 2 months?

Give me a break...


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## MrMatt (Dec 21, 2011)

james4beach said:


> Notice that bond yields are up recently so not a bad entry to bonds. If bonds remain weak, we should see GIC rates go higher soon too.


Bond yields up, when BoC said they are keepign rates at .25% for 2 years? That's nuts


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## MrMatt (Dec 21, 2011)

KaeJS said:


> Tesla makes me want to kill myself.
> Musk is a douche and his cult following makes no sense.
> 
> Tesla is way overvalued by every metric. I almost shorted at $640 because I thought that was a ridiculous price. Silly me. Good thing I chose not to.
> ...


There is a thread for this, but Tesla basically has to become one of the worlds largest automakers, and maintain margins to justify their price.

I think they should just buy GM.


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## james4beach (Nov 15, 2012)

KaeJS said:


> Tesla makes me want to kill myself.
> . . .
> I promise if it hits 1000 I will short.
> 
> Has anyone looked at the option chain for this trash?


Don't do it man. Don't speculate against a crowd-driven bubble.

Better to just avoid it.


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## MrBlackhill (Jun 10, 2020)

I believe NASDAQ may be starting a bubble during this year. You may want to ride it or not. Other indices feel safe.

I certainly won't cry on this first week of the year where my portfolio did +1% every single day (without any NASDAQ exposure)... Fun times.


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## nathan79 (Feb 21, 2011)

Tesla is just bonkers... it's gone up 8.7X over the last 12 months! Bitcoin is about 5X over the same timeframe for comparison (and that is crazy enough!).


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## OneSeat (Apr 15, 2020)

Purely a side issue - but look how the trade volumes increased when personal computers became available - click view attachment.



MrBlackhill said:


> a few years.
> View attachment 21080


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## james4beach (Nov 15, 2012)

nathan79 said:


> Tesla is just bonkers... it's gone up 8.7X over the last 12 months! Bitcoin is about 5X over the same timeframe for comparison (and that is crazy enough!).


Only 8.7X? That's disappointing. It should easily be going up 2% per day and so a 50X return should be possible in a year.

Of course if you need to diversify you can also add in TQQQ and maybe some bitcoin, for something like 10X to 100X your money every year. Investing is super easy.

Mutual fund managers and pension funds are so stupid. With just Tesla, bitcoin, and hand-picked stocks (maybe a Motley Fool subscription) they should be able to make 10X their money every year. Only morons would buy all the junk in the S&P 500 and TSX Composite... can you imagine being so lazy and stupid.


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## MrBlackhill (Jun 10, 2020)

OneSeat said:


> Purely a side issue - but look how the trade volumes increased when personal computers became available - click view attachment.


Interesting. Everybody "working from home", but in reality, they are on their computers investing.

Or maybe investors have learned from 2008 how big of an opportunity it is when there's a market crash and money printing.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> Interesting. Everybody "working from home", but in reality, they are on their computers investing.


And how many new gamblers do we have in this system since COVID?

They're at home, they're bored. Markets are entertaining and I think gambling (speculating) is way up.


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## Eder (Feb 16, 2011)

Rather than a new bubble ( other than the internet/Tesla darlings) I think stocks are reacting to inflation threats...banks up, telecoms down etc.


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## doctrine (Sep 30, 2011)

Bitcoin and companies without profits can and should go up 5-15% a day for the foreseeable future. I don't see any issue with this? It's "how it is now, ok boomer."

This is the type of thing I see. Bitcoin is starting to attract the retail gamblers. Look at the volume growing on QETH and QBTC.


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## MrBlackhill (Jun 10, 2020)

doctrine said:


> Bitcoin and companies without profits can and should go up 5-15% a day for the foreseeable future. I don't see any issue with this? It's "how it is now, ok boomer."
> 
> This is the type of thing I see. Bitcoin is starting to attract the retail gamblers. Look at the volume growing on QETH and QBTC.


True, and why bother buying expensive Bitcoin that rose only +300% in 6 months when you can buy cheap companies such as HIVE.V that rose +900% in 6 months.


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## Tostig (Nov 18, 2020)

james4beach said:


> And how many new gamblers do we have in this system since COVID?
> 
> They're at home, they're bored. Markets are entertaining and I think gambling (speculating) is way up.


Robin Hood investors. No commission, no minimum. They can jump in and out throughout the day.


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## Eder (Feb 16, 2011)

I overheard a couple young guys on the beach today discussing their bitcoin investments...one told the other that he was going to sell then buy back lower as that's what you do to get rich. The other listened intently.

I was going to butt in & expound the virtues of dividend investing but the wife wanted to leave.


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## Pluto (Sep 12, 2013)

MrMatt said:


> For example lets say a stock that I valued at $100 in Jan, was trading for $70, so that's a pretty good inveestment, but now it's at $140... so is it overvalued, or am I thinking wrong?
> Maybe 2 years of 0% interest makes $140 ok.


Not enough information to make an assessment. I'd want to know the PEG of the stock and its historical PEG range to get a clue.


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## james4beach (Nov 15, 2012)

Eder said:


> I overheard a couple young guys on the beach today discussing their bitcoin investments...one told the other that he was going to sell then buy back lower as that's what you do to get rich. The other listened intently.
> 
> I was going to butt in & expound the virtues of dividend investing but the wife wanted to leave.


They won't listen anyway, they'll tell you it's too boring. I have friends who aren't impressed by my 7.7% CAGR. They say it's possible to do much better.



doctrine said:


> Bitcoin and companies without profits can and should go up 5-15% a day for the foreseeable future. I don't see any issue with this? It's "how it is now, ok boomer."
> 
> This is the type of thing I see. Bitcoin is starting to attract the retail gamblers. Look at the volume growing on QETH and QBTC.


Yes and even large media outlets like Bloomberg and CNBC are now "pumping" bitcoin. If you look on Youtube you will see they have all kinds of bitcoin guests.

It will be interesting to see if this all gets out of control.


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## MrMatt (Dec 21, 2011)

Pluto said:


> Not enough information to make an assessment. I'd want to know the PEG of the stock and its historical PEG range to get a clue.


Well in my example, the PEG is double what it was, because nothing has really changed. But should I adjust my discount rate.

I really feel like stock prices have just simply gone nuts. I'm wondering if anyone else is feeling that they don't make sense.


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## MrMatt (Dec 21, 2011)

james4beach said:


> They won't listen anyway, they'll tell you it's too boring. I have friends who aren't impressed by my 7.7% CAGR. They say it's possible to do much better.
> 
> 
> 
> ...


Living through the dotcom boom, where people were getting internships at MSFT and leaving 2 months in because they just made a few hundred $k playing the market was a crazy time
“”You know it's time to sell when _shoeshine boys_ give you stock tips. "


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## Ukrainiandude (Aug 25, 2020)

james4beach said:


> Geez why is TSLA only up 7% today? The market must be weakening





MrBlackhill said:


> TSLA will be the reason for the next market bubble and crash.





MrMatt said:


> There is a thread for this, but Tesla basically has to become one of the worlds largest automakers, and maintain margins to justify their price.
> 
> I think they should just buy GM.


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## doctrine (Sep 30, 2011)

james4beach said:


> They won't listen anyway, they'll tell you it's too boring. I have friends who aren't impressed by my 7.7% CAGR. They say it's possible to do much better.
> 
> Yes and even large media outlets like Bloomberg and CNBC are now "pumping" bitcoin. If you look on Youtube you will see they have all kinds of bitcoin guests.
> 
> It will be interesting to see if this all gets out of control.


This will end poorly. It is just a question of when. The money inflows are real but when Bitcoin stops going up, it is not going to be very pretty.


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## Pluto (Sep 12, 2013)

MrMatt said:


> Well in my example, the PEG is double what it was, because nothing has really changed. But should I adjust my discount rate.
> 
> I really feel like stock prices have just simply gone nuts. I'm wondering if anyone else is feeling that they don't make sense.


Hmmm. is there a big earnings increase anticipated? 
My tendency is to go with the flow, just keep it and let it pull back. Don't worry, be yappy. But not knowing what it is, it is difficult to say. 
Stocks are up, but bubble is too strong of a word for stocks in general. TESLA is certainly in a bubble, but not all stocks.


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## Rusty O'Toole (Feb 1, 2012)

Eder said:


> I overheard a couple young guys on the beach today discussing their bitcoin investments...one told the other that he was going to sell then buy back lower as that's what you do to get rich. The other listened intently.
> 
> I was going to butt in & expound the virtues of dividend investing but the wife wanted to leave.


Tell me more about the beach. Where are you on the beach in January? How can you travel to a beach with all the restrictions these days? I wouldn't mind spending the rest of the winter on a beach but didn't think it was allowed.


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## off.by.10 (Mar 16, 2014)

doctrine said:


> This will end poorly. It is just a question of when. The money inflows are real but when Bitcoin stops going up, it is not going to be very pretty.


Indeed, I expect an angry mob of "where did all my money go?" Nobody seems to realize the money is being consumed to run the exchanges and miners. It's never coming back out.


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## MrMatt (Dec 21, 2011)

off.by.10 said:


> Indeed, I expect an angry mob of "where did all my money go?" Nobody seems to realize the money is being consumed to run the exchanges and miners. It's never coming back out.


Actually most of the "money" never existed.


The market "price" is just the last trade. It isn't like more than a small portion of Bitcoin or stock traded for the reported "price"
But people think they can just cash out and get the price quoted now.


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## fplan (Feb 20, 2014)

doctrine said:


> This will end poorly. It is just a question of when. The money inflows are real but when Bitcoin stops going up, it is not going to be very pretty.


The same story is being repeated for GTA RE for the last 5-6 years.. prices are not coming down.. in the midst of the worst pandemic princes went up 20%.. 
2008-09 govts took time to react to the crisis .. in 2020, they acted fast.. stocks were down only for 1 month or two.
So anything serious happens Taxpayers are there to protect .. so don't worry keep pumping money into the stock market.. 
BUY BUY BUY IT stocks .. because only IT stocks are pushing the indexes into positive territory.. Shopify is the only reason why TSX is up after 7 years.. FAANG is pushing S&P 500 up.. otherwise, index investors also lose big time.. 

2 Trillion USD is distributed, 350 Bill CAD is disturbed so at least 400Billion will end up in the markets..


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## Ukrainiandude (Aug 25, 2020)

Bubble wont be allowed to burst. Fed will buy ETFs if needed.


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## MrMatt (Dec 21, 2011)

Ukrainiandude said:


> Bubble wont be allowed to burst. Fed will buy ETFs if needed.


Just like the Canadian real estate market.

Honestly they desperately need to let some of the air out of these bubbles.
They're bad all around.


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## Money172375 (Jun 29, 2018)

Rusty O'Toole said:


> Tell me more about the beach. Where are you on the beach in January? How can you travel to a beach with all the restrictions these days? I wouldn't mind spending the rest of the winter on a beach but didn't think it was allowed.


Book a ticket. Get on a plane. No quarantine rules in many places, including Florida.


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## nathan79 (Feb 21, 2011)

I've recently sold some Bitcoin. I still think the value will be much higher in 10 years, but the risk of a correction is hard to ignore, and previous bear markets have lasted for up to three years. 

I traded some of my Bitcoin into USDC stablecoin in case there's a good buying opportunity down the road... just pure speculation.


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## Retired Peasant (Apr 22, 2013)

Rusty O'Toole said:


> Tell me more about the beach. Where are you on the beach in January? How can you travel to a beach with all the restrictions these days? I wouldn't mind spending the rest of the winter on a beach but didn't think it was allowed.


Eder is in Hawaii I believe. There's nothing about it being 'allowed' or 'not allowed'. They are merely 'asking' that people don't travel.


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## doctrine (Sep 30, 2011)

fplan said:


> The same story is being repeated for GTA RE for the last 5-6 years.. prices are not coming down.. in the midst of the worst pandemic princes went up 20%..
> 2008-09 govts took time to react to the crisis .. in 2020, they acted fast.. stocks were down only for 1 month or two.
> So anything serious happens Taxpayers are there to protect .. so don't worry keep pumping money into the stock market..
> BUY BUY BUY IT stocks .. because only IT stocks are pushing the indexes into positive territory.. Shopify is the only reason why TSX is up after 7 years.. FAANG is pushing S&P 500 up.. otherwise, index investors also lose big time..
> ...


Bitcoin is not GTA RE.

Bitcoin from $5-10k to $20k was pushed by news of fringe institutional buying. $20k to $40k is retail panic FOMO bubble. Tens of thousands of bitcoin accounts are opening up daily in North America alone buying crypto assets. There will be a panic sell when the price drops. The Fed isn't stepping in to buy Bitcoin when it drops, unlike other real financial assets.


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## Rusty O'Toole (Feb 1, 2012)

Retired Peasant said:


> Eder is in Hawaii I believe. There's nothing about it being 'allowed' or 'not allowed'. They are merely 'asking' that people don't travel.


I thought the US/Canada border was closed to vehicle traffic except transport trucks and airline flights banned at least between some countries.


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## Eder (Feb 16, 2011)

Rusty O'Toole said:


> Tell me more about the beach. Where are you on the beach in January? How can you travel to a beach with all the restrictions these days? I wouldn't mind spending the rest of the winter on a beach but didn't think it was allowed.


Err...you book a flight & go. 

This is the requirement to go to Hawaii

International travellers from *Japan and Canada* are now the first international travellers allowed to bypass the 10-day quarantine if they've taken a COVID-19 test from a *trusted testing partner* in their country of origin.


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## Retired Peasant (Apr 22, 2013)

Airline flights are not banned - us/can border vehicular traffic yes, but not air. Some snowbirds are supposedly arranging for their car to be transported across the border; then they fly across and pick their car and head south.


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## MrMatt (Dec 21, 2011)

Retired Peasant said:


> Airline flights are not banned - us/can border vehicular traffic yes, but not air. Some snowbirds are supposedly arranging for their car to be transported across the border; then they fly across and pick their car and head south.


It's months past the time to close the borders to non-essential travel.


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## james4beach (Nov 15, 2012)

Retired Peasant said:


> Airline flights are not banned - us/can border vehicular traffic yes, but not air. Some snowbirds are supposedly arranging for their car to be transported across the border; then they fly across and pick their car and head south.


The border is still basically open. Snowbirds are going south and then coming back into Canada, obviously. I am fine with it as long as people obey the mandatory 14 day isolation when they return to Canada.

But I think if numbers keep getting worse, those returning may have to be isolated at dedicated facilities (hotels that are monitored) like they do in Australia. I suspect that people don't obey the 14 day isolation, and with the huge numbers of Canadians going to/from the US, this is too great a risk IMO.


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## james4beach (Nov 15, 2012)

nathan79 said:


> I've recently sold some Bitcoin. I still think the value will be much higher in 10 years, but the risk of a correction is hard to ignore, and previous bear markets have lasted for up to three years.
> 
> I traded some of my Bitcoin into USDC stablecoin in case there's a good buying opportunity down the road... just pure speculation.


Interesting you posted that, because I am planning to sell half my bitcoins. My idea is to sell enough to recover my original cost + some gain, so that I lock in my gain.

Then I'll leave some remaining in BTC which means I continue to gamble, but with zero risk.

You should be careful with those "stable coin" things. Those aren't cash and their value could go 'poof'. I am selling some of my BTC for actual cash.


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## Money172375 (Jun 29, 2018)

james4beach said:


> The border is still basically open. Snowbirds are going south and then coming back into Canada, obviously. I am fine with it as long as people obey the mandatory 14 day isolation when they return to Canada.
> 
> But I think if numbers keep getting worse, those returning may have to be isolated at dedicated facilities (hotels that are monitored) like they do in Australia. I suspect that people don't obey the 14 day isolation, and with the huge numbers of Canadians going to/from the US, this is too great a risk IMO.


Well, at least now they need a covid test within 3 days of departure, before they are allowed on a Canadian bound flight. 14 day quarantine on top of that.


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## MrMatt (Dec 21, 2011)

Money172375 said:


> Well, at least now they need a covid test within 3 days of departure, before they are allowed on a Canadian bound flight. 14 day quarantine on top of that.


Until they enforce the quarantine it's meaningless.
I'm sure some people respect it, but those who are purposely using loopholes to avoid the restrictions are IMO not likely the ones complying with the recommendations.


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## nathan79 (Feb 21, 2011)

james4beach said:


> Interesting you posted that, because I am planning to sell half my bitcoins. My idea is to sell enough to recover my original cost + some gain, so that I lock in my gain.
> 
> Then I'll leave some remaining in BTC which means I continue to gamble, but with zero risk.
> 
> You should be careful with those "stable coin" things. Those aren't cash and their value could go 'poof'. I am selling some of my BTC for actual cash.


I sold a significant amount of BTC for actual CAD just in the last week.

Yeah, I'm still assessing the risks of stablecoins. USDC is supposedly backed in full by US dollars and the reserves are examined monthly by Grant Thornton LLP. Could there still be risks? Absolutely.

It would be safer to cash out entirely to CAD, but that would make it more difficult to take advantage of buying opportunities. I guess I'm a speculator... lol.

I'm still quite long Bitcoin even though I know it will correct at some point. I'm more interested in what will happen 10 or 20 years from now... it will either be worth much less or much more.


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## Eder (Feb 16, 2011)

It is nice flying on a plane where all the passengers have had a negative Covid test. Not so nice wearing a humid itchy mask though...hopefully that will end one day.


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## Tostig (Nov 18, 2020)

Eder said:


> It is nice flying on a plane where all the passengers have had a negative Covid test. Not so nice wearing a humid itchy mask though...hopefully that will end one day.


It was either 2018 or 2019 when I started to bring a mask with me flying. At first I felt strange but when people on the flight started coughing, I knew I did the right thing when I pulled my mask out to wear. It's more comfortable than draping that blanket over your head.


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## james4beach (Nov 15, 2012)

Tostig said:


> It was either 2018 or 2019 when I started to bring a mask with me flying. At first I felt strange but when people on the flight started coughing, I knew I did the right thing when I pulled my mask out to wear. It's more comfortable than draping that blanket over your head.


I plan to wear a mask when flying for many years to come. Too many times, I've had a chatty person beside me who starts engaging, talking, spitting all over me.


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