Recent news articles have said things like "$7.3 trillion in value wiped from the total stock market over the past month". This does not mean people sold $7.3T of stock! This article will explain how market valuations work for both bitcoin and stocks markets.

At the end of March 2020 one BTC was about $6300, with a total market capitalization of $122B.  For comparison Apple was over $1T and that is just one company of many (market cap is the value of all of something in the world).

This might be another historic year for bitcoin
Bitcoin's first halvening was in 2012. That meant mining block rewords were cut in half, effectively a supply shock.  Imagine half of the gold mines in the world went dry one day. That year bitcoin went from around $12 to $1200 by the end of 2012. The second halvening was in 2016 and bitcoin went from around $700 to peak at almost $20,000 a year and a half later.  That's 10 times higher the first time and 30 times the second! Another way to measure this is to consider the second time was 17 times the prior peak.

20 is the midpoint of 10 and 30, and close to 17 so this seems like a reasonable working estimate for the next price peak.

The last peak was $20,000 so 20 times that be about $400,000 each!  The value of all bitcoins would have a market capitalization of around $8T (trillion).  That would value it more than the top 10 stocks combined.  Is this plausible?

It does not take $8T to make an $8T market cap.  
It might seem that people need to collectively sell $8T of other things to raise enough funds to drive the bitcoin market that high. This is not how asset valuations work because most people are not selling or buying most of the time.  

Consider that last week most people that had bitcoins were happy to keep them, and those without bitcoins were happy too. At any given moment only one buyer and one seller have found a price that makes them both happy. These are the only people that set the price. The next pair of buyers and sellers may decide a fair deal would be a little higher or a little lower. All other bitcoin holders are not watching the valuations and deciding to act. Some active traders do this but the vast majority of people have better things to do.

A simplified model to demonstrate how we might get to $400,000 from $6300
Let's say half of bitcoins won't be traded this year and the rest are traded weekly on average.  50%/52 weeks is roughly 1% a week.  The halevning will take place some time in May.  In order for the price to go from $6000 to $400,000 this year could be modeled as if it was steady growth every week over the last 8 months of 2020.  In practice steady growth never happens. There will be some very high growth weeks and some large drops. It might take 3 years to reach this or 3 months. Even though the steady growth case may be very unlikely it can act as a structure to think about how this might work in general.

The formula for calculate a growth rate is:

If the middle of May starts with Bitcoin at $6300 and ends up 14% that is $7182.  Then another 14% the following week grows it to $8172 and so on.  The people that buy it have to sell something(or give up cash they already have), and the people selling are going to buy something (or keep cash). All things being equal the extra funds required are only needed to make up for the difference each week.  ​

The last thing to estimate is how much bitcoin may permanently change ownership within a week. There are about 18,280,000, if 1% are traded every week that is 183,000 per week.  

The net fund flow according to this model is $161,533,775 the first week and $9,396,688,496 the last week of the year. The sum of all of these flows is $75B. $1B is 1/1000 of a trillion, so $75B is less than 1% of the value of Apple last March. Conceivably if all Apple holders decided to sell 1% of their stock to buy bitcoin this alone would could make bitcoin worth $400,000. I don't expect that to happen, this is just a way to put these incredibly large numbers in perspective.

For a global economy $75B is not much.  

This ability for a subset of people to determine the entire market cap can work the other way as well. If the price were to drop significantly it might seem as if $Trillions evaporated. In practice every week the sales were a fraction of the total and the idle shares are priced according to what the active ones traded. The net flow out would be a small fraction of the total loss.  

The same is true for other assets, especially stocks. In order for "The market" to lose $7.3T does not mean one moment everyone sold all of their stocks cheaper.  A small subset of traders each sold lower and lower in steps. Most people still held. 

Where might funds for Bitcoin come from?
The US stock market crashed in February 2020 and March saw a lot of portfolio changes as well.  Much of the money left both stocks and bonds to go into Money market funds (cash). At the same time the federal government created another $2T. While the stated intent is to help the people at the bottom, to a large degree most of the money must first flow through wealthy money managers.

Once someone is a multi millionaire, or has a well connected high paying position, they have no risk and are free to do what they like with extra money. While the government intent might be for them to buy bonds and stocks, they are free to diversify and speculate. Perhaps Real estate?

Money may flee real estate next.
Stocks and bonds are liquid and can be bought and sold in fractions of a second. Real estate, especially homes and businesses, take months to transact. Many people that had real estate for sale in February 2020 still do. As cities shut down and uncertainty grew odds are good the buyers are changing their minds or putting plans on hold for a while. This is a much slower process and in a recession there are more reasons to sell than buy. This will likely lag on the way up as well. 

Money may flow into gold
The gold bugs have been expecting gold to replace the US dollar for decades. It has not and mostly acts as a modest portfolio hedge. It is going up now and may do better than most assets in the near future, but is unlikely to have the windfall the gold bugs hope. It last peaked in 2012 and may set new highs soon.

Gold is interesting in this discussion because the market cap around $9T is similar to what bitcoin would be around $400,000. If the price of gold doubles it could take some or most of the cash that might have gone to bitcoin. One thing to consider with gold is that over the long term higher gold prices encourage more mining to drive up the supply. More supply will balance more demand and limit how high the price can go.

This is a major difference for bitcoin, the rate of supply shrinks every 4 years. Around 2024 there will be another halvening to cut the rate of new production.  Nothing like this happens for gold or any other asset.  

What about the creation of thousands of other crypto assets and currencies?
Even if the supply of bitcoin is limited there is no shortage of alternatives.  For the most part the majority are not designed to be appreciating assets as bitcoin is. The ones that are tend to go up when bitcoin goes up, and loose value when bitcoin looses value. Some of them might do much better, most of them will certainly do much worse. If you have more insight into which few will do better please mention them in the comments! 
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Summary
With money shifting out of stocks, bonds and real estate to cash there is no shortage of possible funds to drive up the bitcoin price this year. In general people that are fearful probably are more inclined to buy something with a longer history such as gold or stay in cash for now. 

If some portion of that cash goes into bitcoin, and the price starts going up as other things are declining, it may get more attention. The more attention it gets the more investors may consider adding some.

On the other hand this might be the year it goes to $0 for one of the reasons outlined in my book. Perhaps it stays in a range near $6000 from now on. 

$75B may be enough to move bitcoin to a $7T market cap valuation, or $400,000 each. 

Many of us first experience philanthropy when Girl Scouts come to the door selling cookies to raise funds (or on the selling side). They are volunteers, learning sales skills, and presumably the money goes to help them or something. Most of us eat our Thin Mints and never dig further.  That's 1 way.  You buy something from a volunteer.

Ten years ago a study about giving found the poorest households (<$20,000 family income) were the least likely to give, about 1 in 3.  But those that gave were the most generous(see chart above).  This is a tremendous chunk for people already at the lowest incomes.  As incomes went up the participation rate did also, with almost everyone donating by the time they make over $130,000 a year.  Basically everyone making $40,000 or more give 2-3%.  I suspect many of those in the study at the lower incomes bought girl scout cookies without keeping track of it as a charity, but there is some aspect of generosity and will be included on this list.

When we watch a you-tube video or listen to a podcast we are often asked to support them on Patreon to produce more content (that makes 2). Sometimes this is in addition to the revenue they get from advertisements(lets call that 3 even if you don't buy the product since your attention was interrupted and your more likely to buy).  Some youtube videos include advertising and some have both.  Some have a sponsored product directly(the show is about the product for sale 4) or indirectly(5 the product is unrelated to the show but paid the cost of making it).  Some sell merchandise they create themselves(buying this to support them is a sixth 6th way to give).  

If you buy food with pink ribbons you may feel this will help cure that cancer or something, it is not clear how much of your purchase price ends up making a difference (7, the opposite of sponsorship since the charity is helping to sell the product)  

Many religions teach tithing (a tenth, also way #8 on this list).  This might pay monks, missionaries, local orphans, or a yacht for the leader. It's not clear if this is similar, do you get heaven points for donating 10%? Demerits if you don't?  Is it a minimum obligation or a typical suggestion? 

When we check out at the grocery store we may be asked to "round up for charity"(9).  Sometimes they specify which one but not always.  We won't notice a $45.90 bill that became $50.00 but this adds up for the store. A pet store might ask if we want to add $1 to help pets(a similar enough variation lets consider it another case of way #9). 

A utility bill might have a box for "donate $5 to help a neighbor in need" that aromatically applies from then on until you make an effort to stop it(10).  This would add up to $600 after a decade.  Presumably after joining they may ask you to increase it.  Which neighbor does this help?  Is the utility piling up cash for a rainy day or are they letting people continue to get services without paying their bill? My guess is occasionally people that get evicted by landlords may have unpaid utility bills that end up uncollected in bankruptcy. If no one donates to this fund then they will raise all the rates slightly to cover these cases.  

The  major charities such as Red Cross rush to emergencies and funnel funds to solve that(classic type of 502c most of us think of, way #11 on this list). Sometimes there is a scandal because the current disaster is funded by the last one as this disaster fund raising does not all get used for this disaster. Less money goes to preventing disasters.  It's hard to see how a city with poor building codes is one quake away from disaster and might be helped in advance. It's much easier to see headlines and images from actual disasters. Since help will be urgently needed, fund raising efforts have delays, spending has delays, and prevention is less interesting, the Red Cross may as well harvest whatever they can from this months leading news disaster and bank it to be ready to help with the next one.  

Many states have tax credits for some programs, which complicate federal taxes. A tax credit seems like a loan.  We give a qualified charity money today, then when we do our taxes they give us a credit for the full amount(12). 

What about reducing your footprint?  If you only eat ethically sourced eggs, or perhaps no animal products you are making a lifestyle sacrifice to benefit others(13). The cost of this life style might be lower, the same or more.  The point is the intent to behave as a better person.

When donating money there are a few other factors to consider about how well the funds will be used.  Charity Navigator ranks charities by transparency and financial responsibility.  For example Doctors Without Borders gets 4 of 4 stars by being highly ranked for both.   March of Dimes only get's 2 stars for being transparent but poor use of funds.   

There is a meta cause called "80,000 hours" that help people starting careers to chose whether it makes more sense to earn more money to donate more, or to directly help people such as becoming a Red Cross doctor, or perhaps a cancer curing researcher.  A similar meta effort is Charity Navigator, which tracks the quality of charities and is itself a charity asking for funds.
Another tool is Givewell, which focuses more on effectiveness.  Conceivably the most transparent and financially responsible charity doing something that doesn't actually help anyone wouldn't be the best thing to fund.  Helping any of these make giving itself more effective is  a 14th way to help.

My perspective is that there are two things a person can do when they find themselves on the path to success.  First, ignore anyone selling houses or cars.  Second, seek to help people that will help others.

Are you getting a little tired of your current car?  If you won a historic lottery jackpot would buying a new car be near the top of the to-do list?  I am not saying to never buy a new car but there are circles of wealthy people that consider it embarrassing to drive anything less than a new Bentley ($160,000 for the cheapest version and double that for the most expensive).  Which brings up real estate.  If you move to a mansion in a gated community of mansions you will see everyone driving new Bentleys. This is not directly philanthropy.  However there is usually a sales tax.  Even though involuntary your large purchase will include some amount that will be used to maintain roads, provide police help if your Bentley is stolen and so on(15). That mansion will require property taxes, which will fund local schools and other things (16), again mostly involuntary.  

Wealthy people that live in wealthy communities have a lower rate of giving than wealthier people in less affluent communities.  Even if you gradually find yourself in this situation you are likely to feel two things.  First the hedonic treadmill where what was once shiny and new feels worn and boring after a while.  Marketing on every media outlet knows this and will encourage you to buy.  The other factor is the peer pressure of keeping up with your neighbors status.  Perhaps you don't need to be the flashiest person in town but do you want to be gossiped about by neighbors because your still driving an old car?  However if you continue to live in a modest neighborhood where everyone has a modest car you can get something newer to you and still fit in without spending nearly as much.

Imagine if everyone did this?  Would a city where no one lives in a mansion or drives a Bentley be a horrible situation?  What if the most successful people tried to compete with each other to help the least successful?  Countries that try to force something like this with tax and legal codes tend to end up worse off.  It would be far better for more people to chose to act like the great Chuck Feeney.  He started from nothing and made Billions, then decided the billionaire life style wasn't for him and spent rest of his life giving it away.  

The bulk of the recipients were new colleges in poor countries.  Some of those people certainly went on to become philanthropists themselves. He would find partners that would donate to a school if they could have a building named after them (17).

Helping animals and other causes may be worthy.  Especially preventing lost habitat and extinctions since recovery may take centuries or never. Some of these are urgent.  Helping people that will go on to help other people (or animals) can have more of an exponential effect given time.  In most cases these are still classic organizations focused on giving, with a mix of volunteers and paid employees.  

Imagine you save one plot of forest for $1M.  You could even set up a trust fund with another $1M to pay legal and other caretakers to ensure it stays untouched in perpetuity.  If there are unique animals in that forest this has a direct benefit to future life.  Alternatively what if you used the $2M as a college trust fund helping like minded students get environmental law and science degrees?  Such a fund could pay out 5%, or $100,000 a year indefinitely and still grow with inflation if prudently invested.  That might be enough to fund 2 students a year.  Those students may not just directly do good with their careers, they may make enough money to retire early and donate to other worthy causes.  Making your own perpetual trust is an 18th way to give.  

A 19th way to give is to consider your investments.  The baseline portfolio will usually have the S&P500 or broader stock market fund.  However this includes tobacco companies giving people lung cancer, Halliburton making ammunition to kill people, Volkswagen faking data to make us breath more pollution, and many other companies with harmful business models.  There exist socially responsible Investing (SRI) funds such as the Vanguard FTSE Social Index Fund and others. These exclude the worst companies but otherwise have the same broad fund of stocks to get the most diversification for the least cost.   

The more people that can live below their means, even as they grow their means, will free up funds to help more people.  Those people can then help more people.  These are exponential seeds.

Another consideration to give money you might have a match through your employer.  If your employer offers this then making the most of it will amplify your giving.  Any time you give with a match is amplified for a 20th way to give.

A final major consideration is children, and to a lesser extent, pets.  From your countries long term point of view when someone raises a child they are creating a new tax payer that will pay into healthcare, welfare, senior care, state taxes, county taxes, and city taxes.  This may be delayed a couple of decades but, in general, most will provide healthy productive decades long before they start to draw on the system.  If a couple has 2 children in their life time they have broken even to produce enough to cover their own needs.  People with zero or one are not contributing as much as they will be taking when older.  Those raising 3 or more kids are doing more than their fair share. 

A common misconception is the old Malthusian argument that human overpopulation causes societies to collapse.  To be fair this was true up to his time in the 1800s.  What he could not have foreseen was a shift to a world where higher populations make the cost of everything much lower through economies of scale and technology.  At the time slaves and non slaves worked long hours growing food and still starved occasionally while today hardly anyone works in agriculture and obesity is the fastest growing health problem everywhere, including in India and Africa.  

Japan has been in a decades long recession due to the lack of children, the US and other countries are on track to follow.

While pets do not pay taxes and have shorter lives they are still an expense that has an altruistic component. If you adopt from a shelter you are often saving a life, especially an older or special needs dog or cat.  This expense could have been sent to a charity, but you would miss out on the Oxycontin health benefits.  You get this with children as well but they are more expensive and time consuming.  One can have children, or pets, or both or neither so lets count this as ways 21 and 22.

Overall perhaps it's best for people inclined to raise children to raise them to be charitable modest spenders, like themselves.  Who will then go on to do the same. 

Those without children presumably have more time and money to do more good.  Presumably about an extra $250,000 each and about 15 hours a week that could have gone into a side business or overtime working for a promotion.  Let's say that nets another $250K for an even $500K per child.  To simplify assume 2 children for 2 people so this is $500K per person.  If one can be happy with $80,000 a year and pull 4% a year from investments they need $2M invested.  To make up for not having children that extra $500K could pay out another $20K a year to do other good things.  Someone earning $100K and living on $80K of it is giving 20% to charity.

The bottom line is people with 2 kids can skip philanthropy if they like.  They have already "paid their dues".  Those without kids may consider aiming to retire with enough to give away another 20% to make up for not having kids.  I suppose this means a couple that has 1 kid may each consider retiring when they can support themselves and give away 10%?

There are those with health problems who can't have kids and also struggle to make even basic incomes and may be a net beneficiary of society.  There are also those with high energy levels,  clear minds and luck that that have several kids and still give billions to charity (Charles Feeney and others).  This article is for those of is with average or better health, average or better judgment, and average or better luck.  We could live more lavishly and help no one.  We could live like paupers and help more.  We chose to live a balanced life well enough within our means to help ourselves enough and some others who need it most.  

We can always find more ways to spend more money, and this is highly recommended by everyone working for sales commissions!  While this may be ok to some extent there are other things that can be done with more income.   Some of those things directly help ourselves at the same time, some things indirectly help us, and other things help others without a benefit.  Some philosophers say if the act of giving feels good then you still get a benefit.  ​I'm fine with that.  If buying a larger, newer car makes me happy; and donating the money that could have paid for the larger car makes me happy, then I might as well help someone needier than a car dealer.  

So that makes 22 ways to give!  Did I miss any?  Please leave a comment.

Further Reading (or playing)
​
Here is a gameified quiz to help think about your approach to choosing what to fund:
https://mygoodness.mit.edu/quiz
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​https://www.mentalfloss.com/article/56264/what-do-girl-scouts-do-all-cookie-money

​https://www.cnbc.com/2018/06/04/these-states-offer-an-attractive-tax-credit-for-charitable-residents.html

https://www.scientificamerican.com/article/why-malthus-is-still-wrong/

https://www.nytimes.com/2018/01/27/world/africa/kenya-obesity-diabetes.html

https://www.philanthropy.com/article/Rich-Enclaves-Are-Not-as/156255
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https://www.mrmoneymustache.com/2011/10/22/what-is-hedonic-adaptation-and-how-can-it-turn-you-into-a-sukka/
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​https://www.businessinsider.com/japan-demographic-time-bomb-reversing-but-us-is-in-danger-2018-7

https://www.hillspet.com/pet-care/behavior-appearance/why-humans-love-pets
https://smartasset.com/retirement/the-average-cost-of-raising-a-child
https://qz.com/work/1324454/how-parents-spend-their-time-when-theyre-with-their-kids/

https://www.prnewswire.com/news-releases/the-harris-poll-releases-annual-reputation-rankings-for-the-100-most-visible-companies-in-the-us-300222052.html
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https://assetbuilder.com/knowledge-center/articles/socially-responsible-index-funds-no-guns-cigarettes-or-sky-high-carbon-footprints

https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=3628
https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=4045​
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https://www.givewell.org/

​https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.25.2.157


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This article is less about distinctions between gambling and speculating and more about the emotions of taking large enough risks. There are references at the bottom for details you may want to go into further.

This article will tell you my strategy to maximize winning at Roulette in Las Vegas.

One thing I personally found hard about speculating, or even moderately risky investing, was to risk large enough sums to make a difference if it worked out.  I know I will be wrong and perhaps wrong more often than not. I know it's acceptable to have a total loss  50% of the time, if the 50% that succeed make 300%. However, like flipping coins, there is always a chance of making the wrong choice several times in a row. My worry was having a bad run of luck, bad timing, or making bad decisions from ignorance or flawed logic.  

Looking back over my life this led to two over cautious mistakes. First, I did not take enough risk when I had a promising idea, so when it payed off the impact to my net worth was negligible. Whenever an investment was extremely successful, it became an uncomfortably large part of my portfolio, so I sold more of it to reduce the risk. Selling too much too soon turned a brilliant winner into a relatively small win. After years of making many good investments at the right time, I have less to show for it than others who made more mistakes, but stuck with larger risks when they did well.

What if casino gambling could offer a fast, well defined way, to practice the emotional aspects of winning and losing larger sums?  

While Craps and Blackjack might have slightly better odds, Roulette has simpler rules and statistics. I defined the goal as finding the best chance to make 10x, minimize my chances of losing too much, and have fun while doing it.  

A typical roulette wheel has 18 red, 18 black numbers, and two green 0's. If you pick one number and the ball lands on it, you win 35 times your bet and keep your initial bet. With two green 0's, there are 36 numbers that lead to a total loss and only one winner. This gives the house a 5.26% edge. Over time and many players the casino will come out ahead by that amount even if individual players in short sessions lose or make far more. 

One way to get a better deal is to go to a casino that has a table with a single 0(European style).  This cuts the house edge in half to 2.7%. With some advanced googling I found two places in Las Vegas with a single 0 table, the Bellagio and Wynn.

I considered many strategies and will focus on two simple baseline strategies.  A key concept is that on a single 0 table all strategies and combinations have the same house edge per spin.  This means the optimization is more about how long you want to play and how often wins come up. The less frequent the wins the more per win and the better your chances of making more money in less time.   

The first baseline strategy is to bet on a single number. This has the highest payoff and lowest probability. The second baseline is the opposite extreme, which is to only do even odds bets.  These are the red/black, odds/evens, or high/low numbers. It has the highest probability and lowest payout. An extra advantage with a European style table is if a 0 comes up when making an even odds bet then instead losing it the casino spins again and let you keep it if it wins the next spin. This cuts the house edge to a slim 1.35% that is as good as the best odds for craps or blackjack.  

Both casinos with a single 0 had a minimum bet of $100 per spin. More on this later.

Remember my goal was to make 10x. With even odds paying 1:1 on an even bet this means to winning four times in a row. For example $100 becomes $200 if you let it ride, then $400 if it hits again, then $800, and finally  $1600 on the fourth win. Less the initial $100 makes $1500.  The probability of this happening is (18/37)^4 or 5.6% for every four sets sets of spins.  In other words roughly one per 18 sets of four spins will pay this 15x.  18*4 = 72 spins total. If you use this strategy you will repeatedly let it ride and often lose on the second or third spin.  Occasionally that fourth spin will hit!  

A key concept is to come to the table with enough money to survive to see your plan through.  With the four-in-a-row evens strategy you will win and lose roughly equally.  

Most Casinos spin about 50 times per hour. This means it will take about 1 hour and 15 minutes to see two green 0s and one four-in-a-row even bet.

This brings up an opportunity to cut the house edge a little more and a key part of my  strategy.  
1.  Know the odds and walk away as soon as you are luckier than average.
Let's say over a half an hour you have seen 25 spins, with one green, 12 red and 12 black. If you stuck with black you may have lost $1300 at that point, and won $1200 to be down only $100.  The next spin is black, then the next, the next, and the next!  $100 became $200, then $400, then $800, and finally $1600. At this point you may be tempted to keep playing.  The odds never get better or worse but if you change your strategy in the heat of excitement you are giving back the edge you have in leaving early. "Quit while you are ahead" is good advice.

Just as you are hoping for four black in a row in this scenario there are slightly higher chances for a losing streak. Imagine  you only brought $400 and get one green and three red in a row?  The day would be over within a few minutes without giving your strategy much chance to work.  

2.  Be prepared to lose long enough to give your strategy a fair chance. 
I won't go into the math but found a rule of thumb is to bring the amount you are hoping to win.  In this example you want a $1600 win so you need to be emotionally (and financially) prepared to lose that much. The casino will help this.  Hand the dealer the money and they will give you chips to play. Accept that the money is theirs and you now need to win it back.  

What happens when the chips are gone?  

3.  Cut your losses.
If you were prepared to lose $1600, and you do, then that is the time to stop. In this example it is not likely to happen in a short period of time but with a few losing streaks it might. Gambling addicts may rationalize "I'm due" and keep going. Casinos count on this. It's a very bad strategy to dig deeper to come up with money to keep playing.

Although the edge is in the houses favor it's basically 18 vs 19.  In effect, a slower, more complicated way, to flip a coin. In principle you could put your entire allocation on a single spin then walk away either way.   Technically this is the best bet because it gives the casino's edge the least time to catch up to a lucky spin.  Why not do this?

4.  Have fun.  
Winning is more fun than loosing, but winning is even more fun when you have experienced losses.  It's an excitement amplifier so powerful some people get addicted to it like a drug. The bulk of casino profits come from the subset of people addicted to gambling.  If you suspect you or someone you love might be capable of becoming addicted please jump to the last link below.  

​5. Leave after your strategy has had enough time.  
There is a lot to do in Vegas! With an outside, even odds bet, you can play a long time. There might be a long run without many 0s or winning or losing streaks. I decided to stay long enough to see about 74 spins then leave with whatever I had and do something else.  

6.  Don't bet more than you can afford to lose.
Jennifer Shahade recommends poker players stake 1% of their net worth per tournament.  Most poker players lose most tournaments, but when they win, they have huge winnings.  Should you bet 1% of your net worth on a trip in Vegas? Maybe! 

Let's say you are planning to retire next year and lose 1% of your life savings.  Will this mean not retiring? Hopefully not. If you are that close to the edge you probably need to keep working anyway. If you gamble 1% and win 10x you just added 10% to your net worth and can consider retiring a few months sooner!

Someone about to retire is cautious because they have the least time to recover from mistakes.   If wagering 1% is ok at that stage it's probably a good strategy for younger people too.  Does this mean a 20 year old should bet 2%, 10%, 50%? Maybe. Part of this experience is to learn good habits, even if a larger bets make sense at that stage it takes a more complex strategy.  

My case study
I initially decided it would be more exciting to have a big win even if it meant more losses along the way. This meant going to the extreme of a single number! Inside bets have a larger edge for the house but I was balancing fun and going for a larger payoff if it happened. This means in a typical set of 37 spins there should be one success for a 35:1 payoff. It could happen on the first spin, the 18th, the 37th, or not at all (the odds it doesn't happen at all is (1-1/36)^37 = 35%). Roughly 2/3 of the time I'd win $3500, less whatever I'd lost up to that point (which could be as much as $3500 if it was the 37th spin).

According to the rule of surviving enough losses to give the strategy a chance means being able to lose 37 times in a row for $3700. 

It took a few months to get comfortable with loosing almost $4000 in an hour. My method was to think of the times I had lost money investing and speculating. I was only doing this one weekend and not as a way of life. The goal was to get comfortable taking large gambles with almost even odds. This is to practice courage with stakes high enough to matter but not so high as to be ruined. 

A friend recommended going in the morning to avoid crowds. This is also better for me because I tend to be optimistic in the morning. By evening I'm tired and more pessimistic. A strategy that requires loosing several $100s in row needs optimism! We went to the Bellagio high stakes room first and the dealer gave me chips for cash. The first challenge was picking a single number. My original plan was to pick one someone else had picked for mutual excitement. But the high stakes room was empty that morning. 

Most roulette wheels have a tote board showing the last two dozen numbers or so. Magical thinkers may choose numbers not seen recently as "due".  Scientific thinkers might look at numbers seen more often as a "mechanical bias".  I expect these tables to be well calibrated and truly random, but being more scientific went with the number that had come up the most recently, 17. 

I bet on 17 and lost four $25 chips.  Then lost two more spins.  A lovely woman brought me a drink and I tipped $2.  Then I lost another $100.  
I knew going for a single number from the 37 meant possibly sitting for over an hour steadily losing without a single win. But the reality was a little boring and depressing.  
After two more losses I noticed $600 was gone in about 6 minutes. How many other things could I have spent that on to have more fun instead?
I bet again and 17 came up.  17!
Wow my number hit! Only the seventh spin! This improbable result was close to the best case scenario! I was prepared to win on the first spin or walk away with nothing after 37.  

I thanked the dealer, tipped him a $25 chip, and left with my friend per the strategy. My new pile of chips was worth $3500!  Less the $600 lost means I made $2900 in 8 minutes. I took my chips to the cashier window for dollars.

On to the Wynn casino to see how it compares.   

After a short ride we were in the Wynn. A world of luxuries with every detail considered including the smell.  While low-end casinos might smell of decades of stale cigarettes, spilled drinks, and sadness the Wynn was the opposite. There was not exactly a smell, more like air cleaner than the cleanest forest hill. We found the high stakes roulette table and sat down to try again.

Just as the Belagio the high stakes room was empty this morning. The tally board showed 5 was the most common number recently. I was bored with the one number strategy and decided to place four chips around the 5 instead.  

To meet the $100 minimum per spin meant putting $25 on each corner.  The payoff for a corner is 8:1 each, or 32:1 if 5 came up.  On the one hand this is less than the 35:1  from placing the whole $100 on the single number. However it makes winning more likely per spin! Looking at the table you can see if all the corners for 5 were selected than a 6 would pay 8:1 twice (16:1) and so would three other numbers.  A 1, 3, 7, or 9 would each pay 8:1. Given the original idea was to make 10x this is not bad.  It's more fun as well because none of the 37 possibilities result in winning $200, $400, or $800.   

After playing about ten minutes, I lost $200 on the first two spins, won $400 on a side number, lost another $200, then made $200 on a corner, lost another $100, then made another $200 on a corner. At the time it was hard to tell if I was ahead or behind with more loosing spins than winning. 

Then I noticed a different section of the table I had never seen before. The dealer explained it was a racetrack and I could bet $25 on a number, then $25 on each of the two numbers to the left and right of it(a neighbors bet). This track matched the wheel so whenever the ball almost lands on your number you still win from having bet on its neighbors. The catch is now the minimum is $125 per spin instead of $100. The upside is five ways to win of 37 (about one spin in seven). When any of those numbers hit then the $100 on the other four are lost and the winner gets 35:1.  However now the winner is only $25 for a net 31:1 payout. The house edge for the neighbors bet is the same as other strategies.   

I played the 5 and its neighbors for about five minutes, losing $125 three times in a row, then 5 hit! The neighbors were still lost for $100 but I made 35x on the $25 (875 - 100 = 775) to net $400. Not nearly as impressive as the big win at Belagio, but more fun along the way with more winning spins until a big win. I tipped the dealer $25 and cashed out my chips to enjoy rest of the day. 

I was definitely in a good mood and felt like a winner. I tipped more and spent money on things I might not otherwise.   Had I lost my original $3700 I'd be telling a sad tale.  

One thing to consider ​is taxes. Apparently the tax rate is 25% for gambling. In my case the winnings were small enough the Casino skipped paperwork, the 300x rule makes Roulette and all table games very unlikely they ever worry about it. You can be certain I will carefully account for every $1 and report it. For one thing I'm publishing this detailed article! More importantly as a rule I pay all the taxes required. Most of us are paying a tremendous amount anyway, why risk extra headaches to sneak a little here and there? I sleep well knowing they might owe me if audited!

The final tally was $5075 won and $1475 lost for $3600 in 22 minutes! I have never made money that fast. Considering I came prepared to lose $3700 this isn't impressive. This is a key take away from this article. Any situation where you feel good about netting $3600 with $3700 at stake is a hint your money could be put to better use somewhere else. The generic math here was a house edge of a few percentage. Compare this to a US treasury bond paying 2% when inflation is 2%. Expectancy of breaking even is better than taking time and effort with an expectancy of losing.  

Another lesson is that I could have quit after the first Casio for $3500 on the $3700 at risk. The second casino mostly traded back and forth for a small victory. The first case had the most variation with many losses likely but a big win if it hit. By making more, smaller, bets per spin the odds of a win were improved, but the size of wins shrunk. 

A final lesson is to bet the right amount when you do bet. The one 0 table is only in the high stakes room. The main room has two 0 tables, and the lowest bets can be found at the three zeros table. The house edge is smallest for the highest cost per spin, but the payouts are larger to match the risk. This is a fast and easy way to practice sizing bets.  Sizing bets is a core skill for speculating, investing and allocating assets.  Too small is a waste of time and missing making the most of being right.  Too large risks losing too much too fast, making it harder to recover from mistakes and bad luck.

As a lucky winner I need to pay my taxes, enjoy some of it, and donate some. I also feel like sharing with the people that were there on the trip. As a rule I'd like to donate 20%. That would be about $500 (rounding). Taxes are $900 which leaves around $2000. Perhaps spend $1500 on myself as a reward for taking some risk and sticking with my strategy to leave ahead. That leaves an extra $500 to spend on friends and family this holiday!

Further Reading
Speculation vs Gambling
https://www.amazon.com/Future-Philanthropist-Guide-Profiting-Bitcoin-ebook/dp/B07YL622JR
https://www.investopedia.com/ask/answers/042715/what-difference-between-speculation-and-gambling.asp
​http://www.finsmes.com/2019/04/what-is-the-difference-between-gambling-and-speculation.html

Casino odds
https://www.thebalanceeveryday.com/get-an-edge-at-the-casino-by-knowing-which-games-have-the-best-odds-4582276
https://www.gambling.com/us/online-casinos/strategy/10-casino-games-with-the-lowest-house-edge-1550900
https://en.wikipedia.org/wiki/Roulette
https://wizardofodds.com/games/roulette/side-bets/neighborhoods/
​http://grochowski.casinocitytimes.com/article/roulettes-worst-bet-59214
​
Las Vegas Casinos
https://www.onlineunitedstatescasinos.com/las-vegas/games/roulette/single-zero/​
https://www.roulettehero.com/las-vegas-roulette.php

Strategies
https://jennifershahade.com/poker/
https://www.roulettephysics.com/roulette-strategy/
https://casino.guru/roulette-scam-strategies

Taxes
https://www.kiplinger.com/slideshow/taxes/T056-S001-tax-tips-for-gambling-income-and-losses/index.html
https://www.efile.com/taxable-gambling-winnings-income-taxes/

Addiction
https://www.scientificamerican.com/article/how-the-brain-gets-addicted-to-gambling/
https://casino.guru/how-to-gamble-safely#tip-8
https://www.theatlantic.com/magazine/archive/2016/12/losing-it-all/505814/
https://www.helpguide.org/articles/addictions/gambling-addiction-and-problem-gambling.htm

DISCLAIMERS
​The author is neither a lawyer nor an accountant, and any legal, financial, or business related advice is based on the author's opinions and experience, and does not guarantee accuracy or results. In no event shall the author be liable for any damages arising out of the use or inability to use the materials contained in this article. You should always seek the advice of a professional before making any legal, business, or financial decision.

The author does not assume any responsibility or liability due to any referenced materials, opinions, or links included in this. The use of any link or recommended material does not guarantee any success related to you or your business and does not imply the endorsement of its products or services. Use of any such referenced material or site is at the user's own risk.

The author makes no guarantees as to the accuracy, thoroughness or quality of the information in this article. 

We make no guarantees as to the accuracy, thoroughness or quality of the information in this article, which is provided only on an “AS-IS” and “AS AVAILABLE” basis at readers sole risk. Some of the information in this guide is relevant only in the United States and may not be accurate or compliant with the laws, regulations, or legal requirements of other countries. It is your responsibility to determine the relevant laws where you reside or do business. You are advised to verify any information before using it for any personal, financial, accounting, legal, or business purpose. The content may be modified in future editions with no obligation to notify you of any corrections or changes to any content.

When people think about retirement the question is usually when?  The default model is to work until your skills are obsolete and your energy levels are low.  Then start collecting social security, medicare, and start spending down your investments.  When the stock market drops that day may seem to have jumped years later.  When your portfolio is growing quickly that day may be sooner.

But do we need to work 100% for decades, then 0% for decades?  What if we worked 100%, then 50%?  

There are several benefits to this strategy.
1. You can drop to 50% years sooner because you will still have income, which lowers how much you need from investments. 
2.  You can keep your identity. When people you meet ask what you do, you can keep saying whatever you say now.
3.  By having 50% more free time you can pursue travel, hobbies, interesting side businesses, or whatever you want.  This is while you still have more energy.
4.  You have a better chance of enjoying your investments.  About 20% of people die between 25 and 65.  For those people (possibly me or you) there is a chance all that money invested will never pay off.
5.  If you miscalculated, or the markets do far worse than expected, you can go back to full time work.  Since you never completely left your skills and contacts are still current.
6.  Once you are open to thinking outside of 100% or 0%, black or white work, you are not limited to 50%.  Perhaps 1 hour a day every day is optimal for you(7/40 = 18%), or you may love your main job but like every weekend be 3 days with a 32/40 (80%) schedule.  Perhaps go from 80% and work your way to less and less over several years until you find a sweet spot.  

Speculations have a similar tendency for all or nothing, black or white, thinking.

For example lets say your friend knows of an empty commercial lot adjacent to a new freeway planned.  Within a few years this is projected to be very desirable for big retailers like Walmart or Home Depot.  This deal needs 20% down and a loan with payments every month, and property taxes, and modest insurance.  The bank requires you to personally guarantee the loan.  As presented this is a black or white decision.  If it pays off as hoped you may make a huge amount and have a significant improvement in your net worth.  If the road is redirected, or the entire real estate market drops, you may be stuck making payments far longer than expected at best, and possibly will owe the bank more than the down payment and have a major setback in net worth.  If you are prudent you will wisely say no to this for the risk of ruin being too  great.  
However that is the black and white default mindset of all in or no deal.  Perhaps you and your friend could start an LLC that buys the property and does not require you to personally guarantee the loan?  Perhaps you could get more people involved for smaller stakes each so no one person is wiped out if it goes poorly.  Perhaps there are other, smaller properties in the area that might do as well with less commitment.  

Can you think of other examples where thinking in shades of grey may offer better options than an extreme all or nothing?

While reading blogs, articles and books written by people that have retired early I noticed philanthropy is a common theme.  Most of us need to be useful, and in the case of those that have become fantastically wealthy such as Bill Gates, it's nearly physically impossible to spend money as fast as they make it.  In general they do not have a specific suggestion about how much to give, and leave it up to the reader to work out once retired.  Which makes sense, there will be more free time to reflect every week!

The Investment books (bitcoin, real estate, and whatever) tend to be laser focused on that one asset. Which makes sense, you want to learn more about that one topic.  What might be different about bitcoin is the simplicity from an investors point of view.  Either it will continue to make people millionaires and billionaires, or not.  If not, there isn't much to say.  If it does, then what?

The average person in the developed world has a better life than most people in history, or even most people living today around the globe.  There is a good moral case that those lucky to be born in North America or Europe should do all they can to help those on less fortunate continents, and even those less fortunate within our cities and towns.  With better access to information and models we can not only give much more, we can give much more effectively.  

My success as an engineer has been to take the best theory and data available at a given moment, and apply it to real world problems in a pragmatic way.  A common saying is that "The perfect is the enemy of the good".  It might take centuries to get something to 99.9999% purity, why not get it to 99% today, make some profit and when the benefits of 99.9% are on the horizon work on that then.

This book takes a pragmatic best from these three.  

The financial independence/ retire early (FIRE) movement advocates spending much less and investing much more to minimize the years you work.  A more pragmatic approach is to invest 20%, live within your means, and retire earlier than most.  

The Effective Altruists might prefer for you to do important work and give away as much as you can, perhaps and until you die or need charity yourself.  A more pragmatic approach is to set a larger than average philanthropic goal for retirement.  If you are already investing 20% of your income and living within your means, then when you no longer need to work you can give this much away instead of investing it.  Many philanthropic millionaires give less than 2%.  20% is relatively far more generous, even if it is far less than the most generous people give.  

The most popular, and the majority, of bitcoin books are written for finance or technology people that want a deep dive on this historic new kind of asset. All of that is well and good for them, but the majority of people only need to know a few key fundamentals.  Just as most people that have bought a stock are aware they this is a share of a company and can enter the symbol and click buy with their brokers website.  We do not need a degree in finance to understand every word in every annual report, nor do we need to understand the layers of market makers and exchanges that convert the "buy" mouse click into a new holding in our portfolio.  The bulk of my book is dedicated to the steps in deciding how large a "bet" to place on bitcoin consider the risk and opportunity, and your situation.  Then some pragmatic steps to make a purchase, manage the holding, and sell to lock in profits.

My hope is that setting achievable goals using straightforward steps will encourage many more people to go for it and succeed!  

What do you think?
​Please leave a comment or email [email protected]

Why do many of us work hard for decades so we can suddenly stop when we are are frail?  Does a lack of effort, purpose and mental challenge increase frailty?

The Financial Independence / Retire Early (FIRE) movement has a similar goal and solves part of the problem.  If you can minimize your spending to invest more, you can reach the retirement goal much younger.  Does this lead to increased frailty, anecdotally I think it does to some degree.  

An alternative option would be to plan to continue working some amount forever.  Perhaps longer vacations and fewer hours per week.  Perhaps as your own boss with flexible hours.  

Lowering expenses would still be important, after all, even someone making a million a year can find a lifestyle of luxury that makes this a necessity.  

If your retirement funds can meet your basic expenses, then income from work can go towards luxuries and philanthropy.