Show HN: Inflation-adjusted stock charts – Total Real Returns

You do mean that, but it doesn't have a lot of bearing on the correctness of your argument. I suspect you've assumed that wealth is neither created or destroyed somewhere in your logic, because what you are saying would make sense if that was an assumption. But that would be a poor assumption if you've made it.

CPI is a tool for adjusting the value of a dollar, but it doesn't have any bearing on the value of the total economy vs the value of all the dollars in existence. All the dollars in existence might buy the entire economy many times over or they might buy a tiny fraction of it. And that ratio changes continuously (both from money creation and economic activity). There is no inverse relationship mediated by the CPI.

I wish the display of "Trendline' and "worst Drawdown" at the top would be calculated based on the selected time interval at the bottom.

For index that have existed for a long time it make comparing with other index hard if we always include the full history.

> This doesn’t mean anything to me. Can you elaborate?

Taleb elaborates better in his very accessible book(s). The basic idea is to invest/use most of your net worth in “safe” investments, those primarily keeping up with inflation or just barely beating it. If shit hits the fan, you have a cushion to fall back on.

Anything beyond keeping you safe and comfortable enough should go chasing the highest returns possible. So you can partake in as much upside as possible.

Startup comp follows this logic. Enough salary to fund your life and basic savings, equity to chase high upside.

Revenue generating assets are nice because you don’t just need to sell for a higher price to make a return. They have intrinsic value. For example owning a profitable business or a rental property.

This period has been very special because of the 401k, which is itself part of the growth story of the corporate legal structure. I think this is coming to an end. Corporate boards and officers no longer represent the best long-term interests of the companies and shareholders they represent. It’s also a very precarious legal status as an arbitrary judicial ruling can make or break a company. Finally, and perhaps most importantly, the corporate bubble is based on arbitrary tax codes that both advantage corporations and push worker savings into the stock market.

Even if these conditions continue unabated, the cash flows from working class into the stock market will eventually hit equilibrium with capital extraction from the owner class. If the extractions return to the same markets, then things stay in equilibrium. They won’t, however, because the tax advantaged assets are different for them. They may seek hyper-volatility, or government bond shelters, but will generally avoid the assets on the working class tax treadmill.

There are fundamentals to financial assets that have nothing to do with “number go up”, and these will ultimately dictate reality, with the caveat that “the markets will remain irrational longer than you will remain solvent”. Rationals get wrecked too, except every once in a while when one gets lucky on their timing and makes so much money that they become a hero and we make movies about them. We cheer because it gives us hope that our intuition will serve us too. Unlikely.

This is all to say that such charts are using an inductive hypothesis to predict an inherently anti-inductive phenomenon. People tithe and sacrifice to their church for a promise of rewards in the afterlife. The stonk religion is the same; well worth the price for your peace of mind. True or not, you’d be a mess without it.

Thanks for the explanation. That was very concise and accessible!