121–130 of 286 posts
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Agree with you. To be sure government and our Corporate overlords have demurred responsibility and put retirement planning on the backs of us clueless workers. But every other proposal sounds worse or unworkable.
Name a non Northern-european country that does retirement better than US.
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This is 1000000% true. The entire system is completely broken. It is literally designed to make the markets keep going up, which as usual benefits the wealthy far more than the average person. And people who are even middle class barely really benefit from it. While the lower class and poor don't benefit at all. I choose not to participate in "investing" because it's not investing. It's literally gambling. You can't…
But how do you fund higher guaranteed social security? You need more money, which means either higher taxes or more people earning taxable money. The speed of population growth is declining, which is a big problem for the latter, and the former clearly has its limits. You're saying stocks are a Ponzi scheme, but as a solution you're proposing something that constantly needs more people paying in money or it will coll…
Did we forget we just changed the corporate tax rate from 35% to like 22%?
We stop taxing self employed people social security/medicare after about ~140k.. where many crazy rich people make WAY more than that, so they could continue to contribute a hell of a lot of income.
We have an insanity of tax loopholes.. including long-term capital gains which just incentivize the ponzi scheme further.
>You're saying stocks are a Ponzi scheme, but as a solution you're proposing something that constantly needs more people paying in money or it will collapse... sounds like a Ponzi scheme.
Do you consider current social security a ponzi scheme? All I'm talking is extending it.. tax people more, more money goes in, more money can go out.
I call the markets a ponzi scheme because it's literally fake valuation to a degree. I'm not saying fake as in fraudulent at all- don't get me wrong. But if the entire market valuation is let's say $1 trillion. If the S&P goes up 1% on the day, that entire valuation (and let's say the sum of peoples retirement, even though it's not nearly this simple) goes up $10 billion. Then the market drops 10% and all the sudden people lost $100 billion in retirement.
Money can literally disappear in that kind of system. That's why I call it a ponzi scheme. It only works if people keep making it go up.
Social security doesn't work like that.
There's something really insidious about tying 401ks and other retirement accounts to the stock market. People including myself end up with a large portion of our assets essentially gambled on the future success of US corporations. It gives some false legitimacy to this idea that our media is constantly pushing, that if the stock market is going well then regular Americans are doing well.
This is 1000000% true. The entire system is completely broken. It is literally designed to make the markets keep going up, which as usual benefits the wealthy far more than the average person. And people who are even middle class barely really benefit from it. While the lower class and poor don't benefit at all. I choose not to participate in "investing" because it's not investing. It's literally gambling. You can't…
If you have money, you need to allocate it in some way - how are you allocating yours in a way that isn't investing, isn't gambling and gives you control over the performance of your assets?
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History has no value in predicting future returns. You just randomly picked a period to make your point. Many such instances disprove it where the breakeven return is more on the magnitudes of decades. We're approaching a seismic shift in monetary policy, from expansion to compression in a high inflation world—something many investors haven't yet experienced.
>History has no value in predicting future returns. You just randomly picked a period to make your point. Many such instances disprove it where the breakeven return is more on the magnitudes of decades. The DJIA has posted real returns since its inception 100 years ago . I like those odds of it continuing to do so. Japan and the Great Depression are outliers. US equities tend to do better than foreign ones. Time sitt…
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Both adverse and averse are used to indicate opposition. Adverse, usually applied to things, often means "harmful" or "unfavorable" and is used in instances like "adverse effects from the medication." Averse usually applies to people and means "having a feeling of distaste or dislike." It is often used with to or from to describe someone having an aversion to something specific, such as "he is averse to taking risks"…
I appreciate that you're trying to be charitable to the author, but this sounds more like a retroactive justification than a new and valid usage. Yes, I know that plenty of our words today evolved out of mistakes, solecisms, misspellings, etc. But that doesn't mean we shouldn't at least try to be kind-of correct.
This is literally the worst misuse of the language.
(This is a joke about the way the word literally has evolved, badly)
The author uses Buffets essay to justify value investing over index funds, but Buffet is a strong proponent of index funds for non professional investors. Instead of stock picking, Buffett suggested investing in a low-cost index fund. “I recommend the S&P 500 index fund,” Buffett said, which holds 500 of the largest companies in the U.S., “and have for a long, long time to people.” He’s even putting 90% of his own es…
Interesting. Investing in Berkshire is like investing in a diversified index fund.
Also, because Berkshire is a conglomerate, businesses which generate large amounts of cash (e.g., insurance float, or businesses that would pay dividends if they were a stand-alone companies) can be used to fund capital-intensive businesses (railroads, energy companies, etc.) without paying taxes to move the money from business A to business B, because they're all owned by the same legal entity. Don't underestimate the power of this effect. It is not possible to achieve with an index fund.
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Why should that be how it works though? We should be taxing people more, and guaranteeing much higher social security so we don't have to gamble our savings in a giant ponzi scheme. It shouldn't be on the individual to be lucky that a massive recession doesn't hit when they want to retire.. or depend on the market making a few percent a year just to survive.
I agree, but you have to specify where you're going pull those taxes from. We need a "sustainable tax base".
How about taxing self employed people social security/medicare without a cap instead of stopping at ~140k?
How about massively increasing long-term capital gains, or even just getting rid of it. Income is income- tax it the same.
Even just increase the standard tax on people. If the average person paid 10% instead of 7.5% into SS/medicare but their SS doubled in the long run, are you really saying the average person would be against that?
There are a billion ways to do this. I am not an expert, but I'm not clueless either. Plenty of other countries tax more and provide guarantees to the people. This country wants to make it seem like everything is a "choice" but it's completely to benefit the rich. "Oh I get to choose my healthcare and how much risk I want to take that I have to pay this year, great!" "Oh I get to choose what investments to put my money into even though I have zero control over the actual outcome, great!"
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Does he have advice for what passive investors should do instead?
A common theme that keeps popping up in this thread. People pointing out that index funds have downsides, then going silent on what's better. Heck, up thread a ways someone even said they just don't invest. Wait, what? That's the better alternative?
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Why should that be how it works though? We should be taxing people more, and guaranteeing much higher social security so we don't have to gamble our savings in a giant ponzi scheme. It shouldn't be on the individual to be lucky that a massive recession doesn't hit when they want to retire.. or depend on the market making a few percent a year just to survive.
Because surely nothing could go wrong with depending on government for your financial security. The government doesn’t need more income. Have you seen how the federal government’s budget is allocated?
Yeah because surely nothing could go wrong with having all your money in a volatile market you have no control over..
The government already guarantees social security, what is your point? If you trust the financial markets over the guarantee of the U.S. Government then I can't convince you otherwise.
Buying value stocks may be better than buying an index, but identifying value stocks is hard and time consuming. Wouldn't the average investor be better off buying index funds, since the average investor does not have the time, inclination, or training to find value stocks?
Yes, agreed. This is comparing Apples and Oranges. Also, keep in mind: If you had invested all your money into a NASDAQ ETF at the peak of the Dotcom bubble 20 years ago, you would have earned about 300% in returns by now. I think it is easy to dismiss indices in a bear situation. When in doubt, zoom out and relax.