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How wealth dies

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Re: How wealth dies

#31

Post by apsurd »

preem_palver wrote: post #15
0xWTF wrote: post #2

Ok, this seems like a good post. At the end of the day, what do I, as a single investor, do? I'm 50 years old, 2 kids in college, I have a $300,000 mortgage on a house presently worth $1M. I have $300,000 cash and an open eTrade account. What do I do with the cash? A) keep it as cash B) Pay off the mortgage C) Buy some QQQ D) Buy some T-notes E) there is no E. I am a simple man. Let's start with a simple solution.

Keep 12 months living expenses in cash/t-bills. Depending on your age, increase to 24 mos if kids etc If cash remaining -> if mortgage rate >4% pay down mortgage (locking in 4%+ yield). If you want to average 50% towards mortgage 50% VOO (S&P Index fund) Deeper post -> https://monetarymusings.substack.com/p/how-to-not-blow-up-wh...

I enjoyed the linked post overall, but want to highlight one thing:

>The real insight: paying down your mortgage reduces your monthly burn, which reduces the chance you’ll need to sell stocks in a downturn. It’s not about math, it’s about resilience.

This seems more emotional than anything. The feeling of paying off a mortgage and being relieved of some monthly burden. But there will always be monthly burdens, that's life. Everyone needs monthly cashflow. So the insight of putting extra cashflow into a mortgage to offset the burden is just reversing the purpose of why you got the mortgage in the first place? What I mean is money has time value, a mortgage is paying for the time. So being in a hurry doesn't automatically insightfully make sense.

The post is all about resilience, I suppose my point is that there will always be a need for monthly costs, so trying to be free of the stress of a monthly cost -a time cost- is overly emotional in my view.

Re: How wealth dies

#32

Post by cyberax »

johnnyanmac wrote: post #16
cyberax wrote: post #8

> On this basis, global material prosperity has grown by 25% since 2004, which is nowhere near claimed “growth” of 96% in real GDP over that period. Moreover, the 25% rise in aggregate prosperity has been matched by the rise in population numbers over those twenty years. This assumes that the GDP growth and the material prosperity are in a simple linear relation. I don't think this makes sense. A small solar panel th…

It doesn't make sense. But that is exactly how policy makers justify how "the economy is doing good!" The GDP was never intended to be used as an indicator of national economic well being; only a simple statistic to measure how much money is exchanged between people. But it only takes a few examples counter to what a public service should do to show that GDP reliance creates anti-patterns. e.g. rising healthcare cost…

The GDP number is an example of "all models are wrong, some are useful". You'll inevitably oversimplify at least _something_ if you try to boil down the economy to a single number.

GDP is still useful. I don't think there are examples of countries that had drops in GDP without being in deep trouble. It exploits the fact that economies [almost] never change quickly, so when you're looking at just one country, the GDP is a reasonable indicator of the overall state.

Where the GDP sucks is when people try to compare the _rates_ of GDP growth between countries.

Re: How wealth dies

#33

Post by fragmede »

0xWTF wrote: post #2

Ok, this seems like a good post. At the end of the day, what do I, as a single investor, do? I'm 50 years old, 2 kids in college, I have a $300,000 mortgage on a house presently worth $1M. I have $300,000 cash and an open eTrade account. What do I do with the cash? A) keep it as cash B) Pay off the mortgage C) Buy some QQQ D) Buy some T-notes E) there is no E. I am a simple man. Let's start with a simple solution.

In your spreadsheet , you have to include what is expected appreciation on the house, what is the mortgage interest rate, how much longer you have on that mortgage, your personal opinion on how well QQQ is going to do, how much you’re gonna want cash - your emergency fund for a rainy day, should be some N months of living expenses. Mix that all up in the spreadsheet, and come up with whatever feels good to you. There is no right answer, and my time machine isn't any better than yours, or anyone else's.

Re: How wealth dies

#34

Post by avs733 »

mwkaufma wrote: post #27

>> Rather, what we need to do is to calibrate the physical economy such that we can benchmark the monetary against the material. This enables us to avoid the futility of measuring the monetary only against itself. Garden-variety Gold Standard quackery.

I kept having my bad vibes meter triggered by the italics so thanks for making the connection for me.

Re: How wealth dies

#36

Post by arresin »

hapless wrote: post #19

Tl;DR computer nerd reads marx, rejects marginal revolution, writes about classical economics in turgid prose Complete and utter horseshit

Glad I wasn’t alone. What absolutely terrible writing.

Re: How wealth dies

#37

Post by stoneman24 »

rout39574 wrote: post #12
mkoubaa wrote: post #3

Posts like this make me want to hurry up and buy a farm

Ahh, we can all buy the farm together. ;) I've been watching my investment accounts, particularly the TSLA fraction, and see-sawing between "This has got to collapse soon, I should..." and "You cannot time the market, idiot". I'm dissatisfied with the inaction, but I can't come up with a coherent theory about how I should act... Bleah.

Yep, I’m sitting on the same fence. We can all see the circular deals in the high tech sector which has been the recent engine of the stock market. It’s all uncertainty, everywhere you look.

Re: How wealth dies

#38

Post by ghostly_s »

measurablefunc wrote: post #20

This is a great article. It clearly explains what people like Nate Hagens have been saying for some time now. The real economy is about EROI & materials, money & financial activity can not change the amount of fossil fuels available for industrial processes regardless of any clever financial engineering.

Less an article than an op-ed.

Re: How wealth dies

#39

Post by fizx »

The goal of post-modern society is to create wealth without additional energy costs.

If I write software that schedules health care more efficiently, I've created value and therefore wealth. If I make a video game that's more fun than the previous generation of games, likewise.

Re: How wealth dies

#40

Post by the_real_cher »

0xWTF wrote: post #2

Ok, this seems like a good post. At the end of the day, what do I, as a single investor, do? I'm 50 years old, 2 kids in college, I have a $300,000 mortgage on a house presently worth $1M. I have $300,000 cash and an open eTrade account. What do I do with the cash? A) keep it as cash B) Pay off the mortgage C) Buy some QQQ D) Buy some T-notes E) there is no E. I am a simple man. Let's start with a simple solution.

You'll always have property taxes, maintenance, insurance etc even after your house is paid off.

So that 300,000 is the money you need to passively support your house after you've paid it off.

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