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Golden Rules for Making Money (1880)

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Re: Golden Rules for Making Money (1880)

#131

Post by rorykoehler »

kamaal wrote: post #85
lr4444lr wrote: post #8

I love this part: The poor spendthrift vagabond says to a rich man: "I have discovered there is enough money in the world for all of us, if it was equally divided; this must be done, and we shall all be happy together." "But," was the response, "if everybody was like you, it would be spent in two months, and what would you do then?" "Oh! divide again; keep dividing, of course!"

The fact that socialists feel entitled to free cash is hardly a surprise. In India which went though decades of socialist rule, its quite common among people to expect others to provide for them all their life. I know a lot of people from my circles, especially older people in the late 50's and 60's who have spent their lives in the socialist era endlessly expect elder brothers/relatives to provide for them. Any refu…

From where I am standing it seems capitalists feel entitled to free cash. They take their capital, dump it in the stock market and hey presto free cash! This free cash mostly arises due to some accounting trick and is not productivity backed at all.

Re: Golden Rules for Making Money (1880)

#133

Post by [deleted] »

kamaal wrote: post #85
lr4444lr wrote: post #8

I love this part: The poor spendthrift vagabond says to a rich man: "I have discovered there is enough money in the world for all of us, if it was equally divided; this must be done, and we shall all be happy together." "But," was the response, "if everybody was like you, it would be spent in two months, and what would you do then?" "Oh! divide again; keep dividing, of course!"

The fact that socialists feel entitled to free cash is hardly a surprise. In India which went though decades of socialist rule, its quite common among people to expect others to provide for them all their life. I know a lot of people from my circles, especially older people in the late 50's and 60's who have spent their lives in the socialist era endlessly expect elder brothers/relatives to provide for them. Any refu…

[deleted]

Re: Golden Rules for Making Money (1880)

#134

Post by dalke »

madaxe_again wrote: post #127
tuttifrutti wrote: post #120

Earlier quoted context omitted.

I was always puzzled how people in the US are quick to spend on credit, and not worry too much...

They are acclimatised to debt - most westerners can't imagine not having a credit card - when I tell folks I cut up my first and last card at 17 they assume I'm a delinquent, broke, punishing myself - for in this society we have managed to redefine debt as wealth .

Here in Sweden, people have a debit card or use a debit app. Most people here easily get through life without a credit card.

While I don't think it's true that "most westerners can't imagine not having a credit card", I don't have a sense of how much other Western countries use credit cards as compared to debit-based systems. http://news.bbc.co.uk/2/hi/business/5380718.stm from 2006 says that UK has the most credit card debt of any European country. "The average British resident owes £3,175") while "The average European owed just £1,558 in unsecured debt."

The more recent http://www.thepennyhoarder.com/how-does-our-credit-card-debt... from 2012 says:

> Most other countries tend to be more cautious with their credit, opting instead to use debit cards (like in the UK and France) or online bank transfers (like in Germany) rather than to charge up a card. And when it comes to charges calculated per year, Europe makes us look like we spend with abandon; French people charge less than $300 each on their credit cards each year, on average. And Germans seem to eschew the “buy now, pay later” mentality as well, only charging an average of $158 per person per year to their credit cards.

That makes it seem like credit card use and debt more a US issue than a more generally Western issue.

Re: Golden Rules for Making Money (1880)

#135

Post by tomp »

rorykoehler wrote: post #131
kamaal wrote: post #85

Earlier quoted context omitted.

The fact that socialists feel entitled to free cash is hardly a surprise. In India which went though decades of socialist rule, its quite common among people to expect others to provide for them all their life. I know a lot of people from my circles, especially older people in the late 50's and 60's who have spent their lives in the socialist era endlessly expect elder brothers/relatives to provide for them. Any refu…

From where I am standing it seems capitalists feel entitled to free cash. They take their capital, dump it in the stock market and hey presto free cash! This free cash mostly arises due to some accounting trick and is not productivity backed at all.

Which accounting trick?

Re: Golden Rules for Making Money (1880)

#136

Post by tomohawk »

iagooar wrote: post #14
vlunkr wrote: post #9

Our credit card driven culture could certainly use his advice on avoiding debt.

I took a credit once, for buying a car, and will never do it again. Although I never had problems with paying the money back, I was paying a lot more money back to the bank, so when I finished paying the credit off, the car was worth half of the price I bought it, almost having paid double the price because of the credit interests. But the worst part was that it didn't feel right. So now my policy is to never buy any…

Borrowing money for a depreciating asset doesn't make much sense in any case. It's not just the extra cost, but additional exposure to risk. Life sometimes throws curve balls, and being leveraged can make the consequences much steeper.

Re: Golden Rules for Making Money (1880)

#137

Post by meric »

arethuza wrote: post #122
77pt77 wrote: post #114

Earlier quoted context omitted.

> 5. Never put "Standard Oil" trades in writing This is good advice?

If you are Standard Oil and are vastly larger than whoever it you are trading with, have a huge legal team and no doubt some friendly judges handy. Mind you - I have worked with very senior people who would avoid putting things in writing and then a few months later always have a notably different account of conversations than I did. At first I thought I was actually forgetting things until I realised it's a trick us…

The one time I forgot to tell my boss to put that bonus he said he will offer me, in writing, I never got it. Ugh.

Re: Golden Rules for Making Money (1880)

#138

Post by meric »

rorykoehler wrote: post #131
kamaal wrote: post #85

Earlier quoted context omitted.

The fact that socialists feel entitled to free cash is hardly a surprise. In India which went though decades of socialist rule, its quite common among people to expect others to provide for them all their life. I know a lot of people from my circles, especially older people in the late 50's and 60's who have spent their lives in the socialist era endlessly expect elder brothers/relatives to provide for them. Any refu…

From where I am standing it seems capitalists feel entitled to free cash. They take their capital, dump it in the stock market and hey presto free cash! This free cash mostly arises due to some accounting trick and is not productivity backed at all.

People who see the stock market that way are merely gamblers and will have their chips taken away in the next financial crisis.

During 2014-2015 I've participated in a lot of share issues to provide cash for gold mining companies requiring capital to move into or expand production.

These are companies with a few hundred shareholders or so.

The profits I've made in the past few months from gold mining companies, I think is perfectly justified. I've done my research and invested in these companies when everyone else has shunned gold and gold related investments. These were companies whose market capitalisation were less than their projected cash flows for the next year. I've invested in these companies when few other people would.

These gains I've made, are completely backed by productivity. Without these latest round of share issues, many of the companies would have gone under, and there would be no gold coming out of the ground.

(You could argue gold has no value beyond being a good material and I'd respond, neither do paint or flowers. With gold, people can use it as an asset without counter party, and provides zero interest, guaranteeing capital during times of negative interest.)

Re: Golden Rules for Making Money (1880)

#139

Post by cJ0th »

edanm wrote: post #103
Mahn wrote: post #67

It's interesting how flat human nature stays over time, how advice given 136 years ago is still perfectly applicable today. Over the course of centuries life has changed dramatically, but we still think, worry, feel and act like our ancestors did from a millennium ago. I'd bet you could easily find advice given in the roman empire times that would still be relevant today.

There are things from 1000's of years ago that are still relevant. But I think it's mostly survivorship bias. The very few things from long ago that we still read, are still relevant today. That's why we know about them! Take a random book from from most periods of history, and it will be uninteresting, if not outright unintelligible, to a modern audience.

> But I think it's mostly survivorship bias

I don't think so. Have you seen who wrote this piece? I'd say it is a classic case of the Barnum effect.

https://en.wikipedia.org/wiki/Barnum_effect

Re: Golden Rules for Making Money (1880)

#140

Post by IkmoIkmo »

ezequiel-garzon wrote: post #24

SNL made a wonderful infomercial in 2006 about point 3: avoid debt. Depending on your location you should be able to watch it in [1] or [2]. During my years in the US it always puzzled me that, upon reaching my credit limit, it would not just increase without any interaction, but sometimes double! American "plastic", as hailed in "The Graduate", was a significant lesson for me. [1] http://www.nbc.com/saturday-night-l…

'avoid debt' is too simplistic. Debt is simply an opportunity increasing instrument. You have no money to make certain investments that create a net benefit, debt gives you access to that opportunity, and it comes at a cost. If that opportunity is worth the cost, debt is great. Of course it makes sense to say 'avoid needless debt', or 'be careful taking on debt', but just to just say avoid debt is to also say avoid taking opportunities that you should be taking and throw out the baby with the bathwater. One could very well say 'avoid debt for needless consumer spending', buying a new TV with debt, usually at some ridiculous APR, just makes no sense.

For companies, debt is even more interesting, because in corporate finance you'll find that debt is subsidised through tax rates. It sounds a bit weird but it's true, and so there is an incentive to take on debt. In some countries due to the tax systems, this applies to individuals too, e.g. for mortgages, the cost of debt reduces effective income and thereby reduces tax liabilities further than if you saved up first and then bought the house without debt, such that in some countries people did not pay off their mortgages because deductible interest payments were attractive.

Debt sucks, I know, I hate the debt culture as much as anyone and as a European the American creditcard industry is something I pity, but the discussion on debt today is extremely one-sided.

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