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Save like a pessimist, invest like an optimist

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Re: Save like a pessimist, invest like an optimist

#161

Post by smabie »

ptsneves wrote: post #84
smabie wrote: post #54

Earlier quoted context omitted.

I have a blog post I wrote awhile ago that might be of interest: Diversification, Risk and Leverage https://cryptm.org/posts/2019/11/28/div.html If I was rewriting the post today, I would make some changes, but by and large, I stand by the post.

@smabie: Thanks a lot for the post. I am for the first time understanding concepts that in words were very hard to process. The math connection you make really helps, as basic calculus as statistics are part of an engineering background.

I really appreciate it! Finance can be a really opaque topic and there's a lack of rigorous yet straightforward material about the subject.

Most information about trading either falls into the total bullshit camp designed for idiot retail investors, or complex papers/books designed for academics or professionals.

My blog tries to straddle the two: providing rigorous material but geared to those without a background in finance.

Re: Save like a pessimist, invest like an optimist

#162

Post by icedchai »

yeetman21 wrote: post #112
darkerside wrote: post #109

Earlier quoted context omitted.

> The owner of a business with 200k in revenue is higher status than a McKinsey employee with a 500k salary. What makes you say that?

He can sell the business or still run it in retirement, McKinsey employee works 25 hours a day and is a slave to his boss

A small business like that is likely very, very dependent on its owner. The owner may be a slave to his customers. The employee can just walk away.

Re: Save like a pessimist, invest like an optimist

#163

Post by ivalm »

xchaotic wrote: post #110
ivalm wrote: post #71

Earlier quoted context omitted.

But humans also don’t have infinite demand on production. If we have a sufficiently high amount of production per capita (ie we are post-scarcity) then growth becomes irrelevant (especially if overall population isn’t growing, which with current trends seems reasonable). At that point the only thing is to ensure that output distribution is sufficiently equitable. We can then have millions of years of stable happy hum…

The rich will not give away their stuff. You’d probably have to give away 90% of your wealth to be level with the rest of the world. Also it is communism and it doesn’t work in practice.

Current world is not post-scarcity. However, there is a point where marginal value of “extra” stuff is essentially zero. When everyone can be at that level is what I mean by post-scarcity.

Re: Save like a pessimist, invest like an optimist

#164

Post by crisdux »

lern_too_spel wrote: post #159
shoo wrote: post #97

Earlier quoted context omitted.

> I claim that economic growth cannot continue indefinitely. [...] the Earth has only one mechanism for releasing heat to space, and that’s via (infrared) radiation. We understand the phenomenon perfectly well, and can predict the surface temperature of the planet as a function of how much energy the human race produces. The upshot is that at a 2.3% growth rate (conveniently chosen to represent a 10× increase every c…

The physicist says that per capita energy use has surged, but that is only true in the developing world. California's per capita consumption of electrical energy has not changed since 1975. https://www.google.com/url?q=https://www.nrdc.org/sites/defa...

Consider that are dealing with a bias metric. California's weather makes it the least energy intensive state. In 1975 about 50% of the homes in my state had air-conditioning. Now its about 95%. Similar story with heating modern systems. Even in the 70s, older generations dealt with a much colder home in the winter than most people would normally allow today. The days that require climate control in my state are something like 2-3x the average number of days in California and at a much higher intensity.

Additionally, California has exported much of it's energy use to other states and countries.

Re: Save like a pessimist, invest like an optimist

#165

Post by darkerside »

icedchai wrote: post #162
yeetman21 wrote: post #112

Earlier quoted context omitted.

He can sell the business or still run it in retirement, McKinsey employee works 25 hours a day and is a slave to his boss

A small business like that is likely very, very dependent on its owner. The owner may be a slave to his customers. The employee can just walk away.

Exactly. You don't make money without having a boss (or many bosses).

Re: Save like a pessimist, invest like an optimist

#166

Post by est31 »

zamfi wrote: post #108
dstick wrote: post #107

Earlier quoted context omitted.

While I agree with your sentiment, how has this worked in the past? Did things reset to 0 during WW1 and 2?

In much of Europe and east Asia, yes! Germany and Japan in particular were bombed basically to 0...

Those two nations still had the right culture and social structure to build blooming new societies. In this context, with "culture" I don't mean political views or such, but work ethic, and things like literacy, education, etc.

The German car industry wouldn't have been thinkable hadn't the Germans invested a lot of research into building machines in a mass produced way, motor research, etc. Sure, the factories themselves were destroyed, but the engineers together with their knowledge remained.

In fact, there are theories that disruptive events are even helpful for economic progress in the long run because they filter out the lazy elite of rich people while giving opportunities for new ideas to be tried out, and hard working people to rise to wealth and influence.

Re: Save like a pessimist, invest like an optimist

#167

Post by onion2k »

fennecfoxen wrote: post #100
yojo wrote: post #39

I’m skeptical of the closing claim that exponential growth keeps happening forever. Yes, you can grow GDP 2% for 200 years, that results in an economy 50x the start size. Expand it to 1000 years and you’re talking about an economy 400 million times as large. After 2100 years you’re up to an economy a QUINTILLION times as large. At some point the exponential curve has to go S-shaped. Maybe we’re still in the happy exp…

> At some point the exponential curve has to go S-shaped. In principle yes, of course. In practice, you are imagining a world in which we never expand our civilization into space and across the galaxy, because otherwise you would be looking at the S curve and thinking "wow, this thing has only just gotten started" and marveling at what lies ahead.

If I had to bet on which happens first out of the end of growth-driven capitalism or humans leaving the solar system I wouldn't be putting my money on spaceships.

Re: Save like a pessimist, invest like an optimist

#168

Post by ipython »

BobbyJo wrote: post #142
paulryanrogers wrote: post #131

Earlier quoted context omitted.

Imagination is unlimited. I don't mean to harsh anyone's dreams. But technological development isn't a predictable march forward. There is less low hanging fruit as things progress. I'd guess we're very close to the peak of attainable technology. Once sustainability comes into the picture then, IMO, we're beyond the limit.

>I'd guess we're very close to the peak of attainable technology. Not many people, and pretty much no research scientist, would agree with that statement. I can personally think of several technologies I'm 100% certain will exist in < 40 years that will drastically alter everything about day to day life.

I’m very curious what are the technologies you’re tracking?

Re: Save like a pessimist, invest like an optimist

#169

Post by onion2k »

spullara wrote: post #152
yojo wrote: post #39

I’m skeptical of the closing claim that exponential growth keeps happening forever. Yes, you can grow GDP 2% for 200 years, that results in an economy 50x the start size. Expand it to 1000 years and you’re talking about an economy 400 million times as large. After 2100 years you’re up to an economy a QUINTILLION times as large. At some point the exponential curve has to go S-shaped. Maybe we’re still in the happy exp…

Over that time, you could populate a good portion of nearby systems. It would only take 1m years for humans to populate every possible planet in the galaxy: https://www.learnastronomyhq.com/articles/how-long-would-it-... Plenty of room for a very large economy. The next galaxy would take some doing though since it is 2.5 million ly away.

"only a million years" seems like a slightly flippant statement in light of the fact humans have only had about 5000 years of civilisation so far.

Re: Save like a pessimist, invest like an optimist

#170

Post by an_opabinia »

shoo wrote: post #97
yojo wrote: post #39

I’m skeptical of the closing claim that exponential growth keeps happening forever. Yes, you can grow GDP 2% for 200 years, that results in an economy 50x the start size. Expand it to 1000 years and you’re talking about an economy 400 million times as large. After 2100 years you’re up to an economy a QUINTILLION times as large. At some point the exponential curve has to go S-shaped. Maybe we’re still in the happy exp…

> I claim that economic growth cannot continue indefinitely. [...] the Earth has only one mechanism for releasing heat to space, and that’s via (infrared) radiation. We understand the phenomenon perfectly well, and can predict the surface temperature of the planet as a function of how much energy the human race produces. The upshot is that at a 2.3% growth rate (conveniently chosen to represent a 10× increase every c…

The stock market has grown significantly while demand for energy has widely declined in the last five months. Every energy long bet has been a disaster.

Economic growth may not be able to continue indefinitely, it’s inconclusive, your computers can create more economic value with declining watts even if you can’t. However accounting value, which is what a stock market is, can definitely grow indefinitely.

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