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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

#171

Post by lern_too_spel »

crisdux wrote: post #164
lern_too_spel wrote: post #159

Earlier quoted context omitted.

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 somet…

We're talking about the growth rate of energy usage. California's weather has not changed since 1975 in a way that would reduce per capita energy usage.

Re: Save like a pessimist, invest like an optimist

#172

Post by peterwoerner »

chii wrote: post #144
sokoloff wrote: post #38

Earlier quoted context omitted.

Unless you have more invested than you’ll plausibly need to withdraw, in which case your investment horizon can be longer than your lifetime. (My investing horizon is ideally more based on my future grandchildren’s lifespan than my own.)

If your investment horizon is longer then your life time, then it means it's dynastic wealth, and is passed to your children/kin.

You can also be thinking about trying to set your grandchildren up with a small inheritance (e.g. down payment on a moderate home). I wouldn't consider that dynastic wealth (they will still need to work) but it goes a long long way to making your grandchildren's life much, much easier.

Re: Save like a pessimist, invest like an optimist

#173

Post by grecy »

dstick wrote: post #107
ericmay wrote: post #42

Earlier quoted context omitted.

Well, eventually what will happen is countries will disappear, wars will destroy things, and other events will wipe out economies, savings, or entire companies. The growth model will probably always be exponential, but from time to time things will reset to 0.

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

The Roman Empire imploded and went back to 0.

As did all the others that can before the current one.

Re: Save like a pessimist, invest like an optimist

#174

Post by ajot »

idoh wrote: post #74
sanderjd wrote: post #62

I'm totally philosophically aligned with this article and enjoyed reading it, but I'm just interested to hear whether anyone else has this problem: More and more stuff I read seems to be name-droppy like this. For instance, I've been reading "The Psychology of Money" recently, and I'm enjoying it, but its style is a lot like this article; an endless series of anecdotes about famous and semi-famous people, with insigh…

It’s not a new trend, it is common in non fiction writing. Everything Malcolm Gladwell writes is in this style, and the same for many non fiction business / self help type books.

"There’s this writing style in popular non-fiction that I’ll call the ‘Malcolm Gladwell method of shoving-a-story-in-your-face’. It substitutes argumentation for storytelling and anecdote, and in so doing sidesteps the difficulty of making a case, since the reader is too distracted by narrative to comprehend the point the author is actually attempting to make.

Whenever this happens, I take care to pay special attention, because often the point is banal, or flawed, or too inconsequential to stand on its own. (I happen to know this because I’ve used this technique a few times on this very blog, and I know from reader feedback how effective it is)."

https://commoncog.com/blog/range-book-summary/

Re: Save like a pessimist, invest like an optimist

#175

Post by marketgod »

darkerside wrote: post #109
el_nahual wrote: post #87

I'm a foreigner that's lived in the US since college. Half of my friends and family are american and the rest foreign. There's a huge cultural difference between both sides' approach to wealth. My american f&f (outside of silicon valley) think of wealth in terms of "saving for retirement." 401ks, tax strategies, etfs, stocks etc. It's very passive, probably "correct", and very unambitious. The foreign side is totally…

> 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?

Because one is a slave and the other is a man/woman.

Re: Save like a pessimist, invest like an optimist

#176

Post by spullara »

onion2k wrote: post #169
spullara wrote: post #152

Earlier quoted context omitted.

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.

After it starts it would hard to stop because of the separation except by some other group of similar creatures.

Re: Save like a pessimist, invest like an optimist

#177

Post by roenxi »

an_opabinia wrote: post #170
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 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.

> 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.

The stock market isn't backward looking, or even short term future looking. Note that someone only watching the S&P 500 would know that the coronavirus broke out in early March but probably think the situation had been completely resolved by August. We can't be sure what the stock market thinks it is seeing (or if it is right for that matter).

And if energy bets didn't turn out well, notice that that correlates to the US losing its position as the world's largest economy. China invested a bunch in energy and now have a noticeably bigger economy [0].

> 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.

This growth isn't going to involve more people because they need food and isn't going to involve more stuff because that needs energy. It'll be a very abstract form of growth.

[0] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

Re: Save like a pessimist, invest like an optimist

#178

Post by chii »

Moodles wrote: post #153
sokoloff wrote: post #130

Earlier quoted context omitted.

I’m perhaps equally surprised that you’d consider anything an emergency that would covered by your ordinary salary within a month’s time. I mean, that’s just normal credit card use, right?

Maybe we’re talking cross purposes here because I generally save a large % of my paycheck. So if an emergency came up (and I was still employed) I would just save a smaller % of it. But regardless I’m just saying you can use a credit card to buy time interest-free before you pay off the emergency with your salary/stocks/whatever. It’s better than taking a margin loan, no?

> So if an emergency came up (and I was still employed) I would just save a smaller % of it.

i mean that's not really an emergency.

An emergency is one such that if you weren't prepared for it, you can't handle it. For example, losing one's job can be considered an emergency (a short one, if you're in high demand).

A medical emergency is a good example of an emergency - to which you prepare for by purchasing insurance.

So by saying that a person's portfolio would perform better by ditching the emergency fund is just the same as saying 'take on more risk and get more return'.

Re: Save like a pessimist, invest like an optimist

#179

Post by refurb »

gexla wrote: post #157
patjenk wrote: post #148

Earlier quoted context omitted.

Sorry to be dense, but where in the article does it claim that GDP will grow forever? An as an aside, GDP is only a proxy for how prolific an economy/country is. The country's output can continue to grow without generating more dollars.

Parking my comment here to be part of the dense club. Why would you even need forever growth? Is it good enough that old companies die and new companies replace the old? In that process, there's always growth to find and invest in?

In that scenario, the economy does become a zero-sum game, no? Your returns are just someone else's loses.

Re: Save like a pessimist, invest like an optimist

#180

Post by refurb »

el_nahual wrote: post #87

I'm a foreigner that's lived in the US since college. Half of my friends and family are american and the rest foreign. There's a huge cultural difference between both sides' approach to wealth. My american f&f (outside of silicon valley) think of wealth in terms of "saving for retirement." 401ks, tax strategies, etfs, stocks etc. It's very passive, probably "correct", and very unambitious. The foreign side is totally…

This isn't that unusual and is sometimes driven by available opportunities. If you live in a developing economy, the number of $500k equivalent jobs is likely not high, and at least for the countries I've visited, they are often roles at multi-nationals with foreigners at the top (and not all that accessible to locals).

Similarly, your potential investments for retirement savings can be quite limited. We're quite spoiled in the west to have massive stock markets with tens of thousands of stable, profitable companies. And a regulatory framework which means the chance you buy a stock and find out the entire company is a fraud is relatively low. I've heard from folks in some developing countries that they'd never put money in their own stock market - the chance of losing everything is way too high.

For developing countries, you often have a young, expanding population, and 7% GDP growth in one year wouldn't be seen as abnormal. Small businesses become a great way to get in on the growth (the market is often highly fragmented, so competition isn't that fierce) and businesses are a much more accessible way to wealth than any corporate job. The other avenue I've seen is real estate. In the SE Asian countries I've been in (the ones growing quickly), real estate is even more of a ticket to wealth than in the US. Seems like they can never build enough and in the big cities, prices aren't that different than non-coastal US ($100k+ USD), which is shocking considering the median salary is 1/10th that of the US.

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