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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

#181

Post by fouc »

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…

> First, Tom Murphy is confused by what economic growth is. You don't need increased energy consumption for economic growth.

> Economic growth measures the number of ways resources (material and non-material) are used hence resources are like the universe; "finite but unbounded." Tom Murphy is a typical Newtonian in his mindset and this imperial reasoning is so pre-Planck.

> Even in a so-called steady state any substitution from one material to another would seen as a kind of economic growth simply because markets the place more value on the newer item.

> Second. He assume that exponential economic growth is tied to some physical exponential. It is not. What is the basis for the recent exponential growth of physical consumption. It is growing population. It has been shown that energy growth of consumption doesn't increase much beyond 150k dollars. So once population stabilizes the physical growth model switches from exponential to linear. Tom Murphy never makes a linear growth model and thus his short-term peakerism.

http://mikenormaneconomics.blogspot.com/2012/04/tom-murphy-e...

Re: Save like a pessimist, invest like an optimist

#182

Post by gexla »

refurb wrote: post #179
gexla wrote: post #157

Earlier quoted context omitted.

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.

There's always winners and losers. We hope the market provides us with ever improving options, which could be a win for everyone. Some may lose by taking down zombies, but the market overall improves.

Re: Save like a pessimist, invest like an optimist

#184

Post by lovecg »

ivalm wrote: post #158
lovecg wrote: post #119

Earlier quoted context omitted.

Would the world of today seem “post-scarcity” to a medieval peasant? I don’t think humanity will ever have “enough” — it’s just not in our nature.

I don’t agree. I don’t think we currently have enough stuff. As a techy in the US I make more than most, but there are still many material things that I can’t quite afford/have to limit myself. However, if production was 100x what it is now then perhaps I would be able to afford them. Post scarcity is at a production level far greater than current. Also, higher production doesn’t mean higher natural resource consumpt…

But don’t you think your desires would grow accordingly? To go back to my “medieval peasant” example, a simple shirt is something we take completely for granted and is arguably “post scarce”. But before industrialization, people would think of a shirt sort of like we think of cars today. It took months of labor to make one, and it cost orders of magnitude more what it costs today. So to those people “I would own a couple of really nice shirts” would have been a reasonable goal to aspire for. They simply could not imagine cars or iphones.

Your second point is an interesting one. I do think we’re gradually moving to a world of artificial scarcity (brand names, luxury goods, bitcoin etc.), plus some things will always be scarce by nature (access to important people, people’s time). So perhaps we’ll just discover that the connection between resource scarcity and human desires is accidental.

Re: Save like a pessimist, invest like an optimist

#185

Post by njarboe »

paulryanrogers wrote: post #105
fennecfoxen wrote: post #100

Earlier quoted context omitted.

> 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.

Our space-ward expansion has some hard physics limits. And we've not yet eclipsed what was already done decades ago. And even settling Mars will require more sustainable lifestyles than most first world citizens now enjoy.

"settling Mars will require more sustainable lifestyles than most first world citizens now enjoy."

Not if they decide to use nuclear power. Humanity has at least one more dramatic jump in power-use/person that has been ready since the 1960's.

Re: Save like a pessimist, invest like an optimist

#186

Post by tarsinge »

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 is not the economy, and even how it is correlated to accounting reality is debatable.

Re: Save like a pessimist, invest like an optimist

#187

Post by ivalm »

lovecg wrote: post #184
ivalm wrote: post #158

Earlier quoted context omitted.

I don’t agree. I don’t think we currently have enough stuff. As a techy in the US I make more than most, but there are still many material things that I can’t quite afford/have to limit myself. However, if production was 100x what it is now then perhaps I would be able to afford them. Post scarcity is at a production level far greater than current. Also, higher production doesn’t mean higher natural resource consumpt…

But don’t you think your desires would grow accordingly? To go back to my “medieval peasant” example, a simple shirt is something we take completely for granted and is arguably “post scarce”. But before industrialization, people would think of a shirt sort of like we think of cars today. It took months of labor to make one, and it cost orders of magnitude more what it costs today. So to those people “I would own a co…

Yeah, my point rests on the idea of dematerialization going forward. I think people have finite capacity of desire for natural resource limited products and it is possible that we are not too unreasonably close to “peak physical stuff.” I can get better more “intelligent” clothing but I will never need 100000 unique clothing items simultaneously. On the other hand, immaterial needs may continue increasing, my desire for AI assistance, computer-human interfaces, and augmented reality may be massive, but those have low marginal cost.

I do also agree that certain things that are scarce by design or by their nature and will continue to be so.

Re: Save like a pessimist, invest like an optimist

#188

Post by sokoloff »

peterwoerner wrote: post #172
chii wrote: post #144

Earlier quoted context omitted.

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.

Exactly. My parents gave me $10K towards my first house down payment and I plan to do similarly for my kids. I’m nowhere near on track to need to talk to a estate trust advisor, but I’m planning to have saved up more than 25x my annual income requirement in retirement; as a result, I’m very likely to die with a positive balance in my accounts.

Don’t worry too much: My kids will 100% have to work if they don’t want a sucky life.

Re: Save like a pessimist, invest like an optimist

#189

Post by marketgod »

darkerside wrote: post #165
icedchai wrote: post #162

Earlier quoted context omitted.

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).

You can fire customers easier than quitting jobs. I fire customers daily. If you are reliant on 1 customer then it's not a business, it's a hobby.

Edit: Also you can be ethical.

Re: Save like a pessimist, invest like an optimist

#190

Post by marvin »

smabie wrote: post #120
marvin wrote: post #75

Earlier quoted context omitted.

And certainly you are well protected against black swan type events, even at 10x leverage...?

Shit happens and even the smartest people can get fucked, just look at the LTCM blow up. So of course it's possible. It's impossible to eliminate all risk, regardless of the leverage ratio. I'm just saying that leverage isn't a reasonable proxy for risk. You have to dig deeper.

That sounds reasonable at first glance, but it would be really interesting to see a proper study of leveraged investments throughout the modern era, and their tendency to blow up compared to the volatility of what would be the reasonable alternative.
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