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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

#191

Post by bufferoverflow »

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 economy is not limited to Earth.

Re: Save like a pessimist, invest like an optimist

#192

Post by Moodles »

chii wrote: post #178
Moodles wrote: post #153

Earlier quoted context omitted.

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 insuranc…

You’re kind of nitpicking here. It doesn’t matter how much the expense is: the point is that you can use a credit card to buy time interest-free before you pay off the expense with stock/paychecks/whatever. Regardless of what the expense is, this is clearly better than taking out a margin loan immediately.

Re: Save like a pessimist, invest like an optimist

#193

Post by marvin »

chii wrote: post #143
xchaotic wrote: post #111

Earlier quoted context omitted.

But as things get automated and cheaper that’s actually negative gdp growth. So it won’t pay your retirement

If things get cheaper, you can live off less income from your investments .

Yep, and in such a world, a reasonable level of taxation would eventually be able to pay for a modest lifestyle for everyone who wanted it.

In a world of such dramatic surplus, it's either that or violent revolution, so I'm fairly sure it would sort itself out.

Re: Save like a pessimist, invest like an optimist

#194

Post by crisdux »

lern_too_spel wrote: post #171
crisdux wrote: post #164

Earlier quoted context omitted.

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.

I'm not talking about the weather changing. I'm talking about the growth of climate control using electricity in states that aren't California has led to continued energy demands.

Honestly your reply is frustrating because you sound like you don't understand my point. Please re read my comment from before.

Re: Save like a pessimist, invest like an optimist

#195

Post by sanderjd »

Moodles wrote: post #129
sanderjd wrote: post #125

Earlier quoted context omitted.

But ... that 200 years of data has nothing to do with what is going to happen in the future...

Not nothing.

I guess this always devolves into philosophy, but yes, the future is actually unknowable.

Re: Save like a pessimist, invest like an optimist

#196

Post by mezod »

smabie wrote: post #51
fairity wrote: post #2

One question that's been top of mind lately for me is how optimistic you should be in your investing strategy. IBK currently allows retail investors to trade on margin with an annual interest rate of only 1% (yes, really). You can borrow up to 2x your principle at this rate. If you were extremely optimistic, you would borrow 2x your principal and expect to 3x your annual return. If you were optimistic but wanted to a…

One should target volatility, not leverage. Without leverage, you can usually only take the most risky of strategies in order to get a return. If you're willing to take on leverage, you are much more likely to find a good strategy. Source: work at a small prop firm that takes on around 10x leverage. Even at this leverage ratio, we are considerably less risky than the S&P 500. Even at 10x, our volatility is somewhere…

would you recommend any literature more broadly argumenting the ideas you defend here? thanks!

Re: Save like a pessimist, invest like an optimist

#197

Post by lern_too_spel »

crisdux wrote: post #194
lern_too_spel wrote: post #171

Earlier quoted context omitted.

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.

I'm not talking about the weather changing. I'm talking about the growth of climate control using electricity in states that aren't California has led to continued energy demands. Honestly your reply is frustrating because you sound like you don't understand my point. Please re read my comment from before.

Even in your scenario, we wouldn't expect per capita energy usage to increase faster than population growth (as the physicist claimed) because now everybody who wants climate control has it. The whole point is that per capita energy usage isn't growing exponentially in the developed world.

Re: Save like a pessimist, invest like an optimist

#198

Post by dredmorbius »

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.

Asset inflation is not economic growth.

(Though the two are very often confused.)

Stock markets occasionally move in directions other than up.

Re: Save like a pessimist, invest like an optimist

#199

Post by crisdux »

lern_too_spel wrote: post #197
crisdux wrote: post #194

Earlier quoted context omitted.

I'm not talking about the weather changing. I'm talking about the growth of climate control using electricity in states that aren't California has led to continued energy demands. Honestly your reply is frustrating because you sound like you don't understand my point. Please re read my comment from before.

Even in your scenario, we wouldn't expect per capita energy usage to increase faster than population growth (as the physicist claimed) because now everybody who wants climate control has it. The whole point is that per capita energy usage isn't growing exponentially in the developed world.

The point I made was regarding electricity usage in california from 1975 until now and how that comparison to the rest of the country isn't valid because it's a bias measure. In 1975 everyone who wanted climate control didn't have it, and that slowly changed to everyone being able to afford year round climate control. That drove huge growth in energy demands in most of the country. In that scenario we would certainly expect per capita energy usage to increase faster than population growth.

Your original claim about California doesn't hold because it's bias.

Re: Save like a pessimist, invest like an optimist

#200

Post by dredmorbius »

bufferoverflow wrote: post #191
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 economy is not limited to Earth.

Practically, it is.

Impractically, that buys you surprisingly little.

"Galactic-Scale Energy"

In 2450 years, we use as much as all hundred-billion stars in the Milky Way galaxy.

https://dothemath.ucsd.edu/2011/07/galactic-scale-energy/

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