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What if your entire worldview was just because of near-zero interest rates?

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Re: What if your entire worldview was just because of near-zero interest rates?

#211

Post by mclightning »

marvin wrote: post #140
howinteresting wrote: post #125

Earlier quoted context omitted.

Isn't the EU lagging due to post-GFC austerity?

It’s much more than that. EU policies stunt growth on a structural level. The tax system and other incentives lead people to not really work their hardest and best, and this propagates all the way to the stock indexes.

>> The tax system and other incentives lead people to not really work their hardest and best, and this propagates all the way to the stock indexes

I used to be a believer in this. But I recently moved from Sweden to UK, from a very socialist country to a very capitalist one.

In capitalist societies people live in survival mode. This doesn't work well in every profession, especially managerial roles become very predatory. It does work well in tech/individual contributor roles though.

Some mundane tasks that are needed for tech development to go smoothly over long periods of time, is easier to manage in socialist Sweden. Whereas in UK, I suspect in US too, people tend to gloss over mundane managerial processes/goals like scrum, roadmap planning, business goals etc.

Re: What if your entire worldview was just because of near-zero interest rates?

#212

Post by boppo1 »

echelon wrote: post #149
HWR_14 wrote: post #144

Earlier quoted context omitted.

Why on earth would you think dividends are a terrible idea?

1. Theoretically speaking, this means the company has nowhere else better to put that cash [1]. Rather than reinvesting back into itself to fuel growth, dividends return company proceeds to investors. It's a sign of slow or no growth. 2. As an investor, you can't control when and how you're taxed. Dividends are taxable when they are paid out. A company stock buyback, on the other hand, would increase the value of you…

This content of your post is exactly what the article is addressing.

Re: What if your entire worldview was just because of near-zero interest rates?

#213

Post by qaq »

spaceman_2020 wrote: post #195
qaq wrote: post #154

Earlier quoted context omitted.

"I'll be okay with a pay cut if it means a more equitable, more fair society" hmm you could make it more equitable by raising your maids comp by your own description it would have 0 adverse effect on you.

The typical Indian maid works in multiple households. My maid works in 7 different houses, spending approx. 1-1.5 hours in each. An individual household paying her more can only go so far - EVERYONE will have to start paying her more. I already pay her substantially more than prevailing rate, but can everyone else afford to do the same?

It does not have to be about "them" you have a path available to you to make a person that you supposedly feel bad about better off.

Re: What if your entire worldview was just because of near-zero interest rates?

#214

Post by hoseja »

boppo1 wrote: post #197
benjaminwootton wrote: post #127

Earlier quoted context omitted.

I agree with your thesis that genuine value creation will become more important. I think this is a more exciting market to operate in as opposed to one where we simply need to raise and spend cash as quickly as possible.

> genuine value creation But how do we even know what this is anymore? With more than half the wealth accumulated by the top fraction of society it seems like ultra-luxury goods are going to be the most profitable, but surely that's not actually genuine value creation. And have we strayed too far to achieve that without austerity? How will we pay interest on the national debt?

Does the top fraction of society ever actually spend significant amounts though. No. Trickle-down has never worked.

Re: What if your entire worldview was just because of near-zero interest rates?

#215

Post by mejutoco »

geysersam wrote: post #159
IncRnd wrote: post #122

Earlier quoted context omitted.

> A stock is worth the present value of future dividends. Not every stock pays dividends. A stock's worth is determined by supply and demand in a market or directly between the seller and the prospective purchaser.

> A stocks worth is determined by supply and demand That's a tautology. It's like saying the price is the price.

This was a novel idea, at some point. For the stock it is a tautology, but for generally determining the worth it is a deep idea. It requires buying into a point of view of this model and, like all models, it is a (useful) approximation.

If one accepts that the worth of something is the price that supply and demand establish, there is no room for workers being underpaid (or overpaid), according to this model. They are paid exactly what the market determines (so what they are worth). Of course this is extremely simplistic, but you get the idea.

Funny, however, how this often touted as self-evident does not stop people from saying x profession earns too much, while the same time advocating for the market as the ultimate solution to all our problems.

Re: What if your entire worldview was just because of near-zero interest rates?

#216

Post by atoav »

boppo1 wrote: post #197
benjaminwootton wrote: post #127

Earlier quoted context omitted.

I agree with your thesis that genuine value creation will become more important. I think this is a more exciting market to operate in as opposed to one where we simply need to raise and spend cash as quickly as possible.

> genuine value creation But how do we even know what this is anymore? With more than half the wealth accumulated by the top fraction of society it seems like ultra-luxury goods are going to be the most profitable, but surely that's not actually genuine value creation. And have we strayed too far to achieve that without austerity? How will we pay interest on the national debt?

Ultra luxury goods have a few downsides tho. The ultra rich are not easy customers, there is a high risk involved with having few customers (e.g. they could leave you hanging, another company could outperform you and grab that customer and you are basically done for etc.). A friend of my family has made his living selling handcrafted multi-million dollar hunting rifles. Let me tell you, these people are not easy to deal or negotiate with. The income brackets below are happier to spend and there is more of them

Even ultra luxury good creators rely a lot on other stuff, like manufacturing machines, hardware, parts, materials, etc. So the safer bet is probably going to be to sell shovels in a gold rush.

Re: What if your entire worldview was just because of near-zero interest rates?

#217

Post by boppo1 »

RayVR wrote: post #117

I just can’t take this person seriously. Clearly written by a non-expert and the questions/ideas are, as a result, well-trodden ground without anything original to add. Take this representative quote “It’s Jerome Powell’s world: never before have I seen markets move so erratically in response to a once-boring Jackson Hole conference. Actually, the first time I ever heard of this event was this year since some acquain…

But is his conclusion wrong?

Re: What if your entire worldview was just because of near-zero interest rates?

#218

Post by lordnacho »

nosianu wrote: post #181
spaceman_2020 wrote: post #124

Earlier quoted context omitted.

My wife's uncles is one of the top doctors in his field in the country, and was the head of department in the country's top medical university. He makes less money than me, even though I'm 35 years younger and my "skills" include some basic coding, some marketing, and some understanding of social media. Whereas this man has spent nearly 50 years in the medical field and has treated multiple presidents. None of the st…

> Enrollment in the medical field is falling drastically because no one wants to work years to make less money than some 24 year old with two years of coding experience. Good comment overall, but I think the issues in the medical field are less about compensation and much much more about insane working conditions and a lot of disincentives. If you want a glimpse at some of it, maybe occasionally check out https://old…

But in the end people have to decide what they want to do, compared to other opportunities.

If being a doctor is the highest paid, highest prestige job, we won't lack doctors.

We seem to be lacking doctors here in the UK.

Re: What if your entire worldview was just because of near-zero interest rates?

#219

Post by ummonk »

geysersam wrote: post #155
Animats wrote: post #113

Earlier quoted context omitted.

> I definitely think a lot of the startup world view is just a function of low rates. Startups could run for decades with $billions in losses and only a passing focus on eventual profits. Yes. Buying growth at a loss is so over. A stock is worth the present value of future dividends.

> a stock is worth.. Hasn't this always been the case? Genuinely curious.

In a speculation driven environment, the future earnings of a particular growth company are heavily dependent on investor sentiment. If people want to invest in a company for whatever reason (such as hype), that means the company can raise more money at a higher valuation for a given amount of dilution, and by investing that money it can generate higher future earnings per share.

Re: What if your entire worldview was just because of near-zero interest rates?

#220

Post by qaq »

spaceman_2020 wrote: post #199
qaq wrote: post #174

Earlier quoted context omitted.

Sure you can if people take individual action based on their honest believes a lot can change. If people simply virtue signal without taking basic actions that are available to them then there is 0 chance something will change.

Blanket statements like that don't really help unless you understand the underlying context. In my context, maids typically work in multiple households. While my household has seen its net worth go up disproportionately, other households around me haven't been as fortunate. So even when I pay 3x the prevailing rate, it doesn't make any real difference since the remaining 6 households my maid goes to can't match my ra…

I grew up poor having any extra money makes a meaningful difference. 3X bump would mean the person is now making like 20% extra it's very meaningful difference pretending otherwise is very disingenuous.
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