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How People Get Rich Now

paulgraham.com

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Re: How People Get Rich Now

#731

Post by WalterBright »

bumby wrote: post #679
WalterBright wrote: post #675

Earlier quoted context omitted.

If you've got a superpower that enables you to determine the "real" value of something rather than its "perceived" value, you can use it to become the richest man in the world.

Intrinsic value can be measured, albeit imperfectly. Equity, as an example, is measuring real assets as opposed to some pie-in-the-sky assumption of future worth built on a foundation of hopes and dreams. Value investors have in fact gotten rich this way for a long time.

> Intrinsic value can be measured

No, it can't. It can only be guessed at. Everybody knows that "book" value isn't terribly reliable.

> Value investors have in fact gotten rich

Here's a simple test for your theory. You're sure you're right. If so, you have invested in "undervalued" stocks and gotten rich. If you haven't invested based on your theory, are you sure you're right?

As for me, I invest my money where my mouth is.

Re: How People Get Rich Now

#732

Post by rcurry »

TapWaterBandit wrote: post #727
jdgoesmarching wrote: post #564

Earlier quoted context omitted.

Agreed. Maybe unpopular opinion, but entrepreneur insights from CEOs are rarely valuable because no individual contribution outweighs sheer luck. Every day millions of people make smart decisions, take good risks, and work hard without significantly improving their conditions. It is pure survivorship bias to think individuals are capable of more than slightly nudging the cosmic needle if it happens to land near the r…

> It makes people uncomfortable to think that success is mostly a matter of luck. I constantly hear this sentiment and don't think it makes people uncomfortable at all. If anything it is the opposite, people cling to this idea to absolve themselves of responsibility for their own situation. What makes people far more uncomfortable is the nagging feeling that success isn't mostly a matter of luck. Success is a choice…

Keith Richards might disagree with you...

Re: How People Get Rich Now

#733

Post by WalterBright »

bobthepanda wrote: post #681
WalterBright wrote: post #655

Earlier quoted context omitted.

Why would any company hire a CEO and pay him millions to warm a seat? Why would the stockholders put up with that?

Stockholders are increasingly not putting up with it. Votes against are still kind of rare, but they do happen: https://www.restaurantbusinessonline.com/financing/starbucks... But also, the board makes CEO decisions, and it's not totally uncommon for board members to also be CEOs of other companies, so they buy the kool-aid because they also benefit from it. Plus, CEOs and boards don't exist in a vacuum. You've got t…

The stockholders can revolt. If they don't, and it's their money being handed to the CEO, is it reasonable for non-stockholders to gripe about it?

Re: How People Get Rich Now

#734

Post by bhl »

greatgib wrote: post #411

Strangely, an explanation for the increased number of wealths coming from new, tech companies and investments that is ignored in his post is the disturbing fact it was taken from the average employee cut of the profits. See this: https://www.theguardian.com/business/2018/aug/16/ceo-versus-... I quote: "The 2017 CEO-to-worker compensation ratio of 312-to-1 was far greater than the 20-to-1 ratio in 1965, and more than…

With respect to tech companies, the compensation ratio is a good starter to get people to think about wealth inequality but as tool or metric for public policy, it is useless.

Here's my intuition on that:

- it doesn't answer how much of the wealth was created (endogenous) or taken (zero sum): tech companies can simultaneously induce new demand and preferences while replacing older companies

- it doesn't answer whether the average worker or society as a whole is better or worse with a lower or higher compensation ratio, because by averaging you lose nuance; for example, are more or less people employed by tech companies now then by the companies that were replaced? are the worker salaries themselves higher or lower compared previous worker salaries?

For me, higher compensation ratios in _tech_ companies is good for people in tech: tech requires less labor for inch of market cap, while that labor is compensated higher. Whether or not that's an overall good for society though, idk.

Re: How People Get Rich Now

#735

Post by seattle_spring »

TapWaterBandit wrote: post #727
jdgoesmarching wrote: post #564

Earlier quoted context omitted.

Agreed. Maybe unpopular opinion, but entrepreneur insights from CEOs are rarely valuable because no individual contribution outweighs sheer luck. Every day millions of people make smart decisions, take good risks, and work hard without significantly improving their conditions. It is pure survivorship bias to think individuals are capable of more than slightly nudging the cosmic needle if it happens to land near the r…

> It makes people uncomfortable to think that success is mostly a matter of luck. I constantly hear this sentiment and don't think it makes people uncomfortable at all. If anything it is the opposite, people cling to this idea to absolve themselves of responsibility for their own situation. What makes people far more uncomfortable is the nagging feeling that success isn't mostly a matter of luck. Success is a choice…

Ironically, people I know who did the most drugs in high school (myself included) are the most successful out of the people I know. The straight-laced A students are all way behind.

Re: How People Get Rich Now

#736

Post by bumby »

WalterBright wrote: post #731
bumby wrote: post #679

Earlier quoted context omitted.

Intrinsic value can be measured, albeit imperfectly. Equity, as an example, is measuring real assets as opposed to some pie-in-the-sky assumption of future worth built on a foundation of hopes and dreams. Value investors have in fact gotten rich this way for a long time.

> Intrinsic value can be measured No, it can't. It can only be guessed at. Everybody knows that "book" value isn't terribly reliable. > Value investors have in fact gotten rich Here's a simple test for your theory. You're sure you're right. If so, you have invested in "undervalued" stocks and gotten rich. If you haven't invested based on your theory, are you sure you're right? As for me, I invest my money where my mo…

I have actually invested a substantial (for me) portion this way. It’s performed better on both an absolute and risk-adjusted basis than either the additional speculative growth or index strategies I’ve employed.

I’d also avoid absolute terms like “everybody”, “always”, etc. because they’re easily falsifiable

Re: How People Get Rich Now

#737

Post by WalterBright »

greedo wrote: post #730
WalterBright wrote: post #655

Earlier quoted context omitted.

Why would any company hire a CEO and pay him millions to warm a seat? Why would the stockholders put up with that?

Tim Cook. Compared to Steve Jobs, Cook is milquetoast. He's fantastic at supply chain management, and milking existing products/services. He's exactly what stockholders have wanted for a CEO after the Jobs died. Someone to basically do the same thing for decades. Milk the iPhone for all it's worth. Yes, I know he's introduce the Watch and AirPods. But he also introduced the HomePod. He's no tech visionary, and eventu…

Do you really believe Cook is just warming a seat? There's a lot more to running Apple than being a visionary.

I'm an Apple shareholder since before Cook, and admit I was skeptical about Cook. But as a shareholder I'm very happy with Cook's leadership. If his compensation is $$$$, that's cool with me.

BTW, Jobs was a visionary, sure. But that wasn't enough - he nearly wrecked Apple through mismanagement. Next Inc. bombed due to his mismanagement as well. But Jobs learned how to run a company with his management of Pixar, and then returned to Apple as still a visionary, but with management competence.

But hey, I might be wrong. Let us know how your shorts on Apple are working out.

Re: How People Get Rich Now

#738

Post by kenneth »

dcolkitt wrote: post #73

> It's easier now to start and grow a company than it has ever been. That means more people start them, that those who do get better terms from investors, and that the resulting companies become more valuable. This may be a quibble, because I think Paul Graham really means a certain type of high-growth startup in mind when he says "start a company". But the rate of new business formation in the US has fallen off a cl…

Note he addresses this directly in the corresponding footnote.

Re: How People Get Rich Now

#739

Post by WalterBright »

bumby wrote: post #736
WalterBright wrote: post #731

Earlier quoted context omitted.

> Intrinsic value can be measured No, it can't. It can only be guessed at. Everybody knows that "book" value isn't terribly reliable. > Value investors have in fact gotten rich Here's a simple test for your theory. You're sure you're right. If so, you have invested in "undervalued" stocks and gotten rich. If you haven't invested based on your theory, are you sure you're right? As for me, I invest my money where my mo…

I have actually invested a substantial (for me) portion this way. It’s performed better on both an absolute and risk-adjusted basis than either the additional speculative growth or index strategies I’ve employed. I’d also avoid absolute terms like “everybody”, “always”, etc. because they’re easily falsifiable

You're way up on others if you actually invest in your theories. Congratulations!

But I do suggest caution. A strategy that works for 3 years may not play out well over 10, 20, 30 years.

Yeah, I know I wrote "everybody knows". I meant "it is generally known".

Re: How People Get Rich Now

#740

Post by monoideism »

triceratops wrote: post #469
monoideism wrote: post #230

Earlier quoted context omitted.

> But this level of wealth concentration and inequality is detrimental to the fabric of a society. We’re not better off, we’re not more innovative, we’re not healthier or more cohesive or happier when this happens. I agree 100%, but you're ignoring the other factor that is detrimental to society: social factors. Notably, the divorce rate and single-parent rate among poor and working class Americans of all races has s…

Finances are generally a big cause of divorces. Have you considered that upper-class couples have low divorce rates because they have money? Rather than they are upper-class because they don't get divorced. Don't get me wrong, divorce is a massive destroyer of wealth. But happy couples don't generally get divorced. And financial stability is a big contributor to happiness.

Yes, I acknowledge that correlation != causation. And these are reasonable questions.
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