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How People Get Rich Now

paulgraham.com

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Re: How People Get Rich Now

#741

Post by comp_throw7 »

bradlys wrote: post #263
jkubicek wrote: post #200

Earlier quoted context omitted.

It is an insane amount of money even in the Bay Area. It's more than enough to support a large family living a very comfortable lifestyle while also saving significantly for retirement. I'm not sure what the grandparent poster is on about.

Everyone argues about this but for most people in tech - $400k/yr does not give you a "very comfortable" lifestyle. You cannot afford a $2m home. A $2m home isn't even that comfortable in the peninsula. (Varies on location but it'll probably be under 2000sqft, still 3-4 bedroom, 4000-8000sqft lot, 2-car garage if you're fortunate, will likely require $200k+ in renovation/repairs on move in, nothing lavish) Good luck…

I'm not sure how you figure that 400k/yr (dual-income) doesn't let you buy a 2m house, putting aside the question of why you'd want to - there are multiple listings under 1.5m in "safe neighborhoods" less than a 20 minute drive away from MTV, and yes, they have 2-car garages.

You're probably looking at a TCO of ~11k/month (mortgage, tax, & maintenance, and it's really more like 9.5-10k/mo after the mortgage interest tax deduction), which is arguably an unwisely large % of your ~20k post-tax take-home, assuming you're putting away a substantial amount into 401ks, but you're left with 9-10k/month, which means you can put easily waste whatever you want on luxury cars (as if you can't be "very comfortable" leasing a new Japanese sedan for under $300/month instead of lighting money on fire for the pleasure of driving less reliable vehicles).

But, I mean, you _could_ if you really wanted to. And still have enough money to travel internationally twice a year. And outsource whatever percentage of your cooking you want to takeout. I'm glad you agree that a full-time nanny would be stretching the definition of "very comfortable", and private schools seem superfluous if you're buying expensive real estate, since part of what it buys you is a spot in the local public school, and if you don't want that you can relatively trivially arbitrage it away by buying a cheaper house in a different zip code.

Is it possible that those people are making the arguably sensible decision to rent instead of buying, because the price to rent ratio in the Bay is truly absurd, and not everybody cares enough about "ownership" to spend an extra 20-30k/yr on it? That doesn't mean that they couldn't make the finances work if they had to, they just have... different priorities. Like putting an extra 20-30k/yr into the market.

Re: How People Get Rich Now

#743

Post by tqi »

boringg wrote: post #118
tqi wrote: post #82

Earlier quoted context omitted.

"working for a corporation day in and out is slavery" Corporations are the boogeyman de jour but from personal experience, landlords / restrictive zoning / "anti gentrification" activists are the primary cause of my angst. I make more money now than I ever thought I would, but a truly staggering amount of it goes directly into my landlord's pocket.

And how much of your paycheck to landlords goes to the bank to pay off the mortgage

Well they bought the place in 2005 for about 1/3 of what the current Redfin estimate is, so probably very little?

And even if that were not the case, with real estate climbing 8% or more per year, they are still in line for a huge payday if / when they choose to sell.

Re: How People Get Rich Now

#744

Post by missedthecue »

PhilipTai wrote: post #709
missedthecue wrote: post #586

Earlier quoted context omitted.

The guardian article and the commenter I replied to are pointing out the difference between 1965 and 2020 as if it's a problem. A problem is defined as something that has a negative impact on people. My analysis points out that the only people that modern CEO pay has a negative impact on is the shareholders. I illustrated that it makes literally no difference to your average floor worker whether the CEO gets $0 or $2…

No. There is really no difference whether CEO is paid in cash or in stock, regarding the negative impact of the pay. Scenario 1: CEO get paid $50 million in stock. Scenario 2: CEO get paid $50 million in cash. And then the company raise $50 million from stock market, so that it will have the same amount of cash as scenario 1. They are the same.

Or they may not be able to raise cash, or they may be a private company without access to the stock market, or they may have bylaws preventing such a thing.

Either way, the employee is not made worse off because the CEO collects a fat stack of options at the expense of the shareholder.

Re: How People Get Rich Now

#745

Post by missedthecue »

CPLX wrote: post #690
missedthecue wrote: post #586

Earlier quoted context omitted.

The guardian article and the commenter I replied to are pointing out the difference between 1965 and 2020 as if it's a problem. A problem is defined as something that has a negative impact on people. My analysis points out that the only people that modern CEO pay has a negative impact on is the shareholders. I illustrated that it makes literally no difference to your average floor worker whether the CEO gets $0 or $2…

This argument is fucking ludicrous. Money is money. If the business used to have it and now the CEO has it then the business gave it to him. There's no class of equity that wasn't originally created and owned by the business so that's where the money comes from. And lest there be any confusion, all the companies we're talking about do massive stock buy backs so it's not even hypothetical, they spend billions of dolla…

It is not "fucking ludicrous".

Both stock comp and cash comp are the same from the shareholders view. They are not the same from the employees view. A higher cash comp for CEOs may well result in lower employee pay, a higher stock comp will not.

Re: How People Get Rich Now

#746

Post by missedthecue »

markvdb wrote: post #706
missedthecue wrote: post #592

Earlier quoted context omitted.

The question is whether anyone is worse off because of it, and my comment points out that contrary to popular rhetoric, if anyone is getting hurt by it, it's not the employees. If you think nobody is getting hurt by it, it's not a problem, it's just envy.

It's certainly possible to view these things from other perspectives than a narrow transactional economic perspective. Can you imagine some of those?

Yes, jealousy and envy that other people do in fact make more money than I do. This is not a real societal problem, it's a personal and human nature problem.

Re: How People Get Rich Now

#747

Post by missedthecue »

Florin_Andrei wrote: post #724
missedthecue wrote: post #588

Earlier quoted context omitted.

And the question is whether that's a problem or not, and if so, who is it a problem for. My comment illustrates that modern CEO pay does not hurt the average employee in any way, only the shareholders. Either you don't think modern CEO pay is a problem, or you think it's a problem because it makes shareholders poorer. It doesn't impact the rest of the employees or reduce their incomes.

> Either you don't think modern CEO pay is a problem, or you think it's a problem because it makes shareholders poorer. The fact that you appear to be completely blind to the third option - the actual issue - is far more telling than any argument you've made so far.

My argument eliminated the third option. It doesn't hold water.

Re: How People Get Rich Now

#748

Post by bumby »

WalterBright wrote: post #739
bumby wrote: post #736

Earlier quoted context omitted.

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".

I appreciate the advice. While I’ve only been investing this way for about 11-12 years, back testing has been statistically valid to the early 2000s (limited by the availability of index funds for comparison). You’re right though, who knows if it’ll work in 30 years. There’s some evidence that it may based on trends in institutional investing. That enough uncertainty to avoid putting all my eggs in that basket.

Re: How People Get Rich Now

#749

Post by boringg »

tqi wrote: post #743
boringg wrote: post #118

Earlier quoted context omitted.

And how much of your paycheck to landlords goes to the bank to pay off the mortgage

Well they bought the place in 2005 for about 1/3 of what the current Redfin estimate is, so probably very little? And even if that were not the case, with real estate climbing 8% or more per year, they are still in line for a huge payday if / when they choose to sell.

Well that depends - if the real estate market holds and they pay for all the appropriate upkeeps. What about the situation where real estate properties go down and it's difficult to find renters or pay for upkeep on the property. Also - rental real estate doesn't rise in the same way the single family homes do.

The landlord is the scourge narrative bugs me. There are for sure a bunch of terrible land lords especially the huge soulless companies but there are a lot of little family operations that don't try and gouge their tenants.

Re: How People Get Rich Now

#750

Post by lanstin »

missedthecue wrote: post #647
lanstin wrote: post #615

Earlier quoted context omitted.

If that worker has a pension or 401k, then it does matter. The fleecing isn't directly from him, but aggregate it by "managerial class" and "middle class" and you see the high $ managerial cash flows are directly at the expense of the middle class and retirement of the middle class. Thru in some tax policy, and you can see it is also taking money away from education of young middle class folks, and investment in comm…

Yes, it hurts shareholders. That's what I wrote in my first comment. You agree with me then?

I agree it's a diversion of wealth from the workers to the management class.
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