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Comment by tppiotrowski | Hacker News Reader

I agree with this take. Being a builder does not generate predictable returns like an index fund or the S&P over the last 100 years. They tell you in school that you should invest money early and watch it accrue, but if we all do that collectively as a society then who is going to build.

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The people who get funding will build, presumably? Investing doesn’t prevent people from building. Investments fund building. (Among other things.) This happens literally when banks loan money to real estate developers or other large projects.

But we’re in a situation where there was, until quite recently, both too much consumer demand (inflation) and too much investment (lots of wasted investment on silly things).

Higher interest rates are an incentive to slow investment and consumption and park money in government funds, where it‘s presumably more inert.

I think the answer to “what if everyone does it” is that everyone doesn’t do the same thing. If you have a good idea then you can spend your own money on it, and sometimes you have to, but if it’s expensive then it’s probably better to try to raise money from other people.

It is pointless and Mindless to save money purely for the purpose of having more. The point of investing and saving is to have money to spend. When money is spent, it goes to the person who built something, provided a service, or has a good.

I think the richest among us seem to disagree with you.

Different people may indeed have different values, but when we are talking about most people and what they are taught, I think this is true. People are thinking about retirement, buying a house, or paying for their kids education and this is why they save.

I disagree. Money buys you recognition, influence and power. There is no fixed price for these. It's an auction where the rewards go to the highest bidder.

Is that what you personally are saving up for?

Freedom. Having money in the bank allows you to control your circumstances. It gives you time to wait for and consider multiple job opportunities. It gives you time to re-skill if the economy shifts or move if your region undergoes an economic depression.

That means being able to buy things. If you can't buy things, it doesn't matter what the number in your account is

More to your core point, you only make money investing if someone is building. Talking to S&P 500 goes up because those companies are building something and the stockholders get a piece of profit when the things that are built sold. If no one builds and no one buys, stocks are worthless and are not an investment.

I think there's an element of educating the younger generation to invest. If you can bring in more investors than are leaving, supply and demand will ensure that prices will keep increasing.

If no one is building things, Society collapses pretty fast.

Doesn't matter how many shares in bread companies you buy and sell. If nobody is baking the bread, people will starve.

A society cannot exist without makers, and neither can an investment Market in the long run

> Being a builder does not generate predictable returns like an index fund or the S&P over the last 100 years.

Sure but investing a modest sum in the S&P 500 as a wage earner, salary earner, or otherwise also requires you to work for someone else your whole life and never get wealthy. That incentive kesp people starting new companies and doing other things - i.e. taking risks.

When valuations are high, companies IPO, founders cash out and hopefully go on start new companies. People on the street buy companies for 3x their annual earnings but the stock market regularly buys companies for 8x, 20x, even 80x their annual earnings. This is expressed in each stock’s P/E ratio.

Predictable? An index fund does not give predictable returns.

Over long timelines, and with rare exceptions, yes they do.

Sure, you just might spend 33 years for a 1.4% real return annually

https://www.portfoliovisualizer.com/backtest-asset-class-all...

What percentage of 30 year spans give a 1.4% return or less? Better question: what's the cumulative distribution function of a 30 year investment span on an S&P 500 index fund?

Both are relevant. It’s good to know what your average scenario for a 30 year span is. It’s also good to prepare for the worst case…

Yes, you might. The vast, vast majority of people won't. Some people are unlucky. That doesn't mean the entire system is nonsense.

No one is saying the system is nonsense. They are saying returns aren't predictable over decades. Buffett highlighted this a few years back: the returns from 1964-81 - zero. From 1981-99 - up about 12x.

These periods highlight that the returns don't meet any common sense definition of "predictable". Maybe if everyone was more precise on the definition of predictable it would resolve the discussion, but it doesn't appear that the common sense definition of predictable is met here.

Looking back it might appear so, but looking forward over any time horizon it is not predictable. Happy to arrange a long-term bet at even money - I'll guess you can't predict within 3% annualized what the total returns are over any time horizon for any of the common indices. And the difference between 4% or 7% over a long time is a lot.

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