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Comment by fordacious | Hacker News Reader

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fordacious·

>Let's assume the asset appreciates at an annual rate of 8 percent

Quite a lot of value creation going on. Good on them!

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Indeed, someone with $10B who increased that to $10.8B over a year earned 80M.

That's like $40K/hr if they take no sick days or time off to go yachting. Their labour must be super important.

8% of 10B is 800M, which comes to $91K every hour of the year. The average American makes $29.81 per working hour.

https://www.indeed.com/career-advice/pay-salary/average-hour...

> must be super important.

of course it is important. They spent $10B dollars on plant and equipment, and/or R&D, and it generates more value over time (which translates to the $80[0]M earned).

Why would "labour" only be valuable if it was the person _doing_ the work?

That's a normal amount for the S&P 500. The return on a privately held company is likely higher.

Value extraction is the predominant mode when financial instruments (including stocks) are involved, not value creation.

Seems unlikely. Value extraction would lead to big dividends but declining share price.

What value creation? This could just be a simple Vanguard S&P 500 ETF like everyone else's.

Might as well take out the biggest margin loan possible and invest in the S&P 500 if that is the case.

That's exactly what a lot retirement funds would do. And it is a good way to invest.

> This could just be a simple Vanguard S&P 500 ETF like everyone else's.

The demand for shares in a company incentivizes entrepreneurs to create companies so that they can then sell the shares.

So even passive investing contributes to innovation.

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