Managing money for rich families AMA

[sserafim]

The best salesmen simply connect a willing buyer with a willing seller or vice versa - salesmen have no morals or empathy for their clients - it's about making the deal - the risk the excitement the chance of failure - the glories of success

Are salesmen sociopathic?

 

[DarkRange55]

I suppose I should also add this in regards to artwork - As you know, there are and have been for centuries, people who are well enough educated or gifted who do collect, buy and sell and who are very monetarily successful. When Marcel Duchamp's urinal became defined as art everything changed.
I have some friends that loan out some of the artwork in their house to the New York Museum of Art. Sometimes they will donate some pieces for a small tax benefit.

Plain bagel is an actual financial analyst at a reputable company

 

[sserafim]

I have some friends that loan out some of the artwork in their house to the New York Museum of Art. Sometimes they will donate some pieces for a small tax benefit.

Damn dude, where are you getting all these friends from?

 

[DarkRange55]

Are salesmen sociopathic?

I worked for an oil and gas company in Beverly Hills and had to leave because they kept lying to their clients. I think I have mentioned this before a little bit more detail on other threads and I've also worked in commercial real estate brokerage focused on hotels as I think, I've also mentioned, more in detail on other threads.

I don't know if psychopath is necessarily the most apt term, but they definitely do not have your best interest at heart and will lie to you to make a sale.

Damn dude, where you getting all these friends from?

This is a little bit more of a joke than an actual answer, but there is also some truth to this: one of the most successful people I know, his mentor and I were at a party at his house one time. His mentor said that my friend's skill was leverage. he would leverage people. he knows people who know other people and he leverages that into people that have a lot of money.

I think part of it is just the circles that you run in… networking. Some people I met through school some people I met through work some people I met through other friends some people I met at events some people I met through family, some people I met through clients, ect…

Damn dude, where you getting all these friends from?

I wish I could do a little idk emoji but I can't use that around you anymore lol



For fine wine, if anyone is interested:

It's a form of asset management where wine is purchased and held in trust using the customers deposits. Since it's (hypothetically) difficult to duplicate or even closely reproduce the aroma and flavor of natural wine it's an easy choice for speculation. With wine, vintage means everything so its value steadily increases as the years go which in theory makes it a solid investment.

The truth:

Not something I follow -- still a fundamentals cash flow guy. NPV (net present value)

I'm not very trusting in a wine fund because the high fees on holding these is controlled by some management company that makes a majority of the profit. If I was to get into this investment, I would contact someone who has a wine purchasing business (my cousin has one) and have them purchase wine for your cellar that you hold and control without the holding and management fees.
If you want to invest in wine, buy good stuff, hold it for a long time and it will go up. The trick is getting an allocation to the good stuff and then having the money to pay for it.

There is an interesting documentary (see: Sour Grapes 2016) about how a lot of vintage wines are fake (counterfeit) and explains the market. I've heard the best investment of all time is funnily "automatic firearms"… (if you'd like me to elaborate, I can).

No on doubling value of $20-$100 bottles.
As I've said above: I'd be very careful on speculating…
I have invested in certain wineries' future delivery of specific vintages, such as Lafitte, Margaux, Petraeus, etc at a buy now price. By the time the bottles are released I've made, from a couple hundred to $1,200, depending on the quality and reviews from top guys at Wine Spectator, James Suckling, Jack Daniel's, etc. But, you could pay $600/bottle for a a certain vintage of a case of Lafitte and it could take years for it to appreciate, if at all. But the very good vintages are valued, Priced In to the market, before it's even offered. So don't be a Fish.

https://en.wikipedia.org/wiki/Sour_Grapes_(2016_film)

 

[SexyIncél]

Are salesmen sociopathic?

You might enjoy my favorite documentary — it's about corporation as psychopath. My friend's a psychopath, to the extent she's aligned with her company. And certainly, so would I be



(I rarely like documentaries... the only other documentary I kinda liked was Century of the Self)

 

[DarkRange55]

Are salesmen sociopathic?

I'm sure some people are. Probably depends on your criteria for psychopath. Hilary was more machiavellian and Trump more narcissistic, as an example. A lot score high on the dark triad test. Narcissists and psychopaths can make goof salespeople (good at their job).

 

[sserafim]

I'm sure some people are. Probably depends on your criteria for psychopath. Hilary was more machiavellian and Trump more narcissistic, as an example. A lot score high on the dark triad test. Narcissists and psychopaths can make goof salespeople (good at their job).

How do you score on the dark triad test?

 

[SexyIncél]

My friend's a psychopath, to the extent she's aligned with her company. And certainly, so would I be

Oh! I should clarify that she's only a psychopath in her institutional role. Otherwise, she's pretty normal. Usual range of morality; courteous & thoughtful

This makes her good at her job. Non-psychopaths weaponize their genuine warmth — to become charismatic

 

[sserafim]

Oh! I should clarify that she's only a psychopath in her institutional role. Otherwise, she's pretty normal. Usual range of morality; courteous & thoughtful

This makes her good at her job. Non-psychopaths weaponize their genuine warmth — to become charismatic

I heard that psychopaths could be charismatic as well

 

[DarkRange55]

I heard that psychopaths could be charismatic as well

Some of them can be also highly intelligent like Ted Bundy

 

[sserafim]

Some of them can be also highly intelligent like Ted Bundy

And you jk jk

 

[DarkRange55]

And you jk jk

Does AI count? Its in my programming
View attachment IMG_0561.webp

And you jk jk

Psychopathy - someone has no fear of consequences so 80% of Navy SEALs are psychopaths. A lot of firefighters and police officers. They don't fear as much. Psychopaths are not very motivated by consequences so when you talk to them, you don't threaten them, it doesn't work. Like "we're going to throw you in jail!" They don't think it's going to happen. Psychopaths that go to prison are always surprised.

 

[Angst Filled Fuck Up]

I have most of my money in my IRA. I often wonder how it will fare in the future, particularly regarding inflation. If I build it up for another 20 years, I keep thinking that by then, the Dollar will be worth next to nothing.

How do you view this? Do you think people should be worried about their retirement accounts over the long haul or do you think the value of it will scale accordingly over time? In other words, just keep adding to it and it'll be fine?

 

[DarkRange55]

Thanks for the AMA!

Suppose someone's starting from scratch: less than 20k us$ savings, a couple small business contacts but not much

But! they've maxxed out some skills: software dev (world class & can deliver entire projects alone), graphic design, interpersonal/negotiation

What paths should they consider, to make maximum money in 1-2 years from the finance/investing world? Also, what do you recommend they learn? Including any book/vid/etc recommendations you may have

Or do you suggest more of a general mindset, as Soros says?


So could that mean the following?

1. save 10k us$
2. get an overview of what one can conceivably invest in; understand every concept you mentioned in this thread
3. get case studies. Start making theories & compare with history
4. start putting your money where your theories are
5. start asking what finance/investors' pain points are, helping them & thereby building relationships & gaining knowledge

Or do you have better ideas?

Are you asking about trading, investing or building a business?

Invest in VTI, VT, VOO, etc. Hold it forever. Upon retirement, live off dividends and/or withdraw 3% per year. Anything wrong with this plan?

Only thing I could say is that VTI is already in VOO and VOO is already in VT but the weightings are different but I'm sure you already knew that. Some investors prefer to simplify and just buy say VT because its everything at market cap weights and follows the efficient market hypothesis in the long term but others don't like VT because it has international stocks - which is another topic.
As long as you're diversified, which you are, you should be good.

Oh okay. Honestly I didn't understand any of that but thanks for the effort I guess

View attachment IMG_0566.webp

And you jk jk

For speculation- another area people have gotten rich is in "blue gold" (water).



Some real estate magnates made their fortunes on options. Some inherited it. Options are one of the ways people do get rich. LeFrak, one of the biggest real estate guys in New York, I know he used a lot of options on land. Trump used a lot of options on the lands around square blocks that he was trying to get to tear down and then put up a tower.
But Options only work if A: you have a plan for the land and B: if the market turns or plan A goes south you can afford to lose the money. If you have lots of money you can gamble that the market will and usually does go up. If you don't have lots of money you might get lucky. You make more reliable money buying and improving.

You also only hear about the winner and not the majority of losers. And they hire asset managers… No retail investor should ever touch options. It's can be similar to gambling but riskier. Also I doubt very much most retail people know what they are doing.

 

[SexyIncél]

Are you asking about trading, investing or building a business?

Yeah, wondering that too: how to position oneself to the finance industry?



Selling pickaxes to goldrushers is a common tech industry mindset. (Example: Amazon's cloud essentially takes a cut of the tech industry's revenue.) This means finding investors/traders, and automating their pain-points, or opening new possibilities

From that standpoint, I guess you'd learn a bit about what these investors/traders know & how well they perform. And be in a better position to decide whether to become an investor/trader

Selling-pickaxes-to-goldminers sounds relatively cooperative. Builds relationships with people who have more incentive to help rather than hurt

 

[sserafim]

Does AI count? Its in my programming
View attachment 131702

Psychopathy - someone has no fear of consequences so 80% of Navy SEALs are psychopaths. A lot of firefighters and police officers. They don't fear as much. Psychopaths are not very motivated by consequences so when you talk to them, you don't threaten them, it doesn't work. Like "we're going to throw you in jail!" They don't think it's going to happen. Psychopaths that go to prison are always surprised.

What other professions are psychopathic?

 

[DarkRange55]

What other professions are psychopathic?

Like professions that draw psychopaths or ones that by nature are ruthless?

 

[sserafim]

Like professions that draw psychopaths or ones that by nature are ruthless?

Professions that draw psychopaths and also ones that by nature are ruthless

 

[Homo erectus]

What do your rich clients think about Kate Princess of Wales releasing a fake photo? Is there any hidden message?

 

[sserafim]

Professions that draw psychopaths

@DarkRange55 Also the "New York Museum of Art" doesn't exist lol. Do you mean the Met?

 

[DarkRange55]

@DarkRange55 Also the "New York Museum of Art" doesn't exist lol. Do you mean the Met?

Lol my mistake thank you for catching that. I haven't lived in New York for a very long time. Thats what I meant! Thanks, lol

Professions that draw psychopaths and also ones that by nature are ruthless

Lawyer (naturally), chef & surgeon (a lot of cutting), clergy (I can also personally vouch for this statistic as at one point I was enrolled in a PhD program in divinity of theological seminary), politicians (of course), bankers and CEO's (of course and again I can personally vouch for the bankers as I started in investment banking), first responders like I said above, sales, supposedly NGO's, journalists and HR. I've had a little experience working with NGO's but not certain.

Yeah, wondering that too: how to position oneself to the finance industry?

View attachment 131735

Selling pickaxes to goldrushers is a common tech industry mindset. (Example: Amazon's cloud essentially takes a cut of the tech industry's revenue.) This means finding investors/traders, and automating their pain-points, or opening new possibilities

From that standpoint, I guess you'd learn a bit about what these investors/traders know & how well they perform. And be in a better position to decide whether to become an investor/trader

Selling-pickaxes-to-goldminers sounds relatively cooperative. Builds relationships with people who have more incentive to help rather than hurt

The companies that supply miners have traditionally made more money in the early stages.
The vast majority of traders underperform the market (in the long-run) even managed funds and there's plenty of empirical data on that. Warren Buffet didn't use traditional strategies to grow Berkshire (there's a good book on that), but he recommends the Boglehead method to most people. On stock picking, it's almost never worth it unless it's your full time job and even then only some are actually good at it.

I think it depends on what you want to do. Finance is a very pedigree driven industry and is also about connections. An MBA from a top 25 university is often times seen as a golden ticket (but doesn't have to be). Most people start in investment banking but it's a HORRIBLE job for the low-level: 80-100hr weeks. Very high burnout rate. Most people that get a bachelors in finance end up selling life insurance (financial advisor). But I think it really just depends on what you want to do, how you market yourself/degree/skills.
99% of people are just better off with the Boglehead method: max your tax advantage accounts by buying broadly diversified low-cost index funds and maximize your skills in your given profession / career.

I did a VC apprenticeship that's fairly selective

1. sure I've built a small time biz (no funding, no exit), but let's be honest, am I going to sit on boards without some track record and advise founders managing large teams in hyper growth?
   No.
2. No deal experience a la banking can hurt
3. Take 7-10 yrs due to fund lifecycle to know if one is even good at VC. Plus not getting any carry unless Senior Assoc./Partner. Less pay than banking usually.

To me it seems VC is best as a later career move it one just loves the startup eco/has a track record of entrepreneurship

VC - I know some extremely, extremely successful VC's (example: my friend's dad is famous and was an early investor in Apple, Skull Candy & Starbucks and made ~$400mil, one of my friend's brother-in-laws is the CFO of a VC fund and another friend of mine is a big tech VC) but for the industry:
The primary providers of funding to the venture capital industry are managers of large pools of capital. These entities include pension funds, university endowments, charitable foundations, and, to a much lesser extent, insurance companies, wealthy families and corporations.
Most large asset pool managers would like a 5 – 10% allocation to venture capital because of its past returns and anti-correlation with other asset classes. Unfortunately they can seldom reach their desired allocation because there aren't enough VC firms that generate returns that justify the risk. That's because the top 20 firms (out of approximately 1,000 total VC firms) generate approximately 95% of the industry's returns… with greater risk comes an expectation of greater return. Venture capital has the greatest risk of all the asset classes in which institutions invest, so it must have the highest expected return.
According to research by William Sahlman at Harvard Business School, 80% of a typical venture capital fund's returns are generated by 20% of its investments. The 20% needs to have some very big wins if it's going to more than cover the large percentage of investments that either go out of business or are sold for a small amount. The only way to have a chance at those big wins is to have a very high hurdle for each prospective investment.

Traditionally, the industry rule of thumb has been to look for deals that have the chance to return 10x your money in five years. That works out to an IRR of 58%.
If 20% of a fund is invested in deals that return 10x in five years and everything else results in no value then the fund would have an annual return of approximately 15%. Few firms are able to generate those returns.

Over the past 10 years, venture capital in general has been a lousy place to invest. According to Cambridge Associates the average annual venture capital return over the past 10 years has only been 8.1% as compared to 5.7% for the S&P 500. That clearly does not compensate the limited partner for taking the increased risk associated with venture capital. However the top quartile (25%) generated an annual rate of return of 22.9%. The top 20 firms have done even better… human nature is not comfortable taking risk; so most venture capital firms want high returns without risk, which doesn't exist. As a result they often sit on the sideline while other people make the big money from things that most people initially think are crazy.

"When it comes to investing in venture capital I would follow the old Groucho Marx dictum about 'never joining a club that would have you as a member.' Beware private wealth managers who offer you access to venture capital fund of funds. I can assure you, as a past partner of a premier venture capital fund that no firm in the top 20 would allow a brokerage firm fund of funds to invest in their fund."
- Andy Rachleff, is Wealthfront's co-founder and Executive Chairman. He serves as a member of the board of trustees and chairman of the endowment investment committee for University of Pennsylvania and as a member of the faculty at Stanford Graduate School of Business, where he teaches courses on technology entrepreneurship. Prior to Wealthfront, Andy co-founded and was general partner of Benchmark Capital, where he was responsible for investing in a number of successful companies including Equinix, Juniper Networks, and Opsware. He also spent ten years as a general partner with Merrill, Pickard, Anderson & Eyre (MPAE). Andy earned his BS from University of Pennsylvania and his MBA from Stanford Graduate School of Business.

Positive returns: Angel investing can be risky business (one of the things my dad did among others). Most prior studies posit that 5-10 percent of investments will be economically profitable. In The American Angel, investors said on average, 11 percent of their total portfolio yielded a positive exit.

Total Value to Paid In (TVPI)
The ratio of the current value of remaining investments within a fund, plus the total value of all distributions to date, relative to the total amount of capital paid into the fund to date. As defined in the current GIPS Standards (http://www.gipsstandards.org/standards/current/Pages/index.aspx)

I'm able to make 60-200% on my money every week just using volume profile and orderflow on book map how come hedge funds don't do this too feels like 99% of hedge fund managers don't beat the snp500 cuz they don't have the balls to really trade vs buy a blue chip and milk "management fees"

For HF, VC, PE - one of my best friends from Taiwan worked at HSBC in private wealth management for ultra-high net worth individuals. One of his clients had a PhD in pharmaceutical trials (or something like that!), he started and sold 3 pharmaceutical companies. The last one he sold for a billion dollars. So my friend was managing a lot of money and he did not like any of those three (HF, PE, VC). BUT every client that wanted to invest in PE, HF and VC lost money on them. One of the multi-family offices my friend is president and CEO of stopped using these three alternative forms of investment. Hedge funds got destroyed in the recent past and in some ways, some of these have relatively speaking fallen out of vogue.

I have most of my money in my IRA. I often wonder how it will fare in the future, particularly regarding inflation. If I build it up for another 20 years, I keep thinking that by then, the Dollar will be worth next to nothing.

How do you view this? Do you think people should be worried about their retirement accounts over the long haul or do you think the value of it will scale accordingly over time? In other words, just keep adding to it and it'll be fine?

Over the past 50-100 years we've had a massive increase in the global population. We've had massive productively gains with technology and overall the world has been pretty prosperous. A big part of that comes from demographics where you have a population pyramid of more young people supporting not that many old people. You have a huge workforce that is paying payroll taxes (at least in the US) and paying Medicare taxes, ect. And that helps support old people and finance the system. Now birthrates are collapsing globally especially in east Asia and the US. America's population pyramid is all from immigration (we'll see how long that lasts…). But overall we've had an inversion of population pyramids. At least in democracies, the old cohort is going to be a massive voting block and they will continue to vote themselves as many benefits as possible as the younger generations continue to shrink as they don't have as much say in politics. Maybe this will lead to some kind of fascism, I don't know. The whole current financial system is based on population growth, productivity gains and the transfer payments from working individuals to retired individuals. So in 100 years when the population begins to collapse and the taxes are much higher - global stock markets, government debt and taxes to support an aging population globally (this will even come for Africa, too, at some point. They probably have it worse because they have huge birthrates now that will probably reverse), whats going to happen? I imagine its going to be worse - taxes and government debt will be high and the stock market (depending on what is representative of the stock market) may not do as well because you have fewer people working in corporations. The only thing that I think would save us would be some type of new technological revolution which maybe enhances lifestyles or lifespans and makes massive gains in productivity for a shrinking working population. Which is entirely possible. If we don't have massive increases in productivity or reverse this crisis, government finances may be so strained that retirement benefits are cut and maybe the global economy starts to flatten out or decline.

I think you might need to save way more than expected (even with an index strategy), live frugally and work longer than expected (even if its part time)

This is a whole area of research and analysis for the USA and many other countries. YES, demographics and intergenerational transfers in many different countries with many complex financial and tax issues.

https://www.nber.org/programs-proje...-disability-research-center?page=1&perPage=50

However, stocks are the best hedge against inflation, which when measured by CPI, which is a basket (yes, food prices have outpaced), has slowed. Companies can raise their prices.

Gold and silver are shiny rocks (I've studied gold INTENSIVELY, read the Golden Constant), a house - thats in one county in one city in one state and bonds which it depends when you bought them. Crypto is a scam and treasuries can be tax inefficient and yields can go down low. Stocks - I think earnings will continue to grow in the future and I think stock prices will continue to go up eventually in the future and thats why I buy them. I just think stocks are the way to go in the long run. The global economy continues to grow.

Cash which you're guaranteed to loose with inflation over time.

Real estate its not east to make money. Its highly risky and highly concentrated. Real estate over time has matched inflation over 100 years. It really depends some places appreciated a lot faster and some places didn't. Its not that easy and it really is all dependent on location.

Cash pays interest. Your savings account and treasuries its all cash basically. If you're a billionaire and you have all your money in short-term treasuries you're gonna be fine.

Whats your take on the mrna vaccines and covid? Im concerned we are headed into a mortality/fertility/cognitive health crisis via either or both of those things.

Do you think elites favor a system reset and/or depopulation?

I'll get back to you, I'm on a ski trip in Montana at the moment. There's actually an exclusive private resort for billionaires up here that my mom's friends belong to.

Yellowstone Club - Wikipedia

en.wikipedia.org

 

[DarkRange55]

Plain bagel is an actual financial analyst at a reputable company

Art and money laundering - I guess you could make the same claim for most any non-regulated collectible – cars, coins, art, stamps, etc. I know Congress is interested in governing some of the art activities. And it used to be that you could 1031 art – no longer though.

US House of Representatives passes an anti-money laundering bill that could affect art and antiquities dealers

Introduced in March, the Counter Act is the latest legislation that faces dealers with financial regulatory burden

www.theartnewspaper.com

Art and money laundering - I guess you could make the same claim for most any non-regulated collectible – cars, coins, art, stamps, etc. I know Congress is interested in governing some of the art activities. And it used to be that you could 1031 art – no longer though.

US House of Representatives passes an anti-money laundering bill that could affect art and antiquities dealers

Introduced in March, the Counter Act is the latest legislation that faces dealers with financial regulatory burden

www.theartnewspaper.com

Also as I said - Artwork is taxed at a higher capital gains rate.

I have most of my money in my IRA. I often wonder how it will fare in the future, particularly regarding inflation. If I build it up for another 20 years, I keep thinking that by then, the Dollar will be worth next to nothing.

How do you view this? Do you think people should be worried about their retirement accounts over the long haul or do you think the value of it will scale accordingly over time? In other words, just keep adding to it and it'll be fine?

I've seen much wealth be created with a concentrated group of companies. Or, in an extreme case just one company. A friend of mine manages money for people with a minimum of $2 million and even he does mostly index fund for his clients. Depends on risk tolerance. Another friend of mine won't manage money for anything below $25 million.

I have most of my money in my IRA. I often wonder how it will fare in the future, particularly regarding inflation. If I build it up for another 20 years, I keep thinking that by then, the Dollar will be worth next to nothing.

How do you view this? Do you think people should be worried about their retirement accounts over the long haul or do you think the value of it will scale accordingly over time? In other words, just keep adding to it and it'll be fine?

Regarding your question on the dollar it's a little bit nuanced so I'm going to have to respond to that later today.

 

[DarkRange55]

I have most of my money in my IRA. I often wonder how it will fare in the future, particularly regarding inflation. If I build it up for another 20 years, I keep thinking that by then, the Dollar will be worth next to nothing.

How do you view this? Do you think people should be worried about their retirement accounts over the long haul or do you think the value of it will scale accordingly over time? In other words, just keep adding to it and it'll be fine?

I'll get back to you on the dollar but -

If you are a billionaire, then you can just buy a basket of well - selected individual bonds portfolio and usually hold to maturity. You can even do some short trading for some bonds… Depends on risk appetite. One of my friend's billionaire clients did this for treasuries. You're not going to make much but you're not going to lose principal either. Not sure you're keeping up with inflation so you may be losing purchasing power. Probably about a historic breakeven – short term Treasuries and inflation. Also depends on age – a 90 year old billionaire is more concerned about capital preservation while a 20 year old billionaire would want to see some growth. Unless the 20 year old billionaire was super chill and just wanted to live a relaxed lifestyle, make 3% on $1 billion, $30 million a year, $2.5 million a month – (taxes notwithstanding…)

For mere mortals in *some* situations the buy bonds and hold strategy is probably more sound. I have a friend who was a financial advisor, had someone come see him after interviewing a number of other advisors. She had just inherited $5 million and the other advisors were telling her to buy stocks, buy bonds, buy mutual funds, we can get it to grow, etc. She said she lived simply, had SS and a pension, traveled a little but even if she tried she didn't think she could spend $100,000/year. Couldn't she just buy some CDs and make 5%, $250,000/year and call it good? My friend told her yes, she could certainly do that and given her non-appetite for risk it made a lot of sense. She wouldn't have inflation protection but she didn't care. She just wanted to protect the capital, live a stress free life and pass the money downstream to heirs. That's an example of where a person could just buy a bunch of bonds, clip the coupon and not worry about growth.

For billionaires, they can be more in the capital preservation positioning, so would want a portfolio that matched the market plus their expenses. That is probably heavier on bonds in a normal rate environment. But generally anyone who's become a billionaire got there by taking some risk and that risk taking DNA doesn't just turn off. Billionaires will buy businesses that will provide cash flow and make them even more billions. They only hold cash and bonds for short term liquidity but otherwise are actively investing in businesses.

Buffet and Bogel certainly have balanced portfolios.

 

[DarkRange55]

Yes, please!


Ah gotcha... so the tech person might want to invest in tech stocks in companies where they have friends in different departments & can connect the dots far better than most. And manage risk, because there's always unforseen events


Ah sorry for being obscure. I mean:

Norman Normie buys a painting because he likes how it looks. But Iris Investor buys it because she predicts a bunch of fish like Norman will value it more in a couple years. Because the painter's doing all the right things & getting press. Simple supply & demand

She's one meta-level above Norman Normie. She doesn't buy it for its direct value, but for how others value it

But! More investors come along. Now Iris Investor now has to model how they value the art too — not just the normies. So she can better predict how to buy/sell. Getting complex! Maybe they use art as a tax-free currency at freeports. And introduce bubbles — where the "laws" of supply/demand don't hold

Unbeknownst to Iris: there's sophisticated investors a meta-level above her — who see her as the fish! They engineer crashes. Like a hoax that undermines the painter's reputation for a couple weeks — so she maybe sells to them in a panic — then afterwards, his name is restored, with tons of free press attention that raise his paintings' value

YES, speculators and cornering the market...and manipulation. Go back to Steven Jay Gould and Robber Barons... Greed is part of human nature and market manipulation. Why the SEC and commodities exchanges.

 

[SexyIncél]

What do you think about Nassim Nicholas Taleb's work? He strikes me as very astute

 

[Ulrich]

How did you go about getting into finance as a career? Did you study it? What background subjects do you think makes a good investor? Quant finance, economics, business, etc. Which do you think are more important? Do you think that experience outweighs theory?
Also, what is your opinion on the Black-Scholes model?

 

[DarkRange55]

What do you think about Nassim Nicholas Taleb's work? He strikes me as very astute

Distributions and fat tails and speculation, all part of market in-efficiencies, etc.

I more or less subscribe to the efficient markets hypothesis over the long term -- volatility and manipulation in smaller emerging markets -- but yes, I am a Random Walk Believer

How did you go about getting into finance as a career? Did you study it? What background subjects do you think makes a good investor? Quant finance, economics, business, etc. Which do you think are more important? Do you think that experience outweighs theory?
Also, what is your opinion on the Black-Scholes model?

what is your opinion on the Black-Scholes model?

Very good place to start for pricing options.. however lots of price variability does not follow normal curve

I'll respond to the rest later

 

[DarkRange55]

I have most of my money in my IRA. I often wonder how it will fare in the future, particularly regarding inflation. If I build it up for another 20 years, I keep thinking that by then, the Dollar will be worth next to nothing.

How do you view this? Do you think people should be worried about their retirement accounts over the long haul or do you think the value of it will scale accordingly over time? In other words, just keep adding to it and it'll be fine?

Watch the DXY. It's relative to other currencies - exchange rates.

Emerging Market Economies Bear the Brunt of a Stronger Dollar

Flexible exchange rates and anchored inflation expectations can alleviate the effects of a strong dollar

www.imf.org

My friend from Columbia was telling me they have, in a manner of speaking, "two different inflations."
Because the dollar is the world's reserve currency, my friend said there's two types of inflation in Columbia. This is gross over simplification but... When the price of oil goes up, Columbia's currency gains strength and the dollar usually goes down, i.e., an example of petrodollar recycling. (~40% of Columbia's economy is petroleum-based). Conversely, either when the dollar is strong or when prices in the US increase, prices increase significantly more in Columbia. When Columbia import goods such as iPhones, Adidas sneakers, American cars, ect. its becomes more expensive. Columbia is still exporting the same amount of oil to the US and receiving the same amount of USD in exchange. But Columbia is forced to spend more of their USD reserves in order to buy the same imports which now cost more. Additionally, and the important part, is when Columbia is forced to spend more of their USD reserves, the value of Columbia's currency (Columbian peso) goes down even further, since there's fewer USD in their nations reserves. So prices for them go up even more.

This is getting into Balance of Payment issues, basic international economic and BOP very important to smaller countries with fewer reserves -- the why of IMF

$ or Fx values reflect the longer term performance and relative position of country.
Depends on economic performance… short term the dollar and then?
Who will win over longer term: US, China, not Russia... and UK pound had its run and Euro has all the countries trying to manage their politics and economy.

A friend of mine hypothesizes - Is the Dollar gonna be like the Pound and London soon? Very valuable but you can't buy anything here. And most people in England don't make much.
England has all that banking vestige. Its a former power with a tiny population. The US has a big population and we can still build things (yes, we can, I can go into this further…) …I think its going to continue to be comfortable living on an international scale in the US. But I think money is going to become harder to get.

But I can try run your question by one of my career economist friends.

Do you think the US economy will crash in the next decade?

I know my last post made sound like a qanon believer but Im not sure how depopulation wouldnt make sense. We are wasting the resources needed for the tech singularity and excess humans are just here to train ai. Thats how i see the next 50yrs going. Free range humans are dangerous and obsolete from the systems perspective.

So I need to unpack this series of questions. First, when you say crash: are you referring to a cyclical stock market crash or a depression? Because a technical recession is different from a depression?

A technical recession is two quarters in a row of negative GDP growth.

Depression = Prolonged downturn -- 4 quarters and 9-10% unemployment.
Not the great covid recession; maybe Greece financial crisis

https://www.britannica.com/money/topic/depression-economics

In a depression it can lead to deflation because GDP collapses and so prices drop in response to big drop in demand. A consequence. Read Galbraith the Big Crash about stock market speculation and the Depression.

So I guest first, I want to clarify that question. Secondly, I can get into the population question.

 

[Ulrich]

bumping. still curious (not that you are obligated to answer)

 

[DarkRange55]

How did you go about getting into finance as a career? Did you study it? What background subjects do you think makes a good investor? Quant finance, economics, business, etc. Which do you think are more important? Do you think that experience outweighs theory?
Also, what is your opinion on the Black-Scholes model?

The famous Black-Scholes Option Pricing Model can be reduced to the heat equation, and newer iterations of option pricing models rely heavily on stochastic volatility modeling.

What background subjects do you think makes a good investor? Quant finance, economics, business, etc. Which do you think are more important?

What do you want to do??

Trading? What kind of trading? FX, derivatives, quant, commodities, prop? Quantitive research, equities analyst, investor relations, associate in investment banking, portfolio manager? Family office? Venture capital? Private equity? Hedge Fund? They all can have different avenues.

Most people on Wall Street start as analysts in investment banking and that usually starts with a summer internship before graduating. Or they get an MBA from a top 25 B-school and go into consulting. Most general businesses majors go into insurance sales and or are financial advisors. Pretty run of the mill.

Generally for undergrads on Wall Street: Economics, Finance, ect. followed by math, engineering and computer science then philosophy. To really move up, an MBA has traditionally been seen as a golden ticket.

Depends on your school. For a semi target or target, finance pays more with broad exits. Accounting is easier to get into from any school, target or not. Finance is very pedigree driven.
For Wall Street and high-finance at a top tier investment bank, you likely need an ivy league or fairly equivalent school degree, say Duke. Most Ivy League schools don't offer business or finance as an undergraduate major so it's usually economics.

Wall Street will take some of the best and brightest from engineering/physics students. They pick engineers for quantitative jobs because of their ability to problem solve.
Trading can be incredibly mathematical in nature, especially as it pertains to derivatives. Math, engineering, and physics majors are highly sought after by recruiters because of their ability to understand incredibly quantitative concepts, while learning to apply them in creative ways.
It is actually more common than people think, but it relies on a heavy amount of mathematics. Usually, you can be hired as a Quants (quantitative analysist). Quants normally work on Wall Street doing mathematical analysis. In recent years it has been more and more common especially as Wall Street executives change in order to deal with a more complex system that requires computer programming, higher end mathematics, and a diverse knowledge on topics.

For super heavy quant work: PhD in physics, mathematics, statistics, computer science or to a lesser extent finance and economics.

Study what interests you, what you're good at and where you want to go.

Generally speaking, not always but generally, economists don't make good investors and good investors don't make good economists. That jerk off economist on CNBC has never placed a bet on the market in his life. He talks about what happened after the fact. An after the fact analysis is useless and in most cases he's wrong. If these guys knew how to make money they wouldn't be on CNBC as economists talking about what happened. They would be billion dollar hedge fund managers.
Economics is a social science using math / statistics to estimate and calculate and show what is happening in economy and markets.

A good investor or a good trader / speculator?? They are very different.
I can say that accountants do not chase or follow the herd. They are usually "consistent" investors that base their decisions on "not timing the market", but what the figures and history has shown over the years. If you actually want to dissect a companies balance sheet and look at financial statements like 10K's and stuff then accounting. This is the basis of fundamental analysis (without projecting future cashflows). It allows you to see through a lot of the bs.

Depends on the job. Generally the big money is highly concentrated at the top. Like an inverse cone. Even in VC you basically need to make senior partner.
Investment banking & other areas of so-called high-finance are extremely rigorous to enter and even harder to climb. When you break down the hourly pay its peanuts for the amount of grueling hours they put in. Trading your life for money but there it's unlikely you'll make it past associate if you even get in. Typically they recruit from the ivies.
Most finance jobs are mediocre. The majority of which you are a salesmen in some capacity. Most financial planners don't package together deals. PhD's in financial engineering do. CFP's are just salesman with prepackaged deals. So the work isn't very exciting either. Its usually very tedious grunt work.
Accounting is safer but boring. Less interesting, less pay, less prestigious but you can make a million dollars a year if you stick it out long enough at a Big 4 and focus on moving up.
Family offices generally have the best work-life balance, the pay can be great and a lot more freedom BUT the culture and investment style depends on the principal.

bumping. still curious (not that you are obligated to answer)

Btw none of this is meant to sound critical. I just need some more specifics to give a more precise answer. There is a lot of money to be made in finance but there also many variables.
Feel free to DM me.

I would say, as an example, I do think we are in the golden age of healthcare. But I always hesitate on those biotech stocks. You practically need a PhD to understand what they are talking about.