Author Topic: Is 100% stocks always the best for early accumulation?  (Read 12895 times)

Metric Mouse

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Re: Is 100% stocks always the best for early accumulation?
« Reply #50 on: October 23, 2016, 09:58:03 PM »

I am not that confident that the stock market will always go up:
https://www.youtube.com/watch?v=1yJWABvUXiU

Agreed.  In fact I am 100% confident that markets will not always go up.  The problem is that we don't know, in advance, when they will go up and when they will go down.  We don't know if we will be 1995 Japan or 2005 China.

Sadly, there are not many good alternatives out there for holders of capital who are hoping to FIRE on investments.  Companies at least have a hope of creating wealth by making/selling/extracting goods for profit.

In another thread I have expressed worries that we are entering an era where capital will be cheap and plentiful, resulting in relatively poor returns for the wealthy.  If capitalists can't use political power to hold onto the current system, the ubiquitous availability of skilled human capital,ever increasingly available and well distributed information-based capital, relatively cheap financial capital (money), and increasingly efficient ways to obtain materials (recycling, new tech materials, 3-D printing, asteroid mining,etc.), I feel that the future wealthy will be those who are actively working and producing, not those who hoarded money. A smaller and smaller percentage of wealth will be needed for food, housing, transport, etc (I hope, or we are in for a much worse world).

25 years from now I would not be shocked if young people think the idea of saving for the future to retire on earnings is considered quaint and unnecessary.

That said, there is no other game in town I can bet on.  Pretty much everything else has a worse risk profile than stocks. I gotta hope that the strongly established cultural habit of living the way we do persists for 4 more decades or so.   I am getting old, so I better hope capitalist, socialism stays the social norm and my money can work at least until my wife and I croak.  The alternative may be to end up like the old guy in Logan's Run, running away to avoid getting vaporized for my uselessness or having young kids stroke my guy hair with looks of wonder on their face at how I survived the purging process.

I'm confused - do you think that "A smaller and smaller percentage of wealth will be needed for food, housing, transport, etc." and thus you will not have a huge 'stache, (but will have little need for a huge stache since everything's so cheap) and so everything will be fine, or do you think that "the strongly established cultural habit of living the way we do persists for 4 more decades or so", at which point you will have a huge 'stache from investing and everything will also be fine?  I mean, except for the purging of old people just because.

lordmetroid

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Re: Is 100% stocks always the best for early accumulation?
« Reply #51 on: October 29, 2016, 05:06:24 AM »
You make an appealing case and the future may very well be according to your hypothesis. In such a world. The stock market will of course exists as a way for the founders to get bought out of their company. The dividend paying consumer oriented businesses like real-estate, food and infrastructure may be the beneficiaries as their will always be a stable demand. While other business will shoot through the roof and then become stale as they get out-competed by the next evolution of products.

 

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