Renewable Future

Intended for constructive conversations. Exhibits of polarizing tribalism will be deleted.
7Wannabe5
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Re: Renewable Future

Post by 7Wannabe5 »

cmonkey said: You'd be collapsing before the rush.....as all of us should be at this point. 8-)
Yeah, that's my general take-away and plan. However, I also think maybe my definition of culture or civilization is different than that which is being discussed in the article linked. A thunderstorm knocked out the power in my apartment for a few hours last night, but the neighborhood a mile away where I have my off-grid camper-garden was still on-the-grid. My project-towards-graceful-collapse is just barely past the phase where you have to make more of a mess before you begin to restore things in better order, so my survivalist functioning is still quite minimal, but I realized that it is already the case that I am better set up to live comfortably in my camper without power from the grid than in my apartment.

jacob
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Re: Renewable Future

Post by jacob »

@ThisDinosaur - So those calculations just use some calculations (simplified) to predict that the majors won't be producing much of any oil and natural gas. This doesn't mean that oil and gas won't be produced---more that a big integrated company won't be viable. However, there are still thousands of private derricks being mom&pop operated all over the country. These produce down to 1-2 bbls/day and they get shut off when the oil price is too low.

In the strange way that finance works, that doesn't mean they won't be good investments though. First, they may attempt to reinvent themselves as alternative energy companies. TOT is trying to go into solar for example. XOM has been a good investment for years; not because their business is exceptional but because they also play their own stock price by buying it back and thus boosting EPS and by that "fooling" the uninformed and by uninformed I here mean e.g. CAPE models and market P/Es based investors who think that's the sole metric. Wanna increase price? Then increase EPS? Easier to do just be decreasing shares.

In a similar fashion the US ceased to be a net energy producer in 1972. However, that didn't mean the country became "a bad investment" because the strategy was shifted from being the world's producer in return for commodities to being the world's empire and exporting laws in the form of control of the financial systems and military dominance in return for stuff.

So it's pretty hard to say which will be good investments in the long run. I can tell you where I am now. I would like to put PV panels on my roof. However, I see practically nobody around here doing that. This suggests to me that it's far from profitable in IL. If I had seen more than a couple of houses, I would buy a grid-based system and stay away from batteries. Batteries are not a sustainable solution. I invest in two majors and an energy distribution company currently. That's because oil prices are currently low. As soon as prices go back up, they're out of my portfolio again. By far my biggest investment is having figuring out to live nicely at about 100kWh per month---and that's the worst HVAC months. All the electronics we connect to the net is low-power. I deliberately bought a Nuc instead of a bigger machine because I knew it would be on constantly. We turn the lights off when we leave a room. Put it another way, if electricity 10x'ed in price, it'd make <4% difference in our budget.

@7wb5 - There are thermodynamical reasons why individuals also follow the EROEI charts. These aren't suggestions like "thou shalt not eat cookies". They're laws of physics. I suggest reading this: https://www.amazon.com/Energy-Society-T ... B008KZCDWA ... I'll assume for the sake of simplicity that your alfaalfa to rabbit poop system is about as efficient as another other biofuel system. Mainly because if it was more efficient, then I presume someone would have thought of cycling food energy through rabbits instead of burning it directly. In that case you get some 450 gal/acre/year of fuel. You have 1/3 of an acre, so you get 150 gals.

Now we need to build and maintain your steam engine and generator. I'm going to use the energy cost of building a car which is about 30GJ. Lets assume your machinery weighs 1/4 of a car, then you need 7.5 GJ. Using your steam engine (and shovelling poop to feed it whenever it's running), which gets 20% duty cycle (being generous here, it'll probably be more like half, you need 37.5GJ which is 255 gals of diesel. That's 20 months of poop just to build and replace the engine. A well-maintained diesel will last 5000 hours before needing a major rebuild. That's about 7 months. Now, I suspect steam engines are less durable than diesels. So you're getting very close to having a personal EROEI of ~1. If it's <1 you're basically sunk. If it's exactly 1, you basically get to build and run engines but never get anything useful done other than using the one you currently have to finish the next one before the one you have wears out.

You can of course increase your _personal_ EROEI in other ways, but that would be a zero-sum game between people and in order for you to have more, someone else will have less. IIRC, the global energy use/person peaked around 1980.

ThisDinosaur
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Re: Renewable Future

Post by ThisDinosaur »

@jacob
I get that owning Oil as a Commodity would be profitable as its becoming more rare. Same with independent oilfield support services. But if the operating cost of the drillers is going up, they should be getting LESS profitable, right?

You said the majors might still be good investments in the event that they become renewables companies. Is that simply because they are "Fooling" the uninformed public into investing in their dead-end tech? Or is that due to the "only game in town" energy situation I mentioned earlier?

If I am looking at CAPE data, how do I correct for buybacks?

Are you expecting to continue a 3% ROI as we approach the end of "business as usual," or is investing just a game to play right before watching the fall of Rome from your homestead?

jacob
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Re: Renewable Future

Post by jacob »

@ThisDinosaur - Whether a company is profitable depends on what they can charge the end consumer. It was painfully obvious to the shale operators that it's not possible to charge $100/bbl even if the oil was rare. Because it wasn't that rare. Some people simply stopped driving their monster trucks and those who didn't stopped buying other things because it cost $100+ to fill up the tank. On the other hand, the run up was quite profitable for a while. I believe that buying at present prices is profitable. But it's complicated. There's more to it than what I'm saying here but too many essays to write ...

The only game in town can be valuable even if it's a dead end ...

If you want to correct CAPE, you have to do it manually.

I doubt we'll have TSM returns of 3% for the quite foreseeable future. Of course should the markets drop 57% again like they did 7 years ago, that number will be higher, but at these equity yields, it's just a game of who's the greater fool. To me, investing is always a game to play right. It's just going to get harder because the tide is going outwards. I don't understand why anyone who spends years educating themselves to fill some specialist role as a worker; then spend more years diligently saving and reducing their COL and yet want to spend no more than a couple of book readings on figuring out how to generate their main source of income from investing. It's as if people figured they could become professional accountants or police officers based on reading couple of blog posts. I just don't understand it.

7Wannabe5
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Re: Renewable Future

Post by 7Wannabe5 »

@jacob: I absolutely believe that I am subject to the limits imposed by the laws of thermodynamics. I just don't think that I am subject to the limits imposed by the world's current batch of engineers. I would like to read the book you recommended, and will definitely add it to my list towards erudition, but please recall that I am an ENTP, so this is my likely post-zombie-apocalypse outcome.
Strengths and Weaknesses

Though enthusiastic brainstormers, ENTPs may have trouble following through on their zombie plans. For instance, they may decide to flee to Borneo, only to change their minds after a few days and attempt to make themselves a raft and float the Mississippi. Generally however, their ability to change plans at the drop of the hat will be a good thing.

Other types: "There appears to be a carnivorous forest blocking our way. But we shall persevere."

ENTP: "See ya!"

Few ENTPs will die because of a boneheaded refusal to change their plans when unpredicted circumstances arise. And since pretty much all circumstances are unpredicted now, they'll have a significant edge in the post-apocalyptic world.
Party Up

When ENTPs join a band of survivors trying to make it safety, they bring with them an unconventional perspective, a knack for brainstorming, an optimistic outlook, and a gun that shoots portals interlinked by wormholes. (It will explode after the first use.) The ENTP will also bake cakes using improvised ingredients.
Also, if he wasn't young enough to be my son, my first plan of action would be to somehow seduce this man to my homestead.(Sadly, I must reveal that this is what frugal ENTP females watch instead of pornography. Okay, maybe some men playing guitar too..)

https://www.youtube.com/watch?v=VVV4xeWBIxE

Anyways, the design I suggested was totally off-the-cuff, I will do some science, math, tinkering, repetitive viewing of critical scenes in the film "Chitty-Chitty-Bang-Bang", and return with a better suggestion inclusive of numbers and/or proof some time before Harvest 2022.

ThisDinosaur
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Re: Renewable Future

Post by ThisDinosaur »

@Jacob
I don't know what insights I can give you into people who are uninterested in learning about investing. I can tell you, as someone who is very new to it, that it is intimidating. You are playing a zero sum game with your life savings against many many many aggressive and better-informed players. There will ALWAYS be someone smarter out there.

I think people like what they are good at, and then become better because they practice. You are obviously very good at investing, and you are interested enough in it to get formally educated. My interest in investing is limited only to freedom. I could give two shits about impressing a financial planner with my last trade. FI can be achieved through 1)business ownership, 2)real estate, or 3)aggressive savings&investment + low COL. The first two require luck/*things beyond my control* to be successful. The third one shouldn't or else its no more robust than the others.

wrt manually correcting CAPE10, the "cyclically adjusted" part refers to inflation, right? I'm not sure where to find (or how to use) inflation and share buyback information in Emerging Markets or Developed Markets. How significant an effect should it have on an individual country's reported CAPE10 and how do you plug the adjusted share numbers into the formula?
http://www.gurufocus.com/global-market-valuation.php

jacob
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Re: Renewable Future

Post by jacob »

The "cyclically" refers to a complete business cycle. The point is to average earnings over the cycle from high to low to get some representative idea. Since the duration of such cycles vary (typically around 7-11 years), people tend to pick a number instead (parsimony), so that's the 10 indicating 10 years. "adjusted" has to do with inflation. I do not plug numbers into formulas. (Doing CAPE by hand is a major major project.) I'm just aware of the effect. I suppose my edge is that many other people aren't. Indeed, many people aren't even aware of the insight gained from the cyclical part and just use forward P/Es. So just by using CAPE you're mentally ahead of lot of people on Wall Street, financial press, etc.

I'm not formally educated in investing or finance or economics. I'm self-taught.

So there are two things they I find weird about common attitudes towards investing especially when it concerns FIRE.

1) That it's somehow perceived to be completely different from any other skill, e.g. "My interest in playing the guitar(*) is limited only to freedom. I don't care about impressing some record company. When playing the guitar to make money I'm up against very many aggressive and better players than me. There will always be an Eric Clapton or somesuch out there. Therefore I don't want to bother trying to learn anything about how to play or what good music is supposed to sound like."

(*) Or becoming a doctor or a plumber or whatever ... everything is intimidating in the beginning.

2) I don't see "aggressive savings&investment" as being in any way more special or robust than real estate or business. Why should it be? Indeed, a lot of investing entails owning exactly those two things. To me the transition from working as a plumber or whatever to working as an investor is pretty much just a career shift. However, the latter, once learned, will likely require far less effort in time than the former. Since I see it as a career shift, I have a hard time relating to why one would not want to spend more time on it since we are after all talking about one's livelihood. Of course one can outsource the issue given enough money, but that comes with the problem of all outsourcing. The more you know, the better you're able to hire the right person. The low cost index people figure that the best ROI on that decision is to hire the average performer because that decision is the cheapest one. This is not a problem insofar average is good enough ... but what if average returns -1% over the next 40 years? Would that be a problem and if so, what kind of problem? Hmmm ... I'm not really out to convince anyone. I just don't understand the passive punting when it concerns one's major source of income insofar that most people probably didn't treat their approach to earned income that way.

cmonkey
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Re: Renewable Future

Post by cmonkey »

ThisDinosaur wrote:I don't know what insights I can give you into people who are uninterested in learning about investing. I can tell you, as someone who is very new to it, that it is intimidating. You are playing a zero sum game with your life savings against many many many aggressive and better-informed players. There will ALWAYS be someone smarter out there.

The approach I take is to just immerse myself in it and let come what insights may come. Try to connect dots between different things/events/posts people make. Any information. I haven't yet picked up any books on investing/economics (I need too!), but I have learned a lot over the past year just by paying attention to things on a daily basis. Eventually you start developing a model in your mind of how things are going, where we might be in the overall story and you can start trying to predict based on that model. This is also why asking for investment advice doesn't work that well because everyone's model is different. Some of the investments people post in the investment log are things I would never consider! But it fits with their model. And the opposite.

At least that's how far I am. Probably not very far. I don't know how far I'll be in 2, 5, 10 years but I'm excited for it. Already I have made a couple of investments that I regret. From those I have learned.

WRT the future of energy investments, my model currently sees a western civilization that will do whatever it takes, dragged kicking and sceaming, to maintain it's way of life and an eastern civilization eager to emulate. So that's what the model says to invest in. Humans will muddle through anything if it is routine enough.

jacob
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Re: Renewable Future

Post by jacob »

cmonkey wrote: The approach I take is to just immerse myself in it and let come what insights may come. Try to connect dots between different things/events/posts people make. Any information. I haven't yet picked up any books on investing/economics (I need too!), but I have learned a lot over the past year just by paying attention to things on a daily basis. Eventually you start developing a model in your mind of how things are going, where we might be in the overall story and you can start trying to predict based on that model. This is also why asking for investment advice doesn't work that well because everyone's model is different. Some of the investments people post in the investment log are things I would never consider! But it fits with their model. And the opposite.
+1

In particular, that's almost exactly what I do; except I also read books ;-) I do believe I have a fairly large and a rather good model but it has taken me years (10+) years to build it, but all I do is to pay attention on a daily basis; try to connect the dots; and occasionally read a book (not necessarily investment related and certainly not some "10 steps to richness in retirement" book (I've already read that "kind"). So my model is mainly a large collection of dots and connections based on tacit experience accumulated starting about 2002 or so.

I have used formal theory to somewhat understand or put words on my network but only really used it to structure it insofar as eliminating false signals. Investing is much more of a social science (oxymoron) than it is a science-science. Some of the blindest people are those with just one hypothesis (theory is way too strong a word to use it)---typically freshly minted undergraduates with zero personal discretionary experience. Investing is after all more or less a competition between hypotheses.

The thing is ... a lot of professionals (investors and pf bloggers) ... and I mean REALLY A LOT ... only have one model in their head and they actually DO NOT care to connect any dots because they're locked in on preferred mode of thinking preferring to develop arguments to justify their own models to others (sales) rather than challenging them or building on them. There's a huge public misconception that professionals are playing against amateurs whereas in reality professionals are playing a somewhat different game. Investing is not like chess or tennis. It's more like WoW (I say that never having played it) in that it's open-ended and you can go and do your thing. Open-ended.

But the main point is ... what's important is to pay attention and connect dots on an ongoing basis and change one's mind if the facts change.

I think this is important for everything. Not just investing.

(Yet many professionals don't really care to make a habit of it. It's kinda like how scientists for a large part remain uninterested in science that's not part of their specialization or how they don't treat science as a philosophy to live by but more as a tool or a process that's mainly useful for generating publications and paychecks.)

FWIW, today, I've written three finance related posts, read four financial articles, and looked at the S&P heatmap once (subconsciously comparing it to yesterday). Not counting the writing, this has taken all of 5 minutes. I have not directly seen anything of consequence that would cause me to change anything happening today.

ThisDinosaur
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Re: Renewable Future

Post by ThisDinosaur »

No formal training? Aren't you a CFA? http://earlyretirementextreme.com/the-e ... estor.html
ERE not more robust than real estate or business? http://earlyretirementextreme.com/why-s ... cceed.html

The appeal of investing is that it IS fundamentally different than working for a living. Your money is working for you, instead of the other way around. Maybe this goes towards your distinction in a recent thread about the mindset of the Upper Class vs. others.

I work very hard, I save most of my money. When possible and appropriate, I exchange my financial assets for tangible claims on future needs (solar panels for power, real estate for housing, arable land for food production.) When no such replacement exists [health insurance, property taxes, unanticipated costs], I have to secure a stream of income. If it weren't for the three items in that last set of brackets, my interest in ROI and investment style would be much much lower.

cmonkey
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Re: Renewable Future

Post by cmonkey »

jacob wrote:looked at the S&P heatmap once (subconsciously comparing it to yesterday).
Oh man this was not a good one to show an over analytical person... :mrgreen:

I on the other hand have picked out something from looking at it. A new DG store was built down the road from me. Walking distance. It's a nice store! I looked up their stock info, thinking it would be nice to use their diviends to pay for my toilet paper, but was dismayed by the yield. File that away.

I now see that DG is down 15% today and that file popped up. My mental model still doesn't include buying it simply due to where I think cyclical consumer stocks are at right now, but that triggered in my mind.

This is a rudimentary example of what I was talking about.

7Wannabe5
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Re: Renewable Future

Post by 7Wannabe5 »

ThisDinosaur said: When no such replacement exists [health insurance, property taxes, unanticipated costs], I have to secure a stream of income. If it weren't for the three items in that last set of brackets, my interest in ROI and investment style would be much much lower.

You could start your own health insurance company and your own municipality to cover property taxes ;) I am actually only kind of kidding. What you actually could do is something like get a very part-time job at a gym or hospital and another very part-time local government job (substitute dog catcher?) Then your money will circle right back around to you in a very anti-fragile fashion.

ThisDinosaur
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Re: Renewable Future

Post by ThisDinosaur »

@7W5, I have objections to your suggestions. However, what do you know about starting a municipality? I'm also only kind of not really kidding.

eudaimonia
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Re: Renewable Future

Post by eudaimonia »

jacob wrote:
So there are two things they I find weird about common attitudes towards investing especially when it concerns FIRE.

This is not a problem insofar average is good enough ... but what if average returns -1% over the next 40 years? Would that be a problem and if so, what kind of problem? Hmmm ... I'm not really out to convince anyone. I just don't understand the passive punting when it concerns one's major source of income insofar that most people probably didn't treat their approach to earned income that way.
I believe the common attitude towards indexing and being satisfied with average returns boils down to three factors: recency bias, groupthink (herd instinct), and loss aversion. I would argue that the last 5 years of stock market returns being in their 98% percentile for best 5 year rolling returns has triggered a recency bias for a lot of folks who don't know much about investing and see that they could have made a lot of money. Once enough new investors jump on the bandwagon you start getting into groupthink territory and this is further fueled with old investors suffering from loss aversion bias who got burned losing money on individual stocks or mistiming the stock market back in 2008 and have vowed that indexing is the only way to go. I'm sure there are other cognitive investing biases involved but I think these 3 are the largest contributors to the current "indexing is king" moment that we're currently going through.

Getting back to the question of whether renewables are a good investment - the key thing to think about isn't whether renewables are going to replace fossil fuels. A lot of folks get stuck on that idea or the morals that surround it. The key question you must ask yourself before making any investment is what is *my* competitive edge in buying/selling this stock/product right now? Some examples of what that might look like:

1) You can structure buying PV and batteries to live off the grid and take your energy bill from $200 a month to $0. Or even a positive cash flow. Initial setup cost is $15000. ROI is 16%. Breakeven occurs in year 6. Risks include: PV continues to become exponentially cheaper reducing energy prices overall and utilities charging redistribution charges instead of power delivery charges.

2) You do the same thing as above to value a private or public company. Based on your research of the industry and the company they have robust financials, good industry outlook, and competent management. The stock is trading at $20. Your research indicates that their fair value is $40 and it should achieve this within 2-3 years. Your structure some long call leaps that are $3.5 for 2 years. Your estimated expectancy is ($20 * 30%) - ($3.5 * 70%) = $3.55 for every $1 risked. Your expected ROI is 18% and you assume that you will be right only 30% of the time based on this type of trade. Risks include: Counterparty risk - your broker not honoring their contract, and risk that your investment timing window is off - say it takes 5 years for the stock to double in price.

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Re: Renewable Future

Post by jacob »

ThisDinosaur wrote:No formal training? Aren't you a CFA? http://earlyretirementextreme.com/the-e ... estor.html
No, I'm not a CFA. I did register for it though. Got the books, read them, and then decided that being an analyst (wearing suits, calling companies, updating spreadsheets and writing reports never to be published) wasn't for me. Reading the books was certainly helpful in terms of taking a big step up from the "popular" level of discourse (e.g. Bernstein et al) but I don't have any credentials. I'm more of a CFA dropout ... like after 4 months.
ThisDinosaur wrote: ERE not more robust than real estate or business? http://earlyretirementextreme.com/why-s ... cceed.html
ERE is vastly more robust that any other life-strategy I can think of. However, that statement should be qualified as to how you understand ERE. If it's understood as extremely early FIRE, then no, definitely not! Unfortunately, the latter is more common than the former.

I've tried hard to point out how all that other ERE stuff is more important that the SWR stuff but I'm up against a [personal finance] community where most prefer to just look at the finances and focus on some kind passive investment+consumerism version. I somewhat lament the general attitude of "it contains a bunch of good ideas so just take what you can use and ignore the rest" that seems to have become the dominant paradigm on the internet, but it is what it is ... only so much I can do.
ThisDinosaur wrote: The appeal of investing is that it IS fundamentally different than working for a living. Your money is working for you, instead of the other way around. Maybe this goes towards your distinction in a recent thread about the mindset of the Upper Class vs. others.
The way I see it is that my money is working for me in the same way that my garden is working (or not working) for me. I'm its steward. I guide where things goes and what grows. So, yes it's working for me, but in some respects it's also just a tool, and in some respects I'm still tending to it, and really, it's mostly working for itself in ways that aren't necessarily aligned with my interests unless I push it in certain directions. If I let it go, it becomes a wilderness; that's still viable but I'd require much more land. If I just tend it like the average of all persons ... well, then I have no say in what it grows if anything. In particular, instead of working for me, it's kinda working for the average of all persons: It becomes a lawn. (And no before the metaphor is stretched to far, there's no investment equivalent to permaculture because finance is not a long-term invariant system like nature is.)

Thus in terms of "living" I see investing as just another way of working. It's not paycheck oriented. It's more a combination of ideas (your insight) and leverage (your portfolio size) and the pay-off is at least somewhat unpredictable. Now, I could hire a gardener ... but I think I should at least have some idea of how to garden myself in order to judge whether I hired a good one.

ThisDinosaur
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Re: Renewable Future

Post by ThisDinosaur »

Well I think you can count me as both an ERE success story and one of Nietzsche's "worst readers."
The first because you've convinced me that the demand side of finance is much more important than the supply. The second because there are parts of your method I agree with, parts where you've changed my mind, and parts I am yet to concede.

I've learned from you that financial independence is just one form of independence, and maybe not even the most important one. At least, that's the (distorted?) takeaway that keeps me coming back. Where I'm getting stuck is the contrast between the sustainable, permaculture, isolationist Craftsman ambiance of most of the ERE strategy, and the competitive hunter, Jungle Fighter approach to investing.

Look, if passive investing isn't likely to work in the real world, then I will gladly give it up. But you've asserted that only 10% of players can win your financial game. That's not going to be fruitful for most of your readers. And I'm one of them.

7Wannabe5
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Re: Renewable Future

Post by 7Wannabe5 »

@jacob: Supernacular analogy! Garden is like Finance. Finance is not like Nature. Economy is more like Nature. ERE is to Economy like Perma-Culture is to Nature. ERE is not limited to Finance like Perma-Culture is not limited to Garden.

@ThisDinosaur: A municipality is like a corporation, and would likely be exceedingly difficult to form (except maybe in Nevada?) I think it would be easier to unbundle all the stuff that is bundled in a property tax bill, and then consider whether you are receiving value in consumption in relationship to price, and also the possibility of utilizing some of what is included in the bundle in order to make a profit. For instance, you do not work 9-5, so you get the lovely park in the center of town all to yourself for your daily promenade, and you only chip in .50/month towards maintenance. Great value! You have also observed that there are black raspberries growing wild along the edges of the park path, and you graze a quart ($9.82 @ grocery) from the commons as you are taking your walk. Now you are making a profit off your fellow citizens!

Alternatively, you could obviously do something like construct a campground out in some wilderness area where there are currently no local property taxes, and charge your visitors for services such as outhouse, bear proof waste receptacles, and dirt path which you provide.

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jennypenny
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Re: Renewable Future

Post by jennypenny »

Yes, I agree investing is like gardening. You have to learn all you can, mostly through self-edification, but then you also have to monitor conditions constantly and figure out how to apply what you've learned during different conditions. Both are too dynamic for most people :( especially when ready-made products are widely available. What many people haven't noticed or choose to ignore is the deteriorating quality of those products (food and funds) and the (very real) possibility that those products might disappear or fail entirely.

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Re: Renewable Future

Post by jacob »

ThisDinosaur wrote:Look, if passive investing isn't likely to work in the real world, then I will gladly give it up. But you've asserted that only 10% of players can win your financial game. That's not going to be fruitful for most of your readers. And I'm one of them.
Right now passive indexing is best for most investors. This tends to hold in trending markets. Also, right now, equity (in the US) is considered the best investment because it's a) received increasingly favorable tax treatment --- the government wants us to invest in risk; b) a vast number of buyers have been added to the market.

However, this may not always be so. However, in order to perceive a) that it's true that it might not always so; b) whenever this happens, then one absolutely has to pay attention. If you have more than a couple of years worth of salary in savings, I think you owe it to yourself to at least browse the finance news on a daily basis.

The original YMOYL book is an example of a 100% LT bond strategy with ongoing rolling which back then was considered failsafe and the least risky---at the time (when thoughts were formulated) the stock market was considered to be a casino. That's likely because in the 1970s TSM went up and down in a trading range, so the overall consensus was that it was gambling. Now, we've had 30 years of yields trending to zero which in turn has boosted equity. Now the recency biased consensus is that stocks always go up and that bonds are stupid. Now, my concern for the common FIRE person is that it's now widely believed that ... well, I don't think I need to repeat standard pf investment advice and the reasoning behind it. What I notice is that it's usually supported by nothing but a survivor biased graph and some platitudes. There's no historic or theoretical or even international perspective.

What's important here is that those from the 1980s and 1990s who retired with money market and LT bonds as the surefire strategy based on similar flimsy reasoning ("I read a book and some author I respect told me") at some point between then and now have had to change their mind. Now, it's very likely that if they hadn't paid attention, they would have been doing at the worst possible time.

So yeah, I do think that the standard advice is the best for most people now. OTOH, I think that the general attitude that it's the best choice because investment is too hard to understand is the .... ARGH ... attitude, ever :)

7Wannabe5
Posts: 9374
Joined: Fri Oct 18, 2013 9:03 am

Re: Renewable Future

Post by 7Wannabe5 »

jennypenny said: What many people haven't noticed or choose to ignore is the deteriorating quality of those products (food and funds) and the (very real) possibility that those products might disappear or fail entirely.
Wouldn't a fund be more like a food processor or restaurant chain? Like how you can get a little bit of anything that is kind of like Mexican food at a chain Mexican restaurant? And what Jacob is recommending is something like at least learn how to grow your own peppers, read a few well-reviewed cookbooks, and take a trip to the region? And, almost anybody who has done even just 2 of those 3 things would never choose to eat at a Mexican chain restaurant again?

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