Investment returns in the era of the decline

[steveo73]

For the purpose of this particular discussion we can limit "progress" to just "economic progress", i.e. whether the economy will keep increasing

People keep demanding new stuff and new stuff keeps coming out. I remember going to the store to get videos. I grew up with no Internet.

I suppose my take is you need to explain why humans will stop inventing and consuming new stuff all the time. The way we utilize energy is not a good reason why human behavior all of a sudden changes.

[zbigi]

People keep demanding new stuff and new stuff keeps coming out. I remember going to the store to get videos. I grew up with no Internet.

I suppose my take is you need to explain why humans will stop inventing and consuming new stuff all the time. The way we utilize energy is not a good reason why human behavior all of a sudden changes.

I have a different take - you'd need to explain what would change compared to the previous couple thousand of years. People in 1000 AD kept demanding new stuff, but so what? It was not being produced, because we didn't have the means. Just wanting/demanding stuff does not make things possible, they also need to be technically feasible given the resources at hand...

For example - nowadays, a single, mundane start of a space rocket consumes more energy that was used (mostly via human muscles) to build the largest pyramid in Egypt (one of biggest feats of humanity till fossil fuels). If there's no fossil fuels, the main source of energy for fueling any kind of machines are: human and animal muscle, burning wood and small-scale renewables (windmills, watermills). You can't really power a factory spewing out a billion smartphones a year with that. Historical evidence shows that these sources of energy barely allowed us to provide essentials for people (food, shelter), to build some fortifications, to manufacture some weapons and finally to build some fancy palaces for the rich with whatever's left. There's just no more room to operate without fossil fuels.

And re: human ingenuity, it was happening during all pre-modern times. People were figuring out better ways to farm, to smelt metals, better machines etc. All that, without the boost of fossil fuels, amounted to 0.1% a year of GDP growth. It only changed to 2-3% a year once we started using coal.

BTW, coal was first used to power the pumps which drained the metal ore mines (which were being constantly flooded, as mines do). As people depleted the more accessible ore deposits and had to go for the nasty ones, powering the pumps with just renewables or animal muscles proved to be more and more insufficient. This prompted the invention of the steam engine, first powered by wood IIRC, but soon after that - by coal (the English had burned almost all their forests by then, so wood stopped being an option). If there were no fossil fuels in the ground, they'd still have to power those steam engines with precious wood, which would make basic metals like iron rare and very, very expensive...

[Hristo Botev]

Detail it out.

No. We likely aren't going to agree as to what the ends are/should be.

Let's be honest - you've got a set of kahunas to follow that approach.

Is that directed at me? If so, "that approach" (family, work/skills, land) is one that has a multi-millenial track record. Your approach (index funds) is only two years older than I am, if the Internet can be trusted.

I'd have to go back to work tomorrow and work for a long time.

Your thinking on this issue seems to assume as a given that work is an evil, but a necessary one, and that our priority (or at least a priority) should be getting to a position as quickly as possible where work is no longer necessary. I dispute that assumption. "You be you" and all; but as far as I've figured it out so far, work/labor/industriousness is a capital "G" universal and objective Good.

All the high falutin BS surrounding whatever metaphysical discussion you want to have probably loses hand over foot to the simple index approach.

I should add that it's fine to talk metaphysical stuff but practicalities are much more important to creating a good life for yourself especially in this context.

Cart before horse. You have to figure out what the good life is first (the metaphysics); then figure out the practicalities of how to get there. If you think the good life is living a life of leisure without the need for work as a certified member of the rentier class, running calculations to ensure you arrive as close as possible at $0 the second you give up the ghost, then index funds probably make a whole lot of sense. (For the record, I think this way of living is degenerate and gross and exploitive and sad.) If you think the good life is being surrounded by family (wife and kids, but also brothers and sisters, aunts/uncles, parents, grandparents, grandkids, and lots and lots of cousins), who are all no more than a short car-ride away from you, building a culture that is your own and not the monoculture of the Machine, focusing on multigenerational wealth and setting your kids up as much as possible to live a virtuous and holy life, then I say invest in family, work/skills, and productive land and other productive fixed assets.

ETA: As an aside, it took a bit, but speaking of the monoculture of the Machine, I finally listened to a good friend's incessant nagging that DW and I needed to check out the Yellowstone TV show. We put it on hold at the library and it finally showed up, and we watched the first episode last night. There was a good quote from the main character (the patriarch) in that episode that I think has some truth in it:

"Leverage is knowing if someone had all the money in the world, this [productive land] is what they would buy."

[Married2aSwabian]

Interesting discussion here.

@Zbigi - maybe you’ve answered your own question: as resources become more scarce and demand increases, invest in mining companies - both for ore like lithium, copper and rare earth, as well as crypto. I’m not currently invested there, but maybe not a bad place to look.

This is a cool graph:

https://ourworldindata.org/world-population-growth

Scroll down to “Population since 10,000 BC” and click play.

We bounced around at under ½ billion people until around 1600 and then started to grow faster, but things don’t really start to take off until the 20th century. It’s true that fossil fuels along with inventions like the diesel tractor, automobile and others made this possible. Nobody had the luxury of sitting around wanting shit like iPhones and videos, or for that matter producing such, because they were too busy doing manual labor to be able to eat and have shelter.

So we are entering a new global phase where countries are in an accelerated scramble for the remaining limited resources. We should keep in mind that markets aren’t the only system that is self-correcting, the planet and all natural systems here tend to self-correct, too.

[Hristo Botev]

EDIT: The motivation for my original question is that, if the money eventually will end up being semi-useless anyway (due to contracting economy, currency debasement, economics shocks etc.), then why the hell am I working and saving right now?

Because money is not semi-useless now, and right now that money can be used to acquire things that have intrinsic value.

[Hristo Botev]

There's just no more room to operate without fossil fuels.

Wendell Berry seems to be doing alright. (Just did a quick Google search that he didn't die since the last time I checked in on him; whew!)

[zbigi]

building a culture that is your own and not the monoculture of the Machine, focusing on multigenerational wealth and setting your kids up as much as possible to live a virtuous and holy life, then I say invest in family, work/skills, and productive land and other productive fixed assets.

"Productive land" implies farming (unless you want to own a mine? . That sound like a ton of hard work (and a ton of capital required) when done at a scale that's more than a hobby. However, I see other options to be making money while (mostly) outside of the Machine and while being useful to the local community - i.e. a car or home appliances mechanic for the technically-minded, any kind of construction workers for those strong and healthy like an ox, local lawyer for those with penchant for arguments and a law degree etc.

[Hristo Botev]

"Productive land" implies farming (unless you want to own a mine? .

Vegetable farming, livestock, orchards, rental homes, hunting leases, hay and tree harvesting, AirBnBs, Harvest Hosts, RV park, wedding venue, any number of businesses built around giving urbanites a chance to be "country" for a day (skeet shooting, dirt bike/BMX tracks, etc.--I mean, our neighbors just spent an obnoxious amount of money to stay the night in a modern-looking one-room cabin/tiny house/shed thing in the woods about an hour from town); I'm sure there are many, many other options.

a/k/a "redneck rich"

For the record, though, we're full down here; but feel free to buy land up north. I mean, climate change and all; it's only going to get hotter down here--but I hear the "Tracys" of the world are flocking to Duluth with an aim to turn it into San Francisco. God speed! https://www.cnn.com/2021/04/12/opinions ... index.html

That sound like a ton of hard work . . . .

Good; what else you going to do, watch the latest degenerate recycled BS on Netflix? (The Greeks already told ALL of these stories.)

a car or home appliances mechanic for the technically-minded, any kind of construction workers for those strong and healthy like an ox etc.

That all sounds great. I remember coming across this list awhile ago and I thought some of it sounded great: https://www.robgreenfield.org/sustainablebusinesses/

All this is to say, as I'm sure Jacob has said over and over and over again, the most important factor in all of this is the spending; you get that number down to as close to $0 as you can, and the sky is the limit.

[ducknald_don]

Your thinking on this issue seems to assume as a given that work is an evil, but a necessary one, and that our priority (or at least a priority) should be getting to a position as quickly as possible where work is no longer necessary. I dispute that assumption. "You be you" and all; but as far as I've figured it out so far, work/labor/industriousness is a capital "G" universal and objective Good.

I'm on the same lines as @steveo on this.

It's not the work itself that is the problem for me, it's working for other people that seems to drain every last drop of pleasure from of it. Personally I want to spend my time on things that are intrinsically rewarding rather than chasing a pay check.

Work for the sake of work is too close to a religious outlook to me, nothing is universally good.

[Hristo Botev]

nothing is universally good.

This is why I said that this whole discussion involved metaphysical questions that the folks on this forum weren't going to come to a consensus on.

This is also why Socrates didn't even respond to Clitophon in the Republic; there's simply no point. (ETAx2: But see C.S. Lewis's The Abolition of Man.)

For the record, because work is a good doesn't mean all work is good.

ETA: I'm not much of a rhetorician, but it seems to me it is a contradiction to say that "nothing is universally good" and then also recognize that some things are

intrinsically rewarding.

[steveo73]

No. We likely aren't going to agree as to what the ends are/should be.

Of course not but if you can't detail it out it's not a valid plan.

Is that directed at me? If so, "that approach" (family, work/skills, land) is one that has a multi-millenial track record. Your approach (index funds) is only two years older than I am, if the Internet can be trusted.

There is still no detailed plan.

Your thinking on this issue seems to assume as a given that work is an evil, but a necessary one, and that our priority (or at least a priority) should be getting to a position as quickly as possible where work is no longer necessary. I dispute that assumption. "You be you" and all; but as far as I've figured it out so far, work/labor/industriousness is a capital "G" universal and objective Good.

Cool.. I have no problems with this. It's just that this is a forum supposedly about retiring early. You get to do you and that is cool but you will more than likely have to work longer.

Cart before horse. You have to figure out what the good life is first (the metaphysics); then figure out the practicalities of how to get there.

Not really. I mean I get it. You need to develop a way of living that works for you but that changes over time. Life isn't about working out your perfect mental outlook and then everything follows from that. Life is more messy. You age and you learn and you change. Investing can be really simple.

The key points remain though. Firstly unless you can detail out your plan it's not a valid option. Secondly if your plan is less efficient than it could be that means more work and potentially considerably more work. There is a trade off.

The index approach is reliable and robust and it's efficient. It's hard to beat for most people. If you can beat it I'm interested but you have to detail out that plan prior to be able to consider if your plan will beat the index approach.

I'll add that the utility value of not going to work for me is really really high. I cannot think of a period in my life that has been better than the current state that I've worked hard to get too.

[steveo73]

I have a different take - you'd need to explain what would change compared to the previous couple thousand of years.

I don't agree with this. We are where we are today. Humans are ingenious. I expect us to continue to advance and I expect massive changes over the next 50-100 years that will astound us.

I'm nearly 50 and the changes in my lifetime have been amazing. We were one of the first households in our area that had a computer and my parents won the Vic 20 in a raffle.

https://en.wikipedia.org/wiki/Commodore_VIC-20

Just take a step back and look at how far we've advanced. You really want to bet against human ingenuity ?

[steveo73]

Personally I want to spend my time on things that are intrinsically rewarding rather than chasing a pay check.

It's alternatives isn't it. I find it interesting on a forum that has a huge goal of being able to retire that people are arguing that working significantly longer is not a problem. I mean it has to be a problem right. If not then forget retirement and we aren't doing that for just one person but for everyone.

Is everyone cool in relation to working significantly longer to utilize sub optimal investing approaches (which are not even detailed enough to provide a realistic plan) in order to manage a risk such as being in an era of decline ?

I worked as a project manager and you have to be practical. When you manage a risk you think of the likelihood of that risk happening and then the potential impact.

If we are honest the likelihood of being in an era of decline is at best unknowable and at worst extremely unlikely. The potential impact is also unknowable. Will your land investments really beat the stock market even under an era of decline ?

Is that worth working double the time that you could be ? Everyone gets to make that call but your time on Earth is limited. Will that approach maximize your happiness ?

[theanimal]

I find it interesting on a forum that has a huge goal of being able to retire that people are arguing that working significantly longer is not a problem.

That is not the goal of ERE. That is the goal of FI.

[steveo73]

This is why I said that this whole discussion involved metaphysical questions that the folks on this forum weren't going to come to a consensus on.

You have to have some parameters when discussing this topic.

If the goal is to become FI then you can assess the time taken to get to that level and the cost associated of doing that. At the moment we are talking significantly sub-optimal investment plans compared to simple index investing. The cost of that is a massive amount of extra work.

If work doesn't matter or FI doesn't matter than it's just a discussion of are we in an era of decline which as you state is a meaningless conversation because everyone will view that differently.

I suppose the question becomes to all of us - are you prepared to pay the cost of a sub optimal investment approach and the cost is considerable additional time spend working.

This reminds me of the discussions about getting to a 3% WR and the value of that. I hope everyone has seen the charts that show your chances of running out of money that includes death. To me getting down to 3% is complete and utter madness. Everyone gets to make that call for themselves but there is a cost.

I'll add one more point. There is the counter argument to the 3% rule which is that if you get your savings rate really high than the extra time spent working isn't that much. This point assumes you can save at that high a rate. There is a cost associated with this as well.

There is no free lunch.

[steveo73]

That is not the goal of ERE. That is the goal of FI.

Oh no. This is terrible. I'm devastated.

Back to reality - who gives a toss. It changes nothing.

[theanimal]

?

It does change things because in that context most of your arguments do not make sense. That is the premise most here are operating under. You're more than welcome to have a differing opinion but it is a bit strange for you to wonder why people are thinking and acting based on a certain strategy on the forum that is explicitly for and about said strategy.

[steveo73]

It does change things because in that context most of your arguments do not make sense. That is the premise most here are operating under. You're more than welcome to have a differing opinion but it is a bit strange for you to wonder why people are thinking and acting based on a certain strategy on the forum that is explicitly for and about said strategy.

I initially assumed you were trolling and I'm not convinced that you aren't trolling but I'll respond as if this isn't a troll.

If your version of ERE doesn't have anything to do with retirement or financial independence or any form of working less and living off investment returns then investment returns don't matter to you and this discussion is probably irrelevant. In that situation I suggest a thread in a section other than the money section would probably suit you better.

[theanimal]

I didn't say that any of what you listed doesn't have anything to do with it. I said that retirement is not the goal of ERE as you can find in many places on this forum, the wiki and the book. You objected to people wanting to work longer because you thought everyone's goal and the goal of the strategy expressed on this site is to retire early. I told you everyone's goal is not to retire early, nor is that the goal of ERE. You make up new argument off things I did not say. I correct you again. Now I am done here.

[steveo73]

I didn't say that any of what you listed doesn't have anything to do with it. I said that retirement is not the goal of ERE as you can find in many places on this forum, the wiki and the book.

You went for the old cult play and it didn't come off. That is the second time you've done that recently and both times you've been so far off base it's not funny and you've made yourself look like a fool.

The big question is will you go for the old cult play again or are you going to stop trolling.

I hope you are done because then the dribble may stop.