seanconn's journal

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ertyu
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Re: seanconn's journal

Post by ertyu »

I'm not who started this but, maybe not do the problem sets but, one of the things I always had problems with when it comes to school is that school teaches you to be good at passing a test on the thing, not necessarily to be good at applying the thing. This is partly unavoidable because people who are good at applying the thing go and get paid well for applying the thing, they don't become school teachers. When reading a textbook, it would be particularly helpful to me to discuss how the material applies practically and what it means when it comes to making investment decisions.

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seanconn256
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Re: seanconn's journal

Post by seanconn256 »

ertyu wrote:
Thu Jan 05, 2023 12:34 am
I certainly agree and have noticed the gap between knowing the material and really absorbing it. In my notes, I have made sure to try and do some of my own thinking, often by re-wording everything at least, and trying to see how to actually apply the concepts/do the math. This is helped by doing the review questions at the end of each chapter. I still find it difficult to see myself applying it to real investing, because I am studying at such a basic level, where the number of assumptions is extremely great.

This is my personal opinion, but it seems like basic economics relies on an extremely simplified model of human behavior, just so it can get started somewhere. I often feel like I am studying the "imagine a horse as a spherical ball in a vacuum" version of economics so I can learn about the basics before I learn to trot.

In other words, I have doubts that any of this stuff is practically applicable until it gets more sophisticated, and as a result there is little content for discussion. I am open to other thoughts on this however

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grundomatic
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Re: seanconn's journal

Post by grundomatic »

I think you nailed it. Learn the basics to later learn "that's not quite how it works".

mathiverse
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Re: seanconn's journal

Post by mathiverse »

Yeah, it's hard to discuss the book. I was in another book group for it in 2021 and the meetings were challenging because, unless someone had specific questions or misunderstandings, it was hard to generate a quality discussion.

Also, in case you hadn't seen this, but were interested: there are old discussion threads for most (all?) of the chapters in the McConnell book. Here is the first: viewtopic.php?t=11046. The other threads have similar titles to that one, so a Google search like "site:earlyretirementextreme.com McConnell" will turn up the others.

ertyu
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Re: seanconn's journal

Post by ertyu »

I just looked through the 2020 edition of mcconnel's economics and i don't know if id recommend the chapters on money, banking, and monetary policy. the textbook seems to be stuck in a pre-2008, positive reserve requirement / money multiplier framework (aka. limited reserves framework) and does not reflect how macroeconomic policy works currently.

for instance, it does not explain the repo/reverse repo facility, or the importance of "liquidity," or the importance of the TGA and its size, or the presence of assets on the fed's balance sheet and their meaning. regulation of banks also happens differently; in mcconnel, the chief regulatory measure is portrayed to be the reserve requirement while banks these days are primarily "balance sheet constrained." I have been looking for an updated textbook. There is this broad-view summary from the St. Lewis fed, there's also the book Central Banking 101 which I haven't yet read but which promises to be a bit more up to date.

But in general, it seems to me economics textbooks are very much obsolete -- see the entire section on cost curves and the perfect competition/monopoly/oligopoly graphs as well as the monetary economics chapters which portray monetary economics as it hasn't been practiced for a good 15 years now. As our purpose in reading these is to understand how the economy and the financial markets work rather than to pass an exam, I'd question how suitable mcconnel's economics is to the investment curriculum these days.

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Re: seanconn's journal

Post by jacob »

ertyu wrote:
Thu Jan 05, 2023 12:34 am
I'm not who started this but, maybe not do the problem sets but, one of the things I always had problems with when it comes to school is that school teaches you to be good at passing a test on the thing, not necessarily to be good at applying the thing. This is partly unavoidable because people who are good at applying the thing go and get paid well for applying the thing, they don't become school teachers. When reading a textbook, it would be particularly helpful to me to discuss how the material applies practically and what it means when it comes to making investment decisions.
I think that depends on the school system. I've been in a few, three countries, and there certainly are differences. The Danish system (as far as my experiences in STEM go) remains my favorite. The focus was on solid practice of fundamentals and being able to apply basic theory to novel situations. IOW, the goal was to teach students a new framework and get them used to applying that framework to whatever problem they can across. "Here's a tool. Lets practice it a lot, so you're able to use it." It was "kennen"-focused.

Contrast with the Swiss wissen-approach that introduced many more tools. Here the goal was for the student to be able to talk _about_ the tools at the exam. The ability to use them was tested once but tool use was really practiced beyond a one-shot demonstration.

The US approach was somewhere in between. There was a bunch a standard problems and the challenge was to identify which one problem one was dealing with and then apply a rehearsed prescription. This works great until a novel situation is encountered.

In my recommendation of econ/finance books, I've been presuming that people would go at it with the "Danish" sentiment and see them as a bunch of frameworks and mental models to guide thinking about the actual world. Not descriptions to be memorized so one can talk precisely about e.g. how exactly the Fed works OR the idea of being able to match the current world to one of 8 case studies in a book. In terms of developing one's thinking, older books are often better because they contain less informational filler details.

mathiverse
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Re: seanconn's journal

Post by mathiverse »

jacob wrote:
Tue Jan 10, 2023 9:13 am
I think that depends on the school system. I've been in a few, three countries, and there certainly are differences. The Danish system (as far as my experiences in STEM go) remains my favorite. The focus was on solid practice of fundamentals and being able to apply basic theory to novel situations. IOW, the goal was to teach students a new framework and get them used to applying that framework to whatever problem they can across. "Here's a tool. Lets practice it a lot, so you're able to use it." It was "kennen"-focused.
Can you explain the kennen focused method in a bit more detail? Is this as simple as saying the Danish system would make you do 50 problems for a given tool vs the Swiss system making you do one problem vs the US system making you do 10 problems? Or does it go deeper than that?

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Re: seanconn's journal

Post by jacob »

mathiverse wrote:
Tue Jan 10, 2023 9:42 am
Can you explain the kennen focused method in a bit more detail? Is this as simple as saying the Danish system would make you do 50 problems for a given tool vs the Swiss system making you do one problem vs the US system making you do 10 problems? Or does it go deeper than that?
Yes, to exaggerate for effect:
Danish: 50 problems for 1 tool.
Swiss: 50 problems for 50 tools.
American: 50 problems for 5 tools.

I think it's best described with
Bruce Lee wrote: I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.
While the cream of the crop rises to the top in any of those systems---those who go to grad school tend to be more similar than different, likely in spite of the system they trained under---the systems do have different paradigms and this is relevant for the "middle of the Bell curve". Once students hit employment, the Danes tend to demand an explanation for why some process is the way it is, but they'll then feel free to implement it creatively. Americans are more plug and play; less asking why, but also stumped with unfamiliar problems(*) The Swiss are great at presenting.

(*) One of my Danish professors liked to put in never-seen-before problem types at the end of the written exam arguing that "if the students didn't learn something new during the examination, they were wasting their time". That's a very different attitude than the "practice the study-guide to get an A+"-mindset.

PS: This is all generalized from my experience in physics/math. Other fields may have different traditions.

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seanconn256
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Re: seanconn's journal

Post by seanconn256 »

Jan post:

Dec savings rate: 83%
Jan savings rate: 80%

Still learning about investing; I'm about halfway through the textbook so far. Some parts have been more interesting than others, but there have been some highlights, namely:
  • the relationships between supply and demand
  • elasticity
  • most of the microeconomics stuff, how do firms decide to expand, short run vs long run behavior, etc
  • oligopoly-ish stuff like non-price competition, price leadership, advertising, game theory, etc. This seems much more similar to how lots of things actually work
One other way I have found the book useful is in correcting some mistakes/simplifications I had about markets. One small example, I used to think that the market price gets set at the cheapest that it is possible to produce something, and that more efficient firms will necessarily beat out less efficient ones. According to the book, market actors will really ask themselves which makes more money; cut my price, and get some of my competitors competition? Or, just keep the current price and make more profit per product?
This determination changes in the short/medium/long run, and ideally the market should still move towards the lower price, but that depends on the timeframe, sector, and market composition. Therefore firms that are less efficient than their counterparts have a place in the market.
Also, related to the discussion above, I have been thinking about basically everything in this book in terms of models/systems. They are useful in describing some things, like basic relationships between supply and demand, but they can be dispensed with if something better comes along, or if their assumptions (which are always so vast) are wrong enough.

On my energy issues; they have improved. What seems to be doing it is a regular sleep schedule (within 30 mins), keeping things bright during the day, keeping them dark at night, and allocating a lot more time to falling asleep. It's still not perfect, but I can keep up with things a lot better now.

Also the mastermind group has started up again, I'm very happy to see that. We are re-reading the ERE book. I have, predictably, already realized that I missed most of it in previous read-throughs.

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seanconn256
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Re: seanconn's journal

Post by seanconn256 »

Feb savings rate: 77%

This month I have just been continuing previous work, nothing really new or interesting.

I usually talk only about the things I am currently working on, so I thought it would be a good idea to do a quick overview of things I have tried, and how they are currently working out.
  • Rent; I used to pay 1300 for rent, I now pay 890. Two bedroom apartment, I have two bedrooms because I work from home and benefit greatly from doing my work in an area of the house I can close off when done.
  • Transportation:I still have a car, it's paid off, but I drive much, much less than I used to. My monthly car expenses are ~20$ for gas, ~60$ for insurance, ~10$ averaged out for oil changes (so 90$ a month total). In a typical week I do not drive, I bike everywhere I can, all year round. I have a bike cart to bring groceries home every week. I see my family, who live an hour away, often. That is the main usage for my car.
  • Food: I spend about 120$ a month on average, mostly because I try to eat as healthily as I can. I only buy single ingredients, and cook everything. I do social events sometimes, and occasionally eat out as a result. I am totally fine with that.
  • Utilities: I'm spending about 80$ on electricity a month. I keep the heater at 50 degrees F (10 C) and wear warm clothing during winter. I put plastic over the window in my office for insulation. In the summer I struggled pretty hard but was able to manage. Mostly because I really can't sleep at temperatures over 70 degrees. I line dry all my clothing, and wash things on cold. Doing this inside has had basically no downside.
  • Exercise: I don't pay anything for working out, I run outside, ride my bike, do yoga.
  • Furniture: I still have some wood lying around, and woodworking tools, but I only use them if I need to. The amount of free furniture I have found just lying around is incredible. A table, two sets of chairs, a drawing desk. This was talked about somewhere on the forum, but if you are willing to go without a piece of furniture for a while, there is a good chance it will just fall into your lap if you do the bare minimum of asking friends and looking around
Misc:
  • I mend my clothing and fix things when they break. I have taken apart my phone to fix the charger port, mended bed sheets, jackets, shirts, pants, etc. I just fix them while I watch a movie or something.
  • I experimented sleeping without a bed, but that was a poor idea. It wasn't uncomfortable as much as it was not-very-comfortable, and as I have sleep problems it definitely didn't help.
  • I often get 80% of something from 10% (or 0%) of the cost, if I just think about it for a small amount of time. I put my monitor at eye height by placing books under it, I made a clothesline from 1$ rope and parts of a chair I found, made a keyboard wrist wrest by folding up an old t shirt, I do my own taxes, buy last years model from ebay, etc. Most things are too small to mention or I don't even remember doing them.
  • I bought I used bread machine for 20$ at a second hand store, and have used it every week since. I love that thing. I buy 25 pound bags of bread, store it in a sealed bucket, and make fresh bread every week. It's probably cheaper, but I don't know how much bread costs.
  • My grocery store trips are very quick because I only go to the dry goods and produce sections, which are at the front of the store.
Nothing groundbreaking, difficult, or all that interesting, but cheap and effective, with not really much compromise.

AnalyticalEngine
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Re: seanconn's journal

Post by AnalyticalEngine »

Sounds like a solid month. Sometimes the basics are the hardest and most important thing of all.

What do you cook for food? This is one area I have always struggled with so I like hearing the details about how people make this work. I too also got a bread machine recently and it's an amazing invention. I know the bread from it isn't as fancy as handmade bread, but it is 100x easier and means you can readily have fresh bread everyday.

dustBowl
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Re: seanconn's journal

Post by dustBowl »

seanconn256 wrote:
Sun Mar 05, 2023 4:15 pm
  • Food: I spend about 120$ a month on average, mostly because I try to eat as healthily as I can. I only buy single ingredients, and cook everything.
This is impressive to me. I'm at ~$400 per month for food, and that's with zero instances of eating out + a decent level of cooking skill. Would you mind talking a little bit about your shopping / cooking strategy?

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seanconn256
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Re: seanconn's journal

Post by seanconn256 »

AnalyticalEngine wrote:
Sun Mar 05, 2023 4:35 pm
A fellow bread machine enjoyer, awesome. In case you have not considered this yet; you can make pizza dough in a bread machine too.
dustBowl wrote:
Mon Mar 06, 2023 2:19 pm
Yea sure, I mostly rotate between recipes that are based on dry goods, but can also have any miscellaneous vegetables added, so I can normally get whatever is cheap, or on sale, or use what I already have. Flexiblity is cheap.

I also normally buy bulk ingredients, and get the cheapest versions within reason. All beans are dry, vegitables not pre chopped, 10lb bags of rice, etc

Example ingredient lists are:

dal ( any lentils (preferably red), tomatoes, onions, spices, butter (for ghee), rice) (at so much dal at some point I rarely eat this anymore, but all the ingredients are dry so its always there)

ragu (some kind of bean (preferably a lentil), some kind of tomato, any pasta, garlic, any saute-able vegetable (namely zucchini), onion, spices)

chili (beans, tomato, garlic, misc peppers, onions, spices, can also add rice or pasta (egg noodles are pretty good))

hot bean soup (garbanzo beans, rice, onion, home made harissa paste, can add leafy greens like spinach)
...

Also soup + toast = fantastic

About twice a year I compare prices between local stores, but mostly I keep a mental note of prices of things and their substitutes every week at the store. In case you didn't notice, I eat a lot of the same stuff in different configurations, so this makes a big difference. For example, green lentils have doubled in price for some reason, so I buy split peas now. They require some pre soaking but then cook the same as lentils.

I split a Sam's club membership with a friend, which pays for itself with frozen fruit and onions alone (25$ a year).

I have also noticed, sales don't mean lower prices very often. Just lower than last week. For example, apples in season are quite cheap, but out of season it will go on "sale" for twice the price. I have in season charts for fruits and veggies that I keep track of. This is especially important for fruit, which generally I need to eat more of.

I also don't really eat meat or dairy, except cheese and butter. I could never abandon cheese.

Also I think most of this is in the ERE book? There's a food section somewhere. Also, the recipes in "Good and Cheap" (free pdf online) are all good.

I am also curious to hear what you all eat, and where the difference lies. I wonder if I live in a cheap area, or if have some sort of massive accounting error somewhere, lol.

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grundomatic
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Re: seanconn's journal

Post by grundomatic »

My house is at about $300/month on groceries for two people. Our cooking and shopping is similar to seanconn's, with instances of splurging on a few luxuries/conveniences. That doesn't count eating out which can be a similar amount in a month. I put that in a separate category because that's not paying for food, it's paying for something else.

AnalyticalEngine
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Re: seanconn's journal

Post by AnalyticalEngine »

Thanks for sharing, @seanconn256. Seems like a pretty solid strategy. On my end, I've paid less attention to prices out of sheer laziness, but I have found The Fat Chance Cookbook, which I got from a friend, has a solid list of pretty frugal recipes. The book is really about getting more vegetables in your diet, so most of the recipes are your standard stuff + adding in a ton of vegetables into sauces, sandwiches, etc. My sandwich consumption has increased quite a lot due to the usefulness of the bread machine. I'll have to try making a veggie pizza with it next.

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Re: seanconn's journal

Post by Western Red Cedar »

seanconn256 wrote:
Tue Mar 07, 2023 10:56 am
I am also curious to hear what you all eat, and where the difference lies. I wonder if I live in a cheap area, or if have some sort of massive accounting error somewhere, lol.
It sounds like you have the food budget and nutrition locked in - well done! Our household grocery budget has started creeping closer to 300-400 per month for two people. I've had it as low as 150-200 in the past.

Cooking is a big creative outlet for DW and I, and we'll bounce between Thai, Korean, Japanese, British, French, Italian and Mexican in the course of a couple weeks. That variety means we tend to need quite a few specialized ingredients in the pantry and refrigerator. I've eased up on the food budget in the last year or so once I got into lifting weights, and I'm eating more animal protein (chicken, turkey, eggs and occasionally beef). I'm also trying to to eat a wider variety of plants which has bumped up food costs a bit. I usually eat a massive salad with a bunch of vegetables, avocado, nuts and seeds every day.

In terms of strategy, I know that I could live on a spartan food budget but like to splurge a bit to add variety. Part of the rationalization is that it has reduced our desire to go out to eat.

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seanconn256
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Re: seanconn's journal

Post by seanconn256 »

Thanks for the responses everyone. Interesting to see that minimizing, then voluntarily increasing, food expenses for health/taste is a pattern found in others too.

I have spent time thinking about how to have the reduced food expense profile while also eating well, and my current strategy is my garden. That is a seasonal source of vegetables and, personally more notably, herbs and spices. Last summer I was no where near producing enough to eat from it regularly, but it was a start.

Also an anecdote; food was the first thing I focused on in ERE, so I worked pretty hard on it in the beginning. I think it was a good ERE microproject, I can see now that I spend little and hardly think about it anymore. Looking forward to doing that in other areas.

Cam
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Re: seanconn's journal

Post by Cam »

seanconn256 wrote:
Tue Mar 14, 2023 10:02 am
I have spent time thinking about how to have the reduced food expense profile while also eating well, and my current strategy is my garden. That is a seasonal source of vegetables and, personally more notably, herbs and spices. Last summer I was no where near producing enough to eat from it regularly, but it was a start.
I'm curious what you've grown (or tried to :D ). We just recently tried potatoes last year with no watering all summer and I think we got about 4.5lbs! I'm right where you are, no where near actually feeding myself or family, but it's a great activity to get outside and to eat really nutritious food at the end of the season.

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seanconn256
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Re: seanconn's journal

Post by seanconn256 »

Cam wrote:
Thu Mar 16, 2023 6:01 am
I tried growing spinach, lettuce, basil, zucchini, carrots, and tomatoes.
I didnt understand what the term "spring mix" meant, so the spinach and lettuce grew well, I just didnt harvest them at the right time.
The zucchini didn't make any zucchini, and I got a couple ounces of carrot. No tomatoes either.
The basil though, massive success. I almost had a bush at the end of the season.
I attribute most of the failures to the fact that I was growing a lot of full sun plants in my partial sun patio.

Cam
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Re: seanconn's journal

Post by Cam »

seanconn256 wrote:
Thu Mar 16, 2023 10:51 am
I tried growing spinach, lettuce, basil, zucchini, carrots, and tomatoes.
I didnt understand what the term "spring mix" meant, so the spinach and lettuce grew well, I just didnt harvest them at the right time.
The zucchini didn't make any zucchini, and I got a couple ounces of carrot. No tomatoes either.
The basil though, massive success. I almost had a bush at the end of the season.
I attribute most of the failures to the fact that I was growing a lot of full sun plants in my partial sun patio.
Nice variety. Your mention of basil reminds me of my growing oregano. Got a free plant from the community garden one year, threw it in a big pot, and it exploded!

Being constrained by the sun is a definite challenge, it's something we deal with here too in the backyard with all the trees. Not a whole lot to do outdoors other than to try to select partial sun varieties and to keep experimenting. Talking about this is getting me excited for the ground to thaw!

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