Early Retirement Extreme Forums

Hristo Botev wrote: ↑

Thu Jan 06, 2022 3:16 pm

It's a multi-generational plan. We're on the path. Our hope is our children won't have to figure out so much and build so much from scratch, when it's their time, but can instead build upon and improve what we started for them, learning from the many, many mistakes we've already made and will continue to make. We're building our own culture and trying to avoid evil by focusing on what's good, and building towards that.

I like your idea but I give you a warning in relation to your kids. They are people and they have to find their own way.

My sister-in-law is married to a fundamentalist muslim. They have very strict ideas and their kids in general follow their approach. They can't invest in index funds due to religious reasons.

sky wrote: ↑

Thu Jan 06, 2022 4:21 pm

I am thinking that my next investment will be in land that I can use to garden.

I have a small backyard but I'm slowly growing more food. You can get a fair bit out of small spaces. I can't yet but I've focused on growing herbs which cost a lot in the supermarket. I'm also growing some fruit. The goal is slowly to get enough fruit and herbs for myself and my wife throughout the year and then maybe enough for a stir-fry or so every week.

Another investment that I would consider as a hedge against inflation is rooftop solar power. Whether that would be a wise investment depends on the future price of electricity.

Maybe "investing in an age of divergence" where the "haves" have more and more and the "have nots" have less and less. If you are surrounded by "haves" invest in alcohol, designer drugs and small dog paraphernalia (Parris Hilton/Kim Kardashian lifestyle products/services). If you are around "have nots", bullets and farts in a jar "The greatest store of value in human history!!!" even rarer than buttcoin.
https://www.theblaze.com/news/reality-s ... jar-report

In fact, no more farts in a jar will be mined from this buttcoin farm, amazing store of value, can defeat any quantum computer.
https://www.yahoo.com/entertainment/90- ... 14784.html

sky wrote: ↑

Thu Jan 06, 2022 7:43 pm

Another investment that I would consider as a hedge against inflation is rooftop solar power. Whether that would be a wise investment depends on the future price of electricity.

We got this one as well. The question is do we start ramping up our solar energy production or maybe better put when do we start ramping up our solar energy production.

Solar power though is a pretty big argument against being in the era of decline.

I would suggest that most predictions outside of a 95% confidence interval, although interesting, are highly unlikely to materialize. When one eliminates one extreme (let's assume we eliminate the top 2.5% of yearly observations from our discussion) only 2.5% of the of the world utility remains, this means roughly once every 50 years something that is not above a -2std dev year occurs. The scenario some gloom and doomers are painting as fact (Al Gore, Greta Thunberg) is a 4-10 standard deviation (0.0000000000000000001) event that sustains for a generation (25 years+) for any of their estimates to come to fruition.

A city sized asteroid will hit the world in the next 100,000,000 years (some big number well beyond human existence, excluding Zuckerberg's humanoid) and be such an event, worrying how your ETFs will fare, which Buttcoin will have the smallest hash rate (or whatever vocab word designed to confuse is used this week) or which reality stars fart in a jar will provide the most arable land seems superfluous (SAT word of the day).

WFJ wrote: ↑

Thu Jan 06, 2022 9:00 pm

I would suggest that most predictions outside of a 95% confidence interval, although interesting, are highly unlikely to materialize.

Great post. The gloomers are consistently wrong and even if they get it right it's hard to make money out of it.

I don't want to get into a debate on global warming but I have been extremely critical of the extremist predictions in the past and it's probably still continuing. I also think we have to take action to mitigate against global warming. I think COVID followed a similar frame of reference in that models were produced with extremist predictions that were basically nuts. The Australian Prime Minister recently even stated that those predictions weren't worth the paper they were printed on. The base science though holds up in that it's a virus that spreads and vaccination works to mitigate the negative effects.

The point being there can be real issues that are a concern to humanity and science should be utilized to help us manage those situations. It's a completely different story though to predict the future accurately and even harder to make money out of it. If you look at COVID as an example just say you predicted the pandemic accurately (the only person I know who stated this was Bill Gates and he never said when) and then bet the markets were going to tank for 2-3 years. You'd have lost money big time despite being the only person in the world to accurately predict the pandemic.

steveo73 wrote: ↑

Thu Jan 06, 2022 6:19 pm

My sister-in-law is married to a fundamentalist muslim. . . . They can't invest in index funds due to religious reasons.

This is interesting to me. Do you know why fundamentalist Muslim's can't invest in index funds? Is it because of something inherent in the nature of the index fund investment vehicle/technology/innovation itself? Or is this a principle that applies to stock market investing generally? Or just participation in the modern economy generally? Or is it because any index fund will necessarily include "evil" companies?

I remember seeing the article in the Atlantic awhile back about index investing being "evil" (https://www.theatlantic.com/magazine/ar ... il/534183/), but they weren't using "evil" in any sort of religious or moral sense of the world, but in the sense that index funds are bad for the economy.

As I said earlier, I tend to think that the financialization of the economy in general equals collapse (and/or is a symptom of collapse, and/or is a causal agent for collapse), in both an economic and a moral and cultural sense.

I suspect there is something to your SIL's husband's views on index funds. If evil is the absence of good, and good is creative, then evil must be destructive. I can see how index funds are more destructive than creative, and how they are therefore more evil than good.

There is of course the issue of "owning" shares in companies via index funds that themselves ARE evil. But, there is also the speculative nature of the index fund itself, and the issue of usury. I need to read my Thomas; but my guess is, a devout God-fearing man has to do some real creative mind-twisting and mental and logical gymnastics to convince himself that index fund investing is a good and not sinful.

Hristo Botev wrote: ↑

Fri Jan 07, 2022 10:48 am

If evil is the absence of good, and good is creative,

I don't follow how good is creative. Plenty of horrible things came from creativity. I would say creativity is just a tool and has no moral dimension (it's neither good nor bad in itself).

zbigi wrote: ↑

Fri Jan 07, 2022 11:09 am

I don't follow how good is creative. Plenty of horrible things came from creativity. I would say creativity is just a tool and has no moral dimension (it's neither good nor bad in itself).

I don't mean "creativity" in that sense. I mean it in the sense of Creation.

I don't remember the syllogism (from Boethius? or Thomas Aquinas?): God is omnipotent; God cannot do evil; God is all good; God is the creative force of the world; Creation is good; Evil does not exist; "Evil" therefore is the privation of good.

Hristo Botev wrote: ↑

Fri Jan 07, 2022 10:48 am

This is interesting to me. Do you know why fundamentalist Muslim's can't invest in index funds? Is it because of something inherent in the nature of the index fund investment vehicle/technology/innovation itself? Or is this a principle that applies to stock market investing generally? Or just participation in the modern economy generally? Or is it because any index fund will necessarily include "evil" companies?

Not really an expert on this but this has come up in the past. The primary issue is that receiving any interest is illegal (not halal) and by extension investing in companies that borrow money (which is some 99% of them) to leverage equity returns is therefore not allowed either. Only pure equity (LTD/Equity = 0%!) plays are allowed. There are also some ESG concerns (e.g. tobacco, pork, ...) as well but as far as I understand "benefiting" directly or indirectly from interest (bonds) is the main issue. Speculative gains are not allowed either.

Likely same arguments as Christian usury. Debt is a source of social conflict during times of scarcity and so preemptively forbidden by religious edict.

There are Islamic investment companies which purport to avoid any debt driven activity. There are also Islamic Mortgages which strictly speaking is an oxymoron, but I think the bank buys the property outright and you gradually buy sections of the house back from the bank whilst paying rent on the rest. In practice it sounds like essentially a mortgage with interest payments renamed.

I guess though its possible you could have a modern economy without debt as there are alternatives to it.

jacob wrote: ↑

Fri Jan 07, 2022 11:33 am

Likely same arguments as Christian usury. Debt is a source of social conflict during times of scarcity and so preemptively forbidden by religious edict.

Well, to be fair, Thomas doesn't really need to be paraphrased.

I answer that, To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality which is contrary to justice. In order to make this evident, we must observe that there are certain things the use of which consists in their consumption: thus we consume wine when we use it for drink and we consume wheat when we use it for food. Wherefore in such like things the use of the thing must not be reckoned apart from the thing itself, and whoever is granted the use of the thing, is granted the thing itself and for this reason, to lend things of this kin is to transfer the ownership. Accordingly if a man wanted to sell wine separately from the use of the wine, he would be selling the same thing twice, or he would be selling what does not exist, wherefore he would evidently commit a sin of injustice. On like manner he commits an injustice who lends wine or wheat, and asks for double payment, viz. one, the return of the thing in equal measure, the other, the price of the use, which is called usury.

On the other hand, there are things the use of which does not consist in their consumption: thus to use a house is to dwell in it, not to destroy it. Wherefore in such things both may be granted: for instance, one man may hand over to another the ownership of his house while reserving to himself the use of it for a time, or vice versa, he may grant the use of the house, while retaining the ownership. For this reason a man may lawfully make a charge for the use of his house, and, besides this, revendicate the house from the person to whom he has granted its use, as happens in renting and letting a house.

Now money, according to the Philosopher (Ethic. v, 5; Polit. i, 3) was invented chiefly for the purpose of exchange: and consequently the proper and principal use of money is its consumption or alienation whereby it is sunk in exchange. Hence it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury: and just as a man is bound to restore other ill-gotten goods, so is he bound to restore the money which he has taken in usury.

https://www.newadvent.org/summa/3078.htm

Hristo Botev wrote: ↑

Fri Jan 07, 2022 11:44 am

Hence it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury: and just as a man is bound to restore other ill-gotten goods, so is he bound to restore the money which he has taken in usury.

... which didn't prevent people in the 13th century from finding workarounds that obeyed the law in letter if not in spirit. For example, synthetic interest can be generated by lending money at 0% in a declining currency while demanding repayment in a stable currency. Also see https://www.investopedia.com/terms/c/currencyswap.asp

For more, see https://www.amazon.com/History-Interest ... 0471732834

jacob wrote: ↑

Fri Jan 07, 2022 11:59 am

... which didn't prevent people in the 13th century from finding workarounds that obeyed the law in letter if not in spirit. For example, synthetic interest can be generated by lending money at 0% in a declining currency while demanding repayment in a stable currency.

... which is why it's not the letter of the law that's important, it's the why behind the law. In your example, you are still selling something that doesn't exist, which results in inequality, which is unjust. The Church imposes edicts (when it used to do those sorts of things) with an aim to try and create societies where doing the good thing is the easier and more convenient choice to make, even for fallen people.

I believe the Jews were often permitted to practice ursury, presumably on the basis they were destined for hell anyway. Jewry Street is still a common road name where the mediaeval money lender was situated.

steveo73 wrote: ↑

Thu Jan 06, 2022 10:05 pm

Great post. The gloomers are consistently wrong and even if they get it right it's hard to make money out of it.

I don't want to get into a debate on global warming but I have been extremely critical of the extremist predictions in the past and it's probably still continuing. I also think we have to take action to mitigate against global warming. I think COVID followed a similar frame of reference in that models were produced with extremist predictions that were basically nuts. The Australian Prime Minister recently even stated that those predictions weren't worth the paper they were printed on. The base science though holds up in that it's a virus that spreads and vaccination works to mitigate the negative effects.

The point being there can be real issues that are a concern to humanity and science should be utilized to help us manage those situations. It's a completely different story though to predict the future accurately and even harder to make money out of it. If you look at COVID as an example just say you predicted the pandemic accurately (the only person I know who stated this was Bill Gates and he never said when) and then bet the markets were going to tank for 2-3 years. You'd have lost money big time despite being the only person in the world to accurately predict the pandemic.

The main issue with the estimates is the difference between predicting with confidence intervals "There's a 90% chance that the abnormal death will be between -100,000 and 100,001" or "temperature in the next period has a 90% probability of being -1 to +1 relative to this period" and bombastic point estimates without any mention of the probability of the outcome, the structure of the distribution and the duration, Andrew Cuomo "Three will be up to 4,000,000 people dying if we don't do XYZ that has nothing to do with health" or Al Gore/Greta Thunberg "Experts estimate that the temperature could increase by 1.5 degrees at some point in the future". The point estimates have a 0.00000000000000000001% probability of occurring but are promoted as "science".

IHME violated many high school level statistics laws in their estimates but is 100% backed by Gates and the mandate was not to be scientists, but political scientists. "There is a 90% probability that the population of politicians and members of the media would score between 0% and 0.1% on a high school level stats exam" is how all estimates of any variable should be communicated, but bombastic point estimates are always used for mass panic.

I'm an applied statistician and if I pulled out one hair every time a paid "expert" or IHME said/published something completely factually wrong, that is covered in a high school stats class, I'd be completely bald.

Hristo Botev wrote: ↑

Fri Jan 07, 2022 10:48 am

This is interesting to me. Do you know why fundamentalist Muslim's can't invest in index funds? Is it because of something inherent in the nature of the index fund investment vehicle/technology/innovation itself? Or is this a principle that applies to stock market investing generally? Or just participation in the modern economy generally? Or is it because any index fund will necessarily include "evil" companies?

I'm pretty sure the issue is usury. So they could invest in specific companies but index funds are out because they can't own any company that lends money.

My FIL is loaded and my BIL (the Muslim) has tried to get him to put money into providing homes for Muslims. So he lends them the money but they don't pay back interest. My FIL didn't go forward with that option because he didn't see the benefit to himself. He did though provide money for their house when they needed to borrow and they couldn't.

Hristo Botev wrote: ↑

Fri Jan 07, 2022 10:48 am

I remember seeing the article in the Atlantic awhile back about index investing being "evil" (https://www.theatlantic.com/magazine/ar ... il/534183/), but they weren't using "evil" in any sort of religious or moral sense of the world, but in the sense that index funds are bad for the economy.

Index funds to me are a gift from God (I'm atheist) to the ordinary man. They allow people like myself to invest up there with the financial elite. To be fair I could probably do well in financial markets without index funds but my FIL was a professional trader. I trust index funds over my FIL's advice but that is really a comment on how effective index funds are. Index funds outperform the best professional traders. It's crazy right.

WFJ wrote: ↑

Fri Jan 07, 2022 4:45 pm

The point estimates have a 0.00000000000000000001% probability of occurring but are promoted as "science".

I agree. It's actually a joke. The bigger problem is people don't understand what they are talking about and they portray their opinions based on false premises as facts.

WFJ wrote: ↑

Fri Jan 07, 2022 4:45 pm

the mandate was not to be scientists, but political scientists.

I tell you what I think the problem is. There are real issues out there that require political action. Some great examples are getting vaccinated for COVID or trying to move towards more sustainable energy production to not impact the worlds ecology too significantly.

These issues are then managed via statistical models which are designed to paint a picture. The problem is these models are often way off base and people quote them as fact. The trick is to understand what these models are and they are typically nonsense. They are used for policy decisions but you shouldn't be taking their predictions as gospel.

WFJ wrote: ↑

Fri Jan 07, 2022 4:45 pm

I'm an applied statistician and if I pulled out one hair every time a paid "expert" or IHME said/published something completely factually wrong, that is covered in a high school stats class, I'd be completely bald.

I worked in data my whole career and studied some statistics. I am far from an expert but I know the inherent problems in modelling. I'm going to give you a flip side response which I find hilarious. I had a guy recently tell me via Bayesian statistics how PCR tests were completely ineffective. I don't understand Bayesian statistics and this guy worked as a labourer or something. The guy with all due respect didn't have an intelligence or education level above my 11 yo son at best. Yet he is quoting completely dodgy statistics to argue his stupid irrational point.

I'm sick of hearing people who are uneducated and inexperienced and don't have a clue what they are talking about making out they are smart educated experts.

The Qur'an makes it abundantly clear that any form of ursury is absolutely forbidden and, in a literalist reading at least, would result in being sent to the hell fires.

It is not like the prohibition on alcohol or homosexuality, on which the Qur'an is arguably somewhat ambiguous on and such prohibitions rely on the hadiths, which have contested weight within Islamic culture.