All about Investments!

[Wade1865]

5 hours ago, Rippounet said:

Why would you think that "free markets" mean "bottom up decision making" ?
I know the free market ideology likes to pretend that the market is a magic calculator in which buyers and sellers have more or less equal power, but I assume all grown-ups are aware that real life doesn't quite work that way.
Funnily enough, we do seem to agree on the "problem" to some extent. I just don't get why you'd preach about the "free market" ; that's a bit as if I was fighting for marxism-leninism: rather anachronistic at this point.

Rippounet -- again, I find your thoughts interesting. Speaking for all Americans, I can say we don't pretend the free market ideal results in equality. In fact, it's the prime reason for wealth inequailty. We know this, yet we actively pursue it because the good life is compelling. It goes back to your thoughts on how an alternative may find us (because we won't seek it out, not seriously); and yet its implementation would retard most countries outside the US and other developed nations -- seems unfair to the rest of the world, though, more recently find economic success?

[Wade1865]

5 hours ago, BigFatCoward said:

I'm going to have to cash in most of my investments to turn the heating on this winter by the looks of it.

BigFatCoward -- I was worried for my (English and Irish) cousins in the greatest empire the world has ever seen, but I'm starting to get a sense of hope. US gas prices have dropped significantly, is it not getting better over there?

[Wade1865]

5 hours ago, Rippounet said:

Funnily enough, we do seem to agree on the "problem" to some extent. I just don't get why you'd preach about the "free market" ; that's a bit as if I was fighting for marxism-leninism: rather anachronistic at this point.

Rippounet -- the only thing I'd be willing to come out of retirement for would be to fight in support of Chaiwan. If the neo-communists come after me in the US, however, I'd flee to Malta or Switzerland..

[BigFatCoward]

25 minutes ago, Wade1865 said:

BigFatCoward -- I was worried for my (English and Irish) cousins in the greatest empire the world has ever seen, but I'm starting to get a sense of hope. US gas prices have dropped significantly, is it not getting better over there?

Worse. Much fucking worse. There is going to be blood on the streets probably. 

[Tywin et al.]

2 hours ago, Rippounet said:

Sounds good, I'll try to get my hands on it.
I'm still working my way through the Culture novels (about to start Look to windward). Thanks to @Tywin et al. for bringing my attention to the series btw.

You sure that was me?

[Rippounet]

15 hours ago, Tywin et al. said:

You sure that was me?

I do believe you mentioned it in passing as an ideal future for humanity, something like five years ago (I have long reading lists).

16 hours ago, Wade1865 said:

We know this, yet we actively pursue it because the good life is compelling. It goes back to your thoughts on how an alternative may find us (because we won't seek it out, not seriously); and yet its implementation would retard most countries outside the US and other developed nations -- seems unfair to the rest of the world, though, more recently find economic success?

You're confusing at least two different things, possibly three.
Productivism is what can be said the "good life." But while productivism is at the heart of capitalism, they are not synonymous.
Free markets are yet something else though, and it's perfectly possible to have capitalism (and thus production) with seriously regulated markets. Most Asian economies are generally said to be proof of that.
 

 

[Wade1865]

20 minutes ago, Rippounet said:

You're confusing at least two different things, possibly three.
Productivism is what can be said the "good life." But while productivism is at the heart of capitalism, they are not synonymous.
Free markets are yet something else though, and it's perfectly possible to have capitalism (and thus production) with seriously regulated markets. Most Asian economies are generally said to be proof of that.

Rippounet -- that was helpful. I wasn't tracking productivism, but it does reflect what I'd call the good life. Agreed, it's not just at the heart of capitalism but practiced by other market systems, too. Also agreed, on heavily regulated markets, the PRC easily comes to mind, and it's the second most powerful economy in the world.

What I'd like to know is, what market system minimizes wealth inequality and is compatible with the health of the earth. So here's my question (below). Although it's framed as a joke, it's not intended to offend; I use it because I'm a noob when it comes to economics:

If capitalism is where I have two cows, but sell one and buy a bull;

and socialism is where I have two cows, but give one to my neighbor;

and communism is where I have two cows, but give both to the government, and receive milk in exchange;

what system, and how would the cows be distributed, in your ideal market economy?

[DireWolfSpirit]

Regarding those bonds-

You may have heard of the inverted yield curve, how its a harbinger of economic downturn and so forth.

The entire treasury market is currently upside down with short term yields higher than the long term yields.

Check it out, this is twisted- 1yr and 2yr with a higher yield than the 30yr long bond!

TICKER	COMPANY	YIELD	CHANGE	%CHANGE
US3M	U.S. 3 Month Treasury	2.563	0.005	0
US1Y	U.S. 1 Year Treasury	3.255	0.002	0
US2Y	U.S. 2 Year Treasury	3.25	0.021	0
US5Y	U.S. 5 Year Treasury	2.965	-0.023	0
US10Y	U.S. 10 Year Treasury	2.842	-0.046	0
US30Y	U.S. 30 Year Treasury	3.114	-0.045

Edited August 14, 2022 by DireWolfSpirit

[Tywin et al.]

On 8/13/2022 at 5:46 AM, Rippounet said:

I do believe you mentioned it in passing as an ideal future for humanity, something like five years ago (I have long reading lists).

Lol, that does sound like me. Glad you're enjoying something I never got around to. Currently I'm reading King of the World, Thunderball and All-Star Superman. 

[Iskaral Pust]

16 hours ago, DireWolfSpirit said:

Regarding those bonds-

You may have heard of the inverted yield curve, how its a harbinger of economic downturn and so forth.

The entire treasury market is currently upside down with short term yields higher than the long term yields.

Check it out, this is twisted- 1yr and 2yr with a higher yield than the 30yr long bond!

TICKER	COMPANY	YIELD	CHANGE	%CHANGE
US3M	U.S. 3 Month Treasury	2.563	0.005	0
US1Y	U.S. 1 Year Treasury	3.255	0.002	0
US2Y	U.S. 2 Year Treasury	3.25	0.021	0
US5Y	U.S. 5 Year Treasury	2.965	-0.023	0
US10Y	U.S. 10 Year Treasury	2.842	-0.046	0
US30Y	U.S. 30 Year Treasury	3.114	-0.045

There’s also a well-known joke that the inverted yield curve has predicted 11 of the last 7 recessions.

FWIW the current level of inversion is very mild but there is very likely a recession ahead because central banks in most of the developed world need to tame inflation, and therefore they need to slow demand/spending even during a hot labor market.  It’s very unlikely they can cool this much inflation without tipping into recession.  But they may attempt that soft landing by tightening a bit, then pausing to see the lagged effects, and then repeat.  (Unfortunately similar to the 1970s)

The picture varies across different countries. Europe faces even more energy inflation and supply limitation (and Britain has Brexit too) so stagflation-ish is quite likely there.  US was the epicenter of inflation (before Russia-Ukraine) because it had the most fiscal over-stimulus during COVID.  Canada and Australia are in similar situations.  But Japan and China didn’t stimulate as much and their COVID response slowed economic activity, so they don’t need tightening by their central banks — that’s why the yen has plummeted relative to the dollar as the interest rate differential has grown this year.

[kiko]

On 8/13/2022 at 2:04 PM, Wade1865 said:

If capitalism is where I have two cows, but sell one and buy a bull;

and socialism is where I have two cows, but give one to my neighbor;

and communism is where I have two cows, but give both to the government, and receive milk in exchange;

While I do think 2 and 3 can be discussed, I always thought that 1 should be formulated differently.

Maybe: Capitalism is where you have two cows but are forced to sell one to feed the other but after that one died next season you find employment at a multinational that owns all the grazing land.

 

[Wade1865]

2 hours ago, kiko said:

While I do think 2 and 3 can be discussed, I always thought that 1 should be formulated differently.

Maybe: Capitalism is where you have two cows but are forced to sell one to feed the other but after that one died next season you find employment at a multinational that owns all the grazing land.

 

kiko -- that’s a good illustration on a risk inherent in capitalism. Only some people have the capacity to thrive as a capitalist — myself, for example. Others can only survive within the system, albeit subjected to greater exploitation. Likewise, not all people have the capacity to thrive under socialism and communism, and can, at best, survive in them.

The question I want you to answer is, what system — using the three examples above as a model — would minimize wealth inequality while maximizing the health of the planet. Note, there might not be an alternative example.

Edited August 15, 2022 by Wade1865

[kiko]

So if I look strictly at your model then it is clearly the last option. Assuming a benevolent and able government, it is the only one providing goods in equal measures to everyone, regardless on where they have started. It is also the only one that allows for a not self-serving distribution of resources.

The first one is only good if you already started with the means of production and a good education as well as economic literacy. By accident it can improve the health of the planet as you call it. E.g it adds value to one economic centre with a lack of bulls at the same time as to the one with a lack of cows.

The second one is not feasible long term, it will obviously diminish all existing wealth for no apparent reason. But maybe it could serve as a stop gap to address local imbalances.

You might balk at my favouring of option 3 because the assumption of a benevolent and skilled higher Form of organization - here called government. But at the same time we would also have to assume that the successful entrepreneurs are benevolent. Both are not so often monitored in the wild.

Personally I don't really like this cow example. It is always defined from the view of someone who is already comparatively well off. From a completely selfish point of view, there is only one path leading to immediate accumulation of wealth. It somewhat ignores the global status (not everyone has two cows and milk) at the begin and the one at the end ( everyone may or may not have a cow and/ or access to milk)

[Wade1865]

15 minutes ago, kiko said:

So if I look strictly at your model then it is clearly the last option. Assuming a benevolent and able government, it is the only one providing goods in equal measures to everyone, regardless on where they have started. It is also the only one that allows for a not self-serving distribution of resources.

The first one is only good if you already started with the means of production and a good education as well as economic literacy. By accident it can improve the health of the planet as you call it. E.g it adds value to one economic centre with a lack of bulls at the same time as to the one with a lack of cows.

The second one is not feasible long term, it will obviously diminish all existing wealth for no apparent reason. But maybe it could serve as a stop gap to address local imbalances.

You might balk at my favouring of option 3 because the assumption of a benevolent and skilled higher Form of organization - here called government. But at the same time we would also have to assume that the successful entrepreneurs are benevolent. Both are not so often monitored in the wild.

Personally I don't really like this cow example. It is always defined from the view of someone who is already comparatively well off. From a completely selfish point of view, there is only one path leading to immediate accumulation of wealth. It somewhat ignores the global status (not everyone has two cows and milk) at the begin and the one at the end ( everyone may or may not have a cow and/ or access to milk)

kiko — appreciate you humoring me on using the two cows model, and the substantive post was helpful. Although oversimplified and idealized for all systems, it’s an adequate point of reference for a noob like me learning about basic economics.

My key takeaway from you emphasizes how capitalism is not a system comprising of capitalists (which surprised me, to great effect). Instead, I now actively acknowledge only a few can thrive, while most can only survive; and, most likely at the cost of the planet. My own words indicated this, amusingly, but I didn’t realize it until seeing your words.

I previously gained a lot of insight from communist thinking, and believe it or not it informed me on how to practice warfare effectively as a counterinsurgent, but what I want to do now is internalize it (and what you articulated here) into my understanding of economics.

I love capitalism, but I also respect communism. Seems paradoxical, which attracts me to both, I suppose. I’m not looking to debate, have no arguments against your position, and balk at none of it.

[Rippounet]

On 8/13/2022 at 2:04 PM, Wade1865 said:

What I'd like to know is, what market system minimizes wealth inequality and is compatible with the health of the earth.

It's an odd question. No "market system," in itself will minimize wealth inequality or preserve the health of the Earth (that's just not what markets do). OTOH, a near infinity of political structures that will do that are perfectly compatible with markets, from most utopian (like Bookchin's communalism) to very real (Nixon's United States, hilariously enough, came very close to doing just that - though of course, the environmental crisis was considerably less serious in the 1970s).

[Wade1865]

ENERGY -- PERTROLEUM

Energy use, they said, was supposed to have seen a revolutionary change. Uncle Joe, in particular, was determined to (prematurely) move the country toward renewables at the expense of petroleum, though I still don't know why he'd undermine the source of US global dominace! And. then. there. was. war -- who would have thought, the most fundamental human endeavor, wouldn't have returned and impacted energy throughout the world. Consequently, I can imagine the hardships Europe will face this winter.

For as long as I can remember, social and political guidance conveyed to me was to avoid investing in oil companies, even though I had a nationalist affinity for it, and other things (primarily autos). Although oil seems to have been crushed in 2007 (great financial crisis), 2018 (not sure why) and 2020 (COVID), focusing on oil (BP, moderately at 8-10% gains; and XOM, overwhelmingly at 58%) proved to be benefical.

Yet, now I hold risk, and despite my positive feelings toward petroleum and it's current value, I think it's clear there's mostly room to fall (once we get through the war in Ukraine, the threat in Chaiwan, and the next European winter). The question I ask myself, then, is what timeframe would be ideal to unload. Any personal or industry opinions on timeframe for unloading?

[Wade1865]

34 minutes ago, Rippounet said:

It's an odd question. No "market system," in itself will minimize wealth inequality or preserve the health of the Earth (that's just not what markets do). OTOH, a near infinity of political structures that will do that are perfectly compatible with markets, from most utopian (like Bookchin's communalism) to very real (Nixon's United States, hilariously enough, came very close to doing just that - though of course, the environmental crisis was considerably less serious in the 1970s).

Rippounet -- very helpful, thanks (again)! Market systems weren't as clear as I thought they were, especially related your nuance. Your posts and kiko's will be great reference points when I do a dedicated study of economics. And it'll be interesting to discover what aspects of US political structures (if not he market system itself) will influence wealth inequality and the environment.

[kiko]

8 hours ago, Wade1865 said:

Any personal or industry opinions on timeframe for unloading?

Just my personal thoughts on it and why I decided against investment in oil&gas

Oil will be a stranded asset sooner or later. Timeframe completely unknown to me.

I did some projects with TotalEnergy and know that they do think of the future economic environment and their place in it. And they have the power and means to pivot to different commodities. In the end big oil could probably buy out every startup on the market. The key is finding the oil company that invests in the future and not in the one that is doing more of the same. That may come with less dividend though. Perhaps a state owned, like Total. They may feel more pressure to invest in clean energy than their completely private owned competitors. But then everyone recommended Gasprom and where would I be now if I had listened. It's bad enough that I have a indirect position in Wintershall with their stranded assets in Russia and the Baltic sea.

I understand that you are in a stage where you want to conserve your assets and live from their passive income, right? I would really worry where I am with oil& gas in 20 years. The only way that I would invest in oil is via Berkshire. Buffet has tons of oil companies and I would expect him or his predecessor to figure out when to dump them. No dividends for you though.

[Wade1865]

1 hour ago, kiko said:

Just my personal thoughts on it and why I decided against investment in oil&gas

Oil will be a stranded asset sooner or later. Timeframe completely unknown to me.

I did some projects with TotalEnergy and know that they do think of the future economic environment and their place in it. And they have the power and means to pivot to different commodities. In the end big oil could probably buy out every startup on the market. The key is finding the oil company that invests in the future and not in the one that is doing more of the same. That may come with less dividend though. Perhaps a state owned, like Total. They may feel more pressure to invest in clean energy than their completely private owned competitors. But then everyone recommended Gasprom and where would I be now if I had listened. It's bad enough that I have a indirect position in Wintershall with their stranded assets in Russia and the Baltic sea.

I understand that you are in a stage where you want to conserve your assets and live from their passive income, right? I would really worry where I am with oil& gas in 20 years. The only way that I would invest in oil is via Berkshire. Buffet has tons of oil companies and I would expect him or his predecessor to figure out when to dump them. No dividends for you though.

kiko -- that was unexpected (as a counter position), thank you! Never heard the term "stranded" in this context, but I can admit with confidence oil will become increasingly marginalized as time goes on. In fact, stranded defines exactly the risk I felt I was holding. Previously, my internalized guidance on holding oil & gas included nationalism, winter and war in Europe, as well as the clarified intentions of the PRC towards Chaiwan.

I had this same discussion a year ago with a colleague (very smart man, combat arms Soldier turned strategic planner, knows global energy better than I ever will) who highlighted the same core point you did. His informed opinion was big oil (e.g. Total, XOM, et al), if wise, could and would pivot into other energy commodities. He was suggesting I moderate my sole focus on oil & gas. Given your shared outlook, I agree it's a solid consideration and will add that to my previous guidance.

I understand what you said is not advice; all risk is mine when I reallocate to exploit a post-winter peak (as I anticipate, albeit uncertainly), though I'll cycle back and forth over the next two decades as events reveal themselves. And you're correct, in this phase of my life (third quarter) I'm no longer interested in earned incomes; I intend to continue liquidating all real estate incomes and move entirely into passive income sources (stocks, bonds).

Great discussion, very thoughtful, value-added!

By the way, I just realized your location -- I lived in Ansbach for a year or two, and loved the country and people. Drank a lot of Paulaner and Schwip Schwap. The German airmen we partnered with in Poland and Mazar-i-Sharif were amazing. Don't freeze to death this winter!

[Wade1865]

Do we have any knowledgeable locals on this board, or those familiar, with Ukrainian real estate? Kiev (or Odessa), city-center (or seaside) property. Hmm?

Slava Ukraini, by the way 

Edited August 29, 2022 by Wade1865