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What's wrong with the financial system and internet? I have a pretty intimate knowledge of both, and I'm OK with them (I don't know anything about food though .

by smanek 16y ago

What's wrong with the financial system and internet? I have a pretty intimate knowledge of both, and I'm OK with them (I don't know anything about food though ...)

Retric 16y ago
The primary focus of the US financial system is sales. In large part this is based on the ignorance of the average American. Take a 25 year old who makes 30k / year and invests 3k/year in their 401k. Now figure out how much they pay in fees on that investment over the next 40 years. Now play the same game with a 25 year old who would like to invest 10 million and if anything they get worse service even if they get a lot more face time.
- hugh3 16y ago
  I'm not sure what you're getting at here, partly because I've never invested in a 401K _or_ tried to invest $10 million cash. How much fees does each of these guys pay?
  - Retric 16y ago
    For a 401k a little over 1/2 a % per year or around (1.065 ^40/ 1.07 ^40) 17% of their final return over 40 years. For 10 million investment ~1% per year is not uncommon so something like (1.06^40 / 1.07^40) = 32% of their return over 40 years. Now plenty of people pay far more or less than these numbers, but that's a reasonable ballpark. For more details from someone with a little money: http://philip.greenspun.com/materialism/money http://philip.greenspun.com/materialism/money "Jeffrey Greene owned $500 million in Southern California real estate and was getting nervous about its value. He was an old friend of Paulson's and, in 2006, let Paulson pitch him on the virtues of investing in his new fund to bet against mortgages. Instead of agreeing to pay the 2-and-20 fee (2 percent annually raked off the top regardless of performance, plus 20 percent of any profits), Greene decided that he could run the trade himself. He pestered his Merrill Lynch broker until the guy got approval from top executives to allow a rich individual to participate in the illiquid and confusing credit default swap market. " http://philip.greenspun.com/book-reviews/the-greatest-trade-ever http://philip.greenspun.com/book-reviews/the-greatest-trade-...
- Mc_Big_G 16y ago
  I have issues with the 401k system, but it's hard to beat an instant 50% return on your investment from company matching. What kind of fees are you paying?
  - Retric 16y ago
    I try and stay under 0.2% but a lot of this is hidden and many people pay a lot more than that.
loup-vaillant 16y ago
I may confuse "financial" with "monetary" here. Anyway, the main problem is banks creating money out of thin air, then taking an interest when they lend it. I am oversimplifying, but the observable effects are the same: Banks are basically taking their toll. That should be the privilege of the state. The internet is the voice of the people, but we are encouraged to be clients, consumers. Not servers, participants, peers. At the root of the problem are some unjustified limitations. Weak upload bandwidth, dynamic IP (when we have a public one) and blocking the outgoing SMTP port are the most glaring. If those limitation were addressed (and we educate people of course), the internet would be more decentralized and more free. More details here: http://www.softwarefreedom.org/events/2010/ISOC-NY-Moglen-2010/ http://www.softwarefreedom.org/events/2010/ISOC-NY-Moglen-20...

by smanek 16y ago

What's wrong with the financial system and internet? I have a pretty intimate knowledge of both, and I'm OK with them (I don't know anything about food though ...)

Retric 16y ago

The primary focus of the US financial system is sales. In large part this is based on the ignorance of the average American. Take a 25 year old who makes 30k / year and invests 3k/year in their 401k. Now figure out how much they pay in fees on that investment over the next 40 years. Now play the same game with a 25 year old who would like to invest 10 million and if anything they get worse service even if they get a lot more face time.

hugh3 16y ago
I'm not sure what you're getting at here, partly because I've never invested in a 401K _or_ tried to invest $10 million cash. How much fees does each of these guys pay?
- Retric 16y ago
  For a 401k a little over 1/2 a % per year or around (1.065 ^40/ 1.07 ^40) 17% of their final return over 40 years. For 10 million investment ~1% per year is not uncommon so something like (1.06^40 / 1.07^40) = 32% of their return over 40 years. Now plenty of people pay far more or less than these numbers, but that's a reasonable ballpark. For more details from someone with a little money: http://philip.greenspun.com/materialism/money http://philip.greenspun.com/materialism/money "Jeffrey Greene owned $500 million in Southern California real estate and was getting nervous about its value. He was an old friend of Paulson's and, in 2006, let Paulson pitch him on the virtues of investing in his new fund to bet against mortgages. Instead of agreeing to pay the 2-and-20 fee (2 percent annually raked off the top regardless of performance, plus 20 percent of any profits), Greene decided that he could run the trade himself. He pestered his Merrill Lynch broker until the guy got approval from top executives to allow a rich individual to participate in the illiquid and confusing credit default swap market. " http://philip.greenspun.com/book-reviews/the-greatest-trade-ever http://philip.greenspun.com/book-reviews/the-greatest-trade-...
Mc_Big_G 16y ago
I have issues with the 401k system, but it's hard to beat an instant 50% return on your investment from company matching. What kind of fees are you paying?
- Retric 16y ago
  I try and stay under 0.2% but a lot of this is hidden and many people pay a lot more than that.

loup-vaillant 16y ago

I may confuse "financial" with "monetary" here. Anyway, the main problem is banks creating money out of thin air, then taking an interest when they lend it. I am oversimplifying, but the observable effects are the same: Banks are basically taking their toll. That should be the privilege of the state. The internet is the voice of the people, but we are encouraged to be clients, consumers. Not servers, participants, peers. At the root of the problem are some unjustified limitations. Weak upload bandwidth, dynamic IP (when we have a public one) and blocking the outgoing SMTP port are the most glaring. If those limitation were addressed (and we educate people of course), the internet would be more decentralized and more free. More details here: http://www.softwarefreedom.org/events/2010/ISOC-NY-Moglen-2010/ http://www.softwarefreedom.org/events/2010/ISOC-NY-Moglen-20...