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thaumaturgy 15y ago
Why not an investment company that invested in startups and small businesses by pooling the resources of Joe Traders? I would assume that, since much of the smart money right now seems to be in startups, the return can't be all that bad, and you'd have a shot at leveraging three different groups in such a way as to improve all their lives, which would be a neat trick all on its own.
- bastiat 15y ago
  No, this is not where the smart money goes, as I understand the term "smart money." Perhaps you meant something else, like "the money of smart people with whom I am familiar."
- true_religion 15y ago
  Many companies provide matching funds for retirement accounts, but don't allow you much say in where you invest. You can be given a basket of stocks and told to pick, or told which fund managers you're allowed to use. That aside, individual investors usually like their current funds and are loathe to leave them just for something that promises better results. -- What I envision is a site that simplifies the current technical and quantitative trading tools into something usable by the common trader. That way if your company says pick from stocks A to Z to invest in June, you can decide which stock to pick. For example, don't pick A because seasonal trends dictate they always fall 8% in June. Or don't pick B because it is overbought because it is nearly touching a resistance band and has only broken resistance once in the past 5 years. My examples are from technical analysis, but quantitative techniques work just as well. The tools available are good, but require a lot of theoretical knowledge before use. For a common investor, using a algorithmic tool with fewer options, sensible defaults, and automatically applied backtesting would be a huge step upwards from listening to Fast Money or the musings of their coworkers.
  - anamax 15y ago
    > Many companies provide matching funds for retirement accounts, but don't allow you much say in where you invest. You can be given a basket of stocks and told to pick, or told which fund managers you're allowed to use. You do realize that the 2nd sentence isn't necessarily supporting evidence for the first, that the basket and the funds matter. Regardless, the big 401(k) providers already have advice services. (Schwab's is provided by a 3rd party.) And, independent financial advisors will take your company's list and generate a plan. (such as ricedelman.com .) Yes, I realize that there are employers who don't use such providers or won't pay for the advisor service, but how can your service address that problem?
    - true_religion 15y ago
      What I see is a split in the market. People who aren't provided financial services by their employer or investment company simply take their financial advice from free or traditional sources. Or they attempt to do stock planning themselves, which is only ideal if you are already knowledgeable about the market and can invest time each day to study it. The service could bridge the 'knowledge gap', allowing those who want to plan themselves to do so without pitfalls. And since its a system of sensible defaults as their knowledge of the market increases they can tweak the parameters of the program to better suit their needs. In a black box program such as a neural network on the algorithmic side, or a financial planner on the human side, this is impossible.
      - anamax 15y ago
        > People who aren't provided financial services by their employer or investment company simply take their financial advice from free or traditional sources. Yes, but since those folks are already ignoring the many for-pay services, what are you going to do differently. The answer better not be "I'll take their list of choices and produce a plan" because folks at ricedelman.com (among others) have done that for years. (I mention him because he has a nationally syndicated radio show advertising his services. There are many others who don't. How are you going to complete with that?) You seem focused on how the plan is created. I doubt seriously that that will be enough to make you successful in the 401(k) advice biz. My free advice is to sell your investment tools as tools instead of saying that you're in the 401(k) advice biz. The tools are independent of 401(k)s. Which reminds me, you keep saying "stocks". Do you really think that there are many 401(k)s that allow specific stock purchases but don't have employer-paid advisors? I haven't looked at a lot of 401(k)s but in my sample the (few) employers who allow individual stock purchases also have employer-paid advisors. Some of the plans with lots of fund choices (but no "individual stock" option) also have employer-paid advisors. For the most part, the plans with no employer-paid advisors are the ones with crappy mutual fund choices and no "buy specific stock" option (with the possible exception of the employer's stock). What can you do for them?
  - anamax 15y ago
    > don't pick A because seasonal trends dictate they always fall 8% in June I don't believe that such a stock exists.

Tichy 15y ago

Wow, I must admit I would probably never invest so much into a place I am just renting. Your landlord won the lottery. Still, it makes me feel uncomfortable. Yes, society is cheering on the people who sacrifice themselves (just watch any movie from the US, that message gets driven home with a sledge hammer). But I doubt that is for the best of the individual. Of course people are cheering if they get something out of you for free.

thaumaturgy 15y ago
Hmm. I'm not sure how to respond, honestly. I don't feel like I'm investing into a place I'm renting; I feel like I'm investing into my home, and by extension, myself. Every time I walk outside, I feel like I've accomplished something, even if it's a relatively small thing. No matter how anything else is going in my life, that feeling is still there. If the owners decided to boot us out this month and sell the place for more than they could have otherwise, or even rent it out to someone else now that they can get more for the rent, I still would not feel like I had done something foolish. I still, for a while, will have made a place better. Even if new tenants or owners stopped maintaining it and let it go to ruin, that would only be a decision they have made, and still not change what I had done. It's made the other people in the neighborhood happy. It's made me happy. It's made the landlords happy. Maybe I could have spent the time and money on something else, but that's true no matter what I do. So, why not do something that makes so many people happy? > Yes, society is cheering on the people who sacrifice themselves... On my good days, I think that might be because society is looking for leaders that they can look up to. On my bad days, I think that might be because society has gotten lazy and just wants someone else to take care of it. > But I doubt that is for the best of the individual. It might not be best for many individuals, because it's easy to feel like you're being taken advantage of, or that you're giving up something you shouldn't be. But, for some individuals -- a growing number of them, I hope -- some forms of sacrifice can be so rewarding that it doesn't feel at all like sacrifice. > Of course people are cheering if they get something out of you for free. Sure, but maybe you're getting to do something you enjoy anyway. If you go out for a hike or visit a river or beach, why not pick up some trash while you're out there? If you're going to live in a home, why not improve it a bit while you're there? If you're going to get together with some friends, why not bring some food? And if people cheer you on for that, is that so bad? Anyway, the most powerful motivation, for me, is that I can see as clearly as if I were living in it now a world in which everyone else did things like this -- looked out for each-other, helped each-other up, cleaned up and improved the things around them, and invested in great little bistros and sandwich shops and bookstores and parks and such because they recognized the value of having such things in their community. I've found that it's impossible to tell anyone else what that kind of world looks like, or to get them to believe in it by talking about it. So, instead, I try to make it. One run-down house at a time. :-)
- Tichy 15y ago
  If you are happy, who am I to argue with that. Maybe you just really like your landlord. "living in it now a world in which everyone else did things like this -- looked out for each-other, helped each-other up, cleaned up and improved the things around them, and invested in great little bistros and sandwich shops and bookstores and parks and such because they recognized the value of having such things in their community." I like that, except for the part where the house still belongs to the landlord, not to the community or you. I would pick up trash in the mountains, because the mountains belong to everyone (or the government, which in theory is everyone). With the sandwich shops, I think capitalism could deliver: if people would realize the value of having sandwich shops in the park, they would perhaps be willing to pay for sandwiches, making it profitable to build nice sandwich shops. Sandwich shop owners as well as people living near the park would be motivated to keep it nice, as it would improve both the sandwich shop and the value of the houses around it. Maybe there are aspects of what you are doing that I don't see, though. As long as the landlord lets you live there, maybe you get to live in a nice place for a low rent. If you ever have to move, your landlord might write you a glowing letter of recommendation and make it easy for you to find another nice place. Then again, as they seem of the "not caring" kind, maybe they won't :-/
  - thaumaturgy 15y ago
    I'm seriously amused by your last paragraph. It actually made me smile, because, despite explaining precisely why I'm doing this kind of stuff, you're still looking for the "angle", and that's the best example of why I find this attitude so difficult to communicate in an effective way to so many other people (and why I've all but given up at it). Yes, I am now living in a place with lower rent than I might be otherwise, but the rent is not lower than the total amount of money and time I have put into it; yes, the landlords might write an amazing letter of recommendation, but my experience so far has been that it's nearly impossible to wrest any kind of letter out of a landlord, no matter how good your relationship. As far as capitalism goes ... y'know, I don't dislike it, but I don't think it's an answer to everyone's needs, either. In order to work, capitalism requires that everything have a measurable, monetary value, and that most people agree on that value. Talk about the Mona Lisa to a capitalist, and the capitalist will tell you that whatever is spent on insuring and protecting the Mona Lisa is representative of its value; talk about the Mona Lisa to an art expert, and they'll use a term that is utterly foreign to a capitalist: "priceless". If people had money to spend at capitalist parks, and capitalist parks realized that they could rent space to vendors (and make some money too), then capitalist vendors would move in and compete for the same spaces, and discerning customers would visit the best vendors, and everyone would be happy! ...except, the story doesn't end there, because eventually the capitalist park realizes that it has developed more value in its space by drawing people to a park where there's great food, so they raise the fees on the vendors, and the vendors realize that they can make more money by advertising more aggressively, or, better yet, by opening up side-businesses and operating those in the same park also ... eventually, this system corrupts itself and the park is no longer a park or the people can no longer afford to go there or any of a number of outcomes. For real world examples, look no further than the article that spawned this whole thread, or the huge number of empty commercial spaces that are still asking for ridiculous rents. So, I am skeptical of capitalism's ability to be anything more than a better economic model than anything else that's currently viable. And, the house does belong to the community, in a way, because it's a part of it, and it belongs to me, in a way, because I live in it. I think when I said "value", I was thinking of something different than what you were when you read it.

thaumaturgy 15y ago

I want to finish this conversation with just one point, which I'll try to make as clearly as possible. I started this thread with a post that included the question, "Why don't more poor people clean up their neighborhoods?" I was being rhetorical, but your comments here are a fine example of one of the reasons why they don't: lack of a sense of ownership. Let's set aside for a moment all of the other factors into why poor neighborhoods tend to be run-down and crime-ridden -- lack of resources, hunger, hopelessness, crime, drugs -- and imagine a neighborhood filled with perfectly rational poor people. We'll take Bob as an example. Bob rents a house for slightly less than he can afford from a landlord that, for whatever reason, is not interested in fixing the place up and demanding a higher rent. Maybe it's because the landlord also doesn't have the funds; maybe it's because all the other places in the neighborhood are run down too, so the landlord could never realize as much value from improvements. In Bob's neighborhood, none of the houses are freshly painted, because it's in nobody's best personal interest to do it, because they don't own the places. None of the yards are weeded or landscaped, the plumbing leaks, and the wiring is hazardous. Bob commits as little of his own resources to his house, because it doesn't belong to him. Eventually, the neighborhood becomes the victim of its own disrepair, and is no longer worth investing any money in at all. Bob, being perfectly rational, simply moves into a similar situation at another neighborhood. A wealthy investor shows up, purchases the homes for the rather low amounts that they command, from landlords happy to be rid of them and getting anything at all for them, and kicks out the tenants who simply move into other neighborhoods and repeat the pattern. The investor razes the miserable houses to the ground, which is probably the right thing to do at that point, and builds whatever their market research firm tells them is most valuable there -- a shopping center, parking, condominiums. This, indeed, is a cycle that is being played out every day all over the U.S.; I've personally seen it in more places than I could easily recall. But, I question that system. I think, if Bob weren't a rational actor, if instead he moved into a community and decided to behave as though it belonged to him as much as anyone else there, and subsequently started fixing little things here and there -- and then his neighbors did the same, because they didn't want to suddenly have the worst place on the block, and so on -- then, perhaps, poor people could discover that they can afford to live in nice neighborhoods after all. G'night.

Tichy 15y ago
I hope it is clear that I don't mean to attack you, I am just trying to understand. We seem to agree that sense of ownership is the problem - and to me it is real, as those poor people really don't own the place they live in. You are right that there could be a problem with people staying poor indefinitely and things only getting worse over time. On the other hand, maybe the problem isn't "how can poor people live in nice places" but "how can poor people be less poor"? For example, apparently the poor people in your story seem to be good at renovating houses. Why shouldn't they be paid for it and hence become less poor (equivalently, be allowed to live in a nice house with lower rent in exchange for renovating said house). It seems it would cost the landlords nothing to give them a job, it is a win win situation. I do think, or rather fear, that capitalism (or any real world instance of it) has some loopholes which might lead to the whole system collapsing, that is, everything belonging to just a few and the rest being poor. I am not sure that scenario is really happening (I just don't know), but there seem to be some signs of it.
- thaumaturgy 15y ago
  > I hope it is clear that I don't mean to attack you, I am just trying to understand. I didn't feel attacked at all. :-) Thanks for the conversation.
anamax 15y ago
> In Bob's neighborhood, none of the houses are freshly painted, because it's in nobody's best personal interest to do it, because they don't own the places. None of the yards are weeded or landscaped, the plumbing leaks, and the wiring is hazardous. Bob commits as little of his own resources to his house, because it doesn't belong to him. > But, I question that system. I think, if Bob weren't a rational actor The above tells us more about your definition of "rational" than anything else. You're envy driven. The guy above defines "rational" differently - he's greed driven. He fixes up the place that he rents because of the value that he gets. IMHO, you're too concerned about what someone else gets. You don't even see how anyone else can think differently, hence your label "rational". Envy is the stupid sin. It's the only sin that doesn't get you anything.
- gnosis 15y ago
  Envy driven? It sounds to me like he's driven by altruism and a simple desire to make the place he lives more pleasant. I really don't know where you got envy from.
  - anamax 15y ago
    Reread the exchange. ("The guy above" is not Bob.) I'm responding to someone who thinks that it's irrational to fix up one's own house when others get significant benefit. The person who is doing the fixup is doing it because he gets significant benefit, regardless of what other people get. The person criticizing thinks that Bob, who won't do work that benefits others without being compensated, is rational. That's envy-talk. Envy is worrying about what other people have/get. Greed is worrying about what you get. A greedy person will do things that benefit himself even if other people benefit without paying. An envious person won't.
    - thaumaturgy 15y ago
      Just for the record, you got that about as wrong as you possibly could -- to such an extent that I'm scratching my head at your interpretation of what I wrote -- but I can't clarify it any further because I've already made this as clear as I can. edit: it sounds like you may not be aware that "rational actor" means a specific thing in microeconomics. See also http://en.wikipedia.org/wiki/Rational_choice_theory http://en.wikipedia.org/wiki/Rational_choice_theory . Specifically, in order for Bob to qualify as a rational actor, he must act in such a way as to maximize his benefit, where his benefit is defined in objective terms of monetary value. i.e., "I like having flowers in my yard" does not qualify as a benefit, thus a rational actor would not spend money to put flowers in their yard. The entire point of all that was to describe, in as simple of an example as I could construct, why I think that behaving only as rational actors -- i.e., measuring our benefits only in terms of monetary value -- can lead to undesirable outcomes, and why acting irrationally -- again, in the sense of microeconomics -- can lead to better outcomes for all involved. I can't figure out where I went wrong in stating all that the last time 'round.

Tichy 15y ago
"Specifically, in order for Bob to qualify as a rational actor, he must act in such a way as to maximize his benefit, where his benefit is defined in objective terms of monetary value. i.e., "I like having flowers in my yard" does not qualify as a benefit" If that truly is the definition of rational, then sorry, economics is sorely mistaken. Or at least the people who conduct economics that way. I always assumed it was clear that "monetary gain" is simply a placeholder for value gained. Of course "I like having flowers in my yard" does qualify. Thinking in terms of monetary gain really makes no sense, especially since money doesn't actually have any value. It only has value if you can use money to put flowers in your yard, if you so desire. I am not an economist but a mathematician by training, so I am not sure what economists are thinking. But they can't (all) be that stupid. Mathematically it is obvious that using such a strict definition of value (monetary gain) is unnecessary and hence should be done away with. That said, I have problems following the "envy driven vs greed driven" argument.
- anamax 15y ago
  >>"Specifically, in order for Bob to qualify as a rational actor, he must act in such a way as to maximize his benefit, where his benefit is defined in objective terms of monetary value. i.e., "I like having flowers in my yard" does not qualify as a benefit" > If that truly is the definition of rational, then sorry, economics is sorely mistaken. You're too kind - if that's the definition of "rational" that economics uses, economics is fundamentally useless. > That said, I have problems following the "envy driven vs greed driven" argument. My apologies. "Greed" is concern with what you have. "Envy" is concern with what other people have. A greedy person will do something that benefits himself regardless of whether it benefits others. An envious person will not do something that benefits himself if he thinks that other people get too much benefit from that thing.