5 ms·

I mean, no? In this specific example, the doctor is buying instruments which derive their interest from exploiting the labor and capital of those in the offerin

I mean, no? In this specific example, the doctor is buying instruments which derive their interest from exploiting the labor and capital of those in the offering company, and after 20 years, the doctor is just living off others work because he 'earned it'. Plus, of course, in this perfect market scenario, no crashes or corrections can ever occur.

deleted 5y ago
[deleted]
throwaway0a5e 5y ago
So say the doctor fronts someone money so they can invest in a business, say buying more garbage trucks for their garbage truck fleet or something. Surely the return on that is earned income? Throwing the money at your preferred wall street instrument of choice is the same thing but with half a million layers of abstraction and redirection all of which involve middle men who either take cuts or otherwise get paid for sorting and bundling, matchmaking, providing liquidity, etc, etc.
- pydry 5y ago
  >Surely the return on that is earned income? No. Why would it be? Those layers of abstraction cut out the risk such that in many cases cash is the riskier instrument.
  - throwaway0a5e 5y ago
    >No. Why would it be? Because the doctor had to evaluate the investment opportunity and risk what they invested. >Those layers of abstraction cut out the risk And that's why you only make pennies on the dollar doing it that way vs the risky way of picking specific things with high growth potential to invest in.
    - pydry 5y ago
      >Because the doctor had to evaluate the investment opportunity and risk what they invested. Unless it's the doctor's hobby somebody usually does this on the doctor's behalf in exchange for a %. This is one of the functions of a well oiled financial industry. If nobody was willing to do this for < expected rate of return then yes, that suggests all the money is earned. >And that's why you only make pennies on the dollar doing it Can you guess the average yearly S&P return over the last 30 years?
FredPret 5y ago
So many issues with this. If the doctor et al - the investing public - don’t own the dividend-paying companies, who will? If you say “a broader base of people” I agree. If you say “the state”, I’d urge you to read some history books. Ownership is an economic concept that is fundamentally misunderstood. It’s a skill you can be good at, and a good owner has a massive positive impact on society. It’s not a golden ticket to sit on your ass and switch off your brain like some others imply. When you own something, you have to look out for everything that can go wrong with your property and have strategies in place to deal with it. You have to consider every possible use of it and decide on the one that adds the most value. You have to consider the long-term flow of resources needed for various projects and invest either your own or borrow someone else’s. You have to hire good managers and then manage them. Owning something is a LOT of work if you do it right because you own the entire outcome, no matter what it is or who’s fault it is.
- pydry 5y ago
  >It's not a golden ticket to sit on your ass and switch off your brain Buy $5 mil in S&P and that's exactly what you can do. Comfortably. The fact that you can mix work with wealth and earn a higher return is proof of little more than you can mix work with wealth. If you have wealth that is.
  - FredPret 5y ago
    If an investment works well and is well known (S&P), it’ll only work for so long. The PE ratio’s in the 500 S&P co’s have been heading ever upward (https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe) indicating some sort of self-reinforcing effect.
    - pydry 5y ago
      70 years?
      - FredPret 5y ago
        Very, very few investors have the vision and nerve to hold their money in one thing for 70 years through the ups and downs. In the case of the S&P500, this would have worked out, but in 99.9999% of other investments, you’d simply have ended with $0 (or less…) and high blood pressure. It is not obvious ahead of time what strategy will work best.
superfunny 5y ago
Are the workers slaves? Are they forced to work for the offering company, or do they choose to do so?
- pydry 5y ago
  They're essentially forced. If you dont for one you have to work for another that is essentially equivalent. With a basic income/free housing your comment would be valid though.

deleted 5y ago

[deleted]

throwaway0a5e 5y ago

So say the doctor fronts someone money so they can invest in a business, say buying more garbage trucks for their garbage truck fleet or something. Surely the return on that is earned income? Throwing the money at your preferred wall street instrument of choice is the same thing but with half a million layers of abstraction and redirection all of which involve middle men who either take cuts or otherwise get paid for sorting and bundling, matchmaking, providing liquidity, etc, etc.

pydry 5y ago
>Surely the return on that is earned income? No. Why would it be? Those layers of abstraction cut out the risk such that in many cases cash is the riskier instrument.
- throwaway0a5e 5y ago
  >No. Why would it be? Because the doctor had to evaluate the investment opportunity and risk what they invested. >Those layers of abstraction cut out the risk And that's why you only make pennies on the dollar doing it that way vs the risky way of picking specific things with high growth potential to invest in.
  - pydry 5y ago
    >Because the doctor had to evaluate the investment opportunity and risk what they invested. Unless it's the doctor's hobby somebody usually does this on the doctor's behalf in exchange for a %. This is one of the functions of a well oiled financial industry. If nobody was willing to do this for < expected rate of return then yes, that suggests all the money is earned. >And that's why you only make pennies on the dollar doing it Can you guess the average yearly S&P return over the last 30 years?

FredPret 5y ago

So many issues with this. If the doctor et al - the investing public - don’t own the dividend-paying companies, who will? If you say “a broader base of people” I agree. If you say “the state”, I’d urge you to read some history books. Ownership is an economic concept that is fundamentally misunderstood. It’s a skill you can be good at, and a good owner has a massive positive impact on society. It’s not a golden ticket to sit on your ass and switch off your brain like some others imply. When you own something, you have to look out for everything that can go wrong with your property and have strategies in place to deal with it. You have to consider every possible use of it and decide on the one that adds the most value. You have to consider the long-term flow of resources needed for various projects and invest either your own or borrow someone else’s. You have to hire good managers and then manage them. Owning something is a LOT of work if you do it right because you own the entire outcome, no matter what it is or who’s fault it is.

pydry 5y ago
>It's not a golden ticket to sit on your ass and switch off your brain Buy $5 mil in S&P and that's exactly what you can do. Comfortably. The fact that you can mix work with wealth and earn a higher return is proof of little more than you can mix work with wealth. If you have wealth that is.
- FredPret 5y ago
  If an investment works well and is well known (S&P), it’ll only work for so long. The PE ratio’s in the 500 S&P co’s have been heading ever upward (https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe) indicating some sort of self-reinforcing effect.
  - pydry 5y ago
    70 years?
    - FredPret 5y ago
      Very, very few investors have the vision and nerve to hold their money in one thing for 70 years through the ups and downs. In the case of the S&P500, this would have worked out, but in 99.9999% of other investments, you’d simply have ended with $0 (or less…) and high blood pressure. It is not obvious ahead of time what strategy will work best.

superfunny 5y ago

Are the workers slaves? Are they forced to work for the offering company, or do they choose to do so?

pydry 5y ago
They're essentially forced. If you dont for one you have to work for another that is essentially equivalent. With a basic income/free housing your comment would be valid though.