10 ms·

Am I the only one in HN who is not into the stock market? I live in Western Europe and I would say 75% of my acquaintances don't do stock market. People I have

Am I the only one in HN who is not into the stock market? I live in Western Europe and I would say 75% of my acquaintances don't do stock market. People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life.

pjc50 5y ago
Do any of them have private pensions? In the UK almost everyone will have been moved over to a "defined contribution" pension whose value is determined by the stock market, usually in the form of a "stakeholder pension". I don't "do" the stock market but I do have such a pension. And every few months sweep spare cash out of my current account into an index fund. Effectively I pay people to worry about this stuff on my behalf. People who retired more than about 10 years ago are far more likely to have "defined benefit" pensions whose value is independent of the stock market.
- bidirectional 5y ago
  Even with DB schemes their funding often relies on exposure to equities.
  - pjc50 5y ago
    Yes, although the recipient is not supposed to be exposed to that - see the UCU strike starting today.
    - iso1631 5y ago
      LOL, I searched for "UCU strike", the first result was "UCU strike calendar" They have so many strikes they need to organise them to make sure they don't overlap each other
    - lotsofpulp 5y ago
      Everyone is exposed to it if they trade in the major currencies. The government will reduce the purchasing power of the currency to ensure the nominal returns to meet the defined benefit obligations are met. This, in turn, will boost the price of equities such as land and stocks, and eventually trickle down as inflation for food and fuel. You will get your defined benefit pension, but how much you can buy with it is variable. And it is going to be less than you think. That is the only way the equation balances with lower economic growth (especially due to lower population growth) and increased competition for resources from the other 7B people in the world.
- hnbad 5y ago
  Not the parent, but I live in Germany and while the new coalition government is expected to push for moving he public pension system to stock based pensions, the current system consists of a public pension system (that employees pay into via their employer to pay out current recipients who previously paid into it) and a private pension system everyone is strongly encouraged to pay into. As I understand it the private system is not directly tied to the stock market though. For most people outside the very niche finance and tech investment bubbles stocks are largely understood as a form of gambling and managed funds as a high yield alternative to a savings account with a small risk of losing money (but this requires some disposable income so again this is somewhat self-selecting). The ordinary Hans Wurst (German Joe Blow) just follows the economy section of the news for a general feeling of if things are going good or bad because line goes down means prices go up and they probably won't get a raise.
  - llampx 5y ago
    Watch the Ampel get into the stock market at its peak and put off an entire generation from the stock market, yet again.
    - hnbad 5y ago
      From a leftist point of view the most frustrating thing about red-green is that they market themselves as progressives and leftists but then just follow the same neoliberal economical politics as everyone else. It's deeply ironic that the reforms that did away with large swathes of the welfare state and labor protections were implemented by a red-green coalition government, not conservatives or the FDP. The lesson most voters take away from this seems to be that leftism is just false advertising and if you vote for leftists you just get the same politics but more dishonest, not that the "leftists" they keep voting for aren't actually interested in leftist politics (though I can see why Die Linke might be unappealing as they're a headache even if you see them as the only viable option).
MrYellowP 5y ago
It's all about the outside influence. When the media doesn't push it, people aren't going to do it. Don't believe it? When the media started pushing GME, people went and bought GME. When the media started pushing btc, people went and bought btc. Stocks aren't being encouraged, therefore most people don't do it and instead cluelessly dismiss it mostly as gambling. Same goes for cryptos. Right until the media pushes it, people buy into it, rich people sell causing prices to crash, and the cycle of cluelessness repeats.
- pasabagi 5y ago
  It is also the case that professional traders make a lot of money out of retail investors. The percentage of retail investors that actually make money are, iirc, quite small. It doesn't make sense to do something when you don't have the time to get good at it, and being bad at it means you're going to lose money. Sometimes you're forced to (when an investment is tied into a basic necessity, like a house), but you're always going to be at a disadvantage.
  - pjc50 5y ago
    Retail _traders_ tend to lose money, retail _investors_ who buy and hold tend to do OK in the long run. > investment is tied into a basic necessity, like a house ? What does this refer to?
    - pasabagi 5y ago
      I mean the rights of tenants are such that if you want to live in decent conditions / a stable domicile, you have to buy a house, thus becoming a property investor.
      - sokoloff 5y ago
        I think the act of buying a house to live in should be considered more an act of consumption than of investment. It’s not 100% consumption, but it’s almost surely we’ll over 50% consumption and yet people get confused by the fact that a slice of it is forced savings and a sliver of it is an investment and they focus on these latter two more than is appropriate and in so doing are prone to less rational decisions than if they thought of it as mostly consumption IMO.
llampx 5y ago
I live in Germany and its the same. Not that that's a good thing. People here are old-fashioned and still believe in "Concrete gold." Fact is, as soon as you've got a meaningful amount of wealth, you're going to want to invest it so you can either get income from it or grow the principal. It could be in a home, multiple properties, or the stock market. > People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life. No offense but you're going to have a tough time comparing to a boomer in terms of wealth generation and building if you're a millenial. I know people who got houses handed to them for very cheap 30-40 years ago, and those houses are worth tremendous amounts of money now. On top of that they have good pensions and insurance from a long time ago. Or they have a rental contract where they're paying 1/3rd of their neighbors so their expenses are low. There's a great income and wealth divide in Europe between the haves and the have nots, and the haves are very good at keeping their wealth and passing it down to their heirs. Meanwhile in most European countries, punitive taxation makes it extremely difficult to move up in social class, even from middle class to upper middle class.
- simongray 5y ago
  > Meanwhile in most European countries, punitive taxation makes it extremely difficult to move up in social class, even from middle class to upper middle class. This is not true. Several of the highest taxed countries in Europe also have the best social mobility in the OECD: https://www.oecd.org/els/soc/1-5%20generations.png https://www.oecd.org/els/soc/1-5%20generations.png It might be the case that Germany is particularly rigid, but that is not transferable to most of Europe and certainly can't be attributed to taxes.
  - RandomLensman 5y ago
    That OECD study is really tricky as it only goes to mean income. The interesting bit would be to really rich and there I am not sure Scandinavia would score so well.
  - hnbad 5y ago
    German has extremely liberal inheritance taxes. On the one hand this is often justified with the existence of the German "Mittelstand" (medium sized businesses typically owned by one family over generations), on the other this means the easiest way to get rich is to have rich parents. Low inheritance taxes are actually a great predictor for maintaining social inequality over generations. If you wanted to reduce social inequality you'd instead want to drastically lower VAT (which disproportionately affects poorer people), adjust income taxes to lower the tax burden on lower incomes and raise it on higher incomes, and drastically raise taxes on income from capital (rather than labor). This isn't even simply an opinion, this is scientific consensus.
erwincoumans 5y ago
You are likely indirectly into the stockmarket, through pension funds or social security. In the USA, a lot of people (especially in big tech) are more directly involved through a 401k, which allows to pick stock/bonds. It could also be that you prioritize investing money into a house instead?
Tainnor 5y ago
You don't have to be "into" the stock market i.e. doing day trading. That's unlikely to make you rich unless you do it as a full-time job (and even then...). You can get lucky, but that's usually about it. Instead, invest a regular amount of money monthly into ETFs. Those are relatively low-risk, but should still yield significant returns over the course of decades. It's true that most people (at least in Germany) don't trust the stock market. The problem is that your wealth is being eaten up by inflation and interests on savings are low or even negative. You will lose money. In addition, Germany's mandatory pension funds are in a bad shape and most private insurances (e.g. Riester) are not worth it. The situation is not the same as in my parents' generation and unfortunately, a lot of people are not realising that.
tommiegannert 5y ago
As a Swede in Switzerland, I think the main difference to the US is the cost. European commissions is mostly "buy and never look again." That fosters a culture where only a few people care and talk about it. In Switzerland, I have to pay ~0.1% stamp duty on every purchase and sale of stocks and ETFs (in a Swiss broker). The UK has a 0.5% stamp duty on stocks. The idea for these brokers to compete on price doesn't make much sense at that point. It's "fine" that the normal fund has a 0.5-1% fee. There's some movement here, but only if you care to engage outside your existing bank (IBKR in the UK, Avanza++ in Scandinavia, Degiro in Europe in general). Investing is good, and---as has been said---pensions are often invested in the stock market, whether you know it or not. But you just don't talk about it, because being active is costly. In Sweden, the defined contributions are auto-invested in a balanced fund unless you engage. There's something to be said about having sane defaults when you create a system. As for the US, I'm not sure Robinhood was a step in the right direction. We should encourage people to own companies, not try to profit from Brownian motion. But that's perhaps a topic for another discussion. Finally, I'm heavily into the stock market. I have several accounts across the world (though not really by design). I'm fascinated about this oddity that I can buy more food in the future just by having a different piece of paper, compared to someone else. But I also spend a stupid amount of time trying to find ways to reduce cost of investments. My guess is that most people don't, and it's kind-of the first step for a European that's paying >1% in fund fees. Or who don't even know how much they're paying.
pembrook 5y ago
Europeans can have the luxury of not worrying about investing since many European countries offer livable pensions (for now…the demographic future for this isn’t looking so good). However, this isn’t as great as it sounds. While the European model for healthcare and education is better, their pension schemes are arguably a much worse deal than what Americans can have. In Europe, you’re basically paying the government to take your money and invest it in much too conservative, in fact, negative-yielding! bonds right now due to pension fund mandates. You can’t take the proper amount of risk given your age (in your 20s-40s you should be almost fully allocated to stocks) because the pension fund needs to constantly be paying out money to old people—they can’t risk huge drawdowns. There’s a surprisingly large amount of middle class Americans who will retire millionaires just because they are able to save for their pension privately and take the proper amount of risk for their age (eg. Target date funds). Meanwhile, in Europe, governments shelter people from the harsh realities of how financial markets work, but you have to hope and pray that enough people are born in the coming decades to make up for the conservative pension mandates. And you have to pray that the government allows you to retire sometime before you die (in the nordics, retirement ages are constantly being pushed back and pension benefits are shrinking...due to said demographics). I predict every country will eventually move to a hybrid private/public pension model like the US over the next 40 years. So you'll have to start caring eventually.
- iso1631 5y ago
  In the UK you can stick whatever you want into stocks and shares isas, if you can afford it. The problem is that housing costs rise to suck every spare penny of income from pretty much everyone so very few people have spare money to put into those isas.
  - pembrook 5y ago
    I believe this is also a side-effect of these poor pension schemes. European governments see the demographic timebomb coming, so they massively incentivize their citizens to invest in a primary residence, treating it as forced savings. This inflates local real estate values to ridiculous levels, especially while interest rates are low. However, incentivizing your citizens to take leveraged bets (big mortgages) on a single piece of real estate is...not great. This means the investment portfolio of the average European citizen is ONE specific apartment (zero diversification), and negative yielding sovereign bonds (via government pension funds). Since most European mortgages are not fixed rate, it will be interesting to see what happens as interest rates start rising in Europe. While the bonds will start paying better interest, that mortgage exposure might start to wreak havoc on the average citizens finances...
headmelted 5y ago
Also Europe here, and leaving aside what others have said about how everyone is invested in the stock market whether explicitly or not (which is entirely true), this rings true for me as well - it's also backed up by data. In the US, the majority of adults are invested in the markets (https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...), whereas in Europe the number of people invested has historically been lower (https://www.ft.com/content/31c4d453-498e-4cc2-b14f-d7e8b17b9221 https://www.ft.com/content/31c4d453-498e-4cc2-b14f-d7e8b17b9...). This makes sense when you think about it - in the past you would have built habits and understanding from relatives and your community (e.g. "Don't invest in stocks that's gambling and they always crash!"), whereas since the Internet came along people have more access to data and perspectives from more places. All of the above said, the last few years, and especially since the lockdowns, the behaviour in the markets has been really alarming. The FT.com link above touches on this, but the rush into [stocks/cryptocurrencies/leveraged funds/options] is something I've never seen before in my lifetime. I don't think the world has ever seen anything like this level of amplified speculation. Bitcoin, Leveraged ETFs, and Options didn't exist in the 1920's. The Netherlands had futures contracts towards the end of Tulipmania, but I haven't seen anything to say that they were leveraged. In the late 1990's it was clear and readily apparent to everyone that the Internet was a massively important step forward. We agreed on that. It wasn't a controversial or widely disputed viewpoint. The market still imploded because of the sheer amount of rampant speculation, so to think something worse won't happen to a multi-trillion dollar market based on a technology many people think only has value for running Ponzi schemes seems to be pretty irrational. To top it off, the wall of hype seems impenetrable at this stage ("have fun staying poor!" etc), so it remains to be seen what happens when the plates stop spinning this time. tldr; Your grandparents might be proven right after all.
- arbol 5y ago
  > In the late 1990's it was clear and readily apparent to everyone that the Internet was a massively important step forward. We agreed on that. It wasn't a controversial or widely disputed viewpoint. The market still imploded because of the sheer amount of rampant speculation, so to think something worse won't happen to a multi-trillion dollar market based on a technology many people think only has value for running Ponzi schemes seems to be pretty irrational. In the 1990s it wasn't clear to everyone that the internet was a massively important step forward. You were younger and probably part of the technically-savvy, forward-looking generation that could clearly see the internet being massively important in future. However, *many* people in the older demographic lacked this insight and didn't fully embrace the internet until the mid to late 2000's. I think we'll see the same thing play out with crypto. Writing everything off in the sector as being ponzi is especially flippant.
runarberg 5y ago
Personally I have a philosophical (read marxist) reason to avoid it. Fundamentally I see the stock market as an exploitation tool which the rich use to siphon money away from workers and into their own pockets without contributing. Every dollar you get but didn’t work for was a dollar that somebody else worked for but didn’t get. The stock market is full of transactions which yields profits for the rich while leaving workers at a loss by means of lower benefits. I refuse to participate and become a class traitor. I’ve never worked in an industry which tries to push stocks onto you as much as software development. They keep paying me out options, giving me stock plans, etc. My strategy is to get sell as soon as I’m able, and transfer the money to a savings account in my local credit union. Don’t let them get away with not giving me my money, but don’t let them dictate how I keep my savings.
- notahacker 5y ago
  Isn't being offered stock in your own company broadly consistent with Marxist principles: workers own a share of the wealth they create? Maybe not as much of a share as they'd like, but I wouldn't have thought that was reason to avoid taking any.
  - GoodbyeMrChips 5y ago
    > being offered stock in your own company Off-topic from the thrust of this conversation, but I always considered the above extremally risky. If your company goes tits-up, you loose your job and your savings. This happened to a lot of people during the dot-com crash of 2000. (Unless you have a high risk tolerance, you will want to diversify much more.)
  - hnbad 5y ago
    It's orthogonal to Marxism but Marx and Engels both engaged in stock trading (not to mention that Engels literally owned a factory). Employment is by definition exploitative because a capitalist system requires the owner to derive profits from labor, i.e. pay workers only a part of the value they generate. This isn't a value judgment, this is a matter of definitions: the capitalist mode of production is by definition exploitative because avoiding exploitation would steer the owner towards bankruptcy and thus kill the entire business. The only solution to avoid this contradiction is to not have a separation between ownership and work, to abolish the capitalist class, i.e. ownership of a business is granted by working for that business, with all the rights and responsibilities ownership implies. However the ultimate ideological goal is usually (similar to how Free Software doesn't want to control copyright but abolish ownership of software) to abolish the notion of ownership or even businesses as distinct entities, much like discrete ownership of land was a nonsensical concept before enclosure (i.e. it was "your land" because you used it and the community was okay with you using it). I think the most frequent misunderstanding of communism comes from trying to fabricate communist structures within capitalist power dynamics. Most of the prominent "communist experiments" had very little to do with actual communism because they were built around the assumption that they were building a foundation for communism to happen later rather than directly building communism in the here and now (hence the Eastern Bloc phrase "real socialism" as a euphemism for authoritarian governments with mandatory labor and limited democratic instruments, none of which is compatible with the definition of communism). The thing most people seem to forget is that the goal of "abolishing the capitalist class" is to also abolish the working class as a subjugated dependent group because it is only a meaningful concept when contrasted with an owning class. The Soviet Union failed terribly at this by replacing the capitalist class with bureaucrats, effectively still maintaining a distinct working class and hoping he bureaucracy would magically "wither away" eventually while doing nothing to make that happen. They also tend to forget that the distinction between capitalist and worker is purely about ownership and there are many overlapping hierarchies of power, and owner vs worker is merely one of them (although one of the most important ones).
fergie 5y ago
Whether or not you care about the stock market is basically a question of whether you run a functioning business or not. If you run a function business then you are have cash sitting on accounts. Even for a fairly modest business, a reasonable operating cushion dictates that you always have 6-7 figure cash reserve. Ideally you want this money to be sitting somewhere where it generates good returns, yet can be accessed quickly and with low transaction costs. Therefore shares and funds start to make sense. These days you can actually move cash directly into funds from your corporate online bank. Shares (and all their financial derivatives) are a good hedge for profitable limited companies, because they either go up in value (yay! profit!) or down in value (yay! tax deductable loss rolled over to next year!). So long as the company is otherwise making a profit, shares are actually pretty hard to lose out on. Also pensions. Most pensions are backed by index funds which are generally related somehow to stocks and shares. If you need to manage a pension fund, you have to pay at least vague attention to the stock market.
- iso1631 5y ago
  Doesn't seem sensible to invest your operating cushion in something as volatile as the stock market, especially given the corralation between a recession causing your operating margin to crash and a recession causing your business to need that operating margin The US stock market has been ridiculously pumped from the last decade-plus of money printing, I wonder how many people think that's normal.
- twic 5y ago
  The stock market is a terrible - criminally negligent - place to keep a company's operating cash. I would be fascinated to read advice from an accountant or other financial professional that says otherwise. I once worked at a company which used a money market fund for its cash. That gave them a slightly better return than a bank account. In the end, not sufficiently better to be worth bothering with.
  - dmurray 5y ago
    If the company has an excess of cash and nothing good to spend it on, I think it's fine to put it in the stock market. Maybe you wouldn't count this as "operating reserves" - I wouldn't do that with the money that's earmarked to pay suppliers but not due for another month, but I would do it with the money that's earmarked for opening a new business location at an indefinite time in the future. You can get whatever risk profile you want from the stock market in return for less yield. If you can accept two-nines certainty that you won't lose half your money in six months, any broad index fund will do. That would be acceptable for a lot of "modest businesses" which find themselves with "6-7 figures cash reserves". If you need better, you can do fancy things with options, or put a fraction of the money in the bank and invest the rest. (I am a financial professional, but not in this field, and this is not financial advice)
JohnJamesRambo 5y ago
Where do you and they keep your retirement money?
- runarberg 5y ago
  In Iceland there is mandatory retirement funds. You can choose which fund and many people pick a fund that is only made off of government bonds. More people probably don’t have a clue what their retirement fund is made off, it is just some number on their paycheck, so they participate in the stock market both indirectly and unknowingly. I think it is kind of a stretch to say that these people are doing stocks. Most people I know use every opportunity to withdraw early from their fund. At most these people do stocks like a person who returns their compost to the city does public gardening.
GlennS 5y ago
I think traditionally most people in most countries ignored the stock market and consider it boring to talk about. Maybe less so in the USA? Not sure. But a lot of computer folks have spare money at the moment, and in that situation you have a few options: consume more, keep it in a savings account, or invest. And some significant proportion choose invest. Keep it in a savings account is a common option, but quite a bad idea. Probably the majority of people who invest do so in property, considering it safer than stocks (which I disagree with, although there are other reasons to like property). This may be changing a bit in recent years, because access is easier now. In Sydney I see adverts for stock brokers at the bus station. Seems like some gamblers have switched to the stock market to get their fix too.
habosa 5y ago
In the US if you have a retirement savings account (which is very advantageous to have) it’s likely to be a 401k or IRA which you have to manage yourself. So having some basic understanding of the stock market is essential to your financial future.
ivanche 5y ago
Ah don’t be afraid of it. You’re missing out an opportunity to live a worryless retirement and to even leave a solid chunk of assets to your kids/partner. Simply invest a few hundreds euros (probably 300-400 will be enough) every month into an ETF which tracks some of the very broad market indices like MSCI World, FTSE All World or even S&P500. You have very good chances of becoming a millionaire or almost-millionaire by the time you retire. Good luck!
teva 5y ago
I'm pretty sure a lot have a life insurance which put a part of the money on the financial market
Gatsky 5y ago
There is a lot of interest in the stock market currently. Individual investors (‘retail’) have been buying a lot of stocks in the last 12 months. Some would say this is typical behaviour before a crash. Business people become folk heroes (Musk) and the news is all about stocks and macroeconomics.
mehphp 5y ago
What do you do for retirement?
koonsolo 5y ago
My parents didn't do stock market, for the simple fact that you got a nice interest from a savings account. Those times are gone now. Some people have a hard time grasping the alternatives. Stocks are considered "risky", but if you have a 10+ years timeframe, an index fund is not risky at all. I also have 75% of acquaintances that don't do stock market or crypto. And that's the reason why my savings are outperforming all of them.

pjc50 5y ago

Do any of them have private pensions? In the UK almost everyone will have been moved over to a "defined contribution" pension whose value is determined by the stock market, usually in the form of a "stakeholder pension". I don't "do" the stock market but I do have such a pension. And every few months sweep spare cash out of my current account into an index fund. Effectively I pay people to worry about this stuff on my behalf. People who retired more than about 10 years ago are far more likely to have "defined benefit" pensions whose value is independent of the stock market.

bidirectional 5y ago
Even with DB schemes their funding often relies on exposure to equities.
- pjc50 5y ago
  Yes, although the recipient is not supposed to be exposed to that - see the UCU strike starting today.
  - iso1631 5y ago
    LOL, I searched for "UCU strike", the first result was "UCU strike calendar" They have so many strikes they need to organise them to make sure they don't overlap each other
  - lotsofpulp 5y ago
    Everyone is exposed to it if they trade in the major currencies. The government will reduce the purchasing power of the currency to ensure the nominal returns to meet the defined benefit obligations are met. This, in turn, will boost the price of equities such as land and stocks, and eventually trickle down as inflation for food and fuel. You will get your defined benefit pension, but how much you can buy with it is variable. And it is going to be less than you think. That is the only way the equation balances with lower economic growth (especially due to lower population growth) and increased competition for resources from the other 7B people in the world.
hnbad 5y ago
Not the parent, but I live in Germany and while the new coalition government is expected to push for moving he public pension system to stock based pensions, the current system consists of a public pension system (that employees pay into via their employer to pay out current recipients who previously paid into it) and a private pension system everyone is strongly encouraged to pay into. As I understand it the private system is not directly tied to the stock market though. For most people outside the very niche finance and tech investment bubbles stocks are largely understood as a form of gambling and managed funds as a high yield alternative to a savings account with a small risk of losing money (but this requires some disposable income so again this is somewhat self-selecting). The ordinary Hans Wurst (German Joe Blow) just follows the economy section of the news for a general feeling of if things are going good or bad because line goes down means prices go up and they probably won't get a raise.
- llampx 5y ago
  Watch the Ampel get into the stock market at its peak and put off an entire generation from the stock market, yet again.
  - hnbad 5y ago
    From a leftist point of view the most frustrating thing about red-green is that they market themselves as progressives and leftists but then just follow the same neoliberal economical politics as everyone else. It's deeply ironic that the reforms that did away with large swathes of the welfare state and labor protections were implemented by a red-green coalition government, not conservatives or the FDP. The lesson most voters take away from this seems to be that leftism is just false advertising and if you vote for leftists you just get the same politics but more dishonest, not that the "leftists" they keep voting for aren't actually interested in leftist politics (though I can see why Die Linke might be unappealing as they're a headache even if you see them as the only viable option).

MrYellowP 5y ago

It's all about the outside influence. When the media doesn't push it, people aren't going to do it. Don't believe it? When the media started pushing GME, people went and bought GME. When the media started pushing btc, people went and bought btc. Stocks aren't being encouraged, therefore most people don't do it and instead cluelessly dismiss it mostly as gambling. Same goes for cryptos. Right until the media pushes it, people buy into it, rich people sell causing prices to crash, and the cycle of cluelessness repeats.

pasabagi 5y ago
It is also the case that professional traders make a lot of money out of retail investors. The percentage of retail investors that actually make money are, iirc, quite small. It doesn't make sense to do something when you don't have the time to get good at it, and being bad at it means you're going to lose money. Sometimes you're forced to (when an investment is tied into a basic necessity, like a house), but you're always going to be at a disadvantage.
- pjc50 5y ago
  Retail _traders_ tend to lose money, retail _investors_ who buy and hold tend to do OK in the long run. > investment is tied into a basic necessity, like a house ? What does this refer to?
  - pasabagi 5y ago
    I mean the rights of tenants are such that if you want to live in decent conditions / a stable domicile, you have to buy a house, thus becoming a property investor.
    - sokoloff 5y ago
      I think the act of buying a house to live in should be considered more an act of consumption than of investment. It’s not 100% consumption, but it’s almost surely we’ll over 50% consumption and yet people get confused by the fact that a slice of it is forced savings and a sliver of it is an investment and they focus on these latter two more than is appropriate and in so doing are prone to less rational decisions than if they thought of it as mostly consumption IMO.

llampx 5y ago

I live in Germany and its the same. Not that that's a good thing. People here are old-fashioned and still believe in "Concrete gold." Fact is, as soon as you've got a meaningful amount of wealth, you're going to want to invest it so you can either get income from it or grow the principal. It could be in a home, multiple properties, or the stock market. > People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life. No offense but you're going to have a tough time comparing to a boomer in terms of wealth generation and building if you're a millenial. I know people who got houses handed to them for very cheap 30-40 years ago, and those houses are worth tremendous amounts of money now. On top of that they have good pensions and insurance from a long time ago. Or they have a rental contract where they're paying 1/3rd of their neighbors so their expenses are low. There's a great income and wealth divide in Europe between the haves and the have nots, and the haves are very good at keeping their wealth and passing it down to their heirs. Meanwhile in most European countries, punitive taxation makes it extremely difficult to move up in social class, even from middle class to upper middle class.

simongray 5y ago
> Meanwhile in most European countries, punitive taxation makes it extremely difficult to move up in social class, even from middle class to upper middle class. This is not true. Several of the highest taxed countries in Europe also have the best social mobility in the OECD: https://www.oecd.org/els/soc/1-5%20generations.png https://www.oecd.org/els/soc/1-5%20generations.png It might be the case that Germany is particularly rigid, but that is not transferable to most of Europe and certainly can't be attributed to taxes.
- RandomLensman 5y ago
  That OECD study is really tricky as it only goes to mean income. The interesting bit would be to really rich and there I am not sure Scandinavia would score so well.
- hnbad 5y ago
  German has extremely liberal inheritance taxes. On the one hand this is often justified with the existence of the German "Mittelstand" (medium sized businesses typically owned by one family over generations), on the other this means the easiest way to get rich is to have rich parents. Low inheritance taxes are actually a great predictor for maintaining social inequality over generations. If you wanted to reduce social inequality you'd instead want to drastically lower VAT (which disproportionately affects poorer people), adjust income taxes to lower the tax burden on lower incomes and raise it on higher incomes, and drastically raise taxes on income from capital (rather than labor). This isn't even simply an opinion, this is scientific consensus.

erwincoumans 5y ago

You are likely indirectly into the stockmarket, through pension funds or social security. In the USA, a lot of people (especially in big tech) are more directly involved through a 401k, which allows to pick stock/bonds. It could also be that you prioritize investing money into a house instead?

Tainnor 5y ago

You don't have to be "into" the stock market i.e. doing day trading. That's unlikely to make you rich unless you do it as a full-time job (and even then...). You can get lucky, but that's usually about it. Instead, invest a regular amount of money monthly into ETFs. Those are relatively low-risk, but should still yield significant returns over the course of decades. It's true that most people (at least in Germany) don't trust the stock market. The problem is that your wealth is being eaten up by inflation and interests on savings are low or even negative. You will lose money. In addition, Germany's mandatory pension funds are in a bad shape and most private insurances (e.g. Riester) are not worth it. The situation is not the same as in my parents' generation and unfortunately, a lot of people are not realising that.

tommiegannert 5y ago

As a Swede in Switzerland, I think the main difference to the US is the cost. European commissions is mostly "buy and never look again." That fosters a culture where only a few people care and talk about it. In Switzerland, I have to pay ~0.1% stamp duty on every purchase and sale of stocks and ETFs (in a Swiss broker). The UK has a 0.5% stamp duty on stocks. The idea for these brokers to compete on price doesn't make much sense at that point. It's "fine" that the normal fund has a 0.5-1% fee. There's some movement here, but only if you care to engage outside your existing bank (IBKR in the UK, Avanza++ in Scandinavia, Degiro in Europe in general). Investing is good, and---as has been said---pensions are often invested in the stock market, whether you know it or not. But you just don't talk about it, because being active is costly. In Sweden, the defined contributions are auto-invested in a balanced fund unless you engage. There's something to be said about having sane defaults when you create a system. As for the US, I'm not sure Robinhood was a step in the right direction. We should encourage people to own companies, not try to profit from Brownian motion. But that's perhaps a topic for another discussion. Finally, I'm heavily into the stock market. I have several accounts across the world (though not really by design). I'm fascinated about this oddity that I can buy more food in the future just by having a different piece of paper, compared to someone else. But I also spend a stupid amount of time trying to find ways to reduce cost of investments. My guess is that most people don't, and it's kind-of the first step for a European that's paying >1% in fund fees. Or who don't even know how much they're paying.

pembrook 5y ago

Europeans can have the luxury of not worrying about investing since many European countries offer livable pensions (for now…the demographic future for this isn’t looking so good). However, this isn’t as great as it sounds. While the European model for healthcare and education is better, their pension schemes are arguably a much worse deal than what Americans can have. In Europe, you’re basically paying the government to take your money and invest it in much too conservative, in fact, negative-yielding! bonds right now due to pension fund mandates. You can’t take the proper amount of risk given your age (in your 20s-40s you should be almost fully allocated to stocks) because the pension fund needs to constantly be paying out money to old people—they can’t risk huge drawdowns. There’s a surprisingly large amount of middle class Americans who will retire millionaires just because they are able to save for their pension privately and take the proper amount of risk for their age (eg. Target date funds). Meanwhile, in Europe, governments shelter people from the harsh realities of how financial markets work, but you have to hope and pray that enough people are born in the coming decades to make up for the conservative pension mandates. And you have to pray that the government allows you to retire sometime before you die (in the nordics, retirement ages are constantly being pushed back and pension benefits are shrinking...due to said demographics). I predict every country will eventually move to a hybrid private/public pension model like the US over the next 40 years. So you'll have to start caring eventually.

iso1631 5y ago
In the UK you can stick whatever you want into stocks and shares isas, if you can afford it. The problem is that housing costs rise to suck every spare penny of income from pretty much everyone so very few people have spare money to put into those isas.
- pembrook 5y ago
  I believe this is also a side-effect of these poor pension schemes. European governments see the demographic timebomb coming, so they massively incentivize their citizens to invest in a primary residence, treating it as forced savings. This inflates local real estate values to ridiculous levels, especially while interest rates are low. However, incentivizing your citizens to take leveraged bets (big mortgages) on a single piece of real estate is...not great. This means the investment portfolio of the average European citizen is ONE specific apartment (zero diversification), and negative yielding sovereign bonds (via government pension funds). Since most European mortgages are not fixed rate, it will be interesting to see what happens as interest rates start rising in Europe. While the bonds will start paying better interest, that mortgage exposure might start to wreak havoc on the average citizens finances...

headmelted 5y ago

Also Europe here, and leaving aside what others have said about how everyone is invested in the stock market whether explicitly or not (which is entirely true), this rings true for me as well - it's also backed up by data. In the US, the majority of adults are invested in the markets (https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...), whereas in Europe the number of people invested has historically been lower (https://www.ft.com/content/31c4d453-498e-4cc2-b14f-d7e8b17b9221 https://www.ft.com/content/31c4d453-498e-4cc2-b14f-d7e8b17b9...). This makes sense when you think about it - in the past you would have built habits and understanding from relatives and your community (e.g. "Don't invest in stocks that's gambling and they always crash!"), whereas since the Internet came along people have more access to data and perspectives from more places. All of the above said, the last few years, and especially since the lockdowns, the behaviour in the markets has been really alarming. The FT.com link above touches on this, but the rush into [stocks/cryptocurrencies/leveraged funds/options] is something I've never seen before in my lifetime. I don't think the world has ever seen anything like this level of amplified speculation. Bitcoin, Leveraged ETFs, and Options didn't exist in the 1920's. The Netherlands had futures contracts towards the end of Tulipmania, but I haven't seen anything to say that they were leveraged. In the late 1990's it was clear and readily apparent to everyone that the Internet was a massively important step forward. We agreed on that. It wasn't a controversial or widely disputed viewpoint. The market still imploded because of the sheer amount of rampant speculation, so to think something worse won't happen to a multi-trillion dollar market based on a technology many people think only has value for running Ponzi schemes seems to be pretty irrational. To top it off, the wall of hype seems impenetrable at this stage ("have fun staying poor!" etc), so it remains to be seen what happens when the plates stop spinning this time. tldr; Your grandparents might be proven right after all.

arbol 5y ago
> In the late 1990's it was clear and readily apparent to everyone that the Internet was a massively important step forward. We agreed on that. It wasn't a controversial or widely disputed viewpoint. The market still imploded because of the sheer amount of rampant speculation, so to think something worse won't happen to a multi-trillion dollar market based on a technology many people think only has value for running Ponzi schemes seems to be pretty irrational. In the 1990s it wasn't clear to everyone that the internet was a massively important step forward. You were younger and probably part of the technically-savvy, forward-looking generation that could clearly see the internet being massively important in future. However, *many* people in the older demographic lacked this insight and didn't fully embrace the internet until the mid to late 2000's. I think we'll see the same thing play out with crypto. Writing everything off in the sector as being ponzi is especially flippant.

runarberg 5y ago

Personally I have a philosophical (read marxist) reason to avoid it. Fundamentally I see the stock market as an exploitation tool which the rich use to siphon money away from workers and into their own pockets without contributing. Every dollar you get but didn’t work for was a dollar that somebody else worked for but didn’t get. The stock market is full of transactions which yields profits for the rich while leaving workers at a loss by means of lower benefits. I refuse to participate and become a class traitor. I’ve never worked in an industry which tries to push stocks onto you as much as software development. They keep paying me out options, giving me stock plans, etc. My strategy is to get sell as soon as I’m able, and transfer the money to a savings account in my local credit union. Don’t let them get away with not giving me my money, but don’t let them dictate how I keep my savings.

notahacker 5y ago
Isn't being offered stock in your own company broadly consistent with Marxist principles: workers own a share of the wealth they create? Maybe not as much of a share as they'd like, but I wouldn't have thought that was reason to avoid taking any.
- GoodbyeMrChips 5y ago
  > being offered stock in your own company Off-topic from the thrust of this conversation, but I always considered the above extremally risky. If your company goes tits-up, you loose your job and your savings. This happened to a lot of people during the dot-com crash of 2000. (Unless you have a high risk tolerance, you will want to diversify much more.)
- hnbad 5y ago
  It's orthogonal to Marxism but Marx and Engels both engaged in stock trading (not to mention that Engels literally owned a factory). Employment is by definition exploitative because a capitalist system requires the owner to derive profits from labor, i.e. pay workers only a part of the value they generate. This isn't a value judgment, this is a matter of definitions: the capitalist mode of production is by definition exploitative because avoiding exploitation would steer the owner towards bankruptcy and thus kill the entire business. The only solution to avoid this contradiction is to not have a separation between ownership and work, to abolish the capitalist class, i.e. ownership of a business is granted by working for that business, with all the rights and responsibilities ownership implies. However the ultimate ideological goal is usually (similar to how Free Software doesn't want to control copyright but abolish ownership of software) to abolish the notion of ownership or even businesses as distinct entities, much like discrete ownership of land was a nonsensical concept before enclosure (i.e. it was "your land" because you used it and the community was okay with you using it). I think the most frequent misunderstanding of communism comes from trying to fabricate communist structures within capitalist power dynamics. Most of the prominent "communist experiments" had very little to do with actual communism because they were built around the assumption that they were building a foundation for communism to happen later rather than directly building communism in the here and now (hence the Eastern Bloc phrase "real socialism" as a euphemism for authoritarian governments with mandatory labor and limited democratic instruments, none of which is compatible with the definition of communism). The thing most people seem to forget is that the goal of "abolishing the capitalist class" is to also abolish the working class as a subjugated dependent group because it is only a meaningful concept when contrasted with an owning class. The Soviet Union failed terribly at this by replacing the capitalist class with bureaucrats, effectively still maintaining a distinct working class and hoping he bureaucracy would magically "wither away" eventually while doing nothing to make that happen. They also tend to forget that the distinction between capitalist and worker is purely about ownership and there are many overlapping hierarchies of power, and owner vs worker is merely one of them (although one of the most important ones).

fergie 5y ago

Whether or not you care about the stock market is basically a question of whether you run a functioning business or not. If you run a function business then you are have cash sitting on accounts. Even for a fairly modest business, a reasonable operating cushion dictates that you always have 6-7 figure cash reserve. Ideally you want this money to be sitting somewhere where it generates good returns, yet can be accessed quickly and with low transaction costs. Therefore shares and funds start to make sense. These days you can actually move cash directly into funds from your corporate online bank. Shares (and all their financial derivatives) are a good hedge for profitable limited companies, because they either go up in value (yay! profit!) or down in value (yay! tax deductable loss rolled over to next year!). So long as the company is otherwise making a profit, shares are actually pretty hard to lose out on. Also pensions. Most pensions are backed by index funds which are generally related somehow to stocks and shares. If you need to manage a pension fund, you have to pay at least vague attention to the stock market.

iso1631 5y ago
Doesn't seem sensible to invest your operating cushion in something as volatile as the stock market, especially given the corralation between a recession causing your operating margin to crash and a recession causing your business to need that operating margin The US stock market has been ridiculously pumped from the last decade-plus of money printing, I wonder how many people think that's normal.
twic 5y ago
The stock market is a terrible - criminally negligent - place to keep a company's operating cash. I would be fascinated to read advice from an accountant or other financial professional that says otherwise. I once worked at a company which used a money market fund for its cash. That gave them a slightly better return than a bank account. In the end, not sufficiently better to be worth bothering with.
- dmurray 5y ago
  If the company has an excess of cash and nothing good to spend it on, I think it's fine to put it in the stock market. Maybe you wouldn't count this as "operating reserves" - I wouldn't do that with the money that's earmarked to pay suppliers but not due for another month, but I would do it with the money that's earmarked for opening a new business location at an indefinite time in the future. You can get whatever risk profile you want from the stock market in return for less yield. If you can accept two-nines certainty that you won't lose half your money in six months, any broad index fund will do. That would be acceptable for a lot of "modest businesses" which find themselves with "6-7 figures cash reserves". If you need better, you can do fancy things with options, or put a fraction of the money in the bank and invest the rest. (I am a financial professional, but not in this field, and this is not financial advice)

JohnJamesRambo 5y ago

Where do you and they keep your retirement money?

runarberg 5y ago
In Iceland there is mandatory retirement funds. You can choose which fund and many people pick a fund that is only made off of government bonds. More people probably don’t have a clue what their retirement fund is made off, it is just some number on their paycheck, so they participate in the stock market both indirectly and unknowingly. I think it is kind of a stretch to say that these people are doing stocks. Most people I know use every opportunity to withdraw early from their fund. At most these people do stocks like a person who returns their compost to the city does public gardening.

GlennS 5y ago

I think traditionally most people in most countries ignored the stock market and consider it boring to talk about. Maybe less so in the USA? Not sure. But a lot of computer folks have spare money at the moment, and in that situation you have a few options: consume more, keep it in a savings account, or invest. And some significant proportion choose invest. Keep it in a savings account is a common option, but quite a bad idea. Probably the majority of people who invest do so in property, considering it safer than stocks (which I disagree with, although there are other reasons to like property). This may be changing a bit in recent years, because access is easier now. In Sydney I see adverts for stock brokers at the bus station. Seems like some gamblers have switched to the stock market to get their fix too.

habosa 5y ago

In the US if you have a retirement savings account (which is very advantageous to have) it’s likely to be a 401k or IRA which you have to manage yourself. So having some basic understanding of the stock market is essential to your financial future.

ivanche 5y ago

Ah don’t be afraid of it. You’re missing out an opportunity to live a worryless retirement and to even leave a solid chunk of assets to your kids/partner. Simply invest a few hundreds euros (probably 300-400 will be enough) every month into an ETF which tracks some of the very broad market indices like MSCI World, FTSE All World or even S&P500. You have very good chances of becoming a millionaire or almost-millionaire by the time you retire. Good luck!

teva 5y ago

I'm pretty sure a lot have a life insurance which put a part of the money on the financial market

Gatsky 5y ago

There is a lot of interest in the stock market currently. Individual investors (‘retail’) have been buying a lot of stocks in the last 12 months. Some would say this is typical behaviour before a crash. Business people become folk heroes (Musk) and the news is all about stocks and macroeconomics.

mehphp 5y ago

What do you do for retirement?

koonsolo 5y ago

My parents didn't do stock market, for the simple fact that you got a nice interest from a savings account. Those times are gone now. Some people have a hard time grasping the alternatives. Stocks are considered "risky", but if you have a 10+ years timeframe, an index fund is not risky at all. I also have 75% of acquaintances that don't do stock market or crypto. And that's the reason why my savings are outperforming all of them.