5 ms·

One problem I have with economics books is that they tend to end with either “and therefore, government spending is bad” or “and therefore, government spending

One problem I have with economics books is that they tend to end with either “and therefore, government spending is bad” or “and therefore, government spending is good”. What I’m really after are non-ideological macroeconomics books that will help a layperson have a better sense of where the economy is headed so I can invest better, not books that would help me make better decisions if I were running a country, which I’m not.

Ilverin 4y ago
Even finance experts like Matt Levine use index funds. Unless you are mega rich and have connections, you almost certainly have no advantage against the many people who work 100 hours a week trying (and often failing) to beat the market.
- XorNot 4y ago
  People do beat the market, but the thing is if you can beat the market then you don't need to accept public money - you become a private trading firm and trade with your own money and keep all the profits. That's the issue: successful firms which beat the market don't keep doing it on behalf of other people for very long.
  - bombcar 4y ago
    The “active funds don’t beat index funds” studies showed they actually do - before expenses. After expenses the net return was lower.
    - nly 4y ago
      If that's the case why bother taking external money? Answer: because they make more money from the fees than they do by "beating the market" The truth is if you beat the market by pure luck once you can market your shit fund and lure in thousands more investors for decades.
      - bombcar 4y ago
        Because the goal isn’t to “beat the market” (most beat by a very small amount) - the goal is to make money selling their “services”.
- anonporridge 4y ago
  This. Imagine the arrogance necessary to believe that you can understand economics, finance, geopolitics, and the vast arrays of industries and competing companies well enough by studying as a hobby in your spare time to get better returns than professional investors who literally spend their entire careers trying to beat the market, and fail on average. Just VTSAX and chill.
  - merely-unlikely 4y ago
    You're correct but I'd like to point at that professional investors don't understand all of that either. They spend their careers focused on little niches in which they can find an advantage. So it's less, what are the mysteries of the economic universe, and more, why does the West Texas Intermediate futures curve differ from the Brent curve and how can I profit from the spread? That and the goal of many (most?) professional investors is not to beat the market. For some they just need to have higher returns than cost of funding and anything positive is accretive. Others sell fund investors on things like low market correlation. Or others have more specific goals like hedging future fuel prices for an airline. Point being, individual investors have completely different goals from most professional investors and as you point out, "VTSAX and chill" is the way.
    - tomatocracy 4y ago
      For many professional investors (and certainly for a large class of asset management firms), the big incentive is to accumulate more AUM. Returns can be a strong marketing tool to do that, but they're not the only one.
rr808 4y ago
I think investing and economics isn't that well correlated. You need some idea of monetary and fiscal policy but as you say economics tends to get political quick. https://www.youtube.com/c/RealVisionFinance https://www.youtube.com/c/RealVisionFinance is pretty good for anything that has the boss Raoul Pal, most other talking heads aren't that great.
- gjvc 4y ago
  Choose your heroes carefully. Raoul Pal lost his mind (and the respect of many) when he became a cryptocurrency shill.
  - rr808 4y ago
    Agreed avoid his crypto stuff. I'm just trying to think of a popular person to talk about markets and economy that isn't a bedroom expert like most of them.
    - gjvc 4y ago
      There are plenty of professional asset managers with a public profile / content.
      - rr808 4y ago
        Most of them are boring or technical or not that good. I love Hugh Hendry but he's repeating himself all the time now. If you have someone you like I'm interested.
ur-whale 4y ago
> What I’m really after are non-ideological macroeconomics books Not possible by definition. Economics is about explaining things after the fact, and incapable of prediction. Therefore, it's all ideology (rock fell on my head, must have offended god of rocks, only logical explanation).
- anonporridge 4y ago
  > Economics is about explaining things after the fact, and incapable of prediction. I would expand on this a bit. The problem with economics is that it's the study of a type 2 chaotic system, where predictions about the system themselves feedback into the system and change the outcome. Contrasted with a type 1 chaotic system, like weather, where predictions are extremely difficult but can be made without affecting the outcome. Economics is chaotic because conscious actors are extremely unpredictable and change their behavior based on new information. This is something you have to bear in mind whenever you hear an economist or government official make a prediction. The very act of making the prediction public often becomes a self defeating prophecy, because masses of people and money make changes to their future behavior based on the prediction. Also called the Prophet's Dilemma, https://en.wikipedia.org/wiki/Self-defeating_prophecy https://en.wikipedia.org/wiki/Self-defeating_prophecy. A close relative of the Preparedness Paradox, https://en.wikipedia.org/wiki/Preparedness_paradox https://en.wikipedia.org/wiki/Preparedness_paradox This is why some of the best predictions are never made public. The best traders don't sell you their strategy. Because as soon as their prediction mechanism becomes too public, it gets absorbed into the system and arbitraged away to worthlessness. That's also why you always must take what government officials say with a grain of salt. They're often not telling you what they really think is going to happen. They're telling you what they think is going to motivate the population to behave in the most productive way given the current environment. Making economic predictions is a grand game of "I know that you know that I know that you know". It's a game of mass manipulation rather than a technical pursuit of simple measurement. It's an art, not a science.
  - ur-whale 4y ago
    > study of a type 2 chaotic system The reason it's chaotic is not just because predictions about it feed back into it. It is also a weather-type chaotic system. > It's an art, not a science. That may well be. However, he question that really matters is : is it useful at all? As demonstrated time and again, this whole legend about hidden winning strategies may very well be utter and complete BS: https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp https://www.investopedia.com/articles/investing/030916/buffe...
unmole 4y ago
> One problem I have with economics books is that they tend to end with either “and therefore, government spending is bad” or “and therefore, government spending is good”. Which economics book ends that way? I'm genuinely curious.
- colinmhayes 4y ago
  Anything associated with MMT.
  - unmole 4y ago
    That would suggest the problem is with MMT, not economics.

Ilverin 4y ago

Even finance experts like Matt Levine use index funds. Unless you are mega rich and have connections, you almost certainly have no advantage against the many people who work 100 hours a week trying (and often failing) to beat the market.

XorNot 4y ago
People do beat the market, but the thing is if you can beat the market then you don't need to accept public money - you become a private trading firm and trade with your own money and keep all the profits. That's the issue: successful firms which beat the market don't keep doing it on behalf of other people for very long.
- bombcar 4y ago
  The “active funds don’t beat index funds” studies showed they actually do - before expenses. After expenses the net return was lower.
  - nly 4y ago
    If that's the case why bother taking external money? Answer: because they make more money from the fees than they do by "beating the market" The truth is if you beat the market by pure luck once you can market your shit fund and lure in thousands more investors for decades.
    - bombcar 4y ago
      Because the goal isn’t to “beat the market” (most beat by a very small amount) - the goal is to make money selling their “services”.
anonporridge 4y ago
This. Imagine the arrogance necessary to believe that you can understand economics, finance, geopolitics, and the vast arrays of industries and competing companies well enough by studying as a hobby in your spare time to get better returns than professional investors who literally spend their entire careers trying to beat the market, and fail on average. Just VTSAX and chill.
- merely-unlikely 4y ago
  You're correct but I'd like to point at that professional investors don't understand all of that either. They spend their careers focused on little niches in which they can find an advantage. So it's less, what are the mysteries of the economic universe, and more, why does the West Texas Intermediate futures curve differ from the Brent curve and how can I profit from the spread? That and the goal of many (most?) professional investors is not to beat the market. For some they just need to have higher returns than cost of funding and anything positive is accretive. Others sell fund investors on things like low market correlation. Or others have more specific goals like hedging future fuel prices for an airline. Point being, individual investors have completely different goals from most professional investors and as you point out, "VTSAX and chill" is the way.
  - tomatocracy 4y ago
    For many professional investors (and certainly for a large class of asset management firms), the big incentive is to accumulate more AUM. Returns can be a strong marketing tool to do that, but they're not the only one.

rr808 4y ago

I think investing and economics isn't that well correlated. You need some idea of monetary and fiscal policy but as you say economics tends to get political quick. https://www.youtube.com/c/RealVisionFinance https://www.youtube.com/c/RealVisionFinance is pretty good for anything that has the boss Raoul Pal, most other talking heads aren't that great.

gjvc 4y ago
Choose your heroes carefully. Raoul Pal lost his mind (and the respect of many) when he became a cryptocurrency shill.
- rr808 4y ago
  Agreed avoid his crypto stuff. I'm just trying to think of a popular person to talk about markets and economy that isn't a bedroom expert like most of them.
  - gjvc 4y ago
    There are plenty of professional asset managers with a public profile / content.
    - rr808 4y ago
      Most of them are boring or technical or not that good. I love Hugh Hendry but he's repeating himself all the time now. If you have someone you like I'm interested.

ur-whale 4y ago

> What I’m really after are non-ideological macroeconomics books Not possible by definition. Economics is about explaining things after the fact, and incapable of prediction. Therefore, it's all ideology (rock fell on my head, must have offended god of rocks, only logical explanation).

anonporridge 4y ago
> Economics is about explaining things after the fact, and incapable of prediction. I would expand on this a bit. The problem with economics is that it's the study of a type 2 chaotic system, where predictions about the system themselves feedback into the system and change the outcome. Contrasted with a type 1 chaotic system, like weather, where predictions are extremely difficult but can be made without affecting the outcome. Economics is chaotic because conscious actors are extremely unpredictable and change their behavior based on new information. This is something you have to bear in mind whenever you hear an economist or government official make a prediction. The very act of making the prediction public often becomes a self defeating prophecy, because masses of people and money make changes to their future behavior based on the prediction. Also called the Prophet's Dilemma, https://en.wikipedia.org/wiki/Self-defeating_prophecy https://en.wikipedia.org/wiki/Self-defeating_prophecy. A close relative of the Preparedness Paradox, https://en.wikipedia.org/wiki/Preparedness_paradox https://en.wikipedia.org/wiki/Preparedness_paradox This is why some of the best predictions are never made public. The best traders don't sell you their strategy. Because as soon as their prediction mechanism becomes too public, it gets absorbed into the system and arbitraged away to worthlessness. That's also why you always must take what government officials say with a grain of salt. They're often not telling you what they really think is going to happen. They're telling you what they think is going to motivate the population to behave in the most productive way given the current environment. Making economic predictions is a grand game of "I know that you know that I know that you know". It's a game of mass manipulation rather than a technical pursuit of simple measurement. It's an art, not a science.
- ur-whale 4y ago
  > study of a type 2 chaotic system The reason it's chaotic is not just because predictions about it feed back into it. It is also a weather-type chaotic system. > It's an art, not a science. That may well be. However, he question that really matters is : is it useful at all? As demonstrated time and again, this whole legend about hidden winning strategies may very well be utter and complete BS: https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp https://www.investopedia.com/articles/investing/030916/buffe...

unmole 4y ago

> One problem I have with economics books is that they tend to end with either “and therefore, government spending is bad” or “and therefore, government spending is good”. Which economics book ends that way? I'm genuinely curious.

colinmhayes 4y ago
Anything associated with MMT.
- unmole 4y ago
  That would suggest the problem is with MMT, not economics.