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Let's assume, for argument's sake, all investments lose money. People are still going to try and invest in the places where they expect to lose the least. Human

Let's assume, for argument's sake, all investments lose money. People are still going to try and invest in the places where they expect to lose the least. Humans tend to be very loss averse. Hanging onto what they've got, to the greatest extent possible, may be their priority and doesn't necessarily disprove the earlier assertion.

pessimizer 4y ago
Except that if the mean investment loses money, the place where you expect to lose the least is cash. e.g. if you are very loss averse, you don't buy lottery tickets at all. You don't just buy the safest ones where you expect to lose the least.
- jovial_cavalier 4y ago
  Not necessarily. If you have 5% inflation, and the best returns on securities are -2% in real terms, you're still better off investing in securities.
  - pessimizer 4y ago
    If you rewrite half of the equation to be about real losses, of course that's true, but that wouldn't make sense to do. However, securities denominated in dollars are also affected by inflation, so the only way to discuss their losses coherently is also against the inflation-adjusted dollar. e.g. lottery winnings are also affected by inflation.
    - randomdata 4y ago
      > If you rewrite half of the equation to be about real losses There is nothing in need of rewrite. The original claim was about money, not currency. As money is defined as the assets, property, or resources owned by someone (i.e. wealth), we can substitute currency with any other asset. Let's use cars, as is convention, and works well as they tend to decline in value much like currency does. So, you trade your car for a security. Some years go by and you decide you want a car again, track down the guy who you sold your car to, and offer to trade the security back for the car. He agrees and now you've got your car back. You didn't lose any cars. You are back to one car, just like you had originally. However, the car is scratched up a little, needs new tires, etc. and as such isn't worth as much as it was when you first traded it. And so, while you haven't lost any cars, you have lost money. The car isn't what it used to be; your wealth has declined. You might not lose any currency in an exchange of assets, you might even gain currency in the deal, but that doesn't necessarily mean you haven't lost money.
- randomdata 4y ago
  Cash is the investment where you expect to lose the most. Hedging against cash losses (also known as inflation) is largely why people chase other investment opportunities. Cash is the easiest investment to hold. If it were stable it would be very attractive, but it is not. The monetary system works hard to ensure that it isn't stable, with mandated targets to ensure that cash holdings lose money every year.
  - pessimizer 4y ago
    If we're talking about securities that are losing money, they can't be beating inflation. You're talking about securities that are beating inflation. i.e. iff your security is worth fewer dollars than it was worth some period of time ago, it is losing money. The fact that dollars have also lost value during the same time means you've lost more money, not less.
    - randomdata 4y ago
      > You're talking about securities that are beating inflation. I said no such thing...? > iff your security is worth fewer dollars than it was worth some period of time ago, it is losing money. And if it sells for more dollars than in the past, but not commensurate with the decline in value of those dollars, then you've still lost money. Less money lost than would have been by holding dollars, but still a loss.

pessimizer 4y ago

Except that if the mean investment loses money, the place where you expect to lose the least is cash. e.g. if you are very loss averse, you don't buy lottery tickets at all. You don't just buy the safest ones where you expect to lose the least.

jovial_cavalier 4y ago
Not necessarily. If you have 5% inflation, and the best returns on securities are -2% in real terms, you're still better off investing in securities.
- pessimizer 4y ago
  If you rewrite half of the equation to be about real losses, of course that's true, but that wouldn't make sense to do. However, securities denominated in dollars are also affected by inflation, so the only way to discuss their losses coherently is also against the inflation-adjusted dollar. e.g. lottery winnings are also affected by inflation.
  - randomdata 4y ago
    > If you rewrite half of the equation to be about real losses There is nothing in need of rewrite. The original claim was about money, not currency. As money is defined as the assets, property, or resources owned by someone (i.e. wealth), we can substitute currency with any other asset. Let's use cars, as is convention, and works well as they tend to decline in value much like currency does. So, you trade your car for a security. Some years go by and you decide you want a car again, track down the guy who you sold your car to, and offer to trade the security back for the car. He agrees and now you've got your car back. You didn't lose any cars. You are back to one car, just like you had originally. However, the car is scratched up a little, needs new tires, etc. and as such isn't worth as much as it was when you first traded it. And so, while you haven't lost any cars, you have lost money. The car isn't what it used to be; your wealth has declined. You might not lose any currency in an exchange of assets, you might even gain currency in the deal, but that doesn't necessarily mean you haven't lost money.
randomdata 4y ago
Cash is the investment where you expect to lose the most. Hedging against cash losses (also known as inflation) is largely why people chase other investment opportunities. Cash is the easiest investment to hold. If it were stable it would be very attractive, but it is not. The monetary system works hard to ensure that it isn't stable, with mandated targets to ensure that cash holdings lose money every year.
- pessimizer 4y ago
  If we're talking about securities that are losing money, they can't be beating inflation. You're talking about securities that are beating inflation. i.e. iff your security is worth fewer dollars than it was worth some period of time ago, it is losing money. The fact that dollars have also lost value during the same time means you've lost more money, not less.
  - randomdata 4y ago
    > You're talking about securities that are beating inflation. I said no such thing...? > iff your security is worth fewer dollars than it was worth some period of time ago, it is losing money. And if it sells for more dollars than in the past, but not commensurate with the decline in value of those dollars, then you've still lost money. Less money lost than would have been by holding dollars, but still a loss.