The wealth-building thread

[muslhead]

I always roll my eyes at the hyperinflation folks. They pounded that drum in 2009 and they are probably pounding it now, but I stopped listening. It really is hyperbole as hyperinflation is usually defined as a rise in prices of more than 50% per month. This ain't Venezuela, folks.

Fiat debasement is another thing. Today, that just refers to increasing the money supply through the printing of fiat. Of course that is a normal thing to the tune of about 2%, so the term may be slightly misused, however it's not as hyperbolic as "hyperinflation". The reason the term is used today is mostly because of the rapid increase in the money supply after the 2008 meltdown and COVID-19 which far exceeds the normal course.

This was the main cause of the temporary halt to the bull run in May of this year, popularized by Elon Musk. A good percentage of Bitcoin mining through its "proof of work" model was mined in China and powered by dirty energy. If you noticed, China banned Bitcoin mining and those folks relocated to other countries, including some in the United states. The proportion of Bitcoin that is mined now with renewable energy is over 50%, which has come a long way to alleviate some of these concerns. And, as the hash rates have come back up, so has the price. It was nice to buy while it was 1/2 off, for those who took advantage.

With that, and the fact that the entire crypto market accounts for only a tiny sliver of what the banking industry produces in terms of CO2, it is safe to say the impact on climate is negligible, and if things go the way some predict, the result will be a net reduction in emissions.

100% agree regarding hyperinflation. But for different reasons.
Hyperinflation is a result of a loss in confidence in the government. Nothing more, nothing less
Could it happen? sure as anything is possible but low probability.

 

[samsa]

Polkadot and Solana, newer protocols that can process 50,000 to 100,000 transactions per second, use a Proof of Stake system, so there is no mining. Ethereum, the #2 crypto asset, is also going in that direction. There is talk of moving Bitcoin to Proof of Stake. If that happens, none of this energy consumption is going to amount to much ...

If that happens, then we'll talk.

In the meantime, cryptocurrencies are nothing but a socially-useless blight upon the planet.

 

[bladerunner6]

If only you were right. There has been pressure for decades on the Great Lakes, which is jointly managed by Canada, which has been far more vocal in resisting the calls to export water to dry US states. And you are correct to a large extent, it is lifestyle choices that accounts for a great deal of the water poverty in the dry and drying-up states. Eventually they are coming for the water so get ready to fight, politically.

During the negotiations for Super NAFTA as it was called when Bush was President and Stephen Harper was the Canadian Prime Minister water privatization was a huge part of their agenda and the Great Lakes had a bullseye on them (still do). This little thing, Great Lakes Water Quality Agreement (GLWQA) is one of the few regulatory hurdles that protects the Great Lakes. All those farmers and people in the dry states want the water bad, real bad. Long showers to take, multiple cars to wash, swimming pools to fill as well as huge tracts of wastefully irrigated crops (surface irrigation where most of that precious water evaporates before ever reaching the root systems). Lots of forces aligned against the few Great Lake States and Canada.

But if people in Texas and Oklahoma expect everyone in Illinois to just stand by while they build a pipeline to Lake Michigan, they are pretty naive.

Anyhow, back to the topic:

You can fit most financial advice on a notecard.

Notecard financial advice.

Then there a few other things people generally agree on like buy used cars, don’t buy too much house, etc.

My only things to add are:

Avoid personal finance gurus. I used to compare them to serial killers and child molesters but I realized that was unfair. Serial killers and child molesters my have been traumatized and that is why they are the way they are. Personal finance gurus are just in it because of greed and ego. All they do is just rehash the most common stuff and add a few bad ideas of their own. Like the guy I fell in with in the 1990’s- Charles Givens. He had a market timing strategy based on interest rates. Or Dave Ramsey, his irrational hatred of credit and his bad math on paying down debt. And most gurus make more money hawking advice then investing. Speaking of financial gurus: Kiyosaki filed for bankruptcy after losing a lawsuit. And his net worth was really never that impressive compared to so many other people in the investing world.

My second comment: people have commented about happiness and one of the happiest people I know is Jonathan at My Money Blog. Partially retired in his mid-thirties, a beautiful family and very level headed. And not a guru, just a happy, successful ordinary average guy.

 

[Chromatischism]

Even with all the tools at its disposal to increase the money supply, the Fed failed to meet its 2% inflation target for most of the years since 2008. "Fiat debasement" is just not a thing.

The talk about "debasement" is mostly because of this:

Not saying right or wrong; just pointing out what they're talking about. Don't shoot the messenger.

 

[JeffS7444]

Avoid personal finance gurus. I used to compare them to serial killers and child molesters but I realized that was unfair. Serial killers and child molesters my have been traumatized and that is why they are the way they are. Personal finance gurus are just in it because of greed and ego.

As Tony Robbins says with the title of his Netflix documentary, he is not your guru. None of these guys should be followed blindly, they are human beings who sometimes make bad decisions and who can fall into the trap of believing their own hype. When you watch Robbins's documentary, you realize that some audience members really, really want to believe that he is their savior, but that is a mistake, because the real value of Robbins, Kiyosaki, et al is as entertainer / coach / cheerleader. But if you treat people like some sort of a messiah, you risk corrupting them and their message.

 

[bladerunner6]

As Tony Robbins says with the title of his Netflix documentary, he is not your guru. None of these guys should be followed blindly, they are human beings who sometimes make bad decisions and who can fall into the trap of believing their own hype. When you watch Robbins's documentary, you realize that some audience members really, really want to believe that he is their savior, but that is a mistake, because the real value of Robbins, Kiyosaki, et al is as entertainer / coach / cheerleader. But if you treat people like some sort of a messiah, you risk corrupting them and their message.

Tony Robbins may say whatever he wants about himself but in general these people believe that they have the answers and that if you listen to them, you are smart and they will guide you. And in any case, Robbins really doesn’t fit into this category- personal finance is not really his hustle.

 

[samsa]

The talk about "debasement" is mostly because of this:

View attachment 152199

Not saying right or wrong; just pointing out what they're talking about.

No individual has ever felt any direct effect of the quantity of M3. So, staring at a graph cannot reveal to them how much M3 is "too much." In fact, I would wager that 99% of the people, with their undies in a bunch about the above graph, couldn't even tell you what M3 is.

What is directly perceptible (and, presumably, the thing the above individuals are actually worried about) is inflation. Here's the Consumer Price Index from the same period.

(Note, as I said previously, that inflation did not meet the Fed's 2% target for most of the past decade.)
I'm willing to take bets as to whether the current blip above 5% will persist. But I'm sure that those, who are running around with their hair on fire about it, can find other ways to lose money.

 

[PatentLawyer]

This was an interesting thread, but some of you decided to have a metaphorical dick measuring contest. It’s boring and you should be able to do better.

 

[Chromatischism]

No individual has ever felt any direct effect of the quantity of M3. So, staring at a graph cannot reveal to them how much M3 is "too much." In fact, I would wager that 99% of the people, with their undies in a bunch about the above graph, couldn't even tell you what M3 is.

What is directly perceptible (and, presumably, the thing the above individuals are actually worried about) is inflation. Here's the Consumer Price Index from the same period.

View attachment 152226
(Note, as I said previously, that inflation did not meet the Fed's 2% target for most of the past decade.)
I'm willing to take bets as to whether the current blip above 5% will persist. But I'm sure that those, who are running around with their hair on fire about it, can find other ways to lose money.

If that's CPI, it looks broadly the same as the graph I posted of M3. Interesting.

But whether I grabbed a screen shot of the M3, or M2, or M1, it shows the same idea, which is a sharp increase in the money supply. Most governments did it to blunt the impact of COVID.

Anyway, I think Bitcoin will continue to rise, even if the current level of inflation is temporary. The same goes for most of the crypto projects in the top 100 or so. Blockchain is new technology (well, it's a decade old now, but it took that long for all these other players to come online after Bitcoin). It's like the early days of the internet when it was finding all its eventual uses.

 

[Jim Matthews]

It's like the early days of the internet when it was finding all its eventual uses.

At last, we agree about something. It's 1999, all over again.

Of course, it's a "Boomer thing" to remember stuff that happened more than ten years ago. We're smug, that way.

"...Mark Cuban thinks so, arguing recently on his blog that the difference between the 2000 bubble and today’s economy is that today’s bubble isn’t really about the stock market. It also includes private “angel” investments, which can’t just be sold off like stocks. And that, he says, is a problem:

So why is this bubble far worse than the tech bubble of 2000?
Because the only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity.
If stock in a company is worth what somebody will pay for it, what is the stock of a company worth when there is no place to sell it?"​

https://time.com/3741681/2000-dotcom-stock-bust/

 

[Jim Matthews]

This was an interesting thread, but some of you decided to have a metaphorical dick measuring contest. It’s boring and you should be able to do better.

To be fair, this website attracts music lovers that have a finely developed distaste for Snake Oil, in all its flavors.

 

[Tks]

I am one, and a fiduciary but never make the assumption. I know many that arent. Its on the consumer to insure they ask.
BTW the cfp credential has become a joke based upon changes in the designation. If you have one it does prove you passed the test (the second hardest test i had to take) but not much more than that. I would prefer someone with 10 years hands on experience, no credential and a fiduciary than someone with just a cfp or cfp and a fiduciary.

Don't you need thousands of work hours to even take the test? I'd be fine with that mount of experience + Fiduciary that was CFP. Though interesting to hear CFP is a joke.. Seemed like something that weeded a lot of morons out.

 

[TheWalkman]

1) Have the discipline to set some money aside and save when you‘re young. I learned to max out on my IRA - $2000 per year in those days - at 23 and that lesson has rewarded me handsomely;

1a) regarding employer matches, if you can’t afford to max out your IRA or 401(k) at least save enough to get 100% of your employer’s match. It’s free money and rarely do you have that opportunity;

2) live below your means.

 

[muslhead]

Fiat debasement doesnt matter ... until it does.
Debasement is not

As Tony Robbins says with the title of his Netflix documentary, he is not your guru. None of these guys should be followed blindly, they are human beings who sometimes make bad decisions and who can fall into the trap of believing their own hype. When you watch Robbins's documentary, you realize that some audience members really, really want to believe that he is their savior, but that is a mistake, because the real value of Robbins, Kiyosaki, et al is as entertainer / coach / cheerleader. But if you treat people like some sort of a messiah, you risk corrupting them and their message.

In this the advisory line of business, Tony Robbins is viewed as a joke. He is a great motivational speaker, a financial guru, uhhm no.
Not much different than the folks at PSAudio in the audio world. Those that know, ignore them, those that dont, get fooled by the bluster.

 

[PatentLawyer]

To be fair, this website attracts music lovers that have a finely developed distaste for Snake Oil, in all its flavors.

Fair, and of course I'm here, too. But there is so much gratuitous snark. Everyone is a tough guy when they are behind their keyboard and no one knows their name.

 

[muslhead]

Don't you need thousands of work hours to even take the test? I'd be fine with that mount of experience + Fiduciary that was CFP. Though interesting to hear CFP is a joke.. Seemed like something that weeded a lot of morons out.

Yes, you do need a ton of work hours to get the actual cfp accredidation. you can be a cfp designee that is supposed to allow to use the accredidation without the actual designation while you accumulate the necessary hours. you need to know the difference and what you are getting when working with one.
IMHO, the cfp is a now a joke. Reasoning is while it was overseen and managed in the past by the CFP board, it is now been turned over to Kaplan. If you dont know Kaplan, they are a huge education for sale company. Its turned into nothing more than an educational money grab, not the differentiation credential it used to be. This is my personal, professional opinion so YMMV as it shows my bias.

 

[JeffS7444]

Fiat debasement doesnt matter ... until it does.
Debasement is not

I sense you had a point to make but I'm not seeing it..?

In this the advisory line of business, Tony Robbins is viewed as a joke. He is a great motivational speaker, a financial guru, uhhm no.
Not much different than the folks at PSAudio in the audio world. Those that know, ignore them, those that dont, get fooled by the bluster.

Judging by the responses to this thread so far, it sounds as if most folks here get their income by working for someone else, or maybe as self-employed individuals rather than generating revenues by other means. Yet "by other means" is exactly the sort of thing I wish to know about, because the mantras of "Spend less, beware of consumer debt, max out your 401(k), buy index funds" are well-trodden ground, and while you can amass a decent amount of money via capital gains in this manner, the taxes are merely deferred, if that. And when the time comes to make withdrawals from said 401(k), you will likely be depleting your asset, not generating income from it.

As for PS Audio, I doubt that Paul McGowan has filled out a time sheet or relied on someone else for a paycheck in decades. Could you do it? I'm realizing how little I know of such things.

 

[Tks]

Yes, you do need a ton of work hours to get the actual cfp accredidation. you can be a cfp designee that is supposed to allow to use the accredidation without the actual designation while you accumulate the necessary hours. you need to know the difference and what you are getting when working with one.
IMHO, the cfp is a now a joke. Reasoning is while it was overseen and managed in the past by the CFP board, it is now been turned over to Kaplan. If you dont know Kaplan, they are a huge education for sale company. Its turned into nothing more than an educational money grab, not the differentiation credential it used to be. This is my personal, professional opinion so YMMV as it shows my bias.

Kaplan is dog turds, no need to say more.

 

[Jim Matthews]

Fair, and of course I'm here, too. But there is so much gratuitous snark. Everyone is a tough guy when they are behind their keyboard and no one knows their name.

Guilty, as charged.

I consider ASR to be one of the few places a Bogon particle cannot long survive. I have developed a low threshold of irritability for untestable claims that have expensive downsides.

****

After 2008, I have taken an (admittedly) conservative approach to managing actual money.

I'm not about to pretend I know why it worked, I certainly didn't understand when the wheels fell off, either (2000 and again in 2008).

Harold Pollack's admonition has worked better and longer than anything else, and that's why I promote the approach.

https://en.m.wikipedia.org/wiki/The_Index_Card

 

[JeffS7444]

Kiyosaki's Why "A" Students Work for "C" Studenst and "B" Students Work for the Government. was really intended for parents wishing to teach their youngsters to gain a broader perspective of how money works, But since I don't have children, I skimmed sections pertaining to suggested family activities, and I found it a fairly easy read.

But I was nearly at the end of the book when I encountered what I thought was a really neat take on how to buy an automobile: It seems that the author had $50K to spend, and found a Porsche that he wanted to own. But this is an author who is very fond of the fable of the golden egg-laying goose, and from this perspective, simply hanging over his money was tantamount to surrendering his goose. So how to solve the seeming conundrum? By using the $50K + bank money to buy a business which generated enough net revenues each month to cover his car payments. Even better, the $50K initial investment is returned at some point, and the monthly revenue stream continues: This sort of thinking is entirely new to me.