The wealth-building thread

[JeffS7444]

Moody’s: US recession could be avoided if the wealthy keep spending

Moody’s says America can dodge a downturn if high earners keep shopping. What about Indonesia?

www.idnfinancials.com

Interesting perspective.

Well thank goodness no one's counting on the likes of me to pick up the slack. If anything, 2025 has felt like a time for bargain-hunting, rather than bigger-ticket purchases. Even in my wilder dreams, I think I'd be inclined to defer bigger-ticket purchases in hopes of getting a better deal in the future, sans Trump tax.

 

[Noske]

If you are going to run an algo, you have to trust the algo. In order to really trust the algo, you might have to understand it (or you are just naive). Investing is always a test of convictions.

The trust in the edge comes from being statistically significant at the 0.01 level.

Being able to understand was discussed, and it was decided it was pretty much irrelevant. Simons likened it to the planets rotating the sun - he might not completely understand why they do it in the manner they do, but he can measure their trajectory with precision.

Call those dudes naive at your peril.

 

[ahofer]

Call those dudes naive at your peril.

I did not, nor do I think so. There’s an important distinction here:

They understood their algos fine, they built them. What they didn’t understand was the underlying market behavior (planets rotating around the sun), but they understand exactly how their models take advantage of it (measuring and predicting trajectory).

The trouble with a significant portion of hedge funds and algo shops is that the people running them *don’t* understand the algos. Not a lot of Simons’ in charge.

 

[Noske]

And low fees, too, at Medallion. Said no one ever. A blanket 4% plus 40% of your gains.

So, where will AI in 5 years take trading and funds?

I think that nobody really knows. What @EJ3 said.

As compared to algorithms and high frequency systems trading, I think nothing, really.

I think that they'd have to be programmed with everything that a team of PhD creatives knows, and that is just first base.

 

[Oddball]

Well thank goodness no one's counting on the likes of me to pick up the slack. If anything, 2025 has felt like a time for bargain-hunting, rather than bigger-ticket purchases. Even in my wilder dreams, I think I'd be inclined to defer bigger-ticket purchases in hopes of getting a better deal in the future, sans Trump tax.

View attachment 478466

I think the notion goes to describe that well off will continue investing, and not necessarily conservative. While they sure as hell can spend, I don't think that is the major point. Stock market is at historic heights, 30xP/E ratio, but it could continue to go up overall. There will always be hiccups but trend could continue upwards.

Money is so concentrated with the rich as well as in major financial institutions that we have not experienced this kind of market. Last time I checked, middle class is shrinking and greed has never been so alive as it is now. Now it's AI, then it will be quantum computing, so there will be a story to tell why the markets need to go higher. It has nothing to do with so called "fundamentals", but more with the nature of the game.

 

[blueone]

This is a new one to me, spotted in today's WSJ.

On the Fence About a Spending Decision? Try the 0.01% Rule.
https://www.msn.com/en-us/money/new...pending-decision-try-the-001-rule/ar-AA1Mv6Ky

The upshot: If you are waffling over a minor purchase, and it amounts to no more than 0.01% of your net worth, don't sweat it. So if your net worth is $500K, go ahead and splurge on that $50 lunch.

That's like being on a diet and deciding you can selectively cheat, and still meet your goals. Most people I know who think they can are either overweight or wonder why their wealth building isn't meeting their objectives. I can't do either. I never cheat on my diet, even when I annoy those around me who say something like "One slice of pizza won't hurt you." And I scrutinize most purchases. Discipline matters. Musicians can't ever play off key or miss the beat. Mathematicians can't ever miscalculate. You're either frugal or you're not.

 

[EJ3]

Well thank goodness no one's counting on the likes of me to pick up the slack. If anything, 2025 has felt like a time for bargain-hunting, rather than bigger-ticket purchases. Even in my wilder dreams, I think I'd be inclined to defer bigger-ticket purchases in hopes of getting a better deal in the future, sans Trump tax.

View attachment 478466

Nice paint job on a fun car. The problem with it (& dune buggies & other topless or more open frame cars) is that usually, your riding partner does not think the weather that you would drive it in (other than overcast, no rain, or sunny) is appropriate.
I went through a 4 year stint of only having a motorcycle (1971 Honda SL 350, with headers & a tune, usually [but not always] on street tires).
I drove it in whatever weather came my way, including snow & ice (I did my best to avoid ice, though [in my area, that was usually on bridges and we have many of them]).
When I did, later, get a car, it was a 1979, 6.6 Liter Trans Am (think 'Smokey & the Bandit' movie but a manual trans instead of an automatic). I managed to deliver a 3 tiered wedding cake (placed in the passenger seat) in 7 inches of snow, driving that. I guess my all weather motorcycling expertise crossed over.

 

[JeffS7444]

That's like being on a diet and deciding you can selectively cheat, and still meet your goals. Most people I know who think they can are either overweight or wonder why their wealth building isn't meeting their objectives. I can't do either. I never cheat on my diet, even when I annoy those around me who say something like "One slice of pizza won't hurt you." And I scrutinize most purchases. Discipline matters. Musicians can't ever play off key or miss the beat. Mathematicians can't ever miscalculate. You're either frugal or you're not.

The article is addressing those for whom wealth objectives are being met, but who may still find it difficult to spend even modest sums of money, and not for the recovering spendthrift! Yes, I've known people who have taken their car to the dealer for routine maintenance, and while waiting, decided simply to buy a new one: the article isn't for them (unless the TCO of said car represents an insignificant portion of their net worth!).

 

[blueone]

The article is addressing those for whom wealth objectives are being met, but who may still find it difficult to spend even modest sums of money, and not for the recovering spendthrift!

Yup, that's me!

 

[JeffS7444]

Nice paint job on a fun car. The problem with it (& dune buggies & other topless or more open frame cars) is that usually, your riding partner does not think the weather that you would drive it in (other than overcast, no rain, or sunny) is appropriate.
I went through a 4 year stint of only having a motorcycle (1971 Honda SL 350, with headers & a tune, usually [but not always] on street tires).
I drove it in whatever weather came my way, including snow & ice (I did my best to avoid ice, though [in my area, that was usually on bridges and we have many of them]).
When I did, later, get a car, it was a 1979, 6.6 Liter Trans Am (think 'Smokey & the Bandit' movie but a manual trans instead of an automatic). I managed to deliver a 3 tiered wedding cake (placed in the passenger seat) in 7 inches of snow, driving that. I guess my all weather motorcycling expertise crossed over.

It's no problem if you don't buy it. I like toying with lots of ideas, but I consider myself something of an expert at not-buying most of them. I do own a Mazda roadster as my only vehicle, but it's 30+ years old, and I only paid around $3500 for it back in the early aughties. My lifetime expenditure on vehicles of all types isn't much more impressive. For much of my working life, I walked + relied on public transit. If I drive too much I feel out-of-sorts, as if I've been couch-surfing all day.

 

[blueone]

It's no problem if you don't buy it. I like toying with lots of ideas, but I consider myself something of an expert at not-buying most of them. I do own a Mazda roadster as my only vehicle, but it's 30+ years old, and I only paid around $3500 for it back in the early aughties. My lifetime expenditure on vehicles of all types isn't much more impressive. For much of my working life, I walked + relied on public transit. If I drive too much I feel out-of-sorts, as if I've been couch-surfing all day.

I am so envious. When I think of the few hundred thousand dollars I've wasted over the years, okay, maybe one more than a few, on cars and their modifications... making a spreadsheet of the ones I remember a couple of years back cured me of that infatuation. The spreadsheet exercise was actually only part of it. There was also the look on young women's faces when they would see me get out of a hot sports car recently. Disappointment. Yet another old man with a fancy sports car. No more.

 

[EJ3]

It's no problem if you don't buy it. I like toying with lots of ideas, but I consider myself something of an expert at not-buying most of them. I do own a Mazda roadster as my only vehicle, but it's 30+ years old, and I only paid around $3500 for it back in the early aughties. For much of my working life, I walked + relied on public transit.

I never lived in a place that public transportation was a big thing (but sometimes could beat traffic by using my boat (parked at my mother's dock in the backyard) to average about 30 MPH down the creek & across the harbor to the City Marina, docking the boat & grabbing a car that I previously parked at the Marina for the rest of the trip.
None of my personal vehicles has ever been within 7 years of new. My current truck is a 2004 Chevy Silverado HD extended cab SS tribute (my wife, my mother & and whatever they want transported, are my usual load. Beyond that, my mother's 15 ft boat (with 15 HP Johnson outboard) & trailer & also my yard equipment (on a trailer) And a few years ago I had a 1968 Pontiac Catalina. (So, not prone to newer vehicles. Neither is my mother (a 2004 Mercedes E320). My wife has a 2024 Subaru CrossTrek (lifted 2 inches). Nothing in my families vehicles have ever remained 'stock' as all have some customization in power & purpose.
The Mazda: most of their vehicles have very good handling (and several of my friends have added turbos) that seem to fit well with the good handling.

 

[JeffS7444]

I am so envious. When I think of the few hundred thousand dollars I've wasted over the years, okay, maybe one more than a few, on cars and their modifications... making a spreadsheet of the ones I remember a couple of years back cured me of that infatuation. The spreadsheet exercise was actually only part of it. There was also the look on young women's faces when they would see me get out of a hot sports car recently. Disappointment. Yet another old man with a fancy sports car. No more.

Any much-younger woman who would pursue me has got problems.

I avoided modifying my car initially because I was feeling broke. But over time, decided that I liked the overall feel of the thing, and while I could come up with ways to increase it's grip and power, they'd come with penalties of their own. And with increased speed comes increased temptation!

 

[JeffS7444]

I never lived in a place that public transportation was a big thing (but sometimes could beat traffic by using my boat (parked at my mother's dock in the backyard) to average about 30 MPH down the creek & across the harbor to the City Marina, docking the boat & grabbing a car that I previously parked at the Marina for the rest of the trip.
None of my personal vehicles has ever been within 7 years of new. My current truck is a 2004 Chevy Silverado HD extended cab SS tribute (my wife, my mother & and whatever they want transported, are my usual load. Beyond that, my mother's 15 ft boat (with 15 HP Johnson outboard) & trailer & also my yard equipment (on a trailer) And a few years ago I had a 1968 Pontiac Catalina. (So, not prone to newer vehicles. Neither is my mother (a 2004 Mercedes E320). My wife has a 2024 Subaru CrossTrek (lifted 2 inches). Nothing in my families vehicles have ever remained 'stock' as all have some customization in power & purpose.
The Mazda: most of their vehicles have very good handling (and several of my friends have added turbos) that seem to fit well with the good handling.

These things seem important to you, and if you're comfortable with your money situation, who's to say you're wrong?

 

[EJ3]

These things seem important to you, and if you're comfortable with your money situation, who's to say you're wrong?

An advantage: I have a lift (obtained from a closing shop for less than $800) and can do my own work, [& get a 10-15% discount on parts].
The wife is happy (with her Subaru's 2 inch lift, as the City Floods from time to time & she might be there). & everything goes through her first:
Happy wife/Happy life. My mother has ceded control to my wife (allowing me to not live in other countries to be able to tolerate my mother's constant
statements trying to do cost control accounting on my finances [my wife, while keeping an eye on me, in that dept, is more reasonable, most times]).

 

[digitalfrost]

What an insane month this has been. I wonder how long this will go on.

 

[Timcognito]

What an insane month this has been. I wonder how long this will go on..

Holiday shopping returns will carry or kill the market momentum, if tradition holds.

 

[EJ3]

Holiday shopping returns will carry or kill the market momentum, if tradition holds.

"You pays your money and takes your chances" or know when to fold & hold. Hopefully.

 

[Sono]

About three months ago I started investing in gold, not physical but ETFs and shares. I can not say that I regret that decision, for those »gold positions« of mine made nearly 50% plus during that time ...

Only question with that: How long will this »rally« go on, possibly?

 

[Mart68]

About three months ago I started investing in gold, not physical but ETFs and shares. I can not say that I regret that decision, for those »gold positions« of mine made nearly 50% plus during that time ...

Only question with that: How long will this »rally« go on, possibly?

Is it really a 'rally'? There's only been two dips in the last 5 years, covid and tariffs, otherwise the trend is relentlessly upwards.