Jump to content
Objectivism Online Forum

prosperity

Regulars
  • Posts

    305
  • Joined

  • Last visited

Posts posted by prosperity

  1. I'm not sure if this is necessarily new news, but it's definitely shocking. Apparently we've moved from covert theft by the State to overt theft in this country. As for attempting to contact owners who have abandoned their property, I guess that depends on whether they truly abandoned their property. What I noticed is that there isn't a lot mentioned on what is being done to get property to their owners where the property wasn't abandoned. This seems to me like outright, overt, theft - it's like a common thug stealing your stuff.

  2. Chairman Obama has added a $75 billion bailout for homeowners facing foreclosure and he has raised the government's committment to Fannie and Freddie to $400 billion. It's as if this is all being done with Monopoly money.

    http://www.washingtonpost.com/wp-dyn/conte...9021801081.html

    Well, the theory is based on something called the "Keynesian multiplier". Allegedly, for every $1 that the Government "stimulates" the economy with, it will produce a "multiplier effect" depending on how much the Government "stimulates" the economy and how much of that "stimulation" gets spent vs. saved. It is definitely a "demand side" type of economics where it is argued that demand drives production instead of production driving demand.

    I think it's funny because - and I think someone here has mentioned something to this effect before - if the multiplier really worked, why not "stimulate the economy" with $15 trillion, or better yet $100 trillion? Why limit yourself to a measly $800 billion? At that point, I think you'd get a lot of voices in Washington saying "oh no, that's too much". But why? If your theory was valid, the dollar amount shouldn't matter. You could stimulate the economy with $1,000,000 trillion and we'd be the richest nation ever.

    Of course, what is being overlooked here is that you - as a consumer - can't buy anything unless there is something to buy. So, production comes before consumption. Keynes didn't get it then and Obama doesn't get it now.

  3. Most rational parents (non-Objectivists by the droves) easily reject this apparent dilemma. They ensure their kids have as much choice as possible within the context of what is reasonable, including allowing their kids to make some choices that they know are simply wrong (assuming there aren't serious or long-term consequences). In addition, they also ensure that they constantly increase the scope of choices their kid can make as they grow up.

    I don't have children yet, but I imagine it may be something like...in the fall, the child wants to wear shorts and a t-shirt to school. This is out of the question. So, you give the child a choice of maybe 2 or 3 outfits but simply control the choices to ones you find acceptable.

    I'm guessing this could be done in reverse for issues where you are going to let the child fail based on a decision you know is wrong but figure they have to learn it themselves.

  4. I thought he was going to be assassinated within the first week. Then again, I didn't think there was any chance of him getting elected. I saw all the animosity towards him in my hometown and thought there was more out there.

    Now it seems more like everyone around here thinks america will see his flaws and not elect him next time. I've heard from more than a few people that if he tries too many more stunts, people will start to rebel. Or even if he gets reelected. Well, I'd be in the battlefield...

    The market is giving proper feedback as usual. Whether it gets explained properly is another matter.

  5. This is actually quite interesting. It seems to show one of two things happening here. Either

    1) Russia is moving towards Capitalism (it's hard to believe that is happening)

    or, much more likely

    2) The realization that NO Socialist State wants to completely throttle individualism and Capitalism. This could be a situation where a second-hander realizes what he is, is subtly broadcasting it to the world, and understands that he NEEDS us to be a nation built on individual rights for his nation to survive.

    This ought to be a HUGE sign for Americans and for our leaders, but it will probably just be ignored.

    I suppose it could be a few other things too, like he had too much to drink the night before but that's all I got at this point.

  6. The healthcare issues in the bill (posted in this thread) are extremely frightening, as someone said to me the other day,

    "the govt is now going to decide whether you live or die"

    K-mac posted an excerpt from that bloomberg article. Tom Daschle has some very scary ideas here. Apparently, in his book, Daschle had said the goal of his health care reform (emphasis added):

    source: http://www.bloomberg.com/apps/news?pid=206...id=aLzfDxfbwhzs

    "...is to slow the development and use of new medications and technologies because they are driving up costs. He praises Europeans for being more willing to accept “hopeless diagnoses” and “forgo experimental treatments,” and he chastises Americans for expecting too much from the health-care system."

    ...Daschle says health-care reform “will not be pain free.” Seniors should be more accepting of the conditions that come with age instead of treating them. That means the elderly will bear the brunt.

    I think Daschle is saying that sick and elderly people should be ready and willing to suffer and die by Government mandate.

  7. I suppose that first they will blame evil businessmen.

    If allowed to continue, they will blame you: for not spending, for nor being your neighbors keeper, for wanting more health care than "we" cam afford, and so on.

    Actually, I can see this happening. I can even see the line of thinking:

    "Being greedy is evil

    Businessmen are greedy

    therefore, businessmen are evil

    ...and since we "know" that we did "something" to fix the economy, the only thing left to blame is the ones who always thwart our plans, the evil people...the businessmen...they did "something" to mess this up..oh, did you American's say that you too are greedy....? You hoarded your cash instead of spending it? Why did you do that? It's not our fault, you guys screwed yourselves"

  8. I happened to hear the Harvard law professor who chairs the oversight board, on NPR; I've also looked over the original report. So, I'm basing my evaluation on more than the linked article.

    Okay, let's start here: what investments? I submit that the government did not make any investment in AIG or Citigroup. If I give money to a bankrupt to whom nobody else will give money on any terms, is that an investment? If so, how do I evaluate the "fair value".

    This committee tries to evaluate a fair value for that money that the government gave to AIG and others. That is simply bogus, because it is based on a bogus assumption. If AIG got $40 billion, and nobody was willing to give it a dime, the whole $40 billion was a give-away. Now, the oversight committee says that only $20 billion of that was a give away. So? If we assume they're right -- which they are not -- it would be a good thing!

    The linked article makes it sound as if the government took over some pre-existing assets -- like some mortgage-backed securities etc,. --- from these companies and that these assets have gone down in value. That is simply false; it has not happened.

    Perhaps I should have said alleged assets. Or alleged investments. I agree with you in that I don't think that there was a way to objectively price these things and no way to determine what their value actually is/was. When I first saw/heard this was happening on the nightly news, I was scratching my head thinking how the hell do you price something without a market for it? :huh:

    I hadn't seen the fill report nor heard it on NPR. Obviously I am missing something.

  9. My point is merely this: where's the surprise? This report seems more like political posturing than useful information.

    What? What exactly is the "posture". It was simply reporting what the Oversight board has found.

    Now, this report is saying that the government provided a subsidy.

    Where does it say that? It says that it lost value in the investments it made in AIG and Citigroup.

    Or, we can take the approach taken by this report and assume that a private party would have charged 25% interest, so we were giving AIG a subsidy of more than half the principle.

    ???? Are you reading the same article that the rest of us are? Nowhere did it even imply this.

    Now...perhaps we should come together on what you are considering a subsidy. I was under the impression this was essentially a bridge loan to AIG.

    I usually agree with your assessment on a variety of issues but I think you missed the boat here. It was just reporting that the Government's investment has lost value...and in my own opinion, because the assets were not valued properly, I'm not sure we're ever going to see a return like Hank implied.

  10. It's not the way you linked, it is that site itself. I found that the link works at time and does not work at others. In fact, if one gets the error, hitting "refresh" will bring up the article.

    To summarize, that article notes that the market value of the TARP assets has fallen. It mentions that Paulson said the government would not lose money.

    There is no surprise there. Markets go up and down, and Paulson never suggested that they would not. What he did suggest was that the final realized amounts will not be less that the govt's purchase price -- something that won;t be known for a while. In fact, Paulson may turn out to be right, but that will still remain a secondary issue. The real issue was the act of taking on the "toxic" assets in the first place.

    Today's business news noted that the govt. is dropping the term "toxic asset", and will now use the term "legacy asset". Even the "troubled asset" "TA-rp" is out the window. Instead, the program will be called "Financial Stabilization Program". With these new names, we should all sleep better! :lol:

    I'm not sure they really understood the value of these things when they purchased them...

    ...if, for example, the price of these "troubled assets" were inflated due to easy credit...what do you suppose would cause them to come back to at least the purchase price? More inflated values?

  11. I'm not sure this is true, as you can certainly quantify whether or not there has been a *drop* in theft (or whatever). You may not be able to tie it definitely to a single cause, but this type of effectiveness quantification goes on all the time in a number of fields, like, say, marketing.

    I agree with Megan. However, the way you measure it is by changing one variable at a time and measuring that. Otherwise, you won't be able to tell what caused what.

  12. Today, the US Senate passed the Obama Stimulus Package and I think we will be paying for this for a very long time. I'm not sure of the details, but obviously Obama et al will want to control the economy further and make this part of the relief effort.

    The Bill still has to go to the House for approval, but I doubt there will be any significant changes.

    If you saw his address to the nation last night, he has drawn a line in the sand - clearly - against the free market (not that you couldn't guess that before now).

    He remarked that (and I am paraphrasing) there are those who believe that the Government should do nothing and let the free market do its work. That, he said, is not an option that is being considered. If you are willing to agree that the Government must do something, he said, then he is willing to negotiate on the particulars.

    He also quickly blamed the entire economic problem on Wall Street.

  13. Good lord...I said that is ONE example.

    I know, you said

    I thought of an example that might illustrate why going it alone is not a profitable idea, in the vast majority of cases.

    I took this to mean that your example applied to a vast majority of cases if they did it themselves - meaning, they would invest in mutual funds.

    Sorry if I misunderstood you.

  14. The free market is irrelevant when there is no one to ensure it is free. There is only one defining attribute of your theory, the complete and utter lack of government, and like I said, been there, done that, got the tee shirt and no fucking thank you.

    Maybe he's never seen The Postman with Kevin Costner. I know it wasn't a very popular movie though...I thought that was a rather good portrayal of anarchy on film.

  15. I'm sorry I didn't read your posts before I invested, though I probably wouldn't have changed my strategy much. I did have half of my investments with a broker, and lost over 50%. I kept "my" half mostly in cash through 2008 and almost broke even. So, after that, I decided that I could do a better job on my own. I don't intend to try to beat any particular sector, but I will try to predict which sectors will do better. I think I can predict this better than non-capitalist money managers. When I have a decent sum, maybe I will get the attention of someone I like.

    I'm not sure why you suggest bonds - they will collapse with the dollar. Insurance I never understood either - I self insure. Gold I think is a good idea, but for non-professionals, I think it's only good for wealth preservation, not as an investment.

    I hope you do well.

    ..last year you could have done very well with energy companies. But I was just reading something rather disturbing the other day and was thinking about how it would affect investments this year. You know with Obamanation's forthcoming energy policy, I don't know how good most of the energy sector is going to fare this year, save maybe wind power (through government subsidies)...maybe nuclear if he can get off the fence. It's going to be an interesting year.

    Some brokers will do that (lose 50% of your holdings). It depends on your investment strategy. The reason I say high cash value insurance and short-term bonds (short-term not long-term) is because they are relatively stable. Insurance is backed by bonds, high quality mortgages, and some common stock. High cash value is very liquid in case you need to exit stage left quickly, and it leverages your savings through a death benefit until you have accumulated what you intended to save. The bonds, as long as they are 5 years or less provide stability without a long-term commitment.

    The other thing I like about both of those options is that if enough people put their money there...that's the real stimulus package. It gives money to businesses to help fuel job creation and expansion, and does it of course through free market dynamics. Part of the equation is getting people to save more money which will help to get this economy back to where it needs to be. The other half of course is cutting government waste and reducing spending. That, we cannot control. The savings aspect, we can.

    As far as the collapsing dollar, that is an issue of course, but not a guarantee. It depends largely on whether people in Washington wake up in time. They are going to have to deal with some major issues before too long here. I agree that Gold is more of a preservation measure, but think about what all of your investments are pegged to - the dollar. So...I think it's nice to have some kind of hedge in gold. The problem is that gold is also priced in terms of fiat currency, so it looks volatile short-term.

    I've heard of some of folks advocating putting all of your money into gold, but chances are your local grocer, the car dealership down the street, and most other people don't take gold as payment (and they can't make change for it either). So...you have to weigh out what percentage you want to "risk" long-term in fiat currency and what percentage you want to "risk" short term in gold.

    Also, I'm not saying that anyone would put 100% of their savings in these three options. I personally like the 90/10 approach or the 80/20 approach. 80/90% in fixed/gold, 10/20 invested in equities or options. With the right investments you could do very well and limit the downside to about 10/20% of your portfolio if something goes wrong.

    http://ticker-classics.denninger.net/archives/2008/03.html

    http://market-ticker.org/archives/748-Why-...Should-Too.html

    FWIW, I have gone into nearly full "Capital Preservation" mode. My guy at Morgan Stanley says that even utilities are getting pooh-poohed now. I hate to be a wet blanket, but I see very hard times ahead. :P

    From that website:

    But this sort of "performance" belies the pitfalls of having someone else run your money for you, chief among the problems being that nobody cares about it as much as you do.

    I think this goes hand in hand with the idea behind the corporate raiders in the 80's...if your interests (or the interests of your money manager) aren't aligned with your investments, it's a recipe for disaster.

    Also, I think it's a good point that someone else isn't going to care as much about your money as you do.

  16. Yes of course you are right. This should not be taken as an out of context truth. However, statistics show that many (a lot) people are not doing as well in their self directed plans as, in the past, their employers did when they invested their money for them (contracting professionals).

    I think there is a good reason for this. The stats I've seen...from DALBARinc. show that it is largely an emotional problem. Those who do have some knowledge of investing are still either undereducated or investing on whim. That can be solved by proper education and dedication to a rational approach to investing.

    There is no inherent reason why people cannot be better investors. You need basically two things: money and information. The latter is what is going to drive your success.

    The information part is where I think there is value in research firms and investment advisers, though you could - if you were ambitious enough, do the research on your own. The research aspect I think is where people will run into a time issue (and probably a skill and ability issue). But learning the basics of investing isn't THAT difficult, and the transactional process of buying and selling doesn't take much intelligence to do and could probably be done by the investors themselves.

    ...but yeah...if you are saying that R&A could probably be done better by professionals, I'd have to agree.

  17. When you have a leak, you call a plumber. When the lights go out, you call an electrician. When you need financial advice, you contact a financial planner. There are good and bad plumbers, electricians and financial planners, as with all people and professions. That's why you should get referrals from trusted friends, family members or coworkers and consult with several specialists before choosing one. Initial consultations are/should be free, so it's just a matter of taking some time to find the right one for you.

    EDIT: I thought of an example that might illustrate why going it alone is not a profitable idea, in the vast majority of cases.

    The last quarter, as you are well aware, the market tanked. As a result, many investors bailed out of their mutual funds. (Way to buy high and sell low, morons!) Anyway, the panic selling forced many mutual fund managers to sell securities within their fund's portfolio (whether they wanted to or not) to generate the cash for the redemptions, thus creating capital gains for the mutual fund's shareholders.

    Shareholders in taxable accounts must pay taxes on these gains, so in a year when our clients had unrealized losses in their portfolio, they were going to be hit with taxes too. (Gotta love the government!) To offset those taxes, we sold portions of our client's funds at a loss so they would have a realized loss to report, thus offsetting the capital gains taxes.

    Now the government is on to this, so in order to prevent a wash sale, we invested our clients in a fund similar to the fund we sold them out of, then in 45 days, we will purchase them back into the original fund, using systematic trades which will prevent them from being charged trading fees.

    As an investor going it alone, would you have even understood all of that, much less been able to perform the calculations necessary to determine how much of which fund(s) to sell? Would you have had time? (Capital gains are typically paid in mid-December, so you would've had to realize the situation, make the necessary calculations and trades prior to December 31st for it to be effective with the 2008 tax year...and all this while you're dealing with the holidays, family, your job and everything else that life and the holidays bring.) Oh, and don't forget to avoid a wash sale!

    I see your point in terms of mutual funds. But this assumes that an individual "going it alone" would use a mutual fund as his best alternative. I don't think that that would be the case. If it were, I think most people would use IRAs or 401(k)s so the impact of taxes would be minimal to them (at least at that point)...they just wouldn't sell...the so-called "buy and hold" mentality.

    But, even if you weren't buying into a qualified plan, if you bought a random selection of about 40-50 different stocks, you could mirror the underlying index - if that was your goal. You don't even need to do any analyzing. Just throw darts at a dart board. It's cheap to buy stocks this way and you avoid the complexities of the mutual fund, have full control, and all the perceived advantages of indexing.

    Referrals from family and friends and consulting with specialists wouldn't have helped you avoid a Bernard Madoff. In fact, most of his clients were from referrals. Not all scammers twist their mustaches and look like a crook. This guy was very well respected.

    The ONE THING that was common among all of his clients though was that they were ignorant of how he was making those returns. This sort of comes back to an earlier idea about investing I had which was one of the major problems is education. Not everyone is going want to learn how to do that...and that's OK. And...maybe a majority of people shouldn't. I think there is a lot of value in the research and analysis done by professionals.

    I still maintain that it is necessary to have at least a basic understanding of how to invest in equities if you are going to put your money there though. A basic understanding...not necessarily a professional's level of understanding.

    I think it's a cop-out for investors to say that they don't have time or that it's "too complicated" to understand. Not only is that a pragmatic answer, it's simply not true...books like "one up on wallstreet" are an easy read and well worth it.

    As far as going to a plumber or a mechanic or any other professional, I agree in most situations. But, this does not:

    1) eliminate the need to have a basic understanding of what the professional does.

    And

    2) I don't think that example applies in the same way when you are talking about finances because the nature of a financial problem and the nature of a plumbing problem are very different. What you do with your money has a lot to do with your values. You could happily go your whole life just turning on and off your faucets and not really worry about it too much. If you have a problem with your plumbing, it's a metaphysical problem. That's just not true with financial planning, of which investing is one component. It's more than just a metaphysical problem

    As an example, you could say when you are having a psychological problem, you go to a psychologist. Or when you are facing an ethical problem you go to a philosopher. I think that this would be a valid assumption. However, in these two instances, neither the philosopher nor the psychologist is going to solve your problem for you (not a proper one anyway). As the patient, you'll need to learn a bit about philosophy and psychology in order for the professional to help you solve your own problems.

    I think it is similar in the financial planning profession (or it ought to be).

  18. There are a few things that I don't like about this article. One is that it seems to be saying that the EMH is valid, and that the "best way" to invest is passively (this strategy only works when a minority of investors use it). It represents the intrinsic approach to investing which I think is highly suspect.

    The other issue presented is whether the average "joe" should even attempt it. I like that the article points out that you have to have an interest in investing. It really depends on the skill level of the investor, and whether or not they are willing to learn how to invest on their own. But, to say that the average Joe can't or that the odds are stacked heavily against them I think is overstating it.

    If you don't have an interest in finance though, even a little, and here is where I deviate from the article, I don't think that you should invest at all. At least not using any type of financial product with variable returns. You are essentially placing all of your financial future in the hands of another person. You wouldn't do it in any other area of your life and I don't think it makes sense here either. You might hand your money over to someone else (like a Bernie Madoff) or an adviser who you *think* is competent but who is not (since you don't know anything about finance and have no interest in it, you've no way to judge their competency), and you wind up with an entirely new problem.

    Also, there are more reasons than what the article tells you as to why large pension funds and mutual funds do so poorly. It isn't because they're trying to beat the market per se, it's because the friction of costs associated with the funds, Government regulations on allocation of funds, liquidity and reserves, and the fact that they get to be so large (they run out of places to put the money) that accounts for a lot of funds being long-term poor performers. Of course, there is not really a huge incentive for the funds to do well to begin with, and also the obvious - that some managers just aren't that good.

  19. I don't have time to follow the markets, so I want to invest aggressively, but long term.

    You don't need to be diversified for diversification's sake. Historically, you would have done exceptionally well by having a majority of your money placed with conservative life insurance companies and buying gold (the mix being dependent on your particular financial situation). Some of this savings could also have been invested in mining stocks and energy companies to push your returns higher while still preserving the bulk of your savings.

    I think what you are proposing though is a recipe for disaster. I think the combination of not having the time to follow the markets and wanting to invest aggressively will do you in, if you go down that road. Investing, like anything else, is a skill. The more time you put in, the more knowledge you gain, the better you develop your ability and skill level, on the whole...the better your results. There is no such thing as automatic profits, which I'm sure you can understand.

    Usually for individuals who don't want to or can't learn how to invest, their best alternative is to bump up their savings by quite a bit and allow professional money managers to invest your savings in more conservative investments, the bulk of which would be placed in high cash value insurance, short-term bonds, and gold. The higher savings rate can offset the lower returns you'll be getting.

    Of course, when I lay it out like that for most people they don't like that option either, haha.

  20. Flatlander,

    BullionVault seems to be one of those companies where you buy gold, but they hold it for you rather than deliver it to you. Is that correct?

    If one assumes that it's a good time to buy gold, what do you find attractive about buying it in this way, rather than taking physical possession? Is it the saving of delivery cost? If you do not intend to trade in and out, this would be a one-time cost. So, would it be worth the lesser security of not having possession?

    Also, if one is going to buy gold that someone else holds, what are the advantages of a company like BullionVault over an ETF like GLD, which is much more mainstreet?

    When you buy gold, you have a few choices. You can leave the gold in the "chain of integrity", meaning in the vault that it is being sold from. The gold that is for sale on bullionvault can be stored in either New York, London, or Zurich - which is I believe typical.

    You can buy either allocated or unallocated, meaning that you can buy physical metal and delineate which gold is yours in the vault (allocated) or you can just buy into a pool (unallocated). The risk, as it were, with unallocated gold is that I believe it can still be leased from the pool because while you own it, you can't specify exactly what you own. The upside is that usually you aren't paying storage fees.

    Although you can't do this from bullionvault (I don't think), you can typically take physical delivery of your gold when it's allocated, but you may have to pay for fabrication, insurance, and shipping. Once it leaves those vaults just keep in mind that if you ever want to do anything with it again (return it to the market), it will need to be assayed and you'll be paying costs for that and possibly for fabrication again, etc....so that will drag down what you get back out of it by a little. Your other option for allocated gold is to just leave it in the vault, pay the storage fee (they're not too bad), and take a trip to your vault once every few months to stare at your shiny metal. :D

    There are lots of companies that sell gold. Monex Deposit Company is a good one in the U.S., and if you don't mind buying online, there is KITCO. Those aren't the only reputable ones, but just to give you an idea.

    ETFs are an easy way to "buy gold", but you're not really buying gold. You don't own the physical metal, just the investment product which is backed by the physical metal, so you can't take delivery of the gold, you can only cash out (which does you little good if what you wanted was the gold). I believe you also pay taxes on gains, fees associated with the ETF, and you also don't control the management of it.

  21. reason for edit...david odden provided a pretty good reply, so what was going to go here would be redundant.

    ***

    I would like to emphasize though that I think Mr. Odden made many excellent points, one in particular about "might makes right"....because this is really what these competing quasi-security firms would be engaged in.

    As MartianHoplite admitted:

    In actual fact, security firms would be driven by two factors to prevent this outcome. First is public opinion.

    ...and herein lies the downfall. David is right. When you get enough socialists together to make a huge security firm, the rest of us wouldn't stand a chance. Or...suppose you had the KKK security firm, ugh. or the KGB security firm....yikes.

  22. Say I decide that the agents of the objectivist, minimal state are not, in fact, acting according to natural, objective law, so I set up my own competing state, and begin recruiting citizens. I have in no way initiated aggression against you. I have simply offered people a service I feel to be better than the one currently on the market.

    So, you want the right to set up a gang, essentially? Because that is what you are describing. It's not a Government, it's you setting up a community of your own and calling it a state. Whatever laws you set may or may not be objective, but what you have is a dictatorship, with you in control...or a gang with you and some friends in control. OK.

    What happens if someone within your "state" decides YOUR rules are unfair? They set up a competing "state" within your boundaries, call for your overthrow (disregarding your property rights because you are a dictator and they are claiming you have no right to their property or yours due to "violating their freedom" or "right to property")...now what? Who handles this dispute? You? heh. Them? heh...

    Do you just ignore each other? How do you decide on the terms of procedure for any kind of legal hearing or binding arbitration? Where will it be held? etc. etc.

    ...I don't think the anarchists have really thought this through. This is something I've never heard any meaningful answer to from them. Since there is no Government, you basically have competing businesses serving as entities that are supposedly capable of redistributing force and applying justice. I've never seen that done without a disinterested party. And, the only disinterested party is one that cannot be bought...in other words, it's not a business.

×
×
  • Create New...