People who just don't get it - investing

Coffee
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I’ve been collecting a few funny/interesting/frustrating points I keep on hearing time and time again, so I thought to just drop it here, along with some thoughts.

  1. You need a ton of money to invest in stocks! (opens up in more points later!)
    Explaining that the beauty of % is that the absolute amount doesn’t matter doesn’t seem to work, because the obvious answer is “Well, 10% on 100 bucks who cares?”. They get on a path that frankly goes to nowhere because not investing eg 2 years from today means they’re already a good 30% behind or more.

  2. It takes a long time/returns are too small!
    Explaining that cash in the mattress loses value to inflation, or asking “What’s your alternative, then?” again falls on deaf ears, as people lack any sort of long-term thinking, or even worse leave the responsibility to someone else…the faceless “state/government” who “will take care of it”.

  3. Stocks are for crooks and scammers
    There’s some value to this concern, especially knowing how true it was in countries like Greece.

  4. I don’t want to lock up my money for a long time!
    Then…ok, don’t lock it up, but…you need to give something up to get something in the future.

  5. You just need to find the next Apple/nVidia!
    Of course, buy low sell high, too, right? What could be simpler than that? Then even trying to give a hint towards the efficient market hypothesis, or to the fact that there are behemoth shops with near infinite computing power and skilled people who cannot themselves find the next nVidia, and hundreds of thousands of retail saps around the world spending their nights googling competently or incompetently trying to get rich quick.

  6. Capital gains should be taxed more than income because it’s getting money without doing any work (just heard this one last week).
    That’s a good one, heard from a colleague last week. They said “this is money for no work, it should be taxed more than work”. I tried to explain that one takes on some risk, and should be compensated for it at the very least, but it fell on deaf ears because the person clearly wasn’t getting it and thought that investing was some sort of injustice being done to them…though I again tried to say that it’s not a zero sum game, one can join the game and it’s to nobody’s loss but not.

Any thoughts from the collective?

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I just heard one thing yesterday and my life would be never be the same again

The owner and founder of IKEA look a loan of 500 krone in 1940s (he was teenager) , he repaid it using cash flows, and after that he just compounded the company and never took a loan or debt or raised equity. Today IKEA is world’s largest furniture retailer with almost 50 billion USD annual revenue.

That’s the reason why stock market returns value over long term because many many entrepreneurs like IKEA founder are creating businesses like Ikea.

Obviously lot of companies fail but that’s where diversification comes into play.

P.S -: Too bad ikea never went public :slight_smile:

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If they tell you this, ask them to try some market timing simulators (e.g. this one from UBS). But I assume the answer will be “well I wouldnt buy based on stock history but because I really know this company has an edge because of XY*”.

*probably random reason, unless this statement comes from someone like our infamous @Your_Full_Name :wink:

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You forgot the following

  1. I am a long term investor with high risk tolerance but I expect stocks to go up every year and I check my balance on daily basis

  2. I do not believe in active investing because I don’t know much about fundamental analysis but I know for sure that BTC will only go up every year :slight_smile:

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Ultimately, what they do with their money is their business. Being wired differently than the mainstream and being able to see value where others won’t is one reason we can be successful in investing. Unless they are my actual partner with our financial success being intertwined, I’d not try too hard to convince them: they could take it on me if they don’t succeed.

The argument I usually use to justify me choosing to invest in stocks as a means of success is specifically that the game is probably somewhat rigged: by investing in a broad, passive basket of stocks, I’m riding the tail of richer, more powerful people. They’ll make sure investing in stocks stays lucrative so the system works for me. It has limitations as they could all lock themselves into private equity and leave me dry on the public market but I find confidence in this concept and that keeps me on track.

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You summed it up nicely. Just today, I had a similar conversation with a FIRE guy

  1. Knows professionally how securities work but doesn’t invest, unless there is a major correction in the stock market
  2. Admires a person in his circles who bought and held but thinks it is now too late to follow this principle
  3. Accepts that inflation is constantly reducing the buying power of his cash pile and doesn’t do a thing about it.
  4. Thinks he already knows that his wealth will not last until his death

I told him to have a serious conversation with himself :joy:

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are you bugging my home?

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Looks like :wink:

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You know now barely how I feel in discussions with nocoiners. :joy:

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Ok, I get the sentiment :slight_smile:

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I get you, I’m a passionate chocolate-coiner

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Oh that’s really good! I missed some because I didn’t see the skip button, but not bad, went by P/E :slight_smile:

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Tell him some guy named something Lynch said more money has been lost waiting for corrections than in corrections :wink:

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I am certain this game has nothing to do with timing the market :joy:

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I tried it a few times in a row, just looking at PE and not at the price at all, “winning” every time. Imagine doing that in real life @Your_Full_Name :stuck_out_tongue:

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“Well now, if everyone did this, it obviously wouldn’t work any more.”

I feel many people think the stock market is a big Ponzi scheme.

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You think they’re financially literate enough to know what a Ponzi scheme is?

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I lost most of the times :smiley:
Here would be another one, based on real S&P data. If you remember how it performed since the 50s you’ll have an edge in this one.

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15 posts were merged into an existing topic: Bubble in passive investment funds

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The only coin guaranteeing a return… in calories :joy:

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