I don't necessarily see AI as a big issue, per se. At its best, LLMs will mostly regurgitate and collate valid information, albeit, without the human element/storyline that makes articles in HD more than just reading Wikipedia or text books. On the other hand, when LLMs hallucinate, they will either crank out complete nonsense, or contrarian views, which is part and parcel to any information source with sufficient diversity. Case in point might be Dave Ramsay's rant from last year claiming that his safe withdrawal rate is 8% because inflation was running at 4% and he could easily get 12% average return from his portfolio. Is that fundamentally any different than an LLM hallucinating and ignoring not only sequence of return risk, but also just bad statistics? Note that LLMs tend to suck at doing actual math and have to be modified to be able to handle math problems. But, math engines require valid inputs to produce valid results, and the converse is still garbage in, garbage out, so if the attached LLM is hallucinating, even doing proper math will simply result in another Dave Ramsay meltdown.
"It took Japan’s Nikkei index an astounding 34 years to surpass its 1989 record high, a feat achieved earlier this year."I think that the headline misses a lot about the "why" it took so long, and one major reason is that the people actually weren't consuming much, and were actually doing mostly what you are trying to do, which is to not own stocks and only having essentially savings accounts. Given the US culture of consumerism, it's unlikely that the US would ever get into that state; this is the primary reason the US seems to be able to recover from crashes and recessions relatively quickly, compared to Japan. That is the ostensibly the primary reason that the Fed has been trying to keep inflation at 2%, since that encourages people to maintain a certain amount of consumption, which is a big driver of the GDP and financial well-being of the US stock market.To some degree, going all in with money market/cash is not only trying to time the markets, there's a rather large longevity risk, i.e., outliving your money, which is another thing that Bogleheads do, or should, worry about as well. Note that all these economic trends are not independent, i.e., the interest rates are high because the Fed cranked up interest rates to fight inflation, and people are still essentially on a buying frenzy. If inflation eventually gets into the 2% Fed target, interest rates will be dropping, and we'd likely be back in the negligible returns for savings and money market accounts that we've been experiencing since the Fed targeted a 2% inflation rate. While the core and headline inflation numbers might get down there, there are other costs that rise faster than that, namely medical and long-term care; if they do, then longevity risk vis-a-vis those costs are a real and present danger.
I'd say at this point, you didn't just "try" to avoid making bad decisions, you "succeeded" in avoiding them. Which is what everyone should be trying to do. To a certain extent, being mostly successful in avoiding bad decisions gives you the resiliency to make "some" bad decisions without hurting you in the long run.
I think if you can afford it, then self-insuring is the way to go. The downside would be the downside, i.e., if your LTC costs exceed the actuarial expectations, then you'd be on the hook for possibly way more than what it would have cost for the LTCI in the first place. However, whichever you choose, it's not the only thing you need to do; you need to minimize your risks of needing LTC, so not just being "active" but actually regaining lost physical activities and range of performance that happened during your sedentary career. There is a slow decline in physical ability, such as with sarcopenia, but you can potentially shape the shape of the decline curve so that your "slow-go" years are minimized and you have a higher quality of life during those years. Once you start down that slippery slope, it can be hard to arrest that degradation, so the earlier you start to work on physicality and weight training, etc., the better off you will be.
I get that there's a desire to be debt free, but putting your assets to work for you is also important. Having a bunch of equity tied up in the house doing nothing to add to your life enjoyment, other than being debt free, is not for me. However, regaining opportunity cost should not be wasted; if the money that you might have paid off the mortgage with is wasted, then you're burdened with both the interest cost AND the opportunity cost. I think that one needs to get even MORE active immediately before or as you get started in retirement. Muscle loss needs to be stopped so that you can enjoy more go-go and slo-go years. Jack LaLanne lived to 96 and at 70, was still stronger than average 20-year old. We've been brainwashed by big Pharma and big Medicine into thinking that our so-called "twilight years" must be accompanied by drastic losses of mobility and ability, and that's just not true, but we have to commit to making that happen.
Comments
I don't necessarily see AI as a big issue, per se. At its best, LLMs will mostly regurgitate and collate valid information, albeit, without the human element/storyline that makes articles in HD more than just reading Wikipedia or text books. On the other hand, when LLMs hallucinate, they will either crank out complete nonsense, or contrarian views, which is part and parcel to any information source with sufficient diversity. Case in point might be Dave Ramsay's rant from last year claiming that his safe withdrawal rate is 8% because inflation was running at 4% and he could easily get 12% average return from his portfolio. Is that fundamentally any different than an LLM hallucinating and ignoring not only sequence of return risk, but also just bad statistics? Note that LLMs tend to suck at doing actual math and have to be modified to be able to handle math problems. But, math engines require valid inputs to produce valid results, and the converse is still garbage in, garbage out, so if the attached LLM is hallucinating, even doing proper math will simply result in another Dave Ramsay meltdown.
Post: Man vs. Machine
Link to comment from May 25, 2024
"It took Japan’s Nikkei index an astounding 34 years to surpass its 1989 record high, a feat achieved earlier this year." I think that the headline misses a lot about the "why" it took so long, and one major reason is that the people actually weren't consuming much, and were actually doing mostly what you are trying to do, which is to not own stocks and only having essentially savings accounts. Given the US culture of consumerism, it's unlikely that the US would ever get into that state; this is the primary reason the US seems to be able to recover from crashes and recessions relatively quickly, compared to Japan. That is the ostensibly the primary reason that the Fed has been trying to keep inflation at 2%, since that encourages people to maintain a certain amount of consumption, which is a big driver of the GDP and financial well-being of the US stock market. To some degree, going all in with money market/cash is not only trying to time the markets, there's a rather large longevity risk, i.e., outliving your money, which is another thing that Bogleheads do, or should, worry about as well. Note that all these economic trends are not independent, i.e., the interest rates are high because the Fed cranked up interest rates to fight inflation, and people are still essentially on a buying frenzy. If inflation eventually gets into the 2% Fed target, interest rates will be dropping, and we'd likely be back in the negligible returns for savings and money market accounts that we've been experiencing since the Fed targeted a 2% inflation rate. While the core and headline inflation numbers might get down there, there are other costs that rise faster than that, namely medical and long-term care; if they do, then longevity risk vis-a-vis those costs are a real and present danger.
Post: Waiting It Out
Link to comment from May 25, 2024
I'd say at this point, you didn't just "try" to avoid making bad decisions, you "succeeded" in avoiding them. Which is what everyone should be trying to do. To a certain extent, being mostly successful in avoiding bad decisions gives you the resiliency to make "some" bad decisions without hurting you in the long run.
Post: Luck Would Have It
Link to comment from May 25, 2024
I think if you can afford it, then self-insuring is the way to go. The downside would be the downside, i.e., if your LTC costs exceed the actuarial expectations, then you'd be on the hook for possibly way more than what it would have cost for the LTCI in the first place. However, whichever you choose, it's not the only thing you need to do; you need to minimize your risks of needing LTC, so not just being "active" but actually regaining lost physical activities and range of performance that happened during your sedentary career. There is a slow decline in physical ability, such as with sarcopenia, but you can potentially shape the shape of the decline curve so that your "slow-go" years are minimized and you have a higher quality of life during those years. Once you start down that slippery slope, it can be hard to arrest that degradation, so the earlier you start to work on physicality and weight training, etc., the better off you will be.
Post: Is buying long-term-care insurance a good idea?
Link to comment from May 18, 2024
I get that there's a desire to be debt free, but putting your assets to work for you is also important. Having a bunch of equity tied up in the house doing nothing to add to your life enjoyment, other than being debt free, is not for me. However, regaining opportunity cost should not be wasted; if the money that you might have paid off the mortgage with is wasted, then you're burdened with both the interest cost AND the opportunity cost. I think that one needs to get even MORE active immediately before or as you get started in retirement. Muscle loss needs to be stopped so that you can enjoy more go-go and slo-go years. Jack LaLanne lived to 96 and at 70, was still stronger than average 20-year old. We've been brainwashed by big Pharma and big Medicine into thinking that our so-called "twilight years" must be accompanied by drastic losses of mobility and ability, and that's just not true, but we have to commit to making that happen.
Post: My Retirement Prep
Link to comment from November 29, 2023