AUTHOR: Philip Stein on 6/23/2024 FIRST: David Powell on 6/23/2024 | RECENT: Bottom Feeder on 6/29/2024
Comments:
Help me understand something. With bitcoin and other cryptocurrencies being squirreled away in “reserves,” ETF portfolios and the coffers of companies like Microstrategy, how is this “money” circulated? With seemingly less and less of it available for actual financial transactions, how can it function as a currency? And if it can’t function as a currency, then what is it exactly?
I suggest that the problem isn’t with modern art, but with the wealthy who buy this stuff. If the market for this so-called art dried up, maybe we’d see less “modern” art and more “inspirational” art. Imagine all the socially useful things $6.2 million could be spent on. Yet, Justin Sun somehow justified blowing it all on a banana taped to a wall. Heartbreaking.
You’re right to point out that the longevity of your community fund demonstrates that fraud is not widespread. Perhaps a bit of fraud is tolerable if it enables a community program to effectively meet people’s needs with minimal overhead. And minimal overhead is likely a major factor contributing to the longevity of the program. Besides, when run at the local level, anyone contemplating defrauding the program might think twice when a friend or neighbor is involved.
Kristine, I think what you describe is the benefit of a principle called subsidiarity where actions taken at the lowest possible political level are most effective. That is, help for those suffering from food insecurity is best handled when that assistance comes from the community rather than from the state or federal level. Community members banding together best understand what their less fortunate members need rather than state or federal government bureaucrats. And the help these folks receive doesn’t involve filling out forms or meeting quotas. I hope that your community and others like it across the country continue to assist your members directly rather than sit back and call for the government to “do something.”
Good point. I’ve often thought that the consequences of paying an annual AUM fee aren’t sufficiently appreciated. Using your example, a $10,000 AUM fee paid from your portfolio means that the $10,000 is no longer compounding in your favor. Assuming an average annual return of 5%, that $10,000 would grow to $26,533 in twenty years. But that money is in your advisor’s pocket, not yours—a huge opportunity cost. Making matters worse, that 1% AUM fee is removed from your portfolio every year.
I wholeheartedly agree. It’s pointless to compare 10-year rates of return without knowing each person’s asset allocation. It’s also important to acknowledge that the most recent decade does not include the bear market of the 2008-9 Great Recession. Your 10-year return is heavily dependent on which 10-year period you consider. I doubt that you’d be as pleased with your 10-year return if your decade began in the year 2000.
I think we can agree that no parent, married or single, is worse than an abusive parent. I can’t imagine why any adult would abuse a child, so I must assume that such an adult suffers some degree of emotional damage that makes them unable to refrain from such behavior. On the topic of nuclear families, let me offer these excerpts from Coming Apart by Charles Murray, 2012, page 158: “…the family structure that produces the best outcomes for children, on average, are two biological parents who remain married…Never-married women produce the worst outcomes.” “I know of no other set of important findings that are as broadly accepted by social scientists…yet are as resolutely ignored by network news programs, editorial writers for the major newspapers, and politicians of both major political parties.”
I’ve read that social scientists have found that children growing up in a household where both biological parents are present, generally do better in life than those growing up in a single parent household. Most of us develop our basic moral sense from our parents. Often, children from single parent homes learn basic life lessons from street culture since a single parent is often working and missing from a child’s life. If abuse can occur in a nuclear family, imagine what must occur in its absence. If a child is not protected by a nuclear family, who has the responsibility to protect and teach that child? Government bureaucrats? Street gangs? What moral lessons will they teach?
Could you give us a hint as to what your “right funds” are? If you hold little or no cash, how do you deal with emergencies during a bear market? It’s my understanding that physicians can leave Medicare Advantage networks. Wouldn’t this pose a problem if the physician you are seeing becomes unavailable when the provider changes the roster of physicians in it's network? Even in a big city, if you need to see a specialist outside your network, you might pay out of pocket for the privilege. It seems that would reduce the savings you currently enjoy. I commend you for never owning a pool. I once owed a house with a small pool and found that the continuous year-round maintenance was a money pit. Never again.
Instead of an equal-weighted S&P 500 fund, why not pair a market cap-weighted S&P 500 fund with a small-cap index fund? Wouldn’t that provide better diversification than an equal-weighted S&P 500 fund? In the October issue of the American Association of Individual Investors journal, Paul Merriman suggested a four-fund portfolio consisting of 25% S&P 500, 25% large-cap value, 25% small-cap blend, and 25% small-cap value. He claims such a portfolio, rebalanced annually, had an average annual return of 11.8% going back to 1928—beating the S&P 500’s 10% return.
Comments:
Help me understand something. With bitcoin and other cryptocurrencies being squirreled away in “reserves,” ETF portfolios and the coffers of companies like Microstrategy, how is this “money” circulated? With seemingly less and less of it available for actual financial transactions, how can it function as a currency? And if it can’t function as a currency, then what is it exactly?
Post: Worth Repeating
Link to comment from January 1, 2025
I suggest that the problem isn’t with modern art, but with the wealthy who buy this stuff. If the market for this so-called art dried up, maybe we’d see less “modern” art and more “inspirational” art. Imagine all the socially useful things $6.2 million could be spent on. Yet, Justin Sun somehow justified blowing it all on a banana taped to a wall. Heartbreaking.
Post: Worth Repeating
Link to comment from January 1, 2025
You’re right to point out that the longevity of your community fund demonstrates that fraud is not widespread. Perhaps a bit of fraud is tolerable if it enables a community program to effectively meet people’s needs with minimal overhead. And minimal overhead is likely a major factor contributing to the longevity of the program. Besides, when run at the local level, anyone contemplating defrauding the program might think twice when a friend or neighbor is involved.
Post: Helping Our Neighbors by Kristine Hayes Nibler
Link to comment from December 28, 2024
Kristine, I think what you describe is the benefit of a principle called subsidiarity where actions taken at the lowest possible political level are most effective. That is, help for those suffering from food insecurity is best handled when that assistance comes from the community rather than from the state or federal level. Community members banding together best understand what their less fortunate members need rather than state or federal government bureaucrats. And the help these folks receive doesn’t involve filling out forms or meeting quotas. I hope that your community and others like it across the country continue to assist your members directly rather than sit back and call for the government to “do something.”
Post: Helping Our Neighbors by Kristine Hayes Nibler
Link to comment from December 28, 2024
Good point. I’ve often thought that the consequences of paying an annual AUM fee aren’t sufficiently appreciated. Using your example, a $10,000 AUM fee paid from your portfolio means that the $10,000 is no longer compounding in your favor. Assuming an average annual return of 5%, that $10,000 would grow to $26,533 in twenty years. But that money is in your advisor’s pocket, not yours—a huge opportunity cost. Making matters worse, that 1% AUM fee is removed from your portfolio every year.
Post: Costs Matter
Link to comment from December 7, 2024
I wholeheartedly agree. It’s pointless to compare 10-year rates of return without knowing each person’s asset allocation. It’s also important to acknowledge that the most recent decade does not include the bear market of the 2008-9 Great Recession. Your 10-year return is heavily dependent on which 10-year period you consider. I doubt that you’d be as pleased with your 10-year return if your decade began in the year 2000.
Post: What is The 10 Year Return on Your Portfolio?
Link to comment from November 30, 2024
I think we can agree that no parent, married or single, is worse than an abusive parent. I can’t imagine why any adult would abuse a child, so I must assume that such an adult suffers some degree of emotional damage that makes them unable to refrain from such behavior. On the topic of nuclear families, let me offer these excerpts from Coming Apart by Charles Murray, 2012, page 158: “…the family structure that produces the best outcomes for children, on average, are two biological parents who remain married…Never-married women produce the worst outcomes.” “I know of no other set of important findings that are as broadly accepted by social scientists…yet are as resolutely ignored by network news programs, editorial writers for the major newspapers, and politicians of both major political parties.”
Post: Those Who Follow by Jonathan Clements
Link to comment from November 3, 2024
I’ve read that social scientists have found that children growing up in a household where both biological parents are present, generally do better in life than those growing up in a single parent household. Most of us develop our basic moral sense from our parents. Often, children from single parent homes learn basic life lessons from street culture since a single parent is often working and missing from a child’s life. If abuse can occur in a nuclear family, imagine what must occur in its absence. If a child is not protected by a nuclear family, who has the responsibility to protect and teach that child? Government bureaucrats? Street gangs? What moral lessons will they teach?
Post: Those Who Follow by Jonathan Clements
Link to comment from November 3, 2024
Could you give us a hint as to what your “right funds” are? If you hold little or no cash, how do you deal with emergencies during a bear market? It’s my understanding that physicians can leave Medicare Advantage networks. Wouldn’t this pose a problem if the physician you are seeing becomes unavailable when the provider changes the roster of physicians in it's network? Even in a big city, if you need to see a specialist outside your network, you might pay out of pocket for the privilege. It seems that would reduce the savings you currently enjoy. I commend you for never owning a pool. I once owed a house with a small pool and found that the continuous year-round maintenance was a money pit. Never again.
Post: Second Guessing
Link to comment from November 3, 2024
Instead of an equal-weighted S&P 500 fund, why not pair a market cap-weighted S&P 500 fund with a small-cap index fund? Wouldn’t that provide better diversification than an equal-weighted S&P 500 fund? In the October issue of the American Association of Individual Investors journal, Paul Merriman suggested a four-fund portfolio consisting of 25% S&P 500, 25% large-cap value, 25% small-cap blend, and 25% small-cap value. He claims such a portfolio, rebalanced annually, had an average annual return of 11.8% going back to 1928—beating the S&P 500’s 10% return.
Post: Equally Bad?
Link to comment from October 24, 2024