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Comment Re:you're both right (Score 1) 824

Nobody said it is a way to make sure you have a steady upward gain. But that in itself is no reason to not participate in stock market - or if it is, you don't show how in your longish replies to my short posts.

Let's try this:

That's in a diversified portfolio of long-term investments, a fairly reliable income.

A "diversified portfolio of long-term investments" is nothing. It's not a reliable income, it's not a reliable strategy, it's not even really a *strategy* in the stock market (diversification is a risk strategy, not an investment strategy; an investment strategy has to have some planning for how to select in such a way as to produce gain).

In other words: that sentence is just a bunch of gibberish and jargon, the kind oft-repeated to people who have *no* investment strategy, frequently *by* people who have no investment strategy, and otherwise by people who stand to profit by getting you into the market (e.g. funds managers who can skim a fee off the top). Buy and hold is crap and professional investors--the big capital investors stealing money hand-over-fist, and particularly the people employed to invest and make gains in investment banking houses--are buying and selling based on sentiment (buy low, sell high). The buy-and-hold strategy--the strategy of "keeping long-term investments"--imposes a timing restriction ("don't sell before X time") or a timing strategy ("buy things you won't have to sell for X time") blindly and bluntly, as a cudgel, with no actual investment strategy related to growth and gains-taking (i.e. actually increasing the value of your portfolio).

Nobody said it is a place where money is generated, instead of stolen.

The suggestion that you *should* be investing if you're not a skilled, well-versed, highly-competent investor implies that money is generated in the market.

There are exactly two kinds of people in the market: Con-artists and marks. If you're just leisurely walking through the stock market buying what looks good, you're a mark; if you're studying the market to determine when idiots are holding out their money to be happily taken away, you're a con-artist. Marks are marks because they believe money comes out of the market magically: they'll "invest" and they'll get a return.

You don't have to outright say a thing to *say* a thing. Smoking improves your mood, gives you more confidence, and puts you among peers of great smokers like John Wayne. A great mass of marketing is built around this--it's all true, of course--and historically has lead people to believe smoking would make them healthy, happy, relaxed, and virile because the marketing statements create an association between smoking and all of those things *without* ever stating as much. They greatly *imply* such things. That's the same as when you tell the fish they can easily make income by putting their money in a diversified, long-term investment portfolio; without a huge pile of additional information, it sure sounds like money just pours out of the stock market as long as you're "diversified"...

This sort of marketing by heavily implying untrue situations, by deliberately misleading the audience, is well-known. It's so well-known that most modern advertisement is based heavily in legal research to stick to common knowledge (which is often faulty--Vitamin C doesn't cure or prevent colds, but look at the orange juice ads...) or shaky research (there *is* research, with poor controls and bad experimental design... and we cite the one study that supports us out of 100 that don't) and avoid criminal false advertisement by deliberately misleading consumers.

But like vegetables are not grown in vegetable market but yet it might make sense to buy them in vegetable market, just because money isn't generated in the stock market doesn't mean it is not a good idea to buy stocks in the stock market.

Nigerian scams aren't created in e-mails, yet it might make sense to buy into a Nigerian Prince's $28 million account that you received in your e-mail.

You're essentially only saying that stocks are injected into the market by IPOs from companies, and so it might make sense to buy those stocks in the stock market. In other words: you're suggesting it's a good idea to buy stocks BECAUSE THEY EXIST, and not for any real strategic reason.

Comment Re:Good excuse... (Score 1) 154

It's not really the same business if the management structure has changed. In that case, they're not really backpedaling after getting caught doing something wrong; they're party to a lump of shit being handed off to them, and have to decide how to handle it.

I would hope any responsible business would make such a decision--even if it looks, on the surface, unethical and *highly* illegal, you want to get a handle on the whole thing first to identify why it's in place, if there was some mitigating factor, and then *how* to handle it if it is in fact unethical and *highly* illegal. I'd rather new management fly with it for several months if that's what it takes to identify, understand, document, develop an action plan for, and explain the situation. In situations of urgency, the timing changes: management devotes large amounts of resources to stopping things which, for example, incur loss of life; they may possibly mitigate the situation first, e.g. by implementing crude lock-out systems on processes which regularly place employees in immediate danger of loss of limb or life, allowing them to continue business as usual while planning out how to permanently resolve the situation.

That's how proper businesses handle things. Improper businesses fire a bunch of people, creating fear, homelessness, tarnished professional reputations, ineffective countermeasures, and a sharp reduction of remaining employees capable of learning from the situation and making better decisions in future, similar situations. Then they make the same mistakes all over again in a few years.

Comment Re:you're both right (Score 1) 824

To eat them, yes. To trade them back and forth? Only as a show to get money out of other idiots who think they can make money the same way.

In essence, it's a giant pyramid scheme: as long as more people keep coming and bringing more money on the table, you can buy from the big winners above you and sell to the new fish below you, making income mostly by inflation or fool-hardy eagerness. The usual line that you can "invest your money and let it grow" (that just getting into the market and holding onto so-called "investments" means you *necessarily* *will* get more money later)--importantly, the narrative that everyone can do this and make money, properly *NOT* mentioning that *someone* else must lose money in the exchange, implied largely by telling people that investing in securities and funds is what they *should* do or else they're not being financially responsible--relies on the market being a pyramid scheme of this sort.

In reality, the market doesn't function exactly that way. It's sold as a glossed-over pyramid scheme, but it functions as a poker table. Poker isn't really gambling, in the strictest sense of the word: we legally and generally consider gambling to encompass games of chance, and exclude games of skill (this creates interesting situations where wagering on which baseball team wins is gambling, but wagering on whether your team can beat an opponent is not: your ability to collect on that wager relies on your skill, and you can affect it by training yourself and your own team). Skilled poker players regularly fleece every last dime out of new fish who come to the table thinking poker is a game of cards, rather than a game of psychological manipulation; the stock market also is a game of psychological manipulation, and immunization of the self thereof.

As a poker analogy, it's quite apt: someone must lose money for someone else to gain money; and you mostly affect this by reading the sentiment of the other players and avoiding distortions of thinking which cause unrealistic sentiments. That is to say: when you see a bubble market, you read how excited the others in the market are by identifying the movements of securities prices and the news and other reporting, and buy into it; when you see these indicators showing a slowdown and a loss of confidence, you sell out to the portion of the market which is still fully-confident and driving the (now more slowly climbing) price upward. You come out with a tidy profit, and those overconfident fools are left holding a bag of pink slips that suddenly become worthless.

Pure technical analysts would say this is why the stock market is curves and not spikes: it grows, its growth slows, and then it rounds off and accelerates downward; it doesn't grow linearly upward, then instantly reverse and start going downward in a straight line. More broad analysts try to read the sentiment from news, and identify if the small fluctuations and the slowdowns are a matter of growing disillusion or just slow trading days and cold feet in general. Nobody in-the-know really says it's like a roulette wheel waiting to hit even or odd and instantly reverse direction without warning, although black swans (like 9/11 or Fukushima Daiichi) happen.

All in all, the whole of this doesn't suggest diversification is a way to maximize profits; rather, it's a way to minimize losses in unpredicted, poorly-read markets where your skill isn't up to par or the situation is just uncontrollable. Nobody can predict a nuclear meltdown--anyone who does predict a nuclear meltdown *prevents* *it* *from* *happening*. Any business which predicts its own demise does something to stop or soften the blow. In general, businesses and governments have much better data than you--they have everything you can see plus loads of secret data, as well as better facilities to analyze it--and so most negative (and positive) situations you can see coming are already being handled (mitigate the negative, exploit the positive). Hedging your bets is necessary only so far as to sacrifice some of your profits in order to capitalize on other potential, less-likely, smaller profits and to reduce the impact of unpredictable losses--which means you make less, but you also lose less.

Or, in short: it's not a way to make sure you have a steady upward gain; it's a way to make sure your movement is steady, rather than wild and dangerous. That movement may be downward. Calling a diversified profile "a reliable income" is a direct lie; it's lower risk and easier to read and respond to, but it's not a magical winning strategy.

Comment Re:Like Tomato? (Score 0) 237

They're talking about the radio controller chipset. The radio is a small CPU (like a 50MHz ARM) plugged into a radio chip. This small CPU provides a GPIO interface to the PCI bus--often also on-chip if using a SoC with wifi--which exposes a Wifi interface to the OS. The OS says, "use channel 4, transmit at 72mW, connect to ESSID Bacon," and the Wifi radio handles setting the actual frequency, sending data, selecting power level, and filtering for the selected ESSID. If the OS asks for non-existent channels or power levels outside what the firmware allows, the firmware refuses.

The summary and the nerd response is to confuse operating system software (ddwrt, tomato) with radio firmware (specialized Thumb instruction set run on a customized microkernel) and claim the feds are banning custom software.

Comment Re:you're both right (Score 1) 824

That's not a great analogy. The vegetable market is where you go to buy consumables, produced by farmers. The problem is our vegetable market in question is a place where some farmer dumps off vegetables he grew, then goes back to being a mason; meanwhile the consumers who buy vegetables sit in the farmer's market for about 30 years selling those same vegetables back and forth between each other, with some consumers coming and going, and with the occasional opening or tightening of their wallets.

Comment Re:Better not look at the "social" sciences then.. (Score 1) 152

Sounds like Michael Chrichton's ranting about aliens and global warming, pointing out that a lot of our mathematical equations are [Unknowable] = [Bunch of unknowable variables multiplied together]. The Drake Equation, for example, says there's as much a chance of us finding aliens or aliens existing or whatever based on how many planets there are, how many are inhabited by aliens, etc., just a pile of quantities we can't know.

I actually considered hanging lampshades on this when I described wealth and buying power--pointing out that certain relationships exist, but that they don't imply any ability to calculate any sort of meaningful metric.

Comment Re:you're both right (Score 1) 824

I said "most often repeated to dazzle small fish".

The company backing the stock is what might generate the money - stock is just a part representation of it

The money traders get by buying and selling stocks is not generated by the company behind the stock. Traders bring all the money to the table.

Comment Re:Trading one set of problems for another (Score 1) 824

Yes, the last thing about solar panels is pretty context-sensitive.

I wrote up a fully risk-analyzed, funded, well-computed Citizen's Dividend. It's essentially just replacing all our welfare (not medicare/medicaid) with an expansion of social security in which everyone starts getting paid at age 18.

The whole thing is worked off the actual market cost of everything. For example: I paid $725/mo for a 700sqft apartment, and a lot of people are paying less per square foot (I've seen rents as low as 64 cents per square foot in nicer areas, which is ludicrous). I took the $1/sqft number, computed from a market where the typical margin was 33 cents profit on the dollar, and added a 33 cent risk margin ($1.33/sqft). Worked out how to put together a good 224sqft apartment (I can do better: 100sqft capsule apartments) for $300. That means we can definitely supply this, we can supply it for a profit, and we can make an assload of money doing it.

Carry the same out for food, clothing, utilities, and so forth, and you come up with surprisingly little. After piling it all together, I added an 8% risk margin (I want a 15% margin; that will come with time) on top of the total in 2013 computations. It came out actually under $600 for the market economy to make a large profit supporting a single individual--note that's $600 per individual for merchants and landlords to make themselves rich as all fuck, not $600 for a person to go out, today, and find some non-subsidized housing and food. Because the people who pounce on setting up the infrastructure fastest will find themselves richer than Warren Buffet in about 3 years, I expect the magical hand of the Free Market will become the immensely greedy hand of give-me-that-shit-now in this particular case (in the same way I expect a cat to eat a bowl of tuna if I leave it near a thousand cats).

17% happens to be the viability number for 2013. In 1950, it'd have to be a 120%-135% income tax; obviously, that's more income than actually existed at the time, so not viable. At the time, welfare cost 1.5% (including social security OASDI). As of 2013, the total cost of welfare made up 17.2% of the total IRS reported AGI, while the total cost of a viable Citizen's Dividend came to 17%. State welfare services to support immigrants and children (neither of whom receive a dividend; it's only for natural-born, resident, adult, American citizens) would shrink to a tiny fraction of their current size, providing the risk control for obvious fallout of either eliminating such welfare or just handing out money every time people had babies (the latter strategy is not only an insanely bad idea, but an unaffordable one).

The CD gets cheaper over time, because of how wealth works (work in progress). For complex reasons, I contemplate fixing the number at 17%. The first obvious reason is to get that risk margin up to 15% (in case we have another 2007 Great Recession--the upcoming automation crisis will be worse); and the second is to ensure that, while any income represents a substantial improvement in quality-of-life, the quality-of-life of the poorest continues to improve right along with the wealth of society. I also just don't want bureaucrats and politicians tinkering.

It's fairly involved and requires a lot of transitional planning and a lot of built-in risk controls. Once it's set, it doesn't require any bureaucratic tinkering; all it takes is some administration to collect money and send out ACH, which is kind of "we keep the pumps running" and not "we decide who gets what." The fact that it's cheaper than modern welfare also helps.

Comment Re:you're both right (Score 1) 824

That's in a diversified portfolio of long-term investments

Dogma, most often repeated to dazzle small fish into thinking the stock market is a place where money is generated, instead of stolen. It's roughly equivalent to a poker table, and it's a zero-sum game. There's a great illusion where you put in a million dollars and a $5 stock with 200,000 shares issued becomes a $50 stock and woo there's ten million dollars!! ...except the other guy at the table only has the million dollars that was put into the market in the first place; you're not getting more than a million dollars by selling all your stock (the price will collapse or you won't sell it all) unless he brings another nine million dollars from outside *into* the stock market, netting $10 million in and $10 million out.

The trick is the idiot does come back with $10 million, because he sees the price going up and up, and wants in on that; you sell it back to him because you see the climb slowing and showing distress, and then it collapses and he cries and sells it back to you for $1 million, and you sell it to the next moron with $10 million in his pocket when it climbs back, and now you have $19 million in your pocket and two poor single-millionaires across the table from you.

The biggest argument against diversification isn't the most obvious. The most obvious is that investing 100% into SPY (the S&P500 tracker) is an instant diversified portfolio; as corollary, any selection of multiple securities--stocks, bonds, options (though they expire), commodities (they get delivered, so you have to keep trading contracts in practice; exchange funds that handle this for you are a close substitute)--behaves like a single security, fluctuating up and down as the market does and as their representative sectors in total do.

A diversified portfolio doesn't magically make money; it simply lowers risk. You must make good buying and selling decisions to make money. In the extreme, a single-stock strategy has the potential to gain *much* more than a diversified portfolio; it can also *lose* much more. In a diversification strategy, you try to select a bunch of securities--stocks or funds which represent a strategy (sector investment, profile investment)--based on what you think would make a good single-security investment, scaling their proportion to their relative risks versus return and your risk tolerance.

That all sounds complex, but it's easily illustrated. Let's say you think BGWNR is likely to climb sharply, making you a 7% profit in the next 6 weeks, but that it's of course more risky than SFBT which you believe is near-guaranteed to make you a 2% profit in the next 6 weeks. You have a pile of money with which to purchase these investments to fill a gap in your portfolio. If your strategy is an aggressive, higher-risk affair, you might put 75% of your money into BGWNR, and 25% into SFBT; if the market betrays you, BGWNR losses should be partially or wholly mitigated by SFBT losses, and the loss in total should be less even if both lose (because BGWNR would lose more of its value than SFBT). If your strategy is a conservative, lower-risk affair, you might put 10% into BGWNR, and 90% into SFBT, because a loss in both would be almost as small as a loss in SFBT, and a win in both would be significantly (but not greatly) larger than a 100% investment in SFBT, and a loss in BGWNR is way more likely than a loss in SFBT and so would probably leave you with *most* of the gain from SFBT if SFBT went up and BGWNR went down.

Does diversification magically mean profit? No. It means less profit, and less loss; it means you don't wake up one day finding out you got wiped out at the race track, and so can keep playing. If you're not a good trader in the first place, you might consistently lose money until you bleed to death slowly. For that matter, the market as a whole has a strong influence on individual securities: MSFT or AAPL can experience a 1.2% drop for the day for absolutely no other reason than the S&P having a shitty -3.2% day (an example of a strategy of all eggs in one basket managing better than a diversified strategy, which, again, isn't a magical rule and shouldn't be taken as an argument that one-bet-on-the-table is a good strategy, either). Your diversified portfolio should move around pretty much like everything else, just less extremely.

Long-term investments are also shit. To be more specific: buy-and-hold is shit; it's used along with diversification so that rich people can buy into small movements, hope for a modicum of stability over a much longer period than you really want to hold any security for, and then sell off and not have to pay income tax (if you hold for less than 1 year, you pay income tax--which can be 39.6% for rich people--versus 15% capital gains). Buy-and-hold is a great and powerful marketing tool used by investment funds who don't care if you make or lose money, as long as you keep it in their fund and let them suck 1% or 0.1% per year out of it.

This is why I no longer play the stock market. I made 1% per day for about a month, then decided to run as far the fuck away as I possibly can. I was waking up at 4am, checking foreign markets, checking foreign exchanges(!), checking commodities, reading news (MarketWatch, Seeking Alpha, anything eTrade brought through, anything UpDown brought through, etc.), reading charts, performing projections, manually calculating metrics (not all the metrics I use are standard-issue technical analysis), etc etc. My mind was in the stock market for 18 hours per day. Fuck that. If I'm not playing that hard, I'm just giving charity to Warren Buffet and Donald Trump; and there's no way I'm playing that hard ever again. There's nothing magic about it; it's stab-out-your-eyes obsession, and you still don't win 100% of your bets.

Maybe I'll take up day trading one day. That's much more casual, believe it or not: the exact same rules as swing trading and trend trading apply, but only over a period of hours. You don't need to make big projections, and you get much faster feedback and instant gratification; the problem is you have to invest more time (you have a few minutes of turn-around before you have to pull your investments, make shorts, buy out your shorts, make new long positions...), which, as I said, is kind of a farce when I'm spending almost zero time trading and 18 hours every fucking day researching. At least when the god damn market closes you're done day trading.

Comment Re:Trading one set of problems for another (Score 3, Interesting) 824

The first thing you do is hire manservants.

If I had $250,000/year income, I could do my own dishes, tend my own yard, and so forth. I probably would tend the bees; but I'd get out of gardening. I'd have a gardener. Someone else would clean my house.

There is no faster way to create jobs with some $200k/year of disposable income than by paying some teenage wench to clean your house, and some old fuck to tend your trees. There just isn't.

If you have millions of dollars, that's great! You can start businesses; but can you create jobs? Well, kind of. If you find a way to produce something currently in production, but with *less* labor, you can produce that product more cheaply. That means you can undersell your competition, outcompeting them, and *eliminate* jobs. More unemployed.

With more unemployed, but cheaper common goods, people generally have more money after buying all the shit they need (except the unemployed, who are struggling to get by). That means you can now spend your millions to expand some niche market--say, smart phones, which still cost $600 and bump your bill by $30/month, but now everyone has more than $600 on hand, whereas before they had the ability to spend an extra $50 on shit they wanted--and make a shitton of profit. That, of course, requires workers--this is why it costs money--so you wind up creating jobs, although only about the amount you displaced in the first place.

This is why we always have unemployment, and why population tends to expand: you create wealth by making things cheaper to produce; you make things cheaper to produce by reducing the total invested labor-hours in production. All those layers of profits added on every good (coal to make steel, steel to make bolts, bolts to make cars) are just aggregate price; bulk purchase can negotiate that down, and direct competition can force it down, but only to the aggregate human labor costs of everything put together. When you reduce the labor cost, you wind up increasing the total buying power--same number of humans produce more things, thus the same percentage of the total income (of everyone and every business) purchases more--which means you can re-employ the same amount of displaced labor (not necessarily the same people) elsewhere, and everyone can buy more shit.

It also means the cost of high amounts of production drops. Producing 10 things costs $100 per unit because of inefficient methods (you wouldn't open a million-dollar production facility to make ten chairs; you'd do it in a slow, inefficient manner that costs less than a million dollars in labor); producing producing 10 million costs $10 per unit, because you can use better methods; and then producing 10 billion starts relying on things like fertilizer and artificial irrigation to grow trees for wood, which is more expensive than simple tree farming, and so it costs $50 per unit. You can actually support a bigger population as you raise wealth in this way, because suddenly everyone can afford that $50 per unit good, since they're spending $50 less elsewhere on other goods; of course, then the population grows and keeps its 4%-8% unemployment, because low unemployment is restrictive on total population wealth and weird shit happens.

So yeah. I'd have tutors, manservants, and landscapers. I might have a purser, but uh... look, my finances are better than yours. Financial management is a side hobby that's reached such a point of acuity for me that I scare bankers and accountants. Their balls shrivel up and die when we talk. I'm hoping our interest rates will go up to 14% median on mortgages so I can start an information campaign to eliminate the 30-year mortgage, since high interest rates make 10-year mortgages accessible for most people who can afford a 30-year mortgage (you wind up only having to tip in $100-$200 more per payment, instead of $2,000+ more; and you pay overall less for the same house). I was going to kill my mortgage in three years, but decided to stretch it to four or five so I could end in a much stronger position--the kind of position where I basically buy whatever the hell I want and get *richer* by taking loans, and can retire on 5 years of savings--on a $60k (now $75k) salary; but that was handled by purchasing a lower-valued house (strategic finances).

If you're ever rich, hire yourself a purser. You definitely want somebody managing your finances. You want somebody telling you when and how to spend your money. You want someone who can say, "Hey, it's 2004, you definitely don't want to buy into this stupid solar panel fad", and then come back later like "Dude it's 2015 and the ROI on solar panels is 2.5 years instead of 19 years, and you'll eliminate a full $1,500/year out of your electric bill and draw $1,500-$2,000/year of income on top of it from energy credits. It's time to buy into this; divert your salary to your 401(k), pay yourself out of your emergency fund, and then take a $15,000 401(k) loan 6 months from now so all the interest goes back into your loan basis. Take this 30% credit and this $1,000 grant. Pay $450 for permitting and engineering." You want someone who constantly alerts you to when and how to save money and if it's a good proposition at the moment, as well as to tell you when you absolutely cannot spend money on stupid shit like a $30,000 sailboat unless you sell the RV or cancel your 4 week vacation in Japan this year.

Comment Re:Psychology more scientific than cancer studies? (Score 1) 255

Dude, the fall-out around climate science is constant.

I've had someone pull the 97% number out, and I pointed out their abstract says they started with 14,000 papers whose primary topic was climate change or global warming, and then discarded all papers which took no final position; the dude came back and said that the discarded papers weren't about climate change at all (which contradicts what the actual study says). The 97% figure also counts papers, not authors; yet it's referenced as a consensus among number of scientists--without even counting *all* climate scientists. The whole thing also ignores the valid scientific standpoint that we don't know about something--you know, like the tons of scientific papers that claim WE DON'T KNOW IF VACCINES CAUSE AUTISM, because we've seen no such evidence supporting that claim, versus the single paper that claims it does.

In the realm of actual science, we have studies for and against which tend to follow the lines of who buys the study; in reality, someone will commission 100 studies, and 99 of them will fall one way, and vanish under NDA. The last study, obviously, gets published. You don't buy results; you buy experiments which may, occasionally, produce faulty results (statistics demands this happen occasionally), and just hide all the ones that don't go your way.

We also have poorly-designed analysis, goal-driven analysis, and all kinds of other shit. Bad experiments in climate scientists aren't because climate science is hard (it is) or because climate scientists are terrible scientists (they're not), but because there's political pressure to do certain things in a certain way, limiting scope, data, etc.

On top of all of it, we have stupid shit like the IPCC coming out and saying they've faked all the data and reports for the past decades because they think if they gave us real numbers we'd think it was ridiculous. They've essentially come out to say they've claimed 0.1C jumps over 50 years when it's really more like a 10C jump over 30 years coming, just they didn't think anyone would believe the earth would catch fire spontaneously.

I haven't analyzed the numbers or taken a full assessment because it's not worth my time doing. I assert it's probably way wonkier because I know the pressures on the field and I know what those pressures do to the rightly pursuit of knowledge. I also know that, regardless of the hard truth, people will take a position based on such political (which, really, is just social) pressures that drive them into their feeling of safety and superiority; it doesn't particularly matter if they're right or wrong, in the same way that murdering someone you meet in an alleyway so you can rob them doesn't immediately become righteous because that person was just on his way from raping and drowning a small child in a nearby lake. Motives are of the mind, not of the physical world.

"The hottest places in Hell are reserved for those who, in times of moral crisis, preserved their neutrality." -- Dante