OT: Goodbye to the American Dream

[dcaster@krl.org]

On Sunday, August 30, 2015 at 10:12:21 AM UTC-4, rickman wrote:

It is really easy to get rich, but you need to start early.

Yes, the best way to be rich is to choose your parents wisely.

--

Rick

Well I did choose my parents wisely. They were not rich, but believed in giving my sister and I a decent education. And my father and I built crystal sets , and motors made of paper clips and other similar things. My father also made sure I had summer jobs every summer starting at age 16.

Dan

 

[Bill Sloman]

On Monday, 31 August 2015 01:16:26 UTC+10, John Larkin wrote:

On Sat, 29 Aug 2015 20:03:43 -0700 (PDT), "dcaster@krl.org"
dcaster@krl.org> wrote:

On Saturday, August 29, 2015 at 8:33:06 PM UTC-4, John Larkin wrote:

The rich don't get rich by being "allowed" to get rich, they formulate
a plan, take the reins, and drive relentlessly toward their goal, a
la: "Damn the torpedos, full speed ahead."

I got rich by buying stocks instead of buying new cars. Some of it was luck, but mostly just recognizing what companies seemed to have their act together and buying their stock. I bought Texas Instruments, John Fluke, IBM, Hexcel, and others. And bought S & P 500 index funds in my 401K . I also bought a little Nucor stock when it was Nuclear Corp of America. Should have lost my ass on that, but it turned out okay.

It is really easy to get rich, but you need to start early.

Dan

I don't think that buying established stocks, getting rich that way,
does society much good. Except for new issues, the stock market is
mostly a gambling pool.

People do use it that way, but the idea is to invest in a company that's doing something profitable, and collect dividends and some capital appreciation as they keep on doing it. My mother got very cross when my father refused to sell stocks in companies that looked as if they'd lost their grasp of making their activities profitable. His argument was that he didn't want to be taxed as a speculator, but what he lost of the duff companies was more than the Australian Tax Office could ever have ripped off him.

If you work for one of the blue chip companies - as he did for much of his career - the idea that a company management could lose its way was a bit hard to take on board, but he should have been quicker to see it when it did happen.

--
Bill Sloman, Sydney

 

[dcaster@krl.org]

On Sunday, August 30, 2015 at 12:05:51 PM UTC-4, amdx wrote:

It is really easy to get rich, but you need to start early.


I got my daughter fully funding her 401K and Roth starting at 23 yrs old.

Not sure how successful I will be, but I funded my niece's Roth IRA last year. She made almost $400 baby sitting , so I funded a Roth IRA for her in that amount. So far it seems to have had no effect. But what do you expect from a 13 year old.

Dan

 

[dcaster@krl.org]

On Sunday, August 30, 2015 at 12:08:55 PM UTC-4, DecadentLinuxUserNumeroUno

Yet another failure to hear those helicopter blades whooshing
overhead.

Must be because they were MILES over your head.

I think it was because they were over your head.

Dan

 

[Bill Sloman]

On Monday, 31 August 2015 01:59:15 UTC+10, amdx wrote:

On 8/29/2015 9:05 PM, Bill Sloman wrote:
On Sunday, 30 August 2015 10:33:06 UTC+10, John Larkin wrote:
On Sat, 29 Aug 2015 17:29:30 -0500, John Fields
jfields@austininstruments.com> wrote:

On Sun, 23 Aug 2015 17:12:49 -0700 (PDT), Bill Sloman
bill.sloman@gmail.com> wrote:


James Arthur's fond conviction that the rich should be allowed to get even richer at everybody else's expense is roughly what you'd expect from somebody who managed to get rich enough to retire at 34, but it doesn't seem to be a good way to generate persistent economic growth.

---
The rich don't get rich by being "allowed" to get rich, they formulate
a plan, take the reins, and drive relentlessly toward their goal, a
la: "Damn the torpedos, full speed ahead."

Some people get rich as a by-product of building things that they have
a passion for. Of course, some other people get rich because all they
care about is wealth and power. Public policy seems to favor the
latter.


Others, get rich by living on less than their income and investing the
rest in the stock market and rental properties.
When you have savings, there are great tax deductions you can use.
SEP, IRA, 401K, HSA.


You resent the rich because you didn't have the balls to go for the
prize when you could, and now it's too late for you to do anything but
kvetch about how - if you'd only been given permission - you could be
as important as your alliance allowed.

Rich people organize ordinary people to get stuff done. Humans are
tribal and need leaders.

And rich people are the only people who can defer significant
consumption in favor of investment.

I don't know why so many people resent the rich. Rich people's wealth
is mostly stock shares, which are just pieces of paper. A billionaire
doesn't eat a hundred times as much as the average person, and doesn't
live in a million square foot house.

What you snipped - without marking the snip - was

https://en.wikipedia.org/wiki/The_Spirit_Level:_Why_More_Equal_Societies_Almost_Always_Do_Better

makes the point that the rich do go around emphasizing the fact that they are richer than the rest of us, and this makes all the social gradients steeper, which doesn't seem to do anything good for the rest of us.

I'm not sure that's true.

Then you'd better read the book.

The authors - Richard G. Wilkinson and Kate Pickett - are medical epidemiologists, who apply the same statistical approach as every other serious epidemiologist.

Your list of anecdotes - which I've snipped - isn't evidence. Technically speaking, I'm a millionaire and so is my wife, and we don't go around making sociali gradients steeper either . Intellectual gradients are another story, but nobody has done any stats on them yet.

--
Bill Sloman, Sydney

 

[Bill Sloman]

On Monday, 31 August 2015 02:05:51 UTC+10, amdx wrote:

On 8/30/2015 9:12 AM, rickman wrote:
On 8/29/2015 11:03 PM, dcaster@krl.org wrote:
On Saturday, August 29, 2015 at 8:33:06 PM UTC-4, John Larkin wrote:

The rich don't get rich by being "allowed" to get rich, they formulate
a plan, take the reins, and drive relentlessly toward their goal, a
la: "Damn the torpedos, full speed ahead."

It is really easy to get rich, but you need to start early.

I got my daughter fully funding her 401K and Roth starting at 23 yrs old.

Yes, the best way to be rich is to choose your parents wisely.

Nah, that's better for determining how long you live, doesn't
necessarily have anything to do with getting rich.

That depends which country you live in. In the USA wealth is now more heritable than height. In places like Scandinavia and Germany, less so.

The statistic have been done.

https://en.wikipedia.org/wiki/The_Spirit_Level:_Why_More_Equal_Societies_Almost_Always_Do_Better

Figure 12.2 in their book is plot of how much of an American son's income is explained by his father's income, on a decade-by-decade basis.

In 1950 it was about 15% and dropped progressively to about 11% in 1980, but it was up to about 21% in 1990, and 33% in 2000.

--
Bill Sloman, Sydney

 

[dcaster@krl.org]

On Sunday, August 30, 2015 at 12:00:07 PM UTC-4, Les Cargill wrote:

The first rich person I ran into had a wedding gift of several million
1970s dollars. The whole "live frugally and become rich" thing is fine
if you're prepared to remain single and/or not procreate. Other
than that, you'll need some sort of Dutch Uncle.

I do not agree with you about needing a Dutch Uncle.

When I graduated from college , I got married , and moved across country.
I borrowed some money from a college friend for a down payment on a house , and then my wife and I both worked but lived on my salary and saved hers.

A couple of years later , it looked to me as if there were going to be layoffs, so I got a job in Alaska for a year, and got some incentive pay for doing that.

Then when the big tech slump in the early 70's ,I got work at a manufactured house company. And then when I realized that was not going to be good financially, I moved back to Washington State. And lived in an apartment for a year while I worked an engineering job and also built a house evenings and weekends.



Then since I had no mortgage, I saved 12% of my salary in my 401k plan for the next twenty years. A Dutch Uncle would have been nice, but it is not a requirement.


I did stay married and had one child. When he was one , I started a college fund for him with $1,000. And every year I contributed another $1,000. But after about four or five years , I started only putting in enough money so that the amount in the fund was the same in thousands as his age. And in another year or so , I did not have to contribute anything. When he went to college, I paid what I could out current income, and used money from his college account for the rest. When he graduated , he still had $65,000 in his account.

Dan

--
Les Cargill

 

[dcaster@krl.org]

On Sunday, August 30, 2015 at 12:20:09 PM UTC-4, Bill Sloman wrote:

What you snipped - without marking the snip - was

https://en.wikipedia.org/wiki/The_Spirit_Level:_Why_More_Equal_Societies_Almost_Always_Do_Better

makes the point that the rich do go around emphasizing the fact that they are richer than the rest of us, and this makes all the social gradients steeper, which doesn't seem to do anything good for the rest of us.

I'm not sure that's true.

Then you'd better read the book.

If you look at my past posts , you will see that I seldom emphasize my wealth and certainly do not say I am richer than the rest of us. For one thing, I worked in the Seattle area and know several of Microsoft people. And while they do not emphasize their wealth, I am sure it is more than mine. I do try to point out that one can become rich without too much effort and without needing a silver spoon.

Dan

--
Bill Sloman, Sydney

 

On Sunday, August 30, 2015 at 1:03:42 PM UTC-4, John Larkin wrote:

A salaried person can become a millionaire by careful saving and
investment, but not likely to become a billionaire.

Someone said that the best way to wind up with a million dollars is to
inherit a billion dollars. The really rich people, these days, made it
themselves somehow. Some actually did something useful.

A genius and his money are soon parted.

Cheers,
James Arthur

 

[dcaster@krl.org]

On Sunday, August 30, 2015 at 12:42:25 PM UTC-4, amdx wrote:

Sorry John, on this one I need you need to get educated.

In my lifetime (1955) the S&P 500 has went from 50 to 2100.
A 42* multiple, inflation is only a 9 multiple.
Just Dollar Cost Average into a low cost total stock market index, and
hold it until you near retirement, Then you need to back off on the
percentage of stocks**.
Rule #1 You can't time the market.
Rule #2 Don't panic and sell at the bottom of a market correction.

Mikek


Certainly agree with the above.

** You need to reduce stock exposure at retirement because the market
does go down and you don't want to withdraw living expenses from a
portfolio that has dropped 35%.

I do not agree with this. If you have enough you may not want to withdraw living expenses from a portfolio that has dropped 35%, but you can.

Dan

 

On Sunday, August 30, 2015 at 10:12:21 AM UTC-4, rickman wrote:

On 8/29/2015 11:03 PM, dcaster@krl.org wrote:
On Saturday, August 29, 2015 at 8:33:06 PM UTC-4, John Larkin wrote:

The rich don't get rich by being "allowed" to get rich, they formulate
a plan, take the reins, and drive relentlessly toward their goal, a
la: "Damn the torpedos, full speed ahead."

It is really easy to get rich, but you need to start early.

Yes, the best way to be rich is to choose your parents wisely.

Or to actually do something, earn some money, and save it.

ttps://en.wikipedia.org/wiki/Stanford_marshmallow_experiment

To get 'rich' you have to earn, live beneath your means, and save, which
used to be common, but which today many people can't do.


Cheers,
James Arthur

 

[DecadentLinuxUserNumeroUn]

On Sat, 29 Aug 2015 20:03:43 -0700 (PDT), "dcaster@krl.org"
<dcaster@krl.org> Gave us:

>I got rich by buying stocks instead of buying new cars.

It certainly wasn't from interpreting Usenet posts. Larkin did not
post that, ya dope.

 

[dcaster@krl.org]

On Sunday, August 30, 2015 at 1:12:33 PM UTC-4, John Larkin wrote:

The system is a gamble, basically a casino with a house cut. Stocks
have value because other investors think they have value. Most stocks
are morally equivalent to investing in Beanie Babies.

Not true. Stocks are not a zero sum game with a house cut. Stock are a game where on average every one gains.

IPOs and later rounds of new investment help companies grow. Trading
established shares don't, at least not directly.

How many IPO's would manage to raise any money if the shares could never be sold? Being able to buy and sell shares of established companies is an essential. Without that there would be no IPO's.

I'd rather invest in my own company, where I can try to make sure it's
going to be productive, create products and IP and jobs.

I understand the feeling. But even if you are an owner , investing in the company that you work for has some risk. If the company does poorly , you may be out of work at the same time when your investments go south.
Not saying it is wrong, but it is riskier that having some money invested outside your company.

Dan

 

On Sunday, August 30, 2015 at 11:16:26 AM UTC-4, John Larkin wrote:

On Sat, 29 Aug 2015 20:03:43 -0700 (PDT), "dcaster@krl.org"
dcaster@krl.org> wrote:

On Saturday, August 29, 2015 at 8:33:06 PM UTC-4, John Larkin wrote:

The rich don't get rich by being "allowed" to get rich, they formulate
a plan, take the reins, and drive relentlessly toward their goal, a
la: "Damn the torpedos, full speed ahead."

I got rich by buying stocks instead of buying new cars. Some of it was luck, but mostly just recognizing what companies seemed to have their act together and buying their stock. I bought Texas Instruments, John Fluke, IBM, Hexcel, and others. And bought S & P 500 index funds in my 401K . I also bought a little Nucor stock when it was Nuclear Corp of America. Should have lost my ass on that, but it turned out okay.

It is really easy to get rich, but you need to start early.

Dan

I don't think that buying established stocks, getting rich that way,
does society much good.

I think it does. If you had zero chance of ever selling your house you'd
have a lot more trouble buying one, getting a loan, or ever justifying the
decision.

Likewise for buying part-ownership in a company. There'd be almost no original
investors if they had no possibility of selling. An active market in parts of
companies--shares--assures the possibility of selling out when you want to.

I don't see anything harmful in buying a tiny part of a company you think is
good, to gain a claim on some part of its fortunes.

Except for new issues, the stock market is
mostly a gambling pool.

Certainly, many treat it that way. The Feds consider it one more way to
manipulate the economy (by making investors think they're richer).

Cheers,
James

 

[dcaster@krl.org]

On Sunday, August 30, 2015 at 1:20:40 PM UTC-4, John Larkin wrote:

Sure, but stocks have a higher value mostly because other shareholders
think they do. Some popular stocks are in companies that don't make
money and probably never will.

Can not agree with that. Generally stocks have a higher value because the company is making more money. The Price to Earnings ( PE ) stays roughly the same. Like anything sentiment does have an effect.

Can you name any companies that are popular and do not make money. There are some, but not many.

Dan

 

On Sunday, August 30, 2015 at 12:44:12 PM UTC-4, dca...@krl.org wrote:

On Sunday, August 30, 2015 at 12:00:07 PM UTC-4, Les Cargill wrote:


The first rich person I ran into had a wedding gift of several million
1970s dollars. The whole "live frugally and become rich" thing is fine
if you're prepared to remain single and/or not procreate. Other
than that, you'll need some sort of Dutch Uncle.

I do not agree with you about needing a Dutch Uncle.

When I graduated from college , I got married , and moved across country.
I borrowed some money from a college friend for a down payment on a house , and then my wife and I both worked but lived on my salary and saved hers..

A couple of years later , it looked to me as if there were going to be layoffs, so I got a job in Alaska for a year, and got some incentive pay for doing that.

Then when the big tech slump in the early 70's ,I got work at a manufactured house company. And then when I realized that was not going to be good financially, I moved back to Washington State. And lived in an apartment for a year while I worked an engineering job and also built a house evenings and weekends.



Then since I had no mortgage, I saved 12% of my salary in my 401k plan for the next twenty years. A Dutch Uncle would have been nice, but it is not a requirement.


I did stay married and had one child. When he was one , I started a college fund for him with $1,000. And every year I contributed another $1,000.. But after about four or five years , I started only putting in enough money so that the amount in the fund was the same in thousands as his age. And in another year or so , I did not have to contribute anything. When he went to college, I paid what I could out current income, and used money from his college account for the rest. When he graduated , he still had $65,000 in his account.

None of the wealthy people I know had Dutch uncles. All were first-generation,
and earned every penny.

Cheers,
James Arthur

 

[rickman]

On 8/29/2015 11:03 PM, dcaster@krl.org wrote:

On Saturday, August 29, 2015 at 8:33:06 PM UTC-4, John Larkin wrote:

The rich don't get rich by being "allowed" to get rich, they formulate
a plan, take the reins, and drive relentlessly toward their goal, a
la: "Damn the torpedos, full speed ahead."

It is really easy to get rich, but you need to start early.

Yes, the best way to be rich is to choose your parents wisely.

--

Rick

 

On Sunday, August 30, 2015 at 1:20:40 PM UTC-4, John Larkin wrote:

On Sun, 30 Aug 2015 11:42:15 -0500, amdx <nojunk@knology.net> wrote:

On 8/30/2015 10:16 AM, John Larkin wrote:
On Sat, 29 Aug 2015 20:03:43 -0700 (PDT), "dcaster@krl.org"
dcaster@krl.org> wrote:

On Saturday, August 29, 2015 at 8:33:06 PM UTC-4, John Larkin wrote:

The rich don't get rich by being "allowed" to get rich, they formulate
a plan, take the reins, and drive relentlessly toward their goal, a
la: "Damn the torpedos, full speed ahead."

I got rich by buying stocks instead of buying new cars. Some of it was luck, but mostly just recognizing what companies seemed to have their act together and buying their stock. I bought Texas Instruments, John Fluke, IBM, Hexcel, and others. And bought S & P 500 index funds in my 401K . I also bought a little Nucor stock when it was Nuclear Corp of America. Should have lost my ass on that, but it turned out okay.

It is really easy to get rich, but you need to start early.


Dan


Except for new issues, the stock market is
mostly a gambling pool.


Sorry John, on this one I need you need to get educated.

In my lifetime (1955) the S&P 500 has went from 50 to 2100.
A 42* multiple, inflation is only a 9 multiple.

Sure, but stocks have a higher value mostly because other shareholders
think they do. Some popular stocks are in companies that don't make
money and probably never will.

It's important to distinguish actual value from a company's stock price.
The actual value is essentially your owner's share of a company's future
profits.

There's an enormous amount of noise and emotion, and unwarranted change in
*price*. That's not the same as the actual, objective, underlying value.

Just Dollar Cost Average into a low cost total stock market index, and
hold it until you near retirement, Then you need to back off on the
percentage of stocks**.
Rule #1 You can't time the market.

Sometimes you can.

*That's* gambling, agreed.

[...]

What dissapoints me is that our capital-intensive economy favors the
prople who can invest, and greatly favors the wheeler-dealers and
brokerages, and destroys small companies and working-class jobs.
Because Wall Street runs Washington.

When the king's offices (e.g. HHS, EPA, IRS) control companies, companies
lobby the king. Have to. When the govt's main function is looting, then
distributing the loot, everyone wants to (has to) play.

That favors big companies / established players. They lobby and get rules good
for themselves and bad for would-be start-ups.

The internet offers a potential Renaissance of small enterprise, but the
fat-headed socialist control-types prevent it. Just try filling out your own
IRS form 1095-B this year (small business employee Obamacare insurance return).

Federal over-spending is the root cause of Obama's stock-pumping wealth-transfer
program. Washington's borrowing to keep the lights on, can't afford real
interest rates, and so is forced to keep rates artificially low. Zero interest
rates on savings drives people into the stock markets (to avoid losing money to
inflation).

The big political movers these days seem to be ex-speculators
(including ex-Nazis) and former hedge fund managers, parasites in my
book.

Cheers,
James

 

[rickman]

On 8/25/2015 8:57 PM, amdx wrote:

My house dropped in value by 1/2,

Is that including the absurd doubling in value (or more) in the few
years immediately before the bubble burst?

--

Rick

 

[krw]

On Sun, 30 Aug 2015 10:37:40 -0400, rickman <gnuarm@gmail.com> wrote:

On 8/25/2015 8:57 PM, amdx wrote:

My house dropped in value by 1/2,

Is that including the absurd doubling in value (or more) in the few
years immediately before the bubble burst?

Not relevant to his point.

My current house has gone up about 60% from what I paid, to about
where it originally sold in '07. Are we in another "absurd doubling
of value" bubble?