afriendlydebate

DCA is a relatively expensive hedge against volatility that ignores inflation risk. Pretty much all you should care about is optimizing around taxes, which is a question you should pose to an accountant since it's very specific to your financial situation.

If you behave ideally then yes, 100% in equities seems to be the optimal solution. The advice comes from the fear that people won't do that. Even the academics that research optimal investment behavior didn't all pile into the stock market in 2009, which was the buying opportunity of a lifetime (and academics have tenure which makes them nearly immune to job loss risk). Similarly, a lot of well educated fund managers were selling in 2008 and 2009. So what are the odds that your grandma was going to calmly hold in the midst of such a crisis?

Now the thing that most people who aren't already retired might not have appreciated is that bonds are also risky, just in different ways. If you treat your bonds like stocks, you would have suffered a pretty serious setback in 2021-2022. Most of the reason people criticize the heavy equity allocation is because of a "forced" over-selling event, which can happen just as easily with bonds. the difference is that you have to keep selling at a loss with bonds whereas equities tend to bounce back rather quickly.

So it's mostly behavioral, and since even experts don't behave all that optimally it might be a reasonable recommendation. Then again, behavioral recommendations tend to feel pretty arbitrary and flip flop depending on when/who you ask.

The simplest version: Inflation is a decline in the value of money itself (1 dollar = 2 apples vs 1 dollar = 1 apple on all goods simultaneously). what causes it is too much money chasing too few goods.

This is a supply and demand argument: whether it be apples or oil, when we have a lot more of something (supply) vs the current demand, they get cheaper. Furthermore, if I know that there's going to be a lot more apples on the market tomorrow, I'm not so keen on paying a higher price today even though the apples arent actually there yet. Well the same must be true for money itself. If there is a lot more money supplied than the demand for it, then its value must go down at some point.

There are easy examples to understand like Zimbabwe: productivity was falling (fewer goods) and rather than fix the productivity issue the government tried to just print enormous amounts of money. So the supply of money was up, and furthermore the rate of printing meant that people knew the supply would continue to go up relative to the amount of goods available. This lead to a feedback loop where people knew that more printing was coming, so would try to get goods instead of money as often as possible, which drives down the supply of available goods and drives up the prices, which causes the government to print more, which convinces people even more that they shouldnt hold on to the money and should exchange it for goods asap, ETC. The chaos lead to even less real goods being produced (how do you go out and do your job if you need to renegotiate your salary every single day), which also pushed up prices.

So we know that just continuously printing more and more money does cause inflation for various reasons. The finer details are really complicated and not agreed upon.

Where it gets complicated: what is the "supply" and "demand" for money in the modern age? I've been alluding to this idea that the supply of money has something to do with the government printing it and the demand for it has something to do with the amount of goods in an economy, but there's very little agreement in the world of economics about how this all really works in modern economies. Most transactions in an economy like the US dont involve money that the government has printed, it's largely credit. All physical dollar bills could disappear tomorrow and most transactions could continue on as if nothing happened because we have checks and credit cards (not saying there would be no effect, just that there could be no effect). Furthermore, governments like the US dont print all that much money, they mostly sell bonds in exchange for money that has been previously printed. These layers and layers of complications makes the real mechanics extremely unclear. What we do know is that when prices on everything goes up and stays up, that's inflation.

Calling a quant fund secretive for not sharing it's strategy is like calling me secretive for not sharing my SSN and address openly. It's sort of the nature of the thing that you don't broadcast it.

Yeah it is a relatively good choice if you want to use the same thing for everything.

It has some low vapor pressure oil in it, it is not 100% low vapor pressure oil. The stuff that evaporates will do so rather quickly regardless of where you use it.

Sounds exactly like a leaking drain. Drains have a "trap" underneath them that holds water permanently to prevent sewer air from coming up the drain (google search "p-trap", there are different kinds but this is the most common). If the trap itself is dried out or damaged, or the drain line is damaged somewhere, you get this smell that, depending on where you live and whatnot, ranges from super musty to outright sewage. If you have a basement you can go around the house pouring water into drains and then going downstairs and checking for leaks. Similarly, if you have any drains you dont use those could have simply dried out.

The reason the smell gets worse when you open the windows is that the sewer/ground is usually colder than your house so you create a kind of warm air "suction" effect where air gets drawn up, warms in your house, then leaves through the windows, drawing more air up behind it.

Alternatively you might have a crawlspace under some part of your house that houses plumbing which is broken and dumping waste in there. I've seen that create a similar effect since it still involves a broken drain but it isnt as clearly foul because there isnt a direct connection to the living space usually.

It is a lubricant. It's just oil. It's a particular mixture of oil, but it's just oil.

The key difference between products like wd40 and 3-in-1 is the type of oil. WD40 is paraffinic, 3 in 1 is naphthenic. At a very high level, it's mostly a temperature/environment distinction: paraffins will generally harden at low temperatures and become waxy (paraffin wax sound familiar?) and naphthenic oils will tend to get runny at high temperatures. So use WD40 in warmer environments like indoors and 3 in 1 in colder environments like outdoors (if you live in a cold climate). This is a huge generalization but for ordinary use cases it really doesn't matter that much. All you need to know is that the reason wd40 seems to randomly disappear is largely because it got cold and flaked away.

Also solvents dont just magically remove things: if I dissolve an oil with alcohol, and then the alcohol evaporates, the oil will still be there. Lubricants often are solvents because you dont want them to form a sludge (oil mixed with things that dont dissolve into it).

We digitized it through debt. Every time you swipe your credit card, you now owe the issuer that money (debt). The issuer does not immediately mail an envelope full of cash to the shop, it records the debt the issuer now owes to the shop. At the end of the day, all transactions are "settled" meaning the various banks and issues get together (digitally and largely automatically) and figure out how much money to transfer between each other. The shop just gets the money in their bank account, which is just digital. Incidentally, your bank account is technically "debt" that your bank owes you.

There are many systems that work this way, and if you chase the thread you will eventually get to banks all showing up at some clearing house like the Federal Reserve in the US and settling with each other. Technically, none of this needs cash that has been physically printed to run; everybody can just keep saying "now I owe you" and the next day "now you owe me".

Many of these systems actually predate the digital age and used to be just massive amounts of paperwork.

There are very few substitutes for lived experience.

Also, assuming Mom isnt financially literate enough to put it in an inflation indexed bond or whatever you prefer, what are the odds her (probably teenage) son is?

The Emperor Hadrian, they say, struck one of his slaves in the eye with a stylus; and when he learned that the man had lost his eye because of this wound, he summoned the slave and allowed him to ask for a gift which would be equal to his pain and loss. When the slave who had suffered the loss remained silent, Hadrian again asked him to speak up and ask for whatever he might wish. But he asked for nothing else but another eye.

Broadly speaking, the reason is that direct dividend payouts are tax disadvantaged even if they go directly into another stock or venture. There's also empire building for leaders and stuff like that, but that's more individual psychology stuff.

To explain further: every company should turn some kind of profit (it's the incentive to do things in the first place, you get more out than you put in to compensate you for your trouble). In a perfect world, a company would then make a decision: is there room to grow in our market or should I return the profits to owners (investors)? If there is room to grow, they reinvest their profits internally and next time there are more profits. If not, then they give the profits back to the owners, who then invest it in different ventures (since if they wanted the cash, they could have just sold their shares at any time).

But we don't live in that world. In our world, because of tax write offs and variable income, it's rather important that I get cash at a time of my choosing. I want to time the payout of my stock so that I pay less income tax. So if my stocks hand me a check, that money is automatically worth, say, 30% less to owners on a weighted average basis. 30% is a LOT to lose. If a cash payout is worth 30% less, then the decision of "can the company just keep growing?" becomes much, much more favourable. Even if it gets to the point of the company just going out and haphazardly buying companies in other industries hoping for some wins. The key distortion is that I don't get taxed on stocks I hold on to, but I do get taxed if I try to take my profits and own another stock.

This is just sort of the high level view. There are lots of complexities that I glazed over (like the fact that there are many stocks that do pay cash dividends). If you want to move one step further and ask "shouldn't opportunities [to invest] in general eventually run out due to finite resources?" Yes, that is possible, but realistically that limit is either centuries away or not there at all due to space travel. Remember, our physical resources stopped being a hard limit on our economies when we entered the digital age. We couldn't build an infinite amount of cars but we can effectively build infinite amounts of software.

The answer to pretty much any proposal like this is cost and feasibility. A blimp-type turbine is hypothetically an interesting idea but has not been done economically yet. Fusion reactors are hypothetically interesting too, but havent been economically done. When you are talking about superstructures on the scale of the US energy grid, "interesting" is about 50-100+ years away from "viable replacement". Electrical grids are incredibly complex and very expensive so you need robust and inexpensive solutions if you want to overhaul them.

To answer your question about helium, technically hydrogen is the answer but you are going to have a hard time convincing the FAA to let you put hydrogen filled blimps up all over the place no matter how reasonable your design is. The optics are bad and the government doesnt like bad optics no matter how sensible the math is (see nuclear power).

Yeah you cant have an overhang if these all nest and you want consistent tread depth. The key is that you are manipulating depth of the treads when you move them to non-concentric positions (concentric is about the centers of circles/arcs lining up, not radius; i can draw any size of circles I want and have the same center. If the circles arent concentric, then the distance between them [tread depth] changes depending on where I measure it). When you overlap your "tops" with the overhang, you are moving their centers away from each other (you can use your strips to verify this: tape them or whatever to the edge of the tops, then overlap the tops: the strips now point to different locations for the center). So your options are:

1. Match the tread depth to the "tops" so the "tops" stay concentric.

2. Figure out the overhang you want, then figure out the math of how deep each tread of each stringer should be and cut accordingly. Remember, the depth is going to vary as a function of position as well so this will likely be messy if you dont CAD it out.

Your problem is that they'd have to be deeper steps (same depth as the "tops") if you want this to line up nicely. You are taking a smaller radius and moving it "inside" of a larger radius (making them not concentric any more). Alternatively you can cut complex stringers.

Draw/Cut out two circles, one smaller than the other. Center them, then move the smaller one to the edge/beyond to see the phenomenon at work. If they are concentric then you can do what you are trying to do, but otherwise the distance from the edge of one circle to the other is not constant.

Microwaves produce light at a particular wavelength. There are things that absorb it well and things that don't. It's no different from sunlight on various surfaces. Asphalt might get super hot, but sand and concrete aren't exactly cold either.

Economies operate on an equilibrium, so nothing can really happen without a reaction. In general, the government can't precisely predict what the correct price is for say, bread, and therefore they set the price target wrong. Typically, if you're doing price controls it's because you want them to be lower, so typically the number is too low. When the price is too low, supply drops (because less people want to/can profitably produce bread). When the supply drops, there are shortages. When there are shortages, the government either pulls back (wasting the whole point of the exercise) or subsidizes production. Subsidizing production tends not to be perfectly precise either, and spending more resources on something than you had to probably causes inflation, because society is channeling more resources towards bread which inherently pulls resources from housing, transportation, etc.

Basically lots of things can go wrong. What exactly goes wrong and how it ties to inflation is really hard to anticipate and handle. Again, these are complex, equilibrium systems so trying to force a particular outcome is like trying to push a bowling ball up a hill with the wrong end of a broom. Odds are at some point the bowling ball is going to get away from you and if you are lucky it just ends up where you started after all of your effort.

The lesson from history is that it is a lot easier to just lower the barriers to making bread if you think the current suppliers are just lazily extracting value from consumers. If there are monopolies or other market distortions then deal with them at the root cause rather than treating the symptoms.

The value of money is arbitrary over the long term. A dollar 100 years ago was worth ~20x as much, but daily wages were ~1/20 of what they are now (very roughly, it's a complex topic when you get into the details).

In terms of what people do when the number gets too big, they tend to just change the unit. It's not exactly the same, but when the euro was introduced, the Italian Lira was worth ~1/2000 of a euro. So a convenience store would be filled with price tags in the thousands. After the euro was adopted, the price tags changed back to single digits. No real value changed, they just changed units essentially. This actually happens progressively too. Countries where 1 unit of currency isnt very valuable just increment in 10s or 100s instead (whatever multiple is most useful). 1 USD may be worth 200 japanese yen, but all that means is that there's basically nothing on the store shelves that sells for a single yen.

The reason we care about inflation is because of shorter term problems. For example, high inflation forces everyone to update prices frequently, and updating prices is not simple. Remember, when we measure inflation, we look at changes in prices, so the people who are changing the prices cant just go look up inflation and punch that number in (because the prices havent changed until said persons change them).