Bailing out companies keeps people in jobs & backstops the assets that comprise retirement/pension systems, both of which keep people in their homes. You could find ways of keeping more people in their homes but they’d almost certainly include bailing out companies, it’s easy to implement and cost effective.
One does not simply become a citizen, most have to convert from a work visa to a permanent visa (requires wait time + process), and then more wait time before being allowed to apply for citizenship. So there’s workers at twitter who can’t merely say “the boss is crazy, I’m out of here”. They have to line up another job and get their visa in order before they can go. No one is asking you to care or treat people differently, though people might judge you based on the thoroughness of your understanding & compassion for the situation.
Because there was the specter of a protracted legal battle to close the Twitter acquisition and that risk (of both time and result) was priced into a 25% discount on the acquisition price. That’s why the stock bumped to 50 on the acquisition news and fell off as the deal became imperiled.
You can balance the real dual-interests at play here through progressive taxation, allowing for transfers of wealth that only marginally accelerate society-wide wealth disparity. The slaves/serfs lingo is a little stretched when it applies necessarily to other people, and those other people have had their entire lives to benefit from the wealth of the other person anyways.
Please tell me, how is one supposed to engage with the "argument" that their personal experience and resulting belief is a "propaganda driven falsehood." That's not an argument, it is pure name calling, and doesn't even make sense as this person seems to be basing their beliefs on direct experience from their own professional life.
1. Not labeling people who disagree with you as “part of a professional managerial class” / people who don’t want to work (propaganda)
2. Actually citing personal experience (just saying you have personal experience isn’t a debate/argument)
> Not labeling people who disagree with you as “part of a professional managerial class” / people who don’t want to work (propaganda)
I see, you get to label others with pejoratives like "propaganda", but others are not allowed to respond in kind with labels of their own. Seems a bit one-sided.
The iShares S&P 500 ETF has returned about 11.6% annualized over the past ten years. Their Ex-US ETF: 2.8%.
Point being: the third variable no one ever takes into account when considering Buffett's advice: "just invest in broad market indexes" literally only works in the US, and only has worked historically. It's not a coincidence that the US is the youngest developed economy on the planet.
In other words: How high would US stock returns have been if interest rates were near-0% throughout the 1900s? Have interest rate adjusted returns actually decayed in the past ten years? How long before the US stock markets stop behaving "historically" and start behaving "globally"?
I'm not asserting entire bearishness on the us economy. The US is still the nerve center of global finance, software technology, education, retail spending, every economic metric you look at the US leads in. That doesn't disappear. Just that: the story of the next twenty years may be the US financial indicators trending more toward historical global norms.
On the contrary; that's a component of my entire argument.
The US and the concept of a developed economy both started at Square 1 around the same time. That's a huge structural advantage. Developing or selling some new technology? No laws. Let's write one; with the input of the businesses doing the development. Other companies had to update their infrastructure over time; we green-fielded it. Much cheaper. Opening a factory? Take a thousand acres of land in the west, no one is using it, take it. Raw materials? An entire content worth of them, virtually untouched by the natives.
Those are all structural advantages which helped fuel the hyper-accelerated growth the US experienced throughout the past two centuries.
And the broader point is, every day that goes by everyone gets older; including the US itself. New businesses contend with more laws and regulations. Infrastructure was built without a plan for how to pay for its maintenance. The land is claimed, and the new owners want a million bucks for it.
That's the reversion to the global mean; that now, we're dealing with a lot of the same shit everyone else is and has been for centuries.
I can't find a good chart for this but the GDP of the EU and the US were almost at par until 2008, after which there was a massive decoupling. The main difference in the EU's and US's response is the level of austerity each engaged in. The US's response, while certainly not ideal, was significantly better than the EU's response.
>> The tax system and other incentives lead people to not really work their hardest and best, and this propagates all the way to the stock indexes
I used to be a believer in this. But I recently moved from Sweden to UK, from a very socialist country to a very capitalist one.
In capitalist societies people live in survival mode. This doesn't work well in every profession, especially managerial roles become very predatory. It does work well in tech/individual contributor roles though.
Some mundane tasks that are needed for tech development to go smoothly over long periods of time, is easier to manage in socialist Sweden. Whereas in UK, I suspect in US too, people tend to gloss over mundane managerial processes/goals like scrum, roadmap planning, business goals etc.
Maybe it only works in the US equity markets, but that's not "only works in the US" -- the S&P 500's companies are: not all based in the US, and in total derive only 75% of their revenues from outside the US.
For reference, the US share of world GDP is about 25%.
It would not surprise me at all if the most scalable, profitable, and growth-oriented companies ended up on the S&P 500 regardless of where in the world they started or where their revenues originate.
I'm not saying anything about interest rates -- your point there might be spot on -- but US stock markets have huge global exposure, and your implied assertion that there's some kind of "global" benchmark equity growth rate doesn't seem that sound.
The point he's making, which is well known, is that while in the US stocks and index funds derived from them dominated all other forms (bonds, real estate, etc), it's almost never the case in any other developed country. For most of the recent past (recent meaning the last century), putting money in index funds would have been suboptimal in almost every country out there.
The fact that the companies get a lot of their revenue from other countries is moot. In those countries, investing in index funds is not the highest performing long term investment.
My post was in response to the prior poster's claim that US exceptionalism here doesn't have a clear rationale, and that one might expect some sort of "reversion to the mean" where "mean" there is the performance of broad equity markets in other countries.
In my post, I'm saying that one shouldn't expect that broad markets indices to grow comparably in other countries, and the fact that they don't says little about how well they do/should/will perform in the US.
Hm, but we've had zero interest rates that entire time so shouldn't we have expected even higher returns? E.g. what would the 90s have looked like with zero rates?
Lowering rates will give a boost to the stock market in the short to medium term. In the long term, returns will settle closer to the interest rate in question (plus a risk premium). See: Japan over the last couple of decades.
It is kind of interesting how this was the core observation of Keynes. It isn't capital that dominates the markets it is money.
According to classical economics people either spend or save, there can be no such thing as indecisiveness or paralysis. What this means is that a too low interest rate would immediately cause inflation and therefore result in a higher nominal interest rate because the rate of capital formation is too slow.
In practice we haven't observed any capital shortages that weren't the result of a one off event. The interest rate appears to be the only barrier and the return on capital followed it in countries excluding the USA.
And by that thinking, if we could only manage historical averages during pronounced low interest rates, what does it say about the prospect of returns for the next few years?
“Things were different before the wars in Iraq and Afghanistan. In those days, sailors were required to train for a regular Navy profession, known as a rate, before they could attempt the SEAL course. Dropouts from the course could return to the rate they had trained for.”
Pre-2006 you’d basically do as you suggested, you’d make it into intelligence/nukes/etc. and then you’d try out for SEALs. Now you play a <1-in-10 lottery where you have to avoid an overzealous training instructor kicking you while lugging a 300lb log amongst other challenges. If you don’t make it you complete a filler job class under SEALs and you’re stuck.
You’re straw-manning this issue & the challenges detailed. SEALs is hands-on work, no one is making an “I’m-too-good” argument because they went to college. There’s people who almost made it through SEALs who would be immense assets elsewhere in armed forces — and prior to 2006 they would have been.
Berkshire had a (especially relative to the market) very good year and it’s the highest weighted constituent in XLF. Also a lot of the active fund companies had this same sort of trend where they went about 2x in market cap in a 12-16 month period in 2020-2021 and then gave about half the growth back (or more) in 2022.
Corresponding index to the fund, usually called the benchmark. US Large cap mutual funds commonly compare against sp500. A small cap index might compare against Russell 2000. MSCI has a number of all-world indexes that a global fund could compare to.
