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Ceciltron posted:What I don't get is why people are convinced that it makes sense to just throw money at something and assume that these funds will go to work and earn more money for you. Holy poo poo. Come visit us in BFC. You have a lot to learn.
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Jan 5, 2015 17:19
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Rick Rickshaw posted:Holy poo poo. Come visit us in BFC. You have a lot to learn. On the plus side, it now makes a lot more sense to me why people are sour as gently caress about capitalism when they purposefully avoid one of the main tools it gives you to make money, because it's some kind of risky voodoo.
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Jan 5, 2015 17:36
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sauer kraut posted:How would the average or even somewhat informed citizen do that when the stock market is just as bubbly/detached from reality, and every safe bond is hovering around -0.1% yield? A good start would be the cessation of whining and joining us in the Canadian investing thread perhaps? 
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Jan 5, 2015 17:37
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PT6A posted:On the plus side, it now makes a lot more sense to me why people are sour as gently caress about capitalism when they purposefully avoid one of the main tools it gives you to make money, because it's some kind of risky voodoo. Holy poo poo is that ever true.
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Jan 5, 2015 17:38
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http://mobile.bloomberg.com/news/2015-01-05/canada-homebuyers-joining-real-estate-doubters-nanos.htmlquote:
Yet another meaningless poll from a canadian polling company which can't poll its way out of a wet paper bag.
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Jan 5, 2015 17:52
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PT6A posted:On the plus side, it now makes a lot more sense to me why people are sour as gently caress about capitalism when they purposefully avoid one of the main tools it gives you to make money, because it's some kind of risky voodoo. Not only that, but many people avoid saving all-together (aside from their house equity  ) because they don't see how their money could make them rich even if they manage to not spend it. So when folks go to weigh the "well if I buy a pool now, I'll be happy now" vs the "if I save this money now, I'll be happy later", the former wins. At least our fellow Canadagoon here is advocating saving something.
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Jan 5, 2015 17:55
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Cultural Imperial posted:http://mobile.bloomberg.com/news/2015-01-05/canada-homebuyers-joining-real-estate-doubters-nanos.html
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Jan 5, 2015 18:06
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Yeah, it's a real mystery why everyone doesn't just invest their savings into S&P 500 trackers. Well, unless they have debts to pay off, but obviously you do that before investing. And really, who has debt these days? Not like taking on debt is important or useful at all. Of course, many poor people have enormous credit card debt, payday loans, that sort of thing. But that's entirely due to spending on flatscreen TVs (source: anecdotes told in BFC) and certainly doesn't represent a perfectly rational way of smoothing consumption when you have a low income and few assets. Well, and of course everyone should also be maxing out their RRSP/TFSA/401k/TLA contributions prior to investing in the stock market. But seriously, who can't afford to do that? Nobody PT6A or Rick Rickshaw knows, that's for sure. Yep, I'd definitely say that if everyone invested properly, they'd all have more money. If only because you need to have more money in order to invest properly.
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Jan 5, 2015 18:08
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Guy DeBorgore posted:Yeah, it's a real mystery why everyone doesn't just invest their savings into S&P 500 trackers. Note that the original post had nothing to do with debt and literally said "stuff your money under your mattress".
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Jan 5, 2015 18:12
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Guy DeBorgore posted:Yeah, it's a real mystery why everyone doesn't just invest their savings into S&P 500 trackers. I know a lot of people who have debt, a lot of whom make way more money than I do, because they just won't stop buying stupid poo poo, and think they need more house than they can afford (and, of course, badly want to own that house instead of renting it). Also, how are "investing in the stock market" and "contributing to RRSP" mutually exclusive? Shares are an approved asset for RRSPs, so it's possible to do both at once. The TFSA contribution limit is $5500, and I agree if you can't max that out, you probably don't have enough money to risk any in the stock market. But I'd also say that if you have a good amount in savings already, you might as well use some of your money in a growthier proposition than having it linger in a savings account, whether it carries tax advantages or not.
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Jan 5, 2015 18:20
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computer parts posted:Note that the original post had nothing to do with debt and literally said "stuff your money under your mattress". No it didn't, it said "don't expect anything of your investments." Which might well be sound advice for someone lured by tales of easy 8%/year returns: don't expect much, because 2% of that's going to inflation and another 3% to various middlemen. Anyway multiple people took that as an opportunity to weigh in that poor people wouldn't be so poor if only they had more investments.
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Jan 5, 2015 18:20
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Guy DeBorgore posted:Yeah, it's a real mystery why everyone doesn't just invest their savings into S&P 500 trackers. There is also an issue with financial literacy which is only taught by some parents or miserly people driven enough to care.
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Jan 5, 2015 18:34
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OK, here's another way of putting it: y'know how a couple pages back I ruffled a bunch of feathers by saying that bankers aren't particularly greedy, they're just rationally responding to structural incentives that favour an overgrown/underregulated finance sector? Well that sword cuts both ways. It's not like poor people are mentally incapable of properly responding to economic incentives. There's a huge number of studies done on the poorest of the poor showing how they behave very rationally, even when that results in counterintuitive behaviour. For some people, hyperbolic discounting is perfectly rational. Heck, for some people, the lottery really does represent their best chance of getting rich. People are poor for structural reasons and behave differently as a result. To listen to the BFC crowd, you'd think it worked the other way around. There's no evidence for this whatsoever. The closer you look at "irrational" spending decisions, the less irrational they seem. The person who would be perfectly well-off if they weren't wasting a chunk of their paycheque simply disappears the harder you look for them. edit: I seriously will start a finance thread at some point and stop derailing this one. I do like following the housing news here, I just don't know enough to contribute! edit2: OK, last thing before I have to run to class. "Rational" in economics doesn't mean "dying with the most money possible," it means "being as happy as possible under the circumstances." A TV is probably the cheapest way to entertain yourself in today's society, and poor people do in fact have leisure time (often much more than rich people!). So spending half your paycheque on a flatscreen TV might be a very sound investment indeed. Guy DeBorgore fucked around with this message at 18:51 on Jan 5, 2015 |
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Jan 5, 2015 18:44
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Guy DeBorgore posted:OK, here's another way of putting it: y'know how a couple pages back I ruffled a bunch of feathers by saying that bankers aren't particularly greedy, they're just rationally responding to structural incentives that favour an overgrown/underregulated finance sector? Well that sword cuts both ways. It's not like poor people are mentally incapable of properly responding to economic incentives. There's a huge number of studies done on the poorest of the poor showing how they behave very rationally, even when that results in counterintuitive behaviour. For some people, hyperbolic discounting is perfectly rational. Heck, for some people, the lottery really does represent their best chance of getting rich. People are poor for structural reasons and behave differently as a result. But none of that will change any time soon which is why all the BFC advice accepts this reality as a baseline and assumes that you are wise enough to see it and take the latter path. Canada is barely holding on as a social democracy but your criticisms would be more appropriate for some of the other more politically oriented D&D threads. cowofwar fucked around with this message at 18:56 on Jan 5, 2015 |
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Jan 5, 2015 18:53
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Guy DeBorgore posted:No it didn't, it said "don't expect anything of your investments." Which might well be sound advice for someone lured by tales of easy 8%/year returns: don't expect much, because 2% of that's going to inflation and another 3% to various middlemen. It said "just save your pay" which is going to have 2% eaten up by inflation by default.
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Jan 5, 2015 19:02
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computer parts posted:Note that the original post had nothing to do with debt and literally said "stuff your money under your mattress". No one has ever said that. A (admittedly low-interest) savings account is the infinitely preferable solution to running the odds of losing a third of your equity on a market crash (like my parents did in 2008) (and the early 2000s) (and so on). I just think that it's possible to live a pretty good life by saving carefully and not relying overmuch on things like RRSPs and pensions, because they can and will all be put to the axe once austerity is done butchering this country.
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Jan 5, 2015 19:14
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Ceciltron posted:No one has ever said that. A (admittedly low-interest) savings account is the infinitely preferable solution to running the odds of losing a third of your equity on a market crash (like my parents did in 2008) (and the early 2000s) (and so on). You sound like my dad. He is a modest, admirable man who avoided over-consumption all of his life, but never made any attempt to figure out investing, and doesn't understand how I could possibly sleep at night with my money in the market. Did your parents happen to sell their remaining two-thirds of their equity in 2000 & 2008? Because that would be a problem. Holding during those downturns, instead of selling, would present no problem at all.
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Jan 5, 2015 19:22
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Ceciltron posted:No one has ever said that. A (admittedly low-interest) savings account is the infinitely preferable solution to running the odds of losing a third of your equity on a market crash (like my parents did in 2008) (and the early 2000s) (and so on). With the central bank's key rates at 0-1% and inflation remaining at around 2% you actually cannot maintain the purchasing power of your savings after inflation. Even good five year GICs are only matching inflation. So for young people who will be working for another thirty years they should not touch GICs, have an emergency account with a couple months expenses and invest the rest in index tracking funds.
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Jan 5, 2015 19:22
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And all of you wonder why I'm so bitter about motherfuckers cruising around in new bmws making it rain with their HELOCs.
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Jan 5, 2015 19:31
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Rick Rickshaw posted:You sound like my dad. He is a modest, admirable man who avoided over-consumption all of his life, but never made any attempt to figure out investing, and doesn't understand how I could possibly sleep at night with my money in the market. Oh, they've held on, it's just the value is gone -I'm not their financial planner, I don't know the details. Their utmost confidence that they will ever recover what they lost (they are now approaching what they initially put in) without trouble and that the past won't repeat itself scares the crap out of me. I'm glad the house has been paid off for a long time. cowofwar posted:You only lose on market crashes if the issuing company goes bankrupt or you sell your shares. Everyone that stayed in the market has seen overall positive returns after the market rebounded. Read the long term investing thread. See, here's the disconnect. I don't really care (to the same extent) about maintaining purchasing power. My purchasing power now is a reflection of my salary - (my expenses+my savings goals). I don't expect to maintain the same standard of living when (and if ever) I (have the chance to) retire. My hope is to survive in my old age, and I certainly don't have any illusions about spending it in exotic locales and "finally doing all the stuff I wanted to do before". Given that I can't predict what will happen tomorrow, much less 30-40 years from now, putting money in investments with the hope of having them grow in time for my retirement reeks of hubris.
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Jan 5, 2015 19:31
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Guy DeBorgore posted:OK, here's another way of putting it: y'know how a couple pages back I ruffled a bunch of feathers by saying that bankers aren't particularly greedy, they're just rationally responding to structural incentives that favour an overgrown/underregulated finance sector? Well that sword cuts both ways. It's not like poor people are mentally incapable of properly responding to economic incentives. There's a huge number of studies done on the poorest of the poor showing how they behave very rationally, even when that results in counterintuitive behaviour. For some people, hyperbolic discounting is perfectly rational. Heck, for some people, the lottery really does represent their best chance of getting rich. People are poor for structural reasons and behave differently as a result. You can basically make anything rational by cherry-picking the utility function. And the idea that most humans are 'rational actors' was pretty thoroughly destroyed by Kahneman and Tversky.
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Jan 5, 2015 19:35
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Kafka Esq. posted:You are the most sour person when it comes to anything Canadian it is truly fun to watch. It's his (other) gimmick, and he's more-or-less said as much. It adds flavour to the thread, and there's not much point in calling him out for it. I mean unless that's your gimmick, in which case 
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Jan 5, 2015 20:17
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blah_blah posted:You can basically make anything rational by cherry-picking the utility function. And the idea that most humans are 'rational actors' was pretty thoroughly destroyed by Kahneman and Tversky. True, but I don't think these are big problems for my argument. To the first point- I think people deserve the benefit of the doubt; if there's a plausible set of preferences which makes someone's actions rational, we should probably assume they're acting rationally. So cherry-picking is justified to an extent. To the second point, my understanding is that the irrational behaviours economists refer to is universal, "part of human nature" so to speak, and not a result of poor education or a lack of individual self-discipline or whatever. I don't think there's any evidence that the degree to which a person acts rationally is an important determinant of their wealth or income. But I know very little about behavioural econ so I might well be wrong here.
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Jan 5, 2015 22:50
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Talking with my friends who bought a house, the guy basically told me I might as well buy a house because "his mortgage is only double what we pay for rent right now in our apartment" Oh only double? Allow me to jump right in then!
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Jan 5, 2015 22:52
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Guy DeBorgore posted:To the first point- I think people deserve the benefit of the doubt; if there's a plausible set of preferences which makes someone's actions rational, we should probably assume they're acting rationally. I don't think that this follows in the slightest. In fact, I think that the above belief is an extraordinary leap of logic.
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Jan 5, 2015 23:07
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blah_blah posted:I don't think that this follows in the slightest. In fact, I think that the above belief is an extraordinary leap of logic. That's a bit unfair. The "plausible set of preferences" qualifier makes it a far more reasonable statement.
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Jan 5, 2015 23:46
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Guy DeBorgore posted:Yeah, it's a real mystery why everyone doesn't just invest their savings into S&P 500 trackers. Mainly because stocks despite beating inflation in the long term are very volatile in the short term investment window. For example in the USA you had whole decade of negative or flat stock price growth like in the 70s/50s before getting another bull market. In my case I have cash socked in safe CDs and the rest "fun money" gets invested in a pile of index funds. I also keep a decent portion socked away in a 60 bond/40 sock split lower risk investment account. I would like to add that people in general seem to really fixated on real estate being the "best" investment despite past history. Don't get left out! etalian fucked around with this message at 00:25 on Jan 6, 2015 |
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Jan 6, 2015 00:21
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Guy DeBorgore posted:OK, here's another way of putting it: y'know how a couple pages back I ruffled a bunch of feathers by saying that bankers aren't particularly greedy, they're just rationally responding to structural incentives that favour an overgrown/underregulated finance sector? A working poor person who buys a TV on credit rather than saving/investing is a totally different thing than the banker whose actions made irresponsible and/or predatory lending commonplace and resulted in a large chunk of the population being set back years financially. Its an apples to oranges comparison at best so cherry picking per se can't be done here.
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Jan 6, 2015 01:44
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PC LOAD LETTER posted:You ruffled feathers with your nonsensical 'don't hate the player hate the game' stuff + by trying to massively downplay the responsibility the bankers had in engineering the run up and bust and who got fleeced by both events. Rationality wasn't the issue. Yeah the US bankers threw basic things like comprehensive underwriting in the trash since they just wanted to make more money and in other cases did outright through through the clever bundling of subprime mortgages into safer investments trick
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Jan 6, 2015 03:21
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http://www.cbc.ca/news/business/record-1-8-million-vehicles-sold-in-canada-in-2014-1.2890326quote:Chrysler Canada sales were up 12 per cent in 2014 and General Motors sales up six per cent in a year that set a record for Canadian car sales. 
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Jan 6, 2015 06:10
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etalian posted:Mainly because stocks despite beating inflation in the long term are very volatile in the short term investment window. This is what you're actually supposed to do, while switching more and more of your money to bonds (or other stuff that's stable and at/above inflation) as you age. Cultural Imperial posted:http://www.cbc.ca/news/business/record-1-8-million-vehicles-sold-in-canada-in-2014-1.2890326 It would be really funny if this was what kickstarted the economy.
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Jan 6, 2015 06:12
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Time to give CBC some credit since their top story for most of the day has been dear Canadians, you are all going to be screwed by the end of year.
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Jan 6, 2015 08:10
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Nah we'll be fine. The Harper Government has started an ad blitz saying you can now get $4000/semester in student loans to complete a trades apprenticeship. It's also the first time I've seen a new slogan "Strong. Proud. Free." so it's possibly a hint of what we'll see in the upcoming election campaign.
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Jan 6, 2015 09:14
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less than three posted:Nah we'll be fine. The Harper Government has started an ad blitz saying you can now get $4000/semester in student loans to complete a trades apprenticeship. It's also the first time I've seen a new slogan "Strong. Proud. Free." so it's possibly a hint of what we'll see in the upcoming election campaign. That's the laziest, most derivative slogan that they could ever come up with for USA Jr.
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Jan 6, 2015 11:13
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Check out CBC's article "Sell the house? 4 ways Canadians can prepare for an interest rate hike". The suggestions are pretty sensible: pay down debt, lock in borrowing rates, don't buy a house so you won't be priced out, and try to sell a house you cannot afford, but the comments are priceless, with people saying that CBC is fear mongering and shouldn't be using tax payer money to give fonancial advice. A few of them are plain "stop talking!!!" from denialists, and many of them blame young people for the mess they're inheriting haha
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Jan 6, 2015 14:52
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eXXon posted:Time to give CBC some credit since their top story for most of the day has been dear Canadians, you are all going to be screwed by the end of year. No argument a slow and steady rise in interest rates would gently caress a lot of people, but I also think the historical precedent of Canada following US rate rises is about to go out the window. The US is back on the rails and a lift in rates is absolutely called for. Canada looks like it's going to get worse before it gets better. The Canadian fed has demonstrated pretty clearly that they won't raise rates purely because of any housing bubble(s), mostly because it'd really gently caress the fragile economy in general and they also need to pay close attention to the loonie.
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Jan 6, 2015 15:27
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Saltin posted:No argument a slow and steady rise in interest rates would gently caress a lot of people, but I also think the historical precedent of Canada following US rate rises is about to go out the window. The US is back on the rails and a lift in rates is absolutely called for. Canada looks like it's going to get worse before it gets better. The Canadian fed has demonstrated pretty clearly that they won't raise rates purely because of any housing bubble(s), mostly because it'd really gently caress the fragile economy in general and they also need to pay close attention to the loonie. Yeah they are basically committed to the whole credit bubble at this point, raising rates would torpedo the economy given the debt load your average Canadian.
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Jan 6, 2015 15:41
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How effected would the US/rest of the world be if Canada's bubble collapsed?
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Jan 6, 2015 15:46
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computer parts posted:How effected would the US/rest of the world be if Canada's bubble collapsed? From a market cap perspective Canada only makes up 3% of all the equity in the world since it's not a exactly a larger scale economy like Japan, China or the USA.
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Jan 6, 2015 15:48
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computer parts posted:How effected would the US/rest of the world be if Canada's bubble collapsed? Not at all. The global reaction would be to shrug and go "eh, sucks to be Canada right now I guess."
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