Skip to main content

View Diary: Wealthy ready to sacrifice for their country (111 comments)

Comment Preferences

  •  There is a correlation between wealth (17+ / 0-)

    and knowledge of economics and how the government contributes to the wealth of the nation.

    That is, educated people who have money are much more likely to realize that persistent deficits are corrosive, that tax cuts don't come close to paying for themselves, and that destroying safety nets is a net loss for the economy.

    In short, they are not going to make good Republicans. The GOP base is people who aspire to be wealthy but lack the necessary education to achieve it, being exploited by a few ruthless billionaires.

    In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

    by blue aardvark on Mon Sep 27, 2010 at 07:23:11 AM PDT

    •  they've also been much more exposed... (2+ / 0-)
      Recommended by:
      Calamity Jean, blue aardvark

      to what happens when you have a government that refuses to police fraud (Greenspan believed that governments shouldn't do so, that the "market will figure it out") - you create markets that nobody dares trade in but sharks.

      Which most of us support with tax deferred retirement plan contributions, btw. Our own little foreign aid package to the Cayman Islands.

      •  My 401(k) (3+ / 0-)
        Recommended by:
        RJDixon74135, papicek, billmosby

        is entirely in bonds, and is likely to remain so invested for the most part. I don't like trying to time this market at all.

        In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

        by blue aardvark on Mon Sep 27, 2010 at 07:35:50 AM PDT

        [ Parent ]

        •  I was afraid of bonds for a while, (3+ / 0-)
          Recommended by:
          neroden, papicek, blue aardvark

          but my adviser convinced me that the interest paid during the wait for bond prices to fall (and there are some bond funds that are paying more than zero, lol) will probably make up for the 10 percent or so decline that will come when rates rise again. I waited in cash for some months and decided like you that trying to time it is futile. Or at least  not terribly necessary, anyway.

          Moderation in most things. Except Reactors. IFR forever!

          by billmosby on Mon Sep 27, 2010 at 07:41:58 AM PDT

          [ Parent ]

        •  Every now and then there's an ad on DKos (2+ / 0-)
          Recommended by:
          papicek, blue aardvark

          from some bank bragging about the "High-Yield" account now paying a whopping 1 and 3/4% APY.

          Spray tons of carcinogens into the ocean to hide petroleum spewed from a hastily-drilled hole from a greedy corporation, but don't smoke pot.

          by xxdr zombiexx on Mon Sep 27, 2010 at 07:57:06 AM PDT

          [ Parent ]

        •  Be careful with the bonds... (1+ / 0-)
          Recommended by:
          papicek

          When interest rates rise, the price of bonds go down.  So your initial principal is at risk.  Personally, I think an all bond portfolio is VERY risky...since there is nowhere for interest rates to go but up.

          •  I am aware of the pricing relationship (1+ / 0-)
            Recommended by:
            papicek

            between bonds and interest rates. If bonds are readily available paying 5% then bonds which pay 3% are sold at a discount on their face value such that the actual return is 5%, and so on.

            Being fully aware of that, I do not choose to invest in equities at this time. My expectation is for the Federal Reserve to not only keep interest rates low for at least another year, but to purchase bonds to keep rates lower still.

            In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

            by blue aardvark on Mon Sep 27, 2010 at 08:15:04 AM PDT

            [ Parent ]

          •  Only if you get a bond fund.... (0+ / 0-)

            It's much safer to get individual bonds and hold to maturity.

            -5.63, -8.10. Learn about Duverger's Law.

            by neroden on Tue Sep 28, 2010 at 12:12:13 AM PDT

            [ Parent ]

        •  read Burton Malkiel's (2+ / 0-)
          Recommended by:
          Calamity Jean, chipmo

          A Random Walk Down Wall Street if you still have funds invested anywhere. The upshot of it is, you could make a lot of money in stocks, or not. You might get lucky, but that's all it is. Whatever you try to do to maximize your returns is likely to wind up costing more than what you get out of it as a market timer.

          He opens stating that a blind monkey throwing darts could perform as well as the best investment advisor, then spends the rest of the book documenting where this has been shown. I know of at least 3 instances in the past 70 years where this has been demonstrated and the results are consistent: random picks perform just as well, sometimes better. Doesn't matter if you are a chartist (like bonddad), values investor (like I was), market timer (like I was), etc.

          Henry Working (IIRC) demonstrated this in the 1930's. Paul Samuelson testified before congress about his random walk experiment in the 50's, the WSJ ran a monthly series for a few years back in the 90's: 4 dart picks vs 4 picks from 4 different investment advisors.

          Same results every time: random picks performed at least as well.

          Market fundamentalists have seized upon this as "proof" of the efficiency of markets, but they aren't even trying to make the link because it's impossible to do so. The reasons why are described in detail in William Poundstone's Priceless: The Myth of Fair Value: people do not possess an innate ability to determine what fair value is, and a susceptible to external stimuli which can be (and are) deliberately manipulated.

          It appears that buying a broad index fund (like Vanguard's S&P 500 index fund) and holding it through thick and thin appears to be the only statistically proven investment strategy. Even so, market-machos like John D. Markman are out there advising people to take on greater risk over which they have no control whatsoever. What Markman really hates are "passive" investors who don't generate fees.

          That's the best information I have to offer right now. Investing is a gamble.

          •  My 401(k) does not charge a fee (1+ / 0-)
            Recommended by:
            papicek

            when I reallocate, but I am limited in the number of reallocations I can make per year.

            I think that on the macro level the market can be timed. Which is to say, in a bad year, invest in bonds. In a good year, go to a mixed portfolio.

            This is a bad year.

            In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

            by blue aardvark on Mon Sep 27, 2010 at 08:17:37 AM PDT

            [ Parent ]

            •  you are paying (0+ / 0-)

              "maintenance fees" I'll bet. There you are. At some point, somebody is paying a fee for this, your trading house isn't administering this fund for free, be certain.

              •  Yes (1+ / 0-)
                Recommended by:
                papicek

                I see withdrawals on a quarterly basis.

                Less than 0.1% per quarter.

                In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

                by blue aardvark on Mon Sep 27, 2010 at 08:25:20 AM PDT

                [ Parent ]

                •  better than my 401k... (1+ / 0-)
                  Recommended by:
                  neroden

                  which was quite a bit higher. That being said, they basically made no money for me, my balances, in every fund and sector as well as in total, accurately reflected the sum of my contributions. No more.

                  This was in a bull market, too.

                  Digusted, I paid the penalty and cashed out.

          •  OK, see, *some* people can beat the market (0+ / 0-)

            John Maynard Keynes did, consistently.

            But this is how it works.

            If you are not clever enough to beat the market consistently, you are also not clever enough to tell whether someone else is clever enough.  (In fact, you may have to be smarter in order to oversee an investment advisor than you have to be to manage investments yourself.)

            Accordingly it is practically impossible to hire an investment advisor effectively.  If you could find a good one, you could do the job yourself, just as well.

            The only people who can hire investment advisors successfully are those who could beat the market but are too busy to do so, because they have so many other marvellous skills.  (How many of them are there?)

            Accordingly, your average investment advisor can charge the same whether competent or not.  :-P  

            And of course the moment you hire an advisor you're paying a fee, and then even if your advisor does better than the market, he has to do better than the market PLUS the fee, and you get the picture.

            Now, how does this apply to mutual funds?  Suppose you're a mutual fund manager who can really beat the market.  Suppose further that you are that rare bird who can do better than the market plus your fee costs.  You quickly have your strategy hammered by tracking inflows and outflows.  Then you get too big to carry out your strategy any more (since the most successful "active" strategies involve finding companies nobody else "noticed").

            Then you try starting a hedge fund with strictly limited investment so as to avoid both of these problems.  (Of course, the fact that none of your clients can tell you from any charlatan is still true.)

            -5.63, -8.10. Learn about Duverger's Law.

            by neroden on Tue Sep 28, 2010 at 12:20:38 AM PDT

            [ Parent ]

    •  Good post, blue aardvark (4+ / 0-)
      Recommended by:
      DBunn, Calamity Jean, blue aardvark, Siri

      My take is this:

      -- Most of the very well off know that if we raise taxes, the dollar will be on a stronger footing, the country will be better off, and they will make more money as a result.

      In fact, if we continue the tax cuts for the rich, the rich will lose more than they gain, because the borrowing costs from the Chinese, Saudis etc will go up, triggering higher interest rates, runaway inflation, and a really bad time for the USA.

      I have no idea why the timid Dems don't bring up this argument.

      I think I understand why the media don't do so, they have been so dumbed down that they cannot even look out for their own interests as high net worth individuals.

      That's why I get my news from the Internet. Mainstream media is worse than useless, they are corrosive.

      •  If you are rich you want the USA to do well (5+ / 0-)

        If you are uber-rich you don't care, as your capital can be moved from country to country freely.

        In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

        by blue aardvark on Mon Sep 27, 2010 at 08:26:36 AM PDT

        [ Parent ]

        •  People forget that that voting base out there (1+ / 0-)
          Recommended by:
          blue aardvark

          possesses common sense and decency when it has the information to work on. That common sense and decency seems to be waking up, before the election, and doing the good things it does, of which this is an example, instead of being buried in social issue and bigotry red herrings, a possibly unintended consequence of Rs initially trying to run not on those as their core this year but on economics. Every last person knows you get rid of your debt/deficit, by paying it.

          •  The counterintuitive nature (0+ / 0-)

            of economics is actually a problem here.  Everyone knows you get rid of your debt by paying it... unfortunately that's not always the right thing for the money-printing government to do, which is why Keynesianism is so difficult to explain to people.

            -5.63, -8.10. Learn about Duverger's Law.

            by neroden on Tue Sep 28, 2010 at 12:22:15 AM PDT

            [ Parent ]

    •  My conclusion, too, blue aardvark (2+ / 0-)
      Recommended by:
      Calamity Jean, blue aardvark

      The GOP base is people who aspire to be wealthy but lack the necessary education to achieve it, being exploited by a few ruthless billionaires.

      How else can one explain uneducated hillbillies with the bare rudiments of indoor plumbing being concerned about the marginal tax rates of people making more than $200,000 per year? (Before anyone goes ballistic, I know that some poor hillbillies are  educated, too.)

      Maybe we should focus more on the correcting the BS surrounding 15% capital gains rates or the multimillion dollar exemptions in the estate tax structure.

      Men never do evil so completely and cheerfully as when they do it from religious conviction -- Pascal

      by RJDixon74135 on Mon Sep 27, 2010 at 08:34:06 AM PDT

      [ Parent ]

    •  Nicely summarized, couldn't agree more (1+ / 0-)
      Recommended by:
      Calamity Jean

      When we file jointly, we nudge upwards of $250,000 in AGI.  We are more than willing to have the amount above that taxed at a higher rate.  Glad to see this poll that shows we are not alone.

    •  Absolutely correct, Mr. Aardvark. (0+ / 0-)

      A fair number of wealthy people are in a position to recognize that good government is necessary for them to retain their standard of living.

      Then there are the sociopaths like the Koch brothers, naturally.

      -5.63, -8.10. Learn about Duverger's Law.

      by neroden on Tue Sep 28, 2010 at 12:11:31 AM PDT

      [ Parent ]

Subscribe or Donate to support Daily Kos.

  • Recommended (143)
  • Community (70)
  • Memorial Day (28)
  • Elections (26)
  • Environment (26)
  • Civil Rights (26)
  • Culture (25)
  • Media (25)
  • Law (24)
  • Science (23)
  • Trans-Pacific Partnership (22)
  • Labor (21)
  • Economy (20)
  • Rescued (20)
  • Josh Duggar (20)
  • Marriage Equality (18)
  • Ireland (17)
  • Education (17)
  • Republicans (17)
  • Climate Change (17)
  • Click here for the mobile view of the site