And anyone who thinks they can consistently predict who will be among the 4% is... mistaken. Diversification is how one manages risk when a system has a power law distribution of outcomes.
Trying to beat the market is playing a zero sum game. Someone has to lose for you to win. I understand savvy winners add information, but most winners are just lucky and it still makes me uneasy to play a zero sum game.
When you simply try to match the market, you float on the tide that mostly raises all boats and sometimes lowers them. That sits much better with me.
Yes, my understanding is that the cost of missing out on those companies that are providing the returns is much more costly than investing in a company that is NOT generating those returns.
In other words, the risk is to miss the winners, not that you will invest in a loser.
The problem is that it is very hard to predict the winners, so it is best to invest in all companies to make sure you have the winners
Banks are not taking huge losses because a huge fraction of loans to PE work out.
Imagine believing PEs are just constantly scamming banks out of their money. Yeah sure.
Its just that people have this carricature of PE in their head plus we are on HN where there are a huge fraction of Dunning-Krugers when it comes to topics about economy. Thats why you get these internally inconsistent arguments
Banks aren't the primary lenders to PE firms, but yes, the general PE business model for debt-financed acquisitions is entirely premised on using the collateral of acquired businesses to take out loans to pay themselves "dividends" and then letting the business fall into bankruptcy. This has been covered in extensive detail by WaPo, WSJ, The Economist, and the NYT. Mark Levine has some good articles on this.
It's okay for you to admit that you don't understand how PE firms work. I've been on both sides; as their tax advisor and at a PE-owned company and I've got firsthand experience with it.
I only contest the claim that lenders are the dumbasses that keep on taking losses. It's nonsense.
Despite having been a tax advisors apparently you don't understand that. That is suprising. Kinda shows that your role doesn't necessarily translate into knowledge about how companies operate.
My claim is not that lenders are dumbasses that keep taking losses, that's your claim.
Lenders are not some homogeneous static group like you imagine them to be. There are many different kinds of lenders (including "creditors" that lend no money at all), and there are constantly new lenders coming into the market all the time, many of whom are not yet sophisticated enough to grasp the risks of lending to PE-owned companies.
My claim was that individual lenders either stop lending to PE firms outright or jack up the interest they charge to PE owned businesses once they have suffered PE-related losses of the kind I described above.
Lending is about risk management, and interest rate pricing is based on the estimated risk of a loan not being repaid. PE-owned companies are considered extremely high risk by most lenders due to the types of shenanigans PE firms pull on a regular basis. It can take over a decade for a PE firm to develop the reputation that would allow the companies it owns to get debt financing on terms anywhere close to what a non-PE-owned company can get. This is part of what killed Toys'R'Us; the interest it had to pay for its debt financing post-PE acquisition exceeded was materially greater than the interest it paid for the same amount of debt financing prior to the acquisition.
As a followup, Saks declared bankruptcy this week, after a sequence of events that began with their PE investors ladling up Saks with debt to pay themselves dividends, added more debt to acquire another company (which resulted in the PE firm getting paid management fees for the "successful" acquisition), and then spun out the debt-ridden conglomerate so it was no longer their problem. In this case, the financial institutions that funded the PE shenanigans mostly got paid off after Saks had to sell one of its most valuable, landmark locations a few weeks ago. The "lenders" that got screwed this time were their suppliers that provided them inventory on credit (like Chanel, etc). Many of them had already stopped providing new inventory to Saks due to the unpaid balances.
Look you keep putting words in my mouth in a quite rude fashion.
You make this situation confusing by basically arguing against a strawman. Where did I say lenders are a homogeneous group? Where did I say that lenders dont understand risks and interest rates? Im pushing back against the prevalent notion that PEs are somehow hoodwinking lenders into constantly taking losses. Its not happening. Thats it. Feel free to show me data that proves otherwise.
If you just want to do a monologue about PEs and their shenanigans then please by all means do so but dont do it as a reply to my comment. Thank you.
If the wealth tax rate is close to zero, who the hell cares?
The wealth tax in e.g. Kanton Zürich is 0.025% (not the cheapest Kanton).
If you are able to grow your capital at - say - inflation corrected 4%, which shouldn't be overly hard, and you pay no taxes whatsoever on cap gains while paying 0.025% on the total accumulated wealth.
I'll let you do the math as to how good you have it there.
The highest marginal wealth tax rate in Zurich is 0.47% and 0.9% in Geneva starting at 2-3mn CHF. It's not irrelevant at all
If you now earn 4% on your capital and pay 0.9% wealth taxes that is like a 25% tax rate on your unrealized gains. Inflation is close to zero anyway and interest rates are negative.
Obviously I prefer that system because we can compound essentially tax free to a couple of 100k before having to think about taxes.
No, because they are not exactly correlated with your gains. For what it's worth, you could have an unrealized deficit but still owe taxes. That's why it's a wealth tax and not unrealized gains tax.
Real estate is included in that wealth, of course. And it has a different tax treatment than "usual" stock market gains.
There's no contradiction between year-over-year growth and nine months of economic decline; year-over-year figures also average in the three months before those nine. Six months, if you are looking at YoY figures for June.
However, I may have been tricked. https://www.indec.gob.ar/uploads/informesdeprensa/pib_09_250... says the official statistic is that the de-seasonalized GDP grew 0.9% in the first quarter and fell 0.1% in the second quarter, so even if the third quarter is down (the official statistics aren't out yet) it's only the second consecutive quarter of negative growth on a cyclically adjusted basis.
I can't find the non-cyclically-adjusted data.
0.8% growth for the first half of the year is very far from "rebound[ing] pretty spectacularly" but it's no recession. But it all depends on whether the 3Q results are -0.9% or +0.9%. Maybe they'll release the report now that the election is over.
Just to clarify, that's an increase of 0.8%, not annualized 0.8% growth. Annualized it would be 1.6%, which is below the long-run post-Industrial-Revolution average of around 3%, but far from the immediate catastrophe Fernandez and his economy minister Massa had perpetrated before Milei came to power.
For the very simple reasons I explained in https://news.ycombinator.com/item?id=45719672 it looks to me like Milei is further hollowing out the Argentine economy. I'm no professor of economics, so my understanding of these issues is highly oversimplified, so I could be wrong.
The south-americans are surprisingly patient. The Argentinians elected Peronists for decades with the unsurprising outcome of decline and ultimately high inflation.
> Quota tracking when using docker subvolumes is basically unusable due to the btrfs-cleaner "background" task (imagine VSCode + DevContainers taking 3m on a modern SSD to cleanup 1 big docker container). This is on 6.16.
I had to disable quota tracking. It lags my whole desktop whenever that shit is running in the background. Makes it unusable on an interactive desktop.
The good news is that not all that '1% of the rich' are leaving. However unless this 28% of all tax figure is wrong, inevitably there will be an increase to counter the loss.
The outcome is not as clear as you make it to be. The Norwegian wealth tax hike resulted in a loss of about $600mn of tax revenue. We will see at which point the british will end up on the laffer curve.
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