If I ever become a bilionaire, or frankly just get a little more than I have now, my next move is: RETIRE.
What the hell is wrong with people like Buffett? He knows he can't buy more time in this life. Same with all the psycho billionaires. Why not give someone else a chance Boomers?
This assumes the purpose of life is to do nothing, that sitting on a beach forever is somehow heaven. Not everyone sees life that way (interestingly such views of work = hell is probably negatively correlated with success).
That's practically a tautological argument though. People who don't like expending a lot of effort on certain things will necessarily have less success at performing said things.
And people will also necessarily have different preferences on how to spend their time and energy, and different amounts of time and energy as well.
Would also like to point out that "sitting on a beach forever" is not the negation of spending all your time an energy on solving the problems that the capitalist economy rewards.
There's plenty of people out there who have a passion for things that aren't expected to earn money, but for whom the best option for actually making money is something that's quite boring.
Someone recently pointed out to me, that if your idea of bliss is to just lounge and do nothing, you might be depressed. Certainly if you hate what you're doing so much that the best thing you can think of is to do nothing, Office Space style, that is a pretty bleak outlook.
I think the point with being able to lounge forever is that you're free to pursue whatever interests you have. You're not shackled by having to make ends meet, so your passion projects don't have to suffer.
Who said anything about "doing nothing"? Retiring is not the same as doing nothing; in particular, retiring does not necessarily imply only "sitting on a beach forever".
There are people for whom life means more than just work, and for whom the end of working does not mean the end of living.
For what it's worth, turk73's attitude regarding work only being a means to earn money is just as misguided and narrow-minded.
Retiring is about finally doing something purely out of personal interest, rather than for enough profit to pay your bills.
Sitting on a beach forever is okay, if you like that sort of thing. It's also okay to write a novel that no one will ever read, or to crash remote controlled helicopters and then repair them. It's also okay to plant a hummingbird, butterfly, and honeybee garden, and buy a big macro lens. Or maybe ride a motorcycle all over the continent. Or move to Florida and do Florida things. Or move to Wyoming and manage a herd of 15 cattle on a plot that the real ranchers call "Flyspeck Ranch". Or open an ice cream shop that turns a profit only 20 days per year.
Retirement is as varied as the people who are no longer bound to conform to a work standard.
It's a shame to see a community so enthusiastic about hobbies and open source and self driven personal improvement to vote up a notion that not working = doing nothing, and that wanting to retire is a view that "work = hell" and is "negatively correlated with success." Retiring isn't to do nothing. Retiring is to uncouple my productivity from the economic value I produce.
I think what some people are missing here is that, for people like Buffet, the stuff they do for work IS their "hobby".
Try this thought exercise: if you suddenly became a billionaire, and didn't need to work for a paycheck any more, would you continue to write software (I'm assuming you're a developer like most on here)? Personally, I would. I probably wouldn't do it 8 hours a day, but I'd find some fun project to work on, and spend some time on that. It'd be my hobby, when I'm not doing something else I enjoy like traveling or skiing or whatever. I didn't get into this field just for the money, I did it because I like computers.
Buffet likes investing. What else is he going to do with his spare time?
I wish there were more part time opportunities for professionals. Yeah, I'd keep doing ML (my day job), but I wouldn't do it 8 hours a day. Unfortunately, nearly all of the ways to to do it require that it's either a fulltime job or not a job at all. If there were a way to work 4 hours a day, or 8 hours a day 9 months of the year or something, turning off my email/slack/meetings outside that window, I'd be all about that. I'd love to slowly retire, putting in less and less time every year.
But the job market doesn't seem to support that, so it's full time or no work for me (unless I put in the huge effort to build up a freelancing portfolio, which doesn't seem to be as much of a job market in ML yet?). Given the choice, I'd choose no work, and make my own work for fun.
Maybe you should look into some other kind of programming hobby? Any why can't you do ML on your own anyway? Does it require too many computational resources? (serious question, I know almost nothing about the field)
Personally, I could easily work on some kind of OSS project if I suddenly found myself with lots of free time. I can do C, C++, Python, etc., so it wouldn't be hard for me to find an existing project to contribute to, or make my own.
I think I was unclear. We're in agreement. I already do plenty of it in my spare time, like you suggest, and I'd love to expand the spare time stuff. What I was trying to add was that since I'd prefer to do it less than 40 hours per week, I wish there was a paid way to do it less than 40 hours per week. The status quo doesn't have much room for paid part-time work in this line of business, and that makes me sad.
And depending what you're doing, it can require ridiculous computational resources (like hundreds of thousands of dollars to train a model), but that's far from the norm. If you aren't trying to advance a couple particular states of the art, you can get by with a fancy computer and patience, or a pretty reasonable AWS/GCP bill, probably comparable to any other fairly expensive hobby.
I agree about the part-time thing too; considering how much of a skills shortage the industry is constantly crying about, and how well-paid developers are (which means that, if they live frugally and don't have kids, they don't really need to work to retirement age if they don't want to), it really should be possible to have part-time positions for people who want to stay current and work on interesting problems but not have to dedicate themselves to it full-time, and not be stuck only doing OSS stuff (which is great, of course, but not really doable with some fields).
Most (all?) Billionaires get there due to immense drive, and possibly a need to succeed. You can't really turn that off - there is always more to do, or even more success.
That said, someone like Bill Gates is probably closest to what you are describing. After making billions didn't retire, but moved from making the money to making the money work for humanity
Bill Gates and Warren Buffet apparently know each other pretty well, maybe they can even be called friends, and Buffet trusts Gates enough to give his foundation $3.6 billion.
Imho the Netflix documentation "Inside Bill's Brain: Decoding Bill Gates" is worth watching for a variety of reasons.
very successful people tend to either like what they do or at least enjoy being busy. it's not really about getting more money, although if you enjoy business, money is one of the main indicators of success.
If you have played poker for 40 years, why not just stop.
What the hell is wrong with poker players? They know they can't buy more time in this life. Same with all the psycho bowlers in bowling alleys. Why not give someone else a chance Boomers?
I don't know how you can think 3. is true. There are many situations that increase wealth without making the world a better place. For instance he could wage a war, turn war prisoners into slaves and take their land. He would be very wealthy but it wouldn't make the world a single bit better.
The reason why trickle down doesn't work is because there is no accountability. There are good and bad ways to make money but trickle down doesn't make that distinction.
I can't tell if you're trolling or just naive, but negative externalities exist everywhere.
A ton of people are getting wealthy providing American taxpayers the "valuable" service of for profit prisons and border detention facilities, Russian taxpayers the "valuable" service of foreign election interference, British taxpayers the "valuable" service of EU trade negotiations, Chinese taxpayers the "valuable" service of total surveillance ..
And of course in the private sector there's client change denial, GHG emissions ("clean coal"), the opioid crisis, medical bankruptcies, data breaches, propaganda, lobbyists, ...
It's in fact incredibly easy to see why "people" value "bad" things - because many people don't see the same things as bad.
That people value different things is an important insight. It's the fundamental reason why trade creates wealth, for example.
We agree that people can acquire wealth in ways that hurt others. I think that's different from saying the wealth itself is bad, but that's perhaps splitting hairs.
Crimes and externalities are real, but they're also very manageable with good legislation, and I think all experience is that the enormous accumulation of wealth since the Industrial Revolution has been the best thing that ever happened.
I don't let the minor imperfections distract from the awesome big picture!
I have my doubts about 3. I am not sure if these guys really “generate” wealth but more concentrate it on themselves even at the expense of others. I am sure e-commerce would have taken off without Bezos and we would have computing without Gates. Maybe in a different shape but not necessarily less or worse.
Then you believe in some form of pre-destined, zero-sum world, which is totally legitimate, but I personally don't believe and find sad, as it makes a lot of life look pretty pointless, if true.
I believe that a lot of people provide value to the world. I also believe that some people have the ability to concentrate the value provided by a lot of people on themselves and benefit more than they deserve based on the value they provided themselves.
Does this make sense? In short, a lot of billionaires benefit much more than they deserve at the expense of others who get less than they deserve.
It's easy to armchair a retirment, but the reality is that for many they become bored. When you retire you get to do what you want and enjoy as a focus, Mr Buffet enjoys his work and ventures, and dare say that had he put his feet up and stepped away at the first opertunity when he was rich enough decades ago, he may well very well be dead today.
I can't attest personally but can relate on some level, work wise I spent lots of times in hotels and the novelty and indeed fun of staying at a hotel, completely pailled and at the stage that I just wanted to cook myself some beans on toast and that compared to hitting a 5* restaurant was more of a calling in the end and shows that variety is the spice of life and you can have too much of a good thing. At least for me and I'm sure others have had there own comparable situations.
But do talk to people who have retired for a while and many will miss work.
Heck, school at the time seemed boring and many couldn't wait to reach adulthood and yet after a decade of work, you appreciate how much more fun school days actually was.
So whilst working, easy to aspire towards retirement, but retirement is what you make it and totally up to you, so many retired people do work, or volunteer work - because they enjoy it.
School, as an experience, is hell compared to work; excruciatingly boring, filled with unpleasant interactions and zero agency. The only upside of school is longer holidays.
Work is fulfilling if you self-identify with what you do. If you don't, it's an act of self-denial, and retirement is more likely.
May I ask, are you under 40? As it was around that age in which the memories of all those adults saying "school, best time of your life, enjoy it whilst you can" and thinking "you crazy fool, silly adults" and retrospectively at 40, thinking "Hmmm, now I get it, now I get it".
I enjoyed college more than school because I specialized in more things that I was better at, whereas school moved way too slowly in the things that interested me (I was the kind of guy who bunked off school and did math problems from the textbook in the woods) and forced me to attend things I deeply disliked, to this day. And besides all that, the degree to which I "fitted in" was mediocre; it was no social picnic.
My 30s were much better than my 20s, and 20s better than my teens; though some of my fondest memories are of the ages 10~14, outside school not in it, reading books and following my programming interests divorced of curriculum. I'm hoping the rest of my 40s are a similar step up from my 30s; and we've got a baby boy on the way in a couple of weeks. We'll see.
School is great if you enjoy dabbling in lots of different things. One of the great challenges of life is that most humans are inclined to generalization but work forces us to specialize on one thing and spend a huge chunk of our life on it.
I found university more fulfilling than my 5+ years of full-time work, so I think your mileage may vary on this. Depending on what sort of activities you enjoy.
What questions? It was a personal, emotional response with no substance that insulted more mature people because they have the nerve to keep playing the game and not go die in the corner. Down-vote away!
Retired people live off the returns from their investments, and since that’s where their income comes from, they usually make decisions about managing those investments from time to time.
At what point should he have said "This is enough"? Most people think just being able to live comfortable lives for themselves is "enough". But those people also can't donate 50 billion dollars to charity like Buffet has. Do you think it would have been a net positive if Buffet gave up investing after his first million?
200x median annual income is "enough". That's 5x median to live on, and 1x median for a fiduciary manager to make sure it lasts forever.
5x median is enough to not worry about money, ever, yet also not so much that one can afford to waste any of it. It lets you have nice things, but not stupidly decadent things. It's still conceivable to spend all that in one year, just on ordinary consumer purchases, services, and travel.
Measuring in terms of median incomes is also a good proxy for how many full-time servants one can afford to hire and employ indefinitely without disgruntlement. At 5x, that's enough for a 2.5x lifestyle, plus a 1.1x personal assistant, and a 1.4x property manager. That kind of enough is "enough".
So no, he should not have given up after his first million. He should have stopped at around $12M instead. It's fine if he keeps working, but really, after that, it's more of a benefit to others if he spends the excess rather than investing it.
I think you may overestimate the impact of philanthropic efforts.
Everything he put into philanthropy could have been spent into the economy by other means. Such as higher employee wages.
I take it as axiomatic that a person with a plethora of money cannot understand the problems of a person with a dearth of money well enough to implement effective solutions.
And I think you're underestimating it. What's your basis for implying that higher wages would always necessarily do more good for the world than philanthropy?
> I take it as axiomatic that a person with a plethora of money cannot understand the problems of a person with a dearth of money well enough to implement effective solutions.
Maybe. First of all, not everyone who has money now has always had money. Secondly, not every problem in the world requires an understanding of poverty in order to solve it.
“If I ever become a bilionaire, or frankly just get a little more than I have now, my next move is: RETIRE.”
I am in the same boat but that’s why we (and a lot of other people) will never make that money. These guys seem to really enjoy business and it’s their favorite thing to do. They have the freedom to do whatever they want but they choose business. Looking at my CEO’s published salary I would retire within one or two months of making that much money. But I will never get there because I am not willing to put that much energy into work.
> I am in the same boat but that’s why we (and a lot of other people) will never make that money.
This gets repeated fairly often and intuitively it makes sense. I'd love to hear a counterexample though - of a naturally lazy person that motivated themselves hard enough, for long enough, purely to make enough money to enable themselves to be stylishly lazy forever.
Mr. Money Mustache, an early Financial Independence blogger, quit working after having invested enough to mostly live off the expected 4% returns of his investment portfolio. Granted, I don't think there's any evidence at all that he is lazy, but he certainly doesn't project the image of a high-powered workaholic business executive.
A few years after retiring, his personal finance blog has at times made an income in the mid-six figures, assuming he was telling the truth in a forum comment somewhere.
I've read stories of early retirees saying that they've made more money than ever after retiring, because the independence freed them from the downside of risky business decisions.
I'd imagine a lot of CEOs are trying to maintain a certain lifestyle and can't retire. Maybe retiring from a CEO position might also mean a loss of access to elite social groups that they value?
> But I will never get there because I am not willing to put that much energy into work.
...either or, I wouldn't put too much stock into thinking this way. Energy output does not always equal monetary success.
Actively investing and giving people your money is giving others a chance. Retiring and keeping the money in an account and living off of it is a lot less so.
It's also worth noting that while most of the Baby Boomers are around typical retirement age, Buffet was actually born in 1930, over a decade before the "Baby Boom" after WWII ended. His children are boomers, however.
"As economies mature and flourish and people and companies begin buying legitimate versions, they usually buy Microsoft because most others already use it. It’s called the network effect."
There's no interoperability with news. And these economies are mature. This is just theft.
At this point, the problem with content subscriptions is ease of use and "fuck you, customer" experiences rather than willingness to pay. I'd gladly pay, say, $200 per year to never see a paywall or commercial and never have to worry about account registrations or overcharging.
But after paying $100 in for a single article I read in a Norwegian newspaper last year, due to a weekly subscription that had "compulsory auto-renewal" in the small print, and no payment confirmations other than the account statement of my rarely-checked bank account... Let's say I'm not so keen on managing 30+ subscriptions to different providers, keeping up with their terms of service and ensuring they don't screw me.
I'll gladly pay when a company is able to figure out the proper UX for this, and the content producers get their heads out of their asses and consent to a sane distribution agreement with them.
Don't punish the publishers for this. They don't manage those aspects themselves, and haven't in a long time.
A couple of publishers do have stakes in those services (ex: Hearst, via https://www.cds-global.com/). At least in North America.
And for what it's worth—auto-renewal is standard and has been for a long time, like with most subscription/monthly services. I don't take that as a "fuck you" as you put it. Alternatively—a lot of people would be just as pissed off if their subscription automatically ended while they're waiting for their next issue.
Anyway I'm not sure I'm clear on why this means they should work for free?
Fun fact: the Toronto Public Library provides free subscriptions to PressReader for those who live in the city limits or work or attend school here as long as you hold a library card.
It’s worth petitioning your local libraries to do the same.
I recently read The Snowball: Warren Buffet and the Business of Life and a lot of that book focused on newspapers. Buffet delivered papers as a boy, had a big legal battle to buy a local Buffalo, NY paper, won a Pulitzer at the Omaha Sun for coverage of a scandal at Boys Town, and he was very close to Kay Graham of The Washington Post. I'm sure this was an emotional decision for him.
Which is why it perplexes me when tech people are so diversified with their holdings, there’s little opinion built in.
You have a competitive advantage. You see the tech tools that are utilized every day in your offices. You can understand neural networks and whether Tesla’s auto pilot OS technically reasonable.
You have the knowledge and skills to properly assess tech companies and their products.
If you work in tech and get compensated with tech money and hold tech stocks as part of your compensation, then your net worth is already tied in a substantial way to tech as an industry. Buying more tech stock increases how much your net worth will swing based on tech industry trends.
Bigger risk, bigger returns. Oftentimes risk is opposite of the goal.
As long as you're aware of the interlinked nature of tech stocks in the tech industry, then by all means buy more, but if you're planning for retirement and you don't have a nest egg that's invested on lower risk with more modest returns, you might want to think twice about putting more eggs in the tech basket.
I've found that extremely few folks benchmark their active investments with alternatives (e.g. S&P 500). Not only that, they don't even analyze their own investment performance. Most people I know who've bought stock in a particular company have no idea in the long run how well that investment has done, beyond simple things like "Very well" or "decent".
I work in a tech company. And almost everyone I know who works there is continually surprised at the stock price. They're surprised when it goes up when there's no seemingly good reason for it to do so, and they're equally surprised when it goes down.
While some may have the skill to analyze and predict, it's safe to say that most people - tech folks included - do not.
The worst part is, even the ones that DO benchmark against the S&P500 or similar are almost always doing it wrong. I have a friend who owns TSLA stock. Of course it has done much better than the S&P over the past several years, so he thinks "it's easy to beat the market, especially if you know a lot about tech." But he's comparing just that ONE investment, not his entire portfolio of other (many failed) investments, weighted by dollars. I know he put a bunch of money on a couple of altcoins and probably several other losing stock picks, but he never talks about any of those other investments.
More importantly (and what you're kind of alluding to) is the RISK - sure, Tesla is beating the SP500 - but how about a week from now, or a year? He is taking on significantly more risk compared to someone who just holds the SP500 - that's fine if it matches your risk appetite, but most people fail to consider the other side of the risk/return coin.
Likewise, a good understanding of the overall portfolio is key - and not just investments. For example, if you work at Tesla and hold mostly Tesla shares you are running an even higher risk than the average Tesla investor - the risk of you getting laid off is closely tied to Tesla shares tanking - and failing to diversify away that risk can hit many of us very, very hard.
I have done it as a sanity check and so far have beat SPY. Its kinda hard to calculate though. In TD Ameritrade, it doesn't give you that metric for you (that I know if, if you know how please let us know!). I have to look at the day I bought each stock and compare it against the price of SPY the same day.
It's not 100% because I don't compare against SPY the same exact time I bought the stock (too much work) and I don't bother calculating dividends. I just assume I am doing better there since I have a higher yield than SPY.
I do better than the market, but I don't recommend people trying to do so for money. I do it as a hobby, its fun for me. Otherwise a person's time is worth putting elsewhere, except in one area. While a person might not be able to beat the market, by being engaged they are more likely to invest more and avoid fruitless spending.
When someone spends 1000$+ on a handbag, I think gee, I'd rather have a share of google instead
> You can understand neural networks and whether Tesla’s auto pilot OS technically reasonable.
The problem with people you describe is learning to do the other half of the company analysis.
There was recently post in HN "Tesla races past $100B in market valuation" : https://news.ycombinator.com/item?id=22118913 People gave good reasons why Tesla has good tech, good cars etc. None of those arguments were tied to price range. They would be just as valid for $100B, $500B or $1T valuations.
Most tech people know very lot about very little. Most programmers know next to nothing about neural nets. Most neural net researchers know very little about self driving cars. Most self-driving car researchers are experts in incremental changes and know very little about what grand breakthroughs are likely in the next 2-3 years. To give you an idea, most go players and most AI researchers were shocked by AlphaGo. The expertise didn't help.
I think for technologists in particular expertise can be very dangerous as we tend to think we know a lot more than we do. Predicting the feasibility of an autopilot on a 1-2 year time horizon is a highly specialized difficult analysis. It's definitely not close to something most tech people can do well.
Is it true that most AI researchers were shocked by AlphaGo? These are the people who say it's impossible we'll get some qualitative breakthroughs yielding human-level or super-human general intelligence in the next few decades.
So if the majority of the group is that shocked by an incremental improvement, it would be better if we just interpreted their long-term forecasts as meaning "no idea" instead.
It would be best to interpret most long-term forecasts as meaning "no idea" instead. This goes for all groups, not just just ML researchers. Now, they have a little edge, and a big edge in the short term, but it's closer to "no idea" than anything else in the long term.
Maybe "tech people" are smart enough to realize that, on a macro level, tech moves together. By diversifying out of their area of expertise, they limit their potential upside but presumably they're hoping to limit their downside exposure. Unless I misunderstand your .. perplexion.
Compared to people whose full-time job is to analyze tech companies for whether they are good investments, I think most tech people know relatively little.
I could certainly pick out which tech companies are likely to succeed better than my grandma, but I'm not competing against her, I'm competing against professionals, and I simply don't have enough time to match someone who spends their entire day on it.
You could make the opposite argument too - our livelihoods are already wrapped up in the industry; so hedge your savings in others.
(Personally I favour diversifying with funds across countries and industries; plus a bet on a particular share, mostly tech for your reasoning, here and there.)
My ability to understand facebook's stack doesn't help me understand whether tiktok will eat their lunch, or whether the government will break up facebook and instagram.
At the stage where tech companies aren't behemoths like that, they're waiting longer and longer to go public. Uber, the poster child for this generation of startup investing, waited until it was a $60B company before it went public. Maybe it's easy as a company to get private investment in the cases where my insider's expertise would help me.
My ability to see that full self driving wouldn't be here by 2020 and that Musk's timelines were hype-fueling B.S. doesn't help me with tesla stock, which went way up regardless.
I think netflix, as it currently exists, is on the way out. But that's a long term bet. Not only can the market stay irrational longer than I can stay solvent, netflix can make changes and turn shit around on that time scale. My informed opinions about the macbook don't help me predict the invention and success of the iphone.
Maybe I could use my expertise for investing if I made investing my full time job, but I have one already, and it probably pays better than whatever I'd earn gambling. What's a reasonably reliable amount to beat the market by in your mind? A few percent? Is a few percent worth giving up a $50k-200k/yr promotion by devoting those same efforts to getting better at my day job? Is a few percent worth investing in my industry so that my portfolio losing value becomes even more correlated to my home losing value and more correlated with losing my job?
Hell, when I vest stock at work, where I'm literally an insider, I immediately sell during open trading windows. It has exactly zero to do with how I feel about my company and everything to do with wanting to hedge my wealth and my employment against each other. A.k.a. diversification.
So many people think there is a way to beat the market but no one outside of a handful have over the course of their life.
I just sat in a stand-up listening to my peers talking about making $20 or $60 on an Apple or Nvidia trade they made, and I'm like dudes you can make thousands in dividends a year and hardly look at your portfolio.
This is just straight naive, please do not bet on stocks based on your 'inside information.'
> Which is why it perplexes me when tech people are so diversified with their holdings, there’s little opinion built in.
This is a strength, not a weakness. It protects against assumptions and biases in opinions.
> You have a competitive advantage. You see the tech tools that are utilized every day in your offices. You can understand neural networks and whether Tesla’s auto pilot OS technically reasonable.
The people I personally know in tech are mostly not located in sv and dont work with hot new shit. They are doing LOB programs for businesses. Smart people but i wouldn't be asking them about Neural Nets
> You’re an insider in some respects. Make an assessment, place your bets.
User 'nullc made a good point the other day on the "Anatomy of a scam" thread:
> Honestly, I think being "tech savvy" is a liability. Someone who doesn't think they're tech savvy knows they don't know. It takes a certain level of expertise to talk yourself into something extremely dumb.
That’s not true, it’s about risk-adjusted returns. What Buffet presumably believes is that a 9% loan has a better reward/risk ratio than the newspaper business. As long as a return is greater than the borrowing rate, you csn synthetically make any return you want. This is why risk is important, because leverage is going to multiply it as well.
9% interest! Buffet thinks the industry is toast, Lee is making a huge gamble (betting against someone who is known to make good predictions) and Buffet might never see that money again if the business goes bankrupt. Pretty odd transaction, maybe someone can explain how it is mutually beneficial.
9% interest! Are you saying that is good or bad? If Buffet is getting interest, at least he is getting money off the table sooner than later. It's less risky than taking an equity stake. The loan is for a lot more than the sale. The loan is probably cheaper money than Lee can get elseware while the sale price for Buffet is probably a better sale price than if he just tried to fire sale the assets. Buffett is an infamous "one last puff" investor. While newspapers are heading down a continual decline, there is still some money to be made for a while.
I think the original comment meant that a 9% interest for a loan is quite steep and might be signaling Buffett's lack of confidence in media as an industry and its ability to generate value in the long term. However in a deal like this 9% might not be unusually high since the article mentions it is mostly being used to "refinance existing debts" so the high interest is probably a premium on that part
Perhaps Buffett sees that bold action is needed to optimize profits e.g. cutting jobs or asset stripping. He definitely doesn't have have time to be make these bold decisions. And he may not want to cloud his reputation by being in control while the jobs are cut.
A third possibility is that Lee has synergies that Berkshire doesn't have e.g. Lee can give it scale.
Arguably being a big investor type probabbly has a lot to do with knowing ... when you're not in a position / maybe not good at the thing that needs to be done.
All of Buffett's companies are pretty lean. They actually let go of a lot of people, he just doesn't wear it because he doesn't run the companies directly.
A common (sometimes predatory) tactic is to make a bad loan at a high rate, as part of a self-financed sale to someone you suspect will have short term success but long term failure, knowing you'll get payments for a certain amount of time, then have the asset returned.
That's one option, but maybe less likely for a business than for a car, because of valuation.
If he already thinks the business's days are numbered, options are limited. Instead of taking a loss by holding it until bankruptcy, or selling it cheap to someone who also sees limited value, he sells it to someone who's (overly) optimistic, and and is willing to pay a higher value.
Since the risk (at that higher value) is high, lenders will either refuse to finance, or offer a rate higher than what Buffet is offering. Buffet needs to offer the financing to make the sale possible, or at least more attractive.
So at worst, he's turned a dead-end investment into positive cash flow for a few months, where he previously was getting zero. If he forecloses and there's something of value left, he might try to sell again, but the foreclosure makes that less likely, given future buyers will consider it in determining it's value. Regardless, he's still better off than before.
Or the business does ok, and he gets a better price for selling than he otherwise would have. And 9% interest on it, which is something, but I suspect extremely low for Buffet. But he's locked in a minimum value and getting a positive rate, mitigating what he perceived to otherwise be a bigger loss.
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[ 3.5 ms ] story [ 195 ms ] threadWhat the hell is wrong with people like Buffett? He knows he can't buy more time in this life. Same with all the psycho billionaires. Why not give someone else a chance Boomers?
And people will also necessarily have different preferences on how to spend their time and energy, and different amounts of time and energy as well.
Would also like to point out that "sitting on a beach forever" is not the negation of spending all your time an energy on solving the problems that the capitalist economy rewards.
There's plenty of people out there who have a passion for things that aren't expected to earn money, but for whom the best option for actually making money is something that's quite boring.
For what it's worth, turk73's attitude regarding work only being a means to earn money is just as misguided and narrow-minded.
Sitting on a beach forever is okay, if you like that sort of thing. It's also okay to write a novel that no one will ever read, or to crash remote controlled helicopters and then repair them. It's also okay to plant a hummingbird, butterfly, and honeybee garden, and buy a big macro lens. Or maybe ride a motorcycle all over the continent. Or move to Florida and do Florida things. Or move to Wyoming and manage a herd of 15 cattle on a plot that the real ranchers call "Flyspeck Ranch". Or open an ice cream shop that turns a profit only 20 days per year.
Retirement is as varied as the people who are no longer bound to conform to a work standard.
Try this thought exercise: if you suddenly became a billionaire, and didn't need to work for a paycheck any more, would you continue to write software (I'm assuming you're a developer like most on here)? Personally, I would. I probably wouldn't do it 8 hours a day, but I'd find some fun project to work on, and spend some time on that. It'd be my hobby, when I'm not doing something else I enjoy like traveling or skiing or whatever. I didn't get into this field just for the money, I did it because I like computers.
Buffet likes investing. What else is he going to do with his spare time?
But the job market doesn't seem to support that, so it's full time or no work for me (unless I put in the huge effort to build up a freelancing portfolio, which doesn't seem to be as much of a job market in ML yet?). Given the choice, I'd choose no work, and make my own work for fun.
Personally, I could easily work on some kind of OSS project if I suddenly found myself with lots of free time. I can do C, C++, Python, etc., so it wouldn't be hard for me to find an existing project to contribute to, or make my own.
And depending what you're doing, it can require ridiculous computational resources (like hundreds of thousands of dollars to train a model), but that's far from the norm. If you aren't trying to advance a couple particular states of the art, you can get by with a fancy computer and patience, or a pretty reasonable AWS/GCP bill, probably comparable to any other fairly expensive hobby.
I agree about the part-time thing too; considering how much of a skills shortage the industry is constantly crying about, and how well-paid developers are (which means that, if they live frugally and don't have kids, they don't really need to work to retirement age if they don't want to), it really should be possible to have part-time positions for people who want to stay current and work on interesting problems but not have to dedicate themselves to it full-time, and not be stuck only doing OSS stuff (which is great, of course, but not really doable with some fields).
That said, someone like Bill Gates is probably closest to what you are describing. After making billions didn't retire, but moved from making the money to making the money work for humanity
Imho the Netflix documentation "Inside Bill's Brain: Decoding Bill Gates" is worth watching for a variety of reasons.
So far, I've found it to be true (as long as the work can be rewarding).
This is what makes him feel alive and purposeful.
If you're suggesting he sit on a beach and sip margarita, people like him can't do that for a long time without feeling the opposite of alive.
What the hell is wrong with poker players? They know they can't buy more time in this life. Same with all the psycho bowlers in bowling alleys. Why not give someone else a chance Boomers?
2. He enjoys what he does.
3. The more wealth he generates, the better off the world is.
The reason why trickle down doesn't work is because there is no accountability. There are good and bad ways to make money but trickle down doesn't make that distinction.
You're 100% right of course that most billionaires makes the world a worse place, but I'd argue he's one of the exceptions.
wat?
Is this some "Make the World a better place™" Silicon Valley techo-religious bullshit?
Wealth can be good or bad and good and bad at the same time, it's not automatic.
Things are valuable because people value them.
So... I struggle to think of why people would value bad things?
A ton of people are getting wealthy providing American taxpayers the "valuable" service of for profit prisons and border detention facilities, Russian taxpayers the "valuable" service of foreign election interference, British taxpayers the "valuable" service of EU trade negotiations, Chinese taxpayers the "valuable" service of total surveillance ..
And of course in the private sector there's client change denial, GHG emissions ("clean coal"), the opioid crisis, medical bankruptcies, data breaches, propaganda, lobbyists, ...
It's in fact incredibly easy to see why "people" value "bad" things - because many people don't see the same things as bad.
We agree that people can acquire wealth in ways that hurt others. I think that's different from saying the wealth itself is bad, but that's perhaps splitting hairs.
Crimes and externalities are real, but they're also very manageable with good legislation, and I think all experience is that the enormous accumulation of wealth since the Industrial Revolution has been the best thing that ever happened.
I don't let the minor imperfections distract from the awesome big picture!
Does this make sense? In short, a lot of billionaires benefit much more than they deserve at the expense of others who get less than they deserve.
I can't attest personally but can relate on some level, work wise I spent lots of times in hotels and the novelty and indeed fun of staying at a hotel, completely pailled and at the stage that I just wanted to cook myself some beans on toast and that compared to hitting a 5* restaurant was more of a calling in the end and shows that variety is the spice of life and you can have too much of a good thing. At least for me and I'm sure others have had there own comparable situations.
But do talk to people who have retired for a while and many will miss work.
Heck, school at the time seemed boring and many couldn't wait to reach adulthood and yet after a decade of work, you appreciate how much more fun school days actually was.
So whilst working, easy to aspire towards retirement, but retirement is what you make it and totally up to you, so many retired people do work, or volunteer work - because they enjoy it.
Work is fulfilling if you self-identify with what you do. If you don't, it's an act of self-denial, and retirement is more likely.
I enjoyed college more than school because I specialized in more things that I was better at, whereas school moved way too slowly in the things that interested me (I was the kind of guy who bunked off school and did math problems from the textbook in the woods) and forced me to attend things I deeply disliked, to this day. And besides all that, the degree to which I "fitted in" was mediocre; it was no social picnic.
My 30s were much better than my 20s, and 20s better than my teens; though some of my fondest memories are of the ages 10~14, outside school not in it, reading books and following my programming interests divorced of curriculum. I'm hoping the rest of my 40s are a similar step up from my 30s; and we've got a baby boy on the way in a couple of weeks. We'll see.
5x median is enough to not worry about money, ever, yet also not so much that one can afford to waste any of it. It lets you have nice things, but not stupidly decadent things. It's still conceivable to spend all that in one year, just on ordinary consumer purchases, services, and travel.
Measuring in terms of median incomes is also a good proxy for how many full-time servants one can afford to hire and employ indefinitely without disgruntlement. At 5x, that's enough for a 2.5x lifestyle, plus a 1.1x personal assistant, and a 1.4x property manager. That kind of enough is "enough".
So no, he should not have given up after his first million. He should have stopped at around $12M instead. It's fine if he keeps working, but really, after that, it's more of a benefit to others if he spends the excess rather than investing it.
Everything he put into philanthropy could have been spent into the economy by other means. Such as higher employee wages.
I take it as axiomatic that a person with a plethora of money cannot understand the problems of a person with a dearth of money well enough to implement effective solutions.
> I take it as axiomatic that a person with a plethora of money cannot understand the problems of a person with a dearth of money well enough to implement effective solutions.
Maybe. First of all, not everyone who has money now has always had money. Secondly, not every problem in the world requires an understanding of poverty in order to solve it.
I am in the same boat but that’s why we (and a lot of other people) will never make that money. These guys seem to really enjoy business and it’s their favorite thing to do. They have the freedom to do whatever they want but they choose business. Looking at my CEO’s published salary I would retire within one or two months of making that much money. But I will never get there because I am not willing to put that much energy into work.
This gets repeated fairly often and intuitively it makes sense. I'd love to hear a counterexample though - of a naturally lazy person that motivated themselves hard enough, for long enough, purely to make enough money to enable themselves to be stylishly lazy forever.
A few years after retiring, his personal finance blog has at times made an income in the mid-six figures, assuming he was telling the truth in a forum comment somewhere.
I've read stories of early retirees saying that they've made more money than ever after retiring, because the independence freed them from the downside of risky business decisions.
> But I will never get there because I am not willing to put that much energy into work.
...either or, I wouldn't put too much stock into thinking this way. Energy output does not always equal monetary success.
It’s not guaranteed but hard work is a necessary ingredient in most cases. And then other factors like luck also need to align.
Actively investing and giving people your money is giving others a chance. Retiring and keeping the money in an account and living off of it is a lot less so.
[1] https://www.latimes.com/archives/la-xpm-2006-apr-09-fi-micro...
There's no interoperability with news. And these economies are mature. This is just theft.
But after paying $100 in for a single article I read in a Norwegian newspaper last year, due to a weekly subscription that had "compulsory auto-renewal" in the small print, and no payment confirmations other than the account statement of my rarely-checked bank account... Let's say I'm not so keen on managing 30+ subscriptions to different providers, keeping up with their terms of service and ensuring they don't screw me.
I'll gladly pay when a company is able to figure out the proper UX for this, and the content producers get their heads out of their asses and consent to a sane distribution agreement with them.
A couple of publishers do have stakes in those services (ex: Hearst, via https://www.cds-global.com/). At least in North America.
And for what it's worth—auto-renewal is standard and has been for a long time, like with most subscription/monthly services. I don't take that as a "fuck you" as you put it. Alternatively—a lot of people would be just as pissed off if their subscription automatically ended while they're waiting for their next issue.
Anyway I'm not sure I'm clear on why this means they should work for free?
It’s worth petitioning your local libraries to do the same.
Move along now, nothing to see here.
Which is why it perplexes me when tech people are so diversified with their holdings, there’s little opinion built in.
You have a competitive advantage. You see the tech tools that are utilized every day in your offices. You can understand neural networks and whether Tesla’s auto pilot OS technically reasonable.
You have the knowledge and skills to properly assess tech companies and their products.
You’re an insider in some respects.
Make an assessment, place your bets.
As a software engineer, I also tend to not invest in big tech companies. YMMV though.
Why avoid a Apple, etc?
Bigger risk, bigger returns. Oftentimes risk is opposite of the goal.
As long as you're aware of the interlinked nature of tech stocks in the tech industry, then by all means buy more, but if you're planning for retirement and you don't have a nest egg that's invested on lower risk with more modest returns, you might want to think twice about putting more eggs in the tech basket.
I work in a tech company. And almost everyone I know who works there is continually surprised at the stock price. They're surprised when it goes up when there's no seemingly good reason for it to do so, and they're equally surprised when it goes down.
While some may have the skill to analyze and predict, it's safe to say that most people - tech folks included - do not.
Likewise, a good understanding of the overall portfolio is key - and not just investments. For example, if you work at Tesla and hold mostly Tesla shares you are running an even higher risk than the average Tesla investor - the risk of you getting laid off is closely tied to Tesla shares tanking - and failing to diversify away that risk can hit many of us very, very hard.
It's not 100% because I don't compare against SPY the same exact time I bought the stock (too much work) and I don't bother calculating dividends. I just assume I am doing better there since I have a higher yield than SPY.
I do better than the market, but I don't recommend people trying to do so for money. I do it as a hobby, its fun for me. Otherwise a person's time is worth putting elsewhere, except in one area. While a person might not be able to beat the market, by being engaged they are more likely to invest more and avoid fruitless spending.
When someone spends 1000$+ on a handbag, I think gee, I'd rather have a share of google instead
The problem with people you describe is learning to do the other half of the company analysis.
There was recently post in HN "Tesla races past $100B in market valuation" : https://news.ycombinator.com/item?id=22118913 People gave good reasons why Tesla has good tech, good cars etc. None of those arguments were tied to price range. They would be just as valid for $100B, $500B or $1T valuations.
I think for technologists in particular expertise can be very dangerous as we tend to think we know a lot more than we do. Predicting the feasibility of an autopilot on a 1-2 year time horizon is a highly specialized difficult analysis. It's definitely not close to something most tech people can do well.
So if the majority of the group is that shocked by an incremental improvement, it would be better if we just interpreted their long-term forecasts as meaning "no idea" instead.
https://intelligence.org/2017/10/13/fire-alarm/
I could certainly pick out which tech companies are likely to succeed better than my grandma, but I'm not competing against her, I'm competing against professionals, and I simply don't have enough time to match someone who spends their entire day on it.
(Personally I favour diversifying with funds across countries and industries; plus a bet on a particular share, mostly tech for your reasoning, here and there.)
At the stage where tech companies aren't behemoths like that, they're waiting longer and longer to go public. Uber, the poster child for this generation of startup investing, waited until it was a $60B company before it went public. Maybe it's easy as a company to get private investment in the cases where my insider's expertise would help me.
My ability to see that full self driving wouldn't be here by 2020 and that Musk's timelines were hype-fueling B.S. doesn't help me with tesla stock, which went way up regardless.
I think netflix, as it currently exists, is on the way out. But that's a long term bet. Not only can the market stay irrational longer than I can stay solvent, netflix can make changes and turn shit around on that time scale. My informed opinions about the macbook don't help me predict the invention and success of the iphone.
Maybe I could use my expertise for investing if I made investing my full time job, but I have one already, and it probably pays better than whatever I'd earn gambling. What's a reasonably reliable amount to beat the market by in your mind? A few percent? Is a few percent worth giving up a $50k-200k/yr promotion by devoting those same efforts to getting better at my day job? Is a few percent worth investing in my industry so that my portfolio losing value becomes even more correlated to my home losing value and more correlated with losing my job?
Hell, when I vest stock at work, where I'm literally an insider, I immediately sell during open trading windows. It has exactly zero to do with how I feel about my company and everything to do with wanting to hedge my wealth and my employment against each other. A.k.a. diversification.
I just sat in a stand-up listening to my peers talking about making $20 or $60 on an Apple or Nvidia trade they made, and I'm like dudes you can make thousands in dividends a year and hardly look at your portfolio.
This is just straight naive, please do not bet on stocks based on your 'inside information.'
This is a strength, not a weakness. It protects against assumptions and biases in opinions.
> You have a competitive advantage. You see the tech tools that are utilized every day in your offices. You can understand neural networks and whether Tesla’s auto pilot OS technically reasonable.
The people I personally know in tech are mostly not located in sv and dont work with hot new shit. They are doing LOB programs for businesses. Smart people but i wouldn't be asking them about Neural Nets
> You’re an insider in some respects. Make an assessment, place your bets.
Most people really aren't
> Honestly, I think being "tech savvy" is a liability. Someone who doesn't think they're tech savvy knows they don't know. It takes a certain level of expertise to talk yourself into something extremely dumb.
https://news.ycombinator.com/item?id=22169680
A third possibility is that Lee has synergies that Berkshire doesn't have e.g. Lee can give it scale.
The 9% discounts the eventual acquisition.
It's used car tactics at the next level.
If he already thinks the business's days are numbered, options are limited. Instead of taking a loss by holding it until bankruptcy, or selling it cheap to someone who also sees limited value, he sells it to someone who's (overly) optimistic, and and is willing to pay a higher value.
Since the risk (at that higher value) is high, lenders will either refuse to finance, or offer a rate higher than what Buffet is offering. Buffet needs to offer the financing to make the sale possible, or at least more attractive.
So at worst, he's turned a dead-end investment into positive cash flow for a few months, where he previously was getting zero. If he forecloses and there's something of value left, he might try to sell again, but the foreclosure makes that less likely, given future buyers will consider it in determining it's value. Regardless, he's still better off than before.
Or the business does ok, and he gets a better price for selling than he otherwise would have. And 9% interest on it, which is something, but I suspect extremely low for Buffet. But he's locked in a minimum value and getting a positive rate, mitigating what he perceived to otherwise be a bigger loss.