And yet when I write that, I start asking myself “but what is a dollar if not an investment that is only worth what someone else is willing to trade for it” and then “wait, what if a stock is a better investment than a dollar” and then “no no no no no investing on top of investing is like double risk”
Is it double risk? We’re going from a situation where we’re talking to a widget producer and saying “yes I would like to exchange a dollar for a widget” to a situation where we’re saying “I would like to exchange a fractional share of Microsoft for a widget.” Seems basically analogous.
Now, obviously in our society all transactions are denominated in dollars, and you have to do the conversion to dollars beforehand because no retailer is actually able to accept shares-of-stock at the counter, but the fact that purchases have to be converted to dollars beforehand doesn’t imply you’re taking on the risk of that currency increasing or decreasing in value if you don’t hold any of it at baseline.
And I guess if you accept this, the question is what defines a “better” or “worse” investment. It sounds like you’re making an assessment that trading risk for money is fundamentally not worthwhile above a certain savings amount; I suppose that’s fair; it just means that to maintain a specific retirement withdrawal rate you have to have a bunch more money saved up pre-retirement (in expectation) than someone who doesn’t, though having done that you also face less risk of ruin from the stock market crashing.
I’m wondering if that mindset can be trivially extended to “but actually the really foolproof asset is freeze-dried meals, since 1 meal=1 meal, as opposed to one dollar which could equal any number of fractional meals in the future”.
That paragraph was meant to be less intuitive and more “wait if you really follow this line of thought it takes you to some nonsensical arenas...”
But we don’t get to say “I’d like to exchange a fractional share of Microsoft for a widget.” You can only exchange a fractional share of Microsoft for A) cash or B) shares in something else, and you can only do so if someone else is willing to make the trade. There are situations in which you could have an asset you want to sell and nobody wants to buy it, which is also true for other assets like houses (and, if you own a business, whatever your business produces [and, if you are a worker with specific skills, the value those skills could bring to an employer]).
As to your last point, there’s a non-trivial reason why some people suggest stockpiling a year’s worth of food...
I’d like to see the intuition expanded upon here:
Is it double risk? We’re going from a situation where we’re talking to a widget producer and saying “yes I would like to exchange a dollar for a widget” to a situation where we’re saying “I would like to exchange a fractional share of Microsoft for a widget.” Seems basically analogous.
Now, obviously in our society all transactions are denominated in dollars, and you have to do the conversion to dollars beforehand because no retailer is actually able to accept shares-of-stock at the counter, but the fact that purchases have to be converted to dollars beforehand doesn’t imply you’re taking on the risk of that currency increasing or decreasing in value if you don’t hold any of it at baseline.
And I guess if you accept this, the question is what defines a “better” or “worse” investment. It sounds like you’re making an assessment that trading risk for money is fundamentally not worthwhile above a certain savings amount; I suppose that’s fair; it just means that to maintain a specific retirement withdrawal rate you have to have a bunch more money saved up pre-retirement (in expectation) than someone who doesn’t, though having done that you also face less risk of ruin from the stock market crashing.
I’m wondering if that mindset can be trivially extended to “but actually the really foolproof asset is freeze-dried meals, since 1 meal=1 meal, as opposed to one dollar which could equal any number of fractional meals in the future”.
That paragraph was meant to be less intuitive and more “wait if you really follow this line of thought it takes you to some nonsensical arenas...”
But we don’t get to say “I’d like to exchange a fractional share of Microsoft for a widget.” You can only exchange a fractional share of Microsoft for A) cash or B) shares in something else, and you can only do so if someone else is willing to make the trade. There are situations in which you could have an asset you want to sell and nobody wants to buy it, which is also true for other assets like houses (and, if you own a business, whatever your business produces [and, if you are a worker with specific skills, the value those skills could bring to an employer]).
As to your last point, there’s a non-trivial reason why some people suggest stockpiling a year’s worth of food...