All consumption is dumb, if you think too hard about it.
Says someone who clearly hasn’t been just hungry for a long while if ever.
More to the point, I don’t see what consumption habits have to do with picking investments. When you are “paying someone just to rebrand index funds for you” you don’t get Miley Cyrus to twerk you.
I think you may be taking him a little too literally. He’s criticizing that position as much as he’s endorsing it. (The context is that he’s commenting on a sort of “financial services for The Youth Of Today” product, and he’s saying: “yeah, from one perspective this is silly because those people should just be investing in index funds; but that’s also the perspective that says they should never actually be spending anything, which is pretty unreasonable when you think about it; so why shouldn’t one thing they spend their money on instead of robotically trying to maximize it be financial services that they enjoy more?”
I don’t see what consumption habits have to do with picking investments.
He’s suggesting that investing with this company called Stash might best be viewed as a variety of consumption that happens to produce not-completely-crazy investment as a side effect, which makes it look less like a rather crappy sort of investment and more like a more than averagely productive sort of consumption.
(Is it reasonable to see it that way? I dunno; it sounds rather contrived to me. But that’s the argument he’s making.)
from one perspective this is silly because those people should just be investing in index funds; but that’s also the perspective that says they should never actually be spending anything
The guy just doesn’t look coherent. In particular, no, that is NOT “also the perspective”, these are two different unconnected things.
more like a more than averagely productive sort of consumption.
More word salad. What in the world is “averagely productive sort of consumption”?
I think classifying all this under “marketing nonsense” is much more productive.
My mental model of the author says: no, they are not unconnected things; the perspective you need to adopt to lead to the conclusion that it’s terribly wrong to invest in ways that don’t maximize (something like) your expected long-term wealth, even if you find doing so more satisfying and enjoyable than just dumping your money into index-funds, is a sort of straw-Vulcan one that cares only about long-term wealth maximization, and from that perspective all “consumption” just leaves you poorer in the long run and is therefore a bad thing.
What in the world is “averagely productive sort of consumption”?
I think the idea is something like this. If you buy a soft drink or go and see a movie, this provides you with some enjoyment but not much in the way of long-term benefits. Most consumption is like this: it gives you something you want, but in the long run you’d have been better off investing what it cost you. Stash’s services are intended to be enjoyable to use, so that using them feels more like consumption than it does like investment, while having some of the same long-term benefits that investing in an index fund would have.
(I repeat that I’m merely attempting to explicate his position and not endorsing it myself. In particular, I gravely doubt that Stash have made investing actually fun to anyone who wasn’t already investing as well as they could with Stash.)
I understood him as saying that paying for anything (with perhaps the exception of items necessary to live) is spending money on something you presumably enjoy, and criticising someone for spending money on something they enjoy is misplaced. So if someone enjoys the rebranding of index funds enough to pay for it, he’s fine with it.
Edit: “When you are “paying someone just to rebrand index funds for you” you don’t get Miley Cyrus to twerk you.” both are forms of paying for enjoyment. People are paying a fee for someone to rebrand index funds for them, just like they might pay a fee to go to a concert or, for that matter, buy a newspaper with stories about companies that interests them.
People are paying a fee for someone to rebrand index funds for them, just like they might pay a fee to go to a concert
I don’t think this is true. People pay a fee for rebranded index funds not because they especially enjoy rebranded index funds, but because they are misled to think that what they are getting is something different from what they are actually getting. People pay a fee because they are told that the fund will bring them higher returns (or less risk, etc.).
I can imagine someone investing in a hedge fund to be able to claim that he is a “hedge fund investor”, but I don’t think this situation is applicable to the great majority of money invested. And it’s paying for signaling, not paying for consumption.
People pay a fee because they are told that the fund will bring them higher returns (or less risk, etc.).
That’s not how it sounds from the article and its source
What Stash tries to add, and what it’s charging users for, is both the unique framing of the funds and ease of use.
Investing in these tech or green energy companies is “self expression,” Robinson said, even if a bog-simple Vanguard index ETF plan “is probably the smart investment.”
Of course, there are still a great many young adults who are more focused on their returns. For them, Stash has an “I Want” tab that includes more diverse investments with snazzy labels.
“We talked to 100 people, and we heard the same thing over and over again: the whole concept of investing was confusing, it was expensive, it was unrelatable, it isn’t my world,” Ronick said about the conversations.
There’s nothing there that implies an expectation of getting a higher return that if they’d invest traditionally.
Do you at least agree that Stash claims it’s doing what Matt claims it is? And you then think that Stash is wrong about what motivates its users?
“We talked to 100 people, and we heard the same thing over and over again: the whole concept of investing was confusing, it was expensive, it was unrelatable, it isn’t my world,”
This is not consumption preferences. This is needing to do something you have no idea about—so you go to whoever claims to be an expert and you believe whatever he tells you. There are many people claiming to be experts, so it becomes crucial to use the right marketing to lure in the marks… err. customers. The old marketing style which mostly used a reliable-looking oldish white guy in a suit and a tie isn’t working all that well any more, so there is a new marketing style that goes for young and hip and cool and all that.
I still don’t believe that people consume and particularly enjoy investment offerings. Giving money to a mutual fund just isn’t a notable sensuous experience :-D
What I do believe is that it is very much in the interest of certain people to make you convinced that giving them money has special significance.
I think it’s important to note here that their fee is $12 a year. That’s a lot more in line with “paying for a good experience” than “paying for investment advice”. I don’t think this $12 a year product falls into the same reference class as typical financial advisors.
I think it’s important to note here that their fee is $12 a year.
I don’t see how this is a meaningful number. The cost to the user is much higher since they’re now stuck in a high-fee fund. And I’m pretty sure that a lot of Stash’s revenue comes from something other than $12/user/year. In particular, high-fee funds tend to pay commissions to those who sell them.
I think a much better analogy would have been “drink tap water instead of bottled water.” It’s a more similar instance of paying explicitly for branding with a misguided understanding of what’s for sale. (i.e. most bottle water is literally tap water)
I think a much better analogy would have been “drink tap water instead of bottled water.”
I drink bottled water. I don’t care about branding in general, but the particular water which I drink tastes different from the water in my tap and I can easily recognize the difference.
Says someone who clearly hasn’t been just hungry for a long while if ever.
More to the point, I don’t see what consumption habits have to do with picking investments. When you are “paying someone just to rebrand index funds for you” you don’t get Miley Cyrus to twerk you.
I think you may be taking him a little too literally. He’s criticizing that position as much as he’s endorsing it. (The context is that he’s commenting on a sort of “financial services for The Youth Of Today” product, and he’s saying: “yeah, from one perspective this is silly because those people should just be investing in index funds; but that’s also the perspective that says they should never actually be spending anything, which is pretty unreasonable when you think about it; so why shouldn’t one thing they spend their money on instead of robotically trying to maximize it be financial services that they enjoy more?”
He’s suggesting that investing with this company called Stash might best be viewed as a variety of consumption that happens to produce not-completely-crazy investment as a side effect, which makes it look less like a rather crappy sort of investment and more like a more than averagely productive sort of consumption.
(Is it reasonable to see it that way? I dunno; it sounds rather contrived to me. But that’s the argument he’s making.)
The guy just doesn’t look coherent. In particular, no, that is NOT “also the perspective”, these are two different unconnected things.
More word salad. What in the world is “averagely productive sort of consumption”?
I think classifying all this under “marketing nonsense” is much more productive.
My mental model of the author says: no, they are not unconnected things; the perspective you need to adopt to lead to the conclusion that it’s terribly wrong to invest in ways that don’t maximize (something like) your expected long-term wealth, even if you find doing so more satisfying and enjoyable than just dumping your money into index-funds, is a sort of straw-Vulcan one that cares only about long-term wealth maximization, and from that perspective all “consumption” just leaves you poorer in the long run and is therefore a bad thing.
I think the idea is something like this. If you buy a soft drink or go and see a movie, this provides you with some enjoyment but not much in the way of long-term benefits. Most consumption is like this: it gives you something you want, but in the long run you’d have been better off investing what it cost you. Stash’s services are intended to be enjoyable to use, so that using them feels more like consumption than it does like investment, while having some of the same long-term benefits that investing in an index fund would have.
(I repeat that I’m merely attempting to explicate his position and not endorsing it myself. In particular, I gravely doubt that Stash have made investing actually fun to anyone who wasn’t already investing as well as they could with Stash.)
In spite of your heroic efforts :-) I continue to think that the author is incoherent and has fallen prey to marketing nonsense.
I understood him as saying that paying for anything (with perhaps the exception of items necessary to live) is spending money on something you presumably enjoy, and criticising someone for spending money on something they enjoy is misplaced. So if someone enjoys the rebranding of index funds enough to pay for it, he’s fine with it.
Edit: “When you are “paying someone just to rebrand index funds for you” you don’t get Miley Cyrus to twerk you.” both are forms of paying for enjoyment. People are paying a fee for someone to rebrand index funds for them, just like they might pay a fee to go to a concert or, for that matter, buy a newspaper with stories about companies that interests them.
What difference are you claiming between the two?
I don’t think this is true. People pay a fee for rebranded index funds not because they especially enjoy rebranded index funds, but because they are misled to think that what they are getting is something different from what they are actually getting. People pay a fee because they are told that the fund will bring them higher returns (or less risk, etc.).
I can imagine someone investing in a hedge fund to be able to claim that he is a “hedge fund investor”, but I don’t think this situation is applicable to the great majority of money invested. And it’s paying for signaling, not paying for consumption.
That’s not how it sounds from the article and its source
There’s nothing there that implies an expectation of getting a higher return that if they’d invest traditionally.
Do you at least agree that Stash claims it’s doing what Matt claims it is? And you then think that Stash is wrong about what motivates its users?
I think the key word here is “marketing”.
This is not consumption preferences. This is needing to do something you have no idea about—so you go to whoever claims to be an expert and you believe whatever he tells you. There are many people claiming to be experts, so it becomes crucial to use the right marketing to lure in the marks… err. customers. The old marketing style which mostly used a reliable-looking oldish white guy in a suit and a tie isn’t working all that well any more, so there is a new marketing style that goes for young and hip and cool and all that.
I still don’t believe that people consume and particularly enjoy investment offerings. Giving money to a mutual fund just isn’t a notable sensuous experience :-D
What I do believe is that it is very much in the interest of certain people to make you convinced that giving them money has special significance.
I think it’s important to note here that their fee is $12 a year. That’s a lot more in line with “paying for a good experience” than “paying for investment advice”. I don’t think this $12 a year product falls into the same reference class as typical financial advisors.
I don’t see how this is a meaningful number. The cost to the user is much higher since they’re now stuck in a high-fee fund. And I’m pretty sure that a lot of Stash’s revenue comes from something other than $12/user/year. In particular, high-fee funds tend to pay commissions to those who sell them.
I think a much better analogy would have been “drink tap water instead of bottled water.” It’s a more similar instance of paying explicitly for branding with a misguided understanding of what’s for sale. (i.e. most bottle water is literally tap water)
I drink bottled water. I don’t care about branding in general, but the particular water which I drink tastes different from the water in my tap and I can easily recognize the difference.