The concept of this model isn’t to give license to any trade meeting these criteria. Instead, it’s to show you a category of trades that might be ignored by hedge funds and HFTs not, a priori, because they are bad investments. So the idea would be that within this space, you’d then look for trades with an attractive risk/reward/tax/fee profile.
I do agree that opportunity costs might be the clincher. It might be that no matter how much you earn an hour (risk adjusted), the simple fact that you can make that much through this form of work is strong evidence you could have made more in another line of work.
It points to a model of the world that goes something like this:
Humanity has a giant pot of slack, known as “funding,” which it doles out liberally to people who’ve got a reasonable chance of providing value to shareholders. This tends to generate even more wealth for those value-generating businesspeople, who then have nothing to do with that money but put it back into the pot.
Investing, then, is only for two kinds of people:
Those who have more money than energy + brains (which doesn’t imply they’re lazy/dumb, just that they have a WHOLE lot of money, or that they’re ready to retire)
People who want to help the investors make better investment decisions. This is a form of work, rather than investing. But they have to prove their product works, by using it to make good investments. Example: people selling satellite data to hedge funds.
So maybe we need a change of quote. Instead of “if you’re so smart, why aren’t you rich,” it’s “why are you investing, if you’re not rich, retired or dumb?”
I agree, these are all important and missing.
The concept of this model isn’t to give license to any trade meeting these criteria. Instead, it’s to show you a category of trades that might be ignored by hedge funds and HFTs not, a priori, because they are bad investments. So the idea would be that within this space, you’d then look for trades with an attractive risk/reward/tax/fee profile.
I do agree that opportunity costs might be the clincher. It might be that no matter how much you earn an hour (risk adjusted), the simple fact that you can make that much through this form of work is strong evidence you could have made more in another line of work.
It points to a model of the world that goes something like this:
Humanity has a giant pot of slack, known as “funding,” which it doles out liberally to people who’ve got a reasonable chance of providing value to shareholders. This tends to generate even more wealth for those value-generating businesspeople, who then have nothing to do with that money but put it back into the pot.
Investing, then, is only for two kinds of people:
Those who have more money than energy + brains (which doesn’t imply they’re lazy/dumb, just that they have a WHOLE lot of money, or that they’re ready to retire)
People who want to help the investors make better investment decisions. This is a form of work, rather than investing. But they have to prove their product works, by using it to make good investments. Example: people selling satellite data to hedge funds.
So maybe we need a change of quote. Instead of “if you’re so smart, why aren’t you rich,” it’s “why are you investing, if you’re not rich, retired or dumb?”