Tuesday, May 10, 2022

If 42% of your wealth comes from the stock market, YOU ARE AN IDIOT and deserve everything that's coming to you

 The is-is-ought fallacy in action.

“In the last 20 years, we’ve had a financial economy that has grown significantly,” said Joseph LaVorgna, chief economist for the Americas at Natixis. “You could have argued a few decades ago that the stock market was not the economy, and that was very accurate. That is no longer the case today.” ...

Through the end of 2021, the share of household wealth that comes from directly or indirectly held stocks hit a record 41.9%, more than double where it was 30 years ago, according to data from the Federal Reserve. A host of factors, from the advent of online trading to stock-friendly monetary policy to a lackluster global economy, has made U.S. equities an attractive place to park money and earn nice returns.

Asset allocation is about diversification, and if 42% of your wealth is tied up in stonks, YOU ARE NOT DIVERSIFIED, no matter how diversified is the stock portion of your portfolio.

The Talmud had it right: One third in hand, one third in land, and only one third in business.

Be it then, as Sir Robert says, that anciently it was usual for men to sell and castrate their children, Observations, 155. Let it be, that they exposed them; add to it, if you please, for this is still greater power, that they begat them for their tables, to fat and eat them: if this proves a right to do so, we may, by the same argument, justify adultery, incest and sodomy, for there are examples of these too, both ancient and modern; sins, which I suppose have their principal aggravation from this, that they cross the main intention of nature, which willeth the increase of mankind, and the continuation of the species in the highest perfection, and the distinction of families, with the security of the marriage bed, as necessary thereunto. 

-- John Locke, First Treatise of Government

42 is not the answer to everything.



 

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