Big Biz Knows: Middleclass - Adios!

[EJ]

Re: Big Biz Knows: Middleclass - Adios!

are you thinking about making that happen, ej?

Indeed I am.

[doom&gloom]

Re: Big Biz Knows: Middleclass - Adios!

Indeed I am.

Indeed I would be interested!

[BadJuju]

Re: Big Biz Knows: Middleclass - Adios!

Good for him Woodsman. There's nothing wrong and a whole lot right about getting your hands dirty doing productive work. One thing I'd change about my job is to do so more than I get a chance to now.
Will

As someone that has done dirty, productive work, trust me, it doesn't do a thing for you.

[shiny!]

Re: Big Biz Knows: Middleclass - Adios!

What if there was a firm that was actually for the clients rather than for the managers?

What if the firm was founded on a set of principles that the client community developed?

What if the client community was part of the development of the firm's investment thesis and this firm's decisions were informed by the opinions of the community of clients themselves?

What if this firm was audited by an elected body of the client community?

An interesting idea.

Sounds like the philosophy of a Credit Union or a Co-op as opposed to a Bank?

[EasternBelle]

Re: Big Biz Knows: Middleclass - Adios!

That would be simply awesome!

But how to feel part of it, when ones feels humbled by the intellectual capacity of others around. How inclusive can it be?
EasternBelle

[ST]

Re: Big Biz Knows: Middleclass - Adios!

That would be simply awesome!

But how to feel part of it, when ones feels humbled by the intellectual capacity of others around. How inclusive can it be?
EasternBelle

Humility is a great strength but not because one thinks less of themselves, but rather because they think of themselves less. The community tries to create conditions where no question is or input is valueless; it may just be the thought, which seems so innocuous, is the one that gets the wheels turning to lead to an entirely different conclusion.

[littleshark]

Re: Big Biz Knows: Middleclass - Adios!

What if there was a firm that was actually for the clients rather than for the managers?

What if the firm was founded on a set of principles that the client community developed?

What if the client community was part of the development of the firm's investment thesis and this firm's decisions were informed by the opinions of the community of clients themselves?

What if this firm was audited by an elected body of the client community?

An interesting idea.

Many of the clients will demand so much of your time and complicate decision making that the operational burden may very well hinder your ability to succeed.

[shiny!]

Re: Big Biz Knows: Middleclass - Adios!

Many of the clients will demand so much of your time and complicate decision making that the operational burden may very well hinder your ability to succeed.

It wouldn't have to operate as a direct democracy. Large co-ops function very well, for example. Every rank-and-file member has a say. An elected board of directors makes the big decisions keeping the best interests of the membership in mind.

This is just off the top of my head. I'm pretty sure EJ knows how to protect his time and decision making ability, and if he's confident enough to mention the possibility of such a firm, he's probably already put a lot of thought into how it could be structured.

A member-centered investment firm... what an interesting idea!

[ST]

Re: Big Biz Knows: Middleclass - Adios!

Many of the clients will demand so much of your time and complicate decision making that the operational burden may very well hinder your ability to succeed.

Think of a typical fund which has no connection to its investors' views. You could compare it to a hypothetical new kind (which does not operate by direct democracy for decision making which would cause the issues you thoughtfully mention), which has a community and open discussion around investment themes.

You still have a captain charged & authorized to make the ultimate decision(s), without additional bureaucratic burden, but you have a valuable collection of others (quartermaster, rigger, second mates, chroniclers, etc..) who contribute thoughtful inputs to the process which may affect the direction.

[ProdigyofZen]

Re: Big Biz Knows: Middleclass - Adios!

What if there was a firm that was actually for the clients rather than for the managers?

What if the firm was founded on a set of principles that the client community developed?

What if the client community was part of the development of the firm's investment thesis and this firm's decisions were informed by the opinions of the community of clients themselves?

What if this firm was audited by an elected body of the client community?

An interesting idea.

The number 1 concern I would have in that scenario is "who are the clients"

In other words, are the clients going to be the same clients who have 50 million + or super high net worth clients? The ones I would think the iTulip community would care not to give services to because they either got rich by rentier economics or in the FIRE industry itself. (obviously not everyone in those industries are bad people nor does everyone in those industries think they are really so much better than everyone else etc)

Why make the people who are helping to prolong the FIRE economy even more rich? The Tom Perkins and Sam Zells of the world. As Sam Zell said yesterday "I agree with Perkins" the "rich work harder than everyone else."

The best line Perkins had in his interview last week: "Let the rich do what the rich do, get richer"

I am thinking about making a t-shirt with that line on it.

The problem is without their capital it is hard to grow the assets of the firm unless you can go straight to Pension funds or Endowments to grow capital but those investors won't look at you unless you are 500mm with a 3 year track record.

The irony of this industry.

[littleshark]

Re: Big Biz Knows: Middleclass - Adios!

Think of a typical fund which has no connection to its investors' views. You could compare it to a hypothetical new kind (which does not operate by direct democracy for decision making which would cause the issues you thoughtfully mention), which has a community and open discussion around investment themes.

You still have a captain charged & authorized to make the ultimate decision(s), without additional bureaucratic burden, but you have a valuable collection of others (quartermaster, rigger, second mates, chroniclers, etc..) who contribute thoughtful inputs to the process which may affect the direction.

Sounds like a portfolio manager with analysts working for him.

[vt]

Re: Big Biz Knows: Middleclass - Adios!

"According to Forbes if you confiscated the wealth of the Forbes 400 and divided it with every other U.S. citizen, each would get $6,435." How would this change the life of the poor?

"The lives of the 400 would change. They would owe no taxes, employ no one, buy no goods or services, and invest in nothing"

"According to Kiplinger 4 million jobs go begging. Job seekers can't pass background and drug tests,or lack the skills to do the job (no necessarily high tech either), or some of the work is not pleasant or easy. No one is stopping applicants from taking these jobs. Why aren't our educational systems advising, teaching, preparing students for the real world?

The above quotes are from an article by Dan Kennedy.

We have reached a point in this economy of a disconnect between job creation and government policy. Government can't create jobs; government needs to provide the right mix of incentives for private industry to do this.

I feel there is a huge misallocation of government spending. The first stimulus was supposed to go to infrastructure; instead it went to FIRE to bail out the crooks that helped (with politicians encouraged and collusion) to create the AFC. Look at recent examples of government funds to companies started by donors that failed. Where are the infrastructure projects that would produce high paying construction work?

http://www.stanford.edu/~chadj/shanghai050.pdf

Are we talking about ill gotten gains? What about the young people that have created new industries in social media, mobile communications, apps. Are Zuckerberg and Jobs the villains? The rich are not the same across their population. Many add large job creation, many have sacrificed, failed a few times, taken years and risks to get where they are. Some have wrongly found their fortunes; these are the ones the media should go after, not the ones that have done good.

We need to change the language. Deng Xiaoping "To get rich is glorious."

We need to create ways to help more get ahead, not blame those that have honestly.

We also need the leadership of this nation on both sides listen to EJ.

[jk]

Re: Big Biz Knows: Middleclass - Adios!

not supporting the idea of direct confiscation and redistribution, but in fact $6400 would make a huge difference in many people's lives. data on giving cash to the poor show that many will use it in long-term benficial ways for themselves and their families- just off the top of my head e.g. a reliable used car or car repairs to be able to get to jobs. even if "wasted" on consumption, almost all that money would be SPENT and give an enormous boost to retail sales, gdp and monetary velocity. then there's a multiplier we need to estimate....

it may be the case that an extra $6400 would not be lifechanging for most members of this community, but we shouldn't dismiss the value of money for those with truly limited or absent resources.

[thriftyandboringinohio]

Re: Big Biz Knows: Middleclass - Adios!

not supporting the idea of direct confiscation and redistribution, but in fact $6400 would make a huge difference in many people's lives. data on giving cash to the poor show that many will use it in long-term benficial ways for themselves and their families- just off the top of my head e.g. a reliable used car or car repairs to be able to get to jobs. even if "wasted" on consumption, almost all that money would be SPENT and give an enormous boost to retail sales, gdp and monetary velocity. then there's a multiplier we need to estimate....

it may be the case that an extra $6400 would not be lifechanging for most members of this community, but we shouldn't dismiss the value of money for those with truly limited or absent resources.

Yes JK. The poor (people at individual income levels of less than $30K) would spend that $6400 to zero in the first 30 days.
If there really are any positive effects from velocity of money or economic multipliers they would kick in immediately at a huge scale.
My 25 year old college grad daughter working at $15/hr would buy a reliable car, it would make a huge difference to her, and her money would be injected right back into the economy.

If you gave it to me, well, I would stick it into an account for some rainy day, leave it there and never think much about it.
That's what I did in spring 2008 with my $800 Bush Tax Rebate Check.
Money is fungible, but you could rightly say I never did spend mine.

The tone of the Forbes article is a little telling and pretty disingenuous.

""The lives of the 400 would change. They would owe no taxes, employ no one, buy no goods or services, and invest in nothing"

Baloney.
Seizing the personal fortune of Bill Gates would not close down Microsoft, nor would taking the personal money from Warren Buffett close down Dairy Queen or GEICO.
The companies and jobs would still be there. The money would still be there, and change from tax sheltered capital gains to fully taxable W2 wages, and some of it would be invested by someone into something.
I doubt the personal spending of these 400 people for "..goods and services..." would be missed in our GDP.
The hubris and arrogance of this theorem is staggering. It smells a bit like the divine right of kings.

[Penguin]

Re: Big Biz Knows: Middleclass - Adios!

Thank you Woodsman, I appreciate it.

It is good to be among this group of kindred souls... even if we have so many opinions that are anything but kindred.

Will