Of Dollars and Data

Yup: follow Ben Carlson (the author of that weblog). As well as his colleague Michael Batnick (https://theirrelevantinvestor.com) and Nick Maggiulli (https://ofdollarsanddata.com). All the publicly facing folks at Ritholtz Wealth Management seem to be top tier.

> […] you can't justify the claim that it's entirely "underlying business activity that drives total returns". The S&P 500 index tracks earnings per share (EPS) fairly closely over the decades: * https://www.macrotrends.net/1324/s-p-500-earnings-history A lot of folks think the top ten stocks in the S&P 500 making up ~40% of the capitalization is bonkers, but they also make up ~40% of the net income share: * https://en.macromicro.me/collections/34/us-stock-relative/142686/us-sp… So from an earnings/income perspective, there appears to be a link between the two. Perhaps worth noting that the US markets seem to (only?) outperform when tech is outperforming, with other US non-tech sectors basically performing the same as out countries' non-tech sectors: * https://ofdollarsanddata.com/do-you-need-to-own-international-stocks/

Yes! And I recommend a post about "The Wealth Ladder" by Nick Maggiulli. A concept I love because I relate is the idea of how we are conscious about how much we spend on things, or we are not. Do you count the cost of a daily lunch vs. dining out at an "expensive" restaurant where you bought three glasses of wine? Does it even matter that you eat out, do you count the cost? Great food for thought about one's attitude towards wealth: https://ofdollarsanddata.com/climbing-the-wealth-ladder/

> Just to be clear, the point of the linked article is that you cannot know that now is the LOW and not the new high. And even if you did know ahead of time when the dip would occur, this article show it's still generally best to DCA instead of sitting in cash: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averagi…

For economics: * Noah Smith: fhttps://www.noahpinion.blog * Since he's retired from his NYT column after 25 years, Krugman: https://paulkrugman.substack.com For personal finance / business: * https://awealthofcommonsense.com * https://ofdollarsanddata.com

https://every.to/napkin-math/, https://www.productlessons.xyz/, https://ofdollarsanddata.com/

For personal finance: "Of dollars and data". Mainly short articles, approximately weekly, and, rare enough to be noted, the code for all analysis is shared. https://ofdollarsanddata.com/

Dalio takes a long view. His fund looks at the sort of vast structural changes that have regularly occurred over the past 500 years of financial history. It's not a great rebuttal to say he's wrong because the last few decades have been great. And Dalio has not always been saying this. He used to advocate an "All-Weather" portfolio that was 55% US treasury bonds: https://ofdollarsanddata.com/ray-dalio-all-weather-portfolio/

> I'd rather take a small hit to the expected value of my returns in order to reduce risk of being on the wrong side of that average. This is a common fallacy. That is not actually the tradeoff you are making, in fact you are taking a hit to the mean value, and also greatly increasing the chances of being on the wrong side of the average[1]. Dollar cost averaging increases variance and decreases the expected return in proportion to your averaging period. You earn less and have a much lower floor for almost no increase in the ceiling. There are nice visualizations here: https://ofdollarsanddata.com/lump-sum-investing/ [1] at least according to history. Who knows what the future holds.

I read this recently and found it insightful, especially if you believe bitcoin is valuable: https://ofdollarsanddata.com/why-is-gold-valuable/

> willfully, thoughtfully, and purposefully attempting to argue that there is no racially motivated correlation between these datasets. On the contrary.... I grew up in Africa. My sister is professor of African studies with degree from UW Madison. I'm familiar with the area and the issues. The "crescent" seen in the data is geography, not some sort of compelling argument for correlation. Exactly contrary to your interpretation of my comment, my point is that the same data sets are correlated everywhere there's density, but I guess "the blob" doesn't seem as persuasive as "the crescent". It's not that it's a crescent, it's just urban America. And it's a problem. PS. See also, "centuries worth of negative compounding at work": https://ofdollarsanddata.com/racial-wealth-gap/

Take a look at the linked article https://ofdollarsanddata.com/why-private-school-isnt-worth-the-cost/ The author is pointing out that spending gobs of money on expensive educations is no better than the public education that is either free (high school) or cheaper (public colleges.) I've lived this, too. My parents sent me to a private high school, and later when I found rankings in my state, my private high school was no better (or worse) than the free one in town. I was no better or worse off, I probably would have kept most of the same friends, and probably would have gotten into the same colleges. Then, my Dad pushed me to a "fancy" private college. The professors were just so-so, and I should have transferred. (I didn't know better.) Later I found rankings and my "fancy" college ranked poorly, but the public college nearby was ranked significantly higher. After graduating from college, I bumped into some people from high school, and we all agreed that our guidance counselor gave us horrible college advice. Had I gone to the public high school, would they have pushed me towards the better public college? I have no idea.

I don't know. But I am still diligently putting part of my paycheck in the S&P 500 every single month. I don't believe you can accurately time the crash, and by cashing out, you are losing some significant returns [0]. In fact, I remember reading last year, a widely discussed article in HN about how we were in a "Late-Stage Major Bubble" [1], since then, then S&P 500 has gone up more than 20%. I'm glad I stayed invested. Even if we are in a bubble, the maxim "The stock market can remain irrational longer than you can remain solvent." still applies. Lastly, regardless of the FED balance sheet, I believe the US remains the best place on earth to start and run a business. America breeds a culture of risk-taking and entrepreneurship and most of the innovation in the world still comes from there. When asked "What are America’s primary strengths?", Lee Kuan Yew, former Singapore's PM, had this to say: Americans have a can-do approach to life: everything can be broken up, analyzed, and redefined. Whether it can or it cannot, Americans believe it can be solved, given enough money, research, and effort. Over the years, I have watched the Americans revise and restructure their economy, after they were going down in the 1980s, when Japan and Germany looked like they were eclipsing America, taking over all the manufacturing. Americans came roaring back. They have the superior system. It is more competitive. What has made the U.S. economy preeminent is its entrepreneurial…

Reminds me of this 2019 post: https://ofdollarsanddata.com/climbing-the-wealth-ladder/

Stocks increased more from 1985 to 2005 with higher rates than from 2005 to 2025. https://ofdollarsanddata.com/sp500-calculator/

My salary is $96,000, which comes to about $5700/month after taxes and everything. I spend about $1300 a month in recurring expenses (rent, gym, etc.). I'm 36, I live with roommates in Brooklyn, and I saved $1200 last month. That means on average, I spent about $100 a day on everything else (food, fun, travel). It's a life that works for me. IMHO, income is logarithmic [0], so in terms of things I might like to have but don't (an apartment with a shared pool?) it would probably be a big jump up in income to get them. If I got a $10K raise tomorrow, it wouldn't really make a difference. If I ever have kids, I'll either have to give some things up or climb the income ladder. [0] https://ofdollarsanddata.com/climbing-the-wealth-ladder/

Those returns depend on when you invest. The inflation adjusted annualized return of the S&P 500 was negative from January 2000 to January 2013 at -0.25%. The inflation adjusted total annual return from January 2000 to January 2024 was 4.5%. https://ofdollarsanddata.com/sp500-calculator/

A catchy blog post on this subject; Even God Couldn’t Beat Dollar-Cost Averaging https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averagi…

Generally whenever I feel this way (and it happened a lot) it was coming from a situation when I tried to press myself to choose. The more I pressed the worse it got, the more anxious I got and the more stuck I felt. There is a recent article on min-maxing and optimising life as much as we can: https://ofdollarsanddata.com/why-you-shouldnt-optimize-your-life/ But life is a not a math equations. There is also a concept of wu-wei called effortless action. Something that we do that doesn't feel like work and we just pursue our energy or flow without even realising it. That is essentially the magic.

Even God Couldn’t Beat Dollar-Cost Averaging - https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averagi… Made the rounds here a couple days ago. “Don’t time the market” is most certainly not stupid advice.

What is « long » green? How long red must be? There are no real signals here, you’re trying to rationalize gambling. Also even if you could perfectly time dips it’s not a good strategy https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averagi…

Are you ignoring dividend reinvestment creating compounding growth? Even god couldn't beat dollar cost averaging, https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averagi…

Invest now. Buying the dip is a terrible investment strategy. [0] [0] https://ofdollarsanddata.com/why-buying-the-dip-is-a-terrible-investme…

Come on. Link to the actual artical? https://ofdollarsanddata.com/why-ive-changed-my-mind-on-bitcoin/

- 25% Wealthfront (~medium aggressive fund) - 30% Industrial/Commercial Real Estate - 5% Crypto - 40% Cash I'd like to reduce the cash. Will probably buy gold with about half the cash to align with a more all weather portfolio [0]. 0. https://ofdollarsanddata.com/ray-dalio-all-weather-portfolio/

> how much or how little influence things like Robinhood and WSB Every attempt at seriously measuring this, and there haven’t been many I’ve found that can be publicly shared [1], found close to negligible levels of broader-market effects. $4bn in options buying, on the other hand, will do it. [1] https://ofdollarsanddata.com/robinhood-trader/

Actually, even God couldn't beat dollar-cost averaging[1]. [1]: https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averagi…

This isn't only a problem with technology: https://ofdollarsanddata.com/why-winners-keep-winning-4e7f221f5b84 > Both King and Rowling’s foray into undercover writing reveals a harsh truth about success and social status — winners keep winning. This idea is formally known as cumulative advantage, or the Matthew effect, and explains how those who start with an advantage relative to others can retain that advantage over long periods of time. This effect has also been shown to describe how music gets popular, but applies to any domain that can result in fame or social status. I discovered this concept by reading Michael Mauboussin’s The Success Equation where he writes: >> The Matthew effect explains how two people can start in nearly the same place and end up worlds apart. In these kinds of systems, initial conditions matter. And as time goes on, they matter more and more.

> 1900 had invested passively in the stockmarket, spent 2% of their wealth How is that possible, though? e.g. according to https://ofdollarsanddata.com/sp500-calculator/ adjusted by inflation the stock market only grew by 34.10% between 1900 and 1982 when adjusted and even if dividends were reinvested. And that's total growth, annualized was barely 0.36% Their wealth wouldn't have increase at all during that period, especially if they wanted to spend 2% each year. Of course it accelerated massively in the 80s (1900-2024 was 2.48% annualized) but using the average would make no sense. If you were still very rich in 1982 you would have made a massive amount of money since then. e.g. somebody like Trump invested all of his inherited wealth (and everything his dad gave him before) into the stock market instead of pretending that he was a very "successful" businessman he would have been much, much richer than he was in 2016 and wouldn't have had to be so ashamed about realising his tax returns.

As usual, there's a few chart crimes in here. Chart 1 shows CPI and inflation adjusted wages on the same graph? Why? Inflation adjusted wages already take into account CPI. There's no sensible reason to plot these two on the same graph. The caption is "wages are up 80% but that didn't keep up with living costs" - you cannot draw that inference from this graph. This graph actually shows that in fact wages grew faster than inflation. Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s - and the average American family is like 10% smaller. Broadly, 1 square foot of the 'average' American home costs exactly the same as it used to in the 1970s. [1] So yes, housing is more expensive in big cities but that's because of zoning as Mr. Andreessen will tell you. Outside big cities it's still zoning, which requires minimum setback, garages, square footage, etc. In fact if you look by cohort, inflation-adjusted, millennials are doing roughly as well as other generations did at their age. [2] Their flagship claim that folks have 86% less purchasing power now holds zero water. The poverty rate remains basically unchanged since the 70s. [3] You'd think there'd be a lot more people in poverty if they only had 1/10th the buying power no?! Some things are more expensive (college, healthcare, 1 sqft of house in a big city, new houses outside of town) and yes, productivity growth far outpaced wage growth - but wage growth…