Welcome to The Saving Ninja’s thought experiment #5. This time he is asking us to think about the following:
A different opinion is somewhat frowned upon in our clique based society, but some of the greatest minds of all time were outliers. They weren’t scared to go against the grain and stand up for what they believed in. So, for this Thought Experiment, I’d like you to reveal yourself: What opinion do you have that most of your peers do not share?
Interesting one, right?
Obviously being such a contrarian bastard 1 there is no way I could whittle this down to just one opinion, so here are a few of ’em for ya 🙂
Free market schmee schmarket
Belief: That there is such a thing as the free market, and that it is the most efficient and fair way of allocating capital, labour and resources.
Peer Group: Capitalists, libertarians, investors, etc…
My view: I’m sorry but there is quite obviously no such thing as a truly free market and the markets we have are actually highly inefficient and prone to corruption and all sorts of other distortions.
There are so many special interest groups and people with money and power manipulating markets and influencing the laws that dictate them, I cannot believe that anyone has the nerve to suggest that there is a free market in the first place and especially not that the systems we have are somehow perfect and we should not try to change them for the better. They don’t need fixing, no siree. Status quo is good because it continues to enrich the people who believe in this shit the most in the first place. What a coincidence huh?
I’ve thought this was obvious since I learned about basic economic terms and systems quite a while ago but never bothered thinking or reading any more deeply to find out whether there was anything to back up my vague thoughts on the subject. But I recently stumbled across this series called free market vs capitalism which totally nailed everything for me with absolute clarity.
There are many reasons in there why the markets we have aren’t actually free, and I won’t just replicate the whole post here, but my favourite one has to be:
“Rational buyers – the entire $44 billion advertising industry is devoted almost entirely to preventing rational buyers. Pre-Edward Bernays advertising was generally of the format: “This product exists. These are its features. This is what it costs.” Post-Bernays marketing is about using psychology to manipulate individual behaviour; getting people to buy something which they wouldn’t without the ad, even if they knew about it.”
Very relevant to the FI mindset that one! 😉
The other one is perfect information. It is surely so clear and obvious that the billions of people who live in market economies do not have perfect information about all the transactions they enter into. So it’s hugely likely that a party on one side of a deal is doing the other one out of value.
I could go on for a while here but hopefully you get the point as we’ve got a lot more to get through before it’s home time 🙂
We got the whole world, in FIRE hands
Belief: If only everyone adopted the FI mindset we could all be retired early and the world would be saved and living in Mustachian utopia.
Peer group: The Mustachian branch (cult?! 🙂 ) of FIRE folks.
My View: WTF, who are we trying to kid!?
There are tonnes of people out there who earn so little and are already on a bare bones budget that there is no room for manoeuvre down the frugality scale. This leaves them having to skill up and earn more… and this is certainly an option for many people that they don’t take for some reason.
But here is my beef and it’s with the word “everyone”.
Clearly not everyone can skill up from say, being a cleaner, to something higher paying.
Who would do the cleaning?!?
We’d have a pretty untidy world left to deal with, far from a utopia in fact 😉
I know, the chances of literally every cleaner in the world all converting to FIRE and becoming high paid software engineers in quick order is overwhelmingly unlikely. But we need people doing those lower paid jobs for our cushty western world to continue to function as we wish.
FI is a great solution for an individual to break free from the systems we have set up, and there is nothing wrong with that.
But for everyone to gain and live in a fairer world, the system needs changing itself.
To put it simply: we should pay cleaners (and anyone else who is actually doing a valuable job) a decent wage FFS!
It is a bit of a contradiction to be both gaming this system for our own gain while railing against it, and I accept that, but I’m just playing the hand I’ve been dealt with here. I feel I have a much greater chance of being able to help to change the system once I’m actually out of it (or the indentured work phase of it, at least).
What? He’s still going on about markets?
Widely held belief: You can’t beat the market
Peer group: Passive Investors
My View: Don’t get me wrong here, I certainly don’t think *I* can beat the market, and I do think it’s great advice to hear this as a new investor.
We don’t want people thinking stock picking is easy and they will get outsized returns just by reading the FT once a week and throwing some darts at list of stock tickers. And well diversified low cost index funds *are* the way to go for 90%+ of investors.
But having said all of that:
I do think it’s possible for “one” to beat the market.
And I do believe that single investors have certain advantages over big fund managers. Such as:
- They can make up their own rules, whereas most funds have certain asset allocations they have to stick to.
- Big funds can’t invest in small amounts because it’s just not worth their time. They can’t dig out really niche companies or sectors to invest in which could ultimately provide the biggest returns.
- Tax efficient vehicles and schemes such as VCTs, EIS and SEIS.
- BITCOIN (for the lolz!)
Again I’m not saying I can do any of the above, but I do believe a motivated individual who had enough time on their hands to research things, there is no doubt in my mind that they could beat the markets, and I am certain that many do.
DIY Everything
Widely held belief: You should insource every job/task you can to yourself.
Peer group: I guess it’s those pesky Mustachians again, init?
My View: I think you should try everything at least once to see if you are in any way proficient at the task and whether it ultimately saved you any money (or is likely to again in future), and whether you enjoyed doing it. But there are plenty of reasons why people shouldn’t just DIY every fucking thing in their lives.
- That proficiency thing – you might just be plain shit at it!
- You might decide you hate the task at hand (Having given it a fair crack, I’ve decide I hate car maintenance and pretty sure I will never bother with that again in future)
- It’s really inefficient in many cases – We are always told about minimalism so we can use less stuff and (yet again) save the world. I can’t think of anything less “minimalism” than every single person owning every single tool to do every conceivable job that might come up in their life. Yes, there are tool libraries and/or you can borrow stuff from mates and/or you can sell them on once you’ve done with the tool. But that is just extra ballache that most people don’t need when in the middle of re-plumbing their bathroom and they realise they are missing a crucial tool and just want to get it done ASAP.
I feel like I’ve written enough now so will finish on an easy one that hopefully doesn’t need much of an explanation:
Widely held belief: You can’t win money gambling.
Peer group: Everyone!
My view: The opposite 🙂
Here are more unpopular opinions for you to read through from other bloggers:
Andy @ liberate.life (on Rebo)
Notes:
- I would have loved to use some alliteration on that one but even I don’t really like to see that word written on the internet 🙂 ↩
Discussion (20) ¬
Ah, you saved the best for last, I see!
Hehe, of course, had to be in there at some point!
I think you’re conflating free market with fair market.
They aren’t the same thing.
Capitalism promotes a free market. In theory this means that any suitably connected, motivated, and resourced party is able to come along and knock the incumbent off their perch. Amazon, Google and Uber are good examples of this. That doesn’t mean the disruptor is any nicer, just that they are better at it.
It is Darwinism, as portrayed in Game of Thrones. It isn’t the fairest who thrive and survive, it is those who are best at playing the game.
{ in·deed·a·bly } recently posted…Marriage of ultimate doom
Hey indeedably,
No, definitely not conflating those two things.
In fact (in my unpopular opinion of course) you are conflating free market with capitalism.
If you read the link I posted he is positing that those two things are almost completely opposed to each other.
In evidence he quotes a quite a few things that were written by Adam Smith himself, the bloke who came up with free market theory:
Yes it’s clearly just theory, people wouldn’t start businesses if they made zero profit. But when people start going on about the free market, I’m not really sure they understand what they are talking about?
I am no expert of course but I found the random internet guy’s arguments compelling enough to adopt this as one of my unpopular opinions 🙂
Cheers
You need to re-read your Adam Smith. (For reference the full text is available here https://eet.pixel-online.org/files/etranslation/original/The%20Wealth%20of%20Nations.pdf)
Smith believed the “invisible hand” of self interest would produce an equilibrium price between what buyers were willing to pay for a good or service, and what sellers were willing to sell it for.
If sellers charged too much, then a competitor would step in an undercut them.
If buyers were willing to pay too little then sellers would cease selling the good or service.
The “free” part was all parties were able to set their own price at which they were willing to conduct a transaction. Smith wasn’t arguing that sellers make zero profits, his argument was that they would only make the profits that the market was willing to support.
{ in·deed·a·bly } recently posted…Marriage of ultimate doom
Ah haha fair play – I will happily admit that I have not read the full text but have (erroneously) relied on “quotes” from internet articles – I will comment on that guys blog post asking what gives with the fake quote.
But I believe this doesn’t detract from the main point I was originally making, so let’s try to find some common ground we can agree on?
Can we agree that Adam Smith advocated:
– Reduction of government interference in market and less regulations
– Free trade between countries
Taking the USA which many hold up as the country who is the best example of the free market ethos, we have:
– Lot’s of regulations (not a bad thing in my opinion)
– Many trade barriers, in fact some call “trade wars” with other nations
So I think my original statement that such a thing as a truly free market does not exist is correct?
It might well be unpopular but I still think I’m right with that statement 😉
Of course we have such things as more free or less free markets, and the more free ones have tended to better their GDP growth per year than the less free ones.
But I think on balance I would rather live in Sweden or Denmark than the USA in terms of how those countries governments get involved in their markets. Leaving healthcare up to the free market has not proven to be anywhere near the optimal solution in terms of outcomes for the US, for the most obvious example (there are many others!)
Cheers
Now you’re talking sense 🙂
A “free” market is as bigger myth as the notion “level” playing field or the existence of a meritocracy. Sighted in the wild about as often as the Loch Ness monster or the Yeti, but with slightly less credibility.
{ in·deed·a·bly } recently posted…Ownership
And well played for coming up with an unpopular opinion! Mission accomplished.
{ in·deed·a·bly } recently posted…Marriage of ultimate doom
You’re gonna see a hoard of angry Mustashians outside your window with this post :))
I’d never really thought about it still being possible to beat the market before, I guess I’ve just got the FI mantra hammered into my head too much! FIREvLondon seems to be doing alright at it, although he has said he’s going to start consolodating into low cost index funds now as it’s not worth the extra effort!
Argh, I really WANT the DIY everything possibility to be true, but you’re right, it can’t/shouldn’t be. When I have my ranch I’ll treat collecting tools like Pokemon, gotta get em all!
Cheers for joining in 🙂
SavingNinja recently posted…The Weird One
Haha – I think the hard core Mustachians left this blog years ago Ninja 🙂
It depends on what kind of life you are living. If you are self sufficient in the woods and have lots of land and storage room, and are miles from everywhere, you have both the means and the need to be DIY everything.
For us city dwellers, it’s not so practical.
Cheers! 🙂
Number 2 definitely resonates with me. I see the FIRE movement as a really unique form of resistance against late stage capitalism: its critique shares so much with Marxism, but then the solution is just to double down on the system to ensure that we’re on the winning side.
As you say, nothing wrong with using the tools and knowledge we have to extract ourselves individually from the shittiness, but we should be doing what we can to pull others up as well. I’m also interested in exploring ways of reaching FI while doing more to change the system in the process.
Interesting stuff Mindy, I had not thought of the parallels between Marxism and FIRE!?! Need to think that one through more.
Let’s start up our own little revolution 🙂
Interesting thoughts there, TFS.
I think I’m kinda with you re the passive investing.
I think it is possible to beat the markets but probably not consistently. Hence I have both passive and active investments in my portfolio (more on the passive side for peace of mind). Do I think I can beat the market? No, but I’ll have a bit of fun trying to, without risking my wealth.
I like the idea of a FIRE revolution but FIRE’s never going to be for the masses – you do have to be earning a certain wage to be able to do it. Many of the ideas however, such as cutting back on consumerism, paying off debt etc is good for everyone to try to practise but in order for the economy to work, we need the spenders in society, just as long as it’s not us!
weenie recently posted…Microfiction #1 – Fire
You definitely dabble more than I do, and put in the research so are more likely to succeed!
I like the recent crowd funding things you’ve been getting involved in. Need to look out for more of those (as early round as possible) in future.
Cheers
Well, Nutmeg are crowdfunding on Crowdcube – only spotted it today, probably would have jumped in, but don’t have time to read up on it now. Might be worth checking out.
weenie recently posted…April 2019 Savings + other updates
Yes, I agree that one can beat the markets by choosing active investment over passive index investment. I aim to identify fund managers who have done that and maybe can do it again. You do, however, need to be able to risk undershooting the market in order to have a chance at overshooting it, so it is not a risk for everyone.
Getting Minted recently posted…Investing a lump sum
Hi Getting Minted,
Interesting approach. I don’t think that identifying fund managers is the way to go here personally – although good luck to you and I hope you can make it work of course 🙂
My point was more that on an individual basis, if you put in the work, there is no logical reason why you couldn’t get an edge over the averages of the market.
Cheers
Hey TFS,
I thoroughly enjoyed reading this post and the subsequent debate in the comments. I found myself nodding in agreement with some of your contrarian ideas, so I think I’m becoming more contrarian myself over the years!
I don’t profess to know much about economics so don’t feel educated enough to jump into the market debates, but with my cynical hat on, I find it hard to believe that corruption and profit/money drivers of big companies doesn’t somehow find a way to sway things.
More of these great debate posts would be awesome!
Corinna