Saturday, August 28, 2010

Megan's List

Blogger Megan McArdle has a list of things where her best guesses turned out to be incorrect in the face of evidence. We all have these cases and it is good to look back and see where foresight failed us. There is nothing like data to help us revise our internal prediction algorithms.

This point, though was chilling:

I believed that over reasonably long time-frames, modest investments in equities would allow you to retire in comfort.

I am mildly interested (as a hobbyist) in personal investment. But I think the implications of this are far broader than one sentence really captures. It makes the whole idea of shifting Social Security (as an insurance program against poverty in old age) into personal accounts somehow less appealing. It also says very interesting things about the rate of retirement for those of us who started our careers late (due to mid-career changes). The more I think about this issue, the more it has very profound implications for the way our work force will evolve.

But, sadly, I also think that this point is the best reading of the current stagnation of equities, even if the long run is better it is hard to have the level of confidence that I once did.


  1. My personal account that I am forced to put 9% of my salary into has lost money every fucking year since I got to my current country.

    The whole house of cards is based on the economists assumption of exponential growth forever which anybody with any training in a reality-based discipline laughs at.

  2. It is also going to be unpleasant when everyone needs to sell at the same time (having had everyone buy all at once).