I was chatting with some of the guys from work today and changed the name of our Teams group to "Crypto Zillionaires" as a bit of a joke. It has been a lot more interesting at work over the last few months however though, as while we have normally had good conversations about all kinds of things, these guys are starting to see and understand the connections I have been talking to them about for a couple years already.
In some ways, it is kind of like lifting the veil on reality, to discover that reality was never what it claimed to be. Although, this might just be another veil below and like an onion, we aren't at the truth yet.
They asked if I have any Ethereum and my go to answer is "a bit" which they think means a lot but, it really does just mean a bit. I bought some back in the day to purchase a couple assets, including Gods unchained cards and a couple tokens with Eth only pairings. One of those tokens is now worth 80 dollars - and I had bought 0.5 of Eth worth - which makes it a 90% loss on todays values.
One of the guys was asking if I had been reading any of the WallStreetBets posts and the craziness of the #lossporn that is going on, where people are posting pictures of their values plummeting. As I said to him, I don't get involved in the drama and hype of these things, as I find it affects my decision-making too heavily and since there is an emphasis on the negative, it makes me more risk averse.
Caution is of course good, but I have spent so much of my life being cautious, that I had failed to build anything of value for the future. It is an interesting mental conflict, as people treat investing cautiously as it comes with risk, with spending as the cautious move, as it is the better to have the bird in the hand, than two in the bush. the problem is of course, that the risk aversion of investing long, means risk exposure in the future if there are no future assets held.
For example, a house which might not be a good yield investment, can work as a store of value that can be used in various ways later, for example, as collateral on the purchase of another asset or a lump sum return sold when required. We were talking about the differences in house pricing in Finland and one was saying that he was reading an article about a person who was struggling to rent in Helsinki, but wouldn't move out of the city as they love the lifestyle. This in my opinion is a very risky approach to life, as it will likely eventuate in the person being completely reliant on others, whether it be the taxpayer-funded government, or friends and family.
Owning a house may be a low-yield, no-yield or negative-yield investment, but at retirement with 15-20 years left to live, it will go a long way to provide a higher quality of financial life. Yes, investing in appreciating assets will likely out-return, but that is a risk also. Ideally, a person could take a diversified approach, but many don't. Also, many overextend one way or another, where they have no low-risk stores like housing that will likely maintain value, or, they spend too much on housing, thinking it is valuable. We all need somewhere to live, but what is the value of Helsinki living?
How much is experience worth, when the experience is perhaps having a few more gigs within walking distance, a few more shopping opportunities, a few more people and a big city attitude? I am not against this kind of decision, but do people really evaluate what the cost is, or are they aught up in the hype? I have plenty of friends in Helsinki and they seem to believe that it is far better than where I am, in a city a fifth the size, but do they realize that the cost of their current lifestyle might make it impossible for them to ever build an asset portfolio?
Again, I think that people do not evaluate risk well, especially future risks. Instead, we are loss averse in the moment and take the "everything will be okay" in the future approach, without considering what it takes for everything to actually be okay. Is it better to live hand to mouth in Helsinki, or live well in the suburbs, whilst being able to put resources away to extend the possibility to maintain lifestyle?
While a lot of people think that the largest change in our lives are when we are young, it is actually when we are retiring, as it is a massive change from moving from career to nothing, especially considering that our habits have become accustomed to conditions for decades. If on top of this, our retirement will trigger a move to a pension that no longer can maintain our accustomed lifestyle, this makes the change even greater and unlikely for the better. It is far easier to extend consumption than to tighten belts.
But, lifestyle itself is heavily influenced by culture and our surroundings, which is why I try to stay away from the hype and drama of social media, as it drives an unnatural view of the world. Even if we have the understanding that Instagram "influencers" on tropical beaches in bikinis are being bankrolled by their working-class parents, it still influences our own desires - it sill nudges us to make emotional decisions that are likely to favor the short view, over the long.
What is interesting in this, is that the people who are spending now, are bankrolling in the invested, favoring the heavily invested who actually have very little need for more money themselves. Convincing people to buy now and not worry about future resources, is a narrative driven by marketing, not people actually thinking about their own well-being or lifestyle at all, they are being controlled.
I heavily limit my exposure to marketing, because I know that I am susceptible to the messaging, even though I have a pretty good understanding of the tricks played, as I minored in marketing at university and am interested in how incentives can manipulate human behavior. 2lifestyle" is definitely one of those manipulators in the messaging, where people are encouraged to live a better life, even if they have to go into debt or forego opportunity to do so. While it drives sales, the reduction in future lifestyle can be extreme, when there is no preparation for maintenance.
One of the things that people have to remember is that no company cares about our well-being, unless it drives their profits. Most companies make profits at the expense of our well-being, so it is probably a good rule of thumb to trust none of them. However, the other thing to remember is that the markets only care about participants and once a person can no longer influence the markets, they are forgotten. The building industry doesn't build assisted living housing for the elderly because they care about their well being, they do it because it makes them money - improved living in old age is a lucky side effect. But, in order to get into one of those apartments, means having the resources to do so, as the normal pension won't be enough.
Going back to the drama and hype of investing itself, since I know I am susceptible to it, I limit my exposure in order to stay out of the FUD and FOMO the best I can. Yes, this can cost me a fair bit in yield at times, but it also means that my approach is a little more balanced, rather than emotional swings about whether I should buy, sell or hold.
One of the guys is having "crypto dreams" where he wakes up in the middle of the night due to fears of Bitcoin dropping, or the excitement of a pump. This is natural, as he has surrounded himself with charts and articles in the last few months, even though it might not be healthy. He will likely find a balance though, as he will recognize that the emotional swings are taking a negative toll on his daily state. But, living for lifestyle seems to be more upside, as one can always divert attention away from the negative, but this too will balance, albeit, later in life where there is likely to be a slow decline, that may drop off a cliff at retirement.
At that point, does #lossporn become the norm, old people complaining to each other about their illnesses, failing body, and lack of government pension? They would also mention their ungrateful kids, but with having kids on the decline due to lifestyle decisions, they probably won't have any to complain about them not visiting.
I don't know what is a good way to live for everyone on earth, but I do see that living financially in the moment without considering the future, is much like taking a lifestyle loan now, having to pay it back at some point, with no clear way of having the resources at that time to do so. It is very risky taking the position of lifestyle now, reliant on others later as when that time comes, the conditions are likely to have changed a lot and like the past, are probably not going to favor the unprepared and uninvested.
People seem more and more willing to throw caution to the wind, thinking that what they are buying has value that they can use later. I know people who have taken loans to go on holidays for the experience, but it seems that on return, the experience becomes one of negotiating repayments and the only value is their memory of the past escape, one that put a veil over reality and made it look pretty for a week or two.
We all make our decisions, even when they are influenced by others. I think that the best thing a person can do, is surround themselves with the informational raw materials that support them to build the kind of life they want, not the finished products that can be bought on credit.
Taraz
[ Gen1: Hive ]
