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PaperclipPerfector  10mo ago (text post)   3018 thread views

Wellness Wednesday for December 27, 2023

The Wednesday Wellness threads are meant to encourage users to ask for and provide advice and motivation to improve their lives. It isn't intended as a 'containment thread' and any content which could go here could instead be posted in its own thread. You could post:

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I have a suspicion that ‘real world’ businesses are much easier to make money in than the internet. Consider that online you’re competing with every smart autist in the third world, some of them are undoubtedly smarter and more informed about the market than you,

Doubt it. A 'real' business , as in a brick and mortar business, can cost hundreds of thousands of dollars or millions to set up. Employees are time consuming and expensive, and you're always a lawsuit away from being shut down. Making money online is not easy, but it is cheaper. Once you find a good nice or method, the money rolls in easy. It does not even have a be a business--for example, take $50k and park it into 3x tech funds and make $500k as one guy on Reddit did[ 1] , and no competition from Cambodian guys either. Anyone can do this. A tangible biz can easily cost $500k to set up, and good luck increasing your $ by 10x in a few years.

  1. https://old.reddit.com/r/LETFs/comments/18qy7c8/my_net_worth_hit_530k_this_month_thanks_to_fngu/

Just because a sector has done well in the near past, it doesn’t mean it will keep doing so in the future as well. There is already a huge amount of future growth priced in the tech stocks. This is basically gambling with your money. Starting a business at least means you are putting your money on your own personal skills, network and competence as well as access to local information.

ust because a sector has done well in the near past, it doesn’t mean it will keep doing so in the future as well.

the goes same for regular biz. look at all the people who started contracting or landscaping businesses in 2005-2009 housing boom

for example, take $50k and park it into 3x tech funds and make $500k as one guy on Reddit did[ 1]

That's not exactly what happened there. Guy kept investing throughout: 8k/month in 2022 and 12k/ month in 2023 (and by implication, several thousand amonth before that as well). He did not just park 50k.

https://old.reddit.com/r/LETFs/comments/18qy7c8/my_net_worth_hit_530k_this_month_thanks_to_fngu/key8dzh

So if the guy started the 2022 with more than 113k (and we have no clue how much investment it took to get here, except that this is down from a high) He could have piled in 200k from 2019 to get to 113. For the next half a year, he kept losing money, WHILE piling in 8k/ month for half a year. But from 2022 to the end of 2023, he's contributed 240k plus his >113k starting point. So over 2 years he invested 353k+ to get to 537k. Still a FANTASTIC gain in 2 years, but not remotely parking 50k as you suggest.

It does not even have a be a business--for example, take $50k and park it into 3x tech funds and make $500k as one guy on Reddit did[ 1] , and no competition from Cambodian guys either. Anyone can do this.

That's just market-timing and sector-concentration with extra steps, aka gambling. On average, volatility decay crushes broadly-diversified triple-leveraged equity ETFs, much less sector-specific triple-leveraged equity ETFs, especially since leveraged equity ETFs typically reset daily.

they both have risks . market crash vs. not getting enough customers, lawsuits, or changing economic conditions

I know this is your thing but putting all your money into highly leveraged sector-specific funds isn’t always such a genius strategy.

You're only risking $50k. If the market crashes, maybe you lose 3/4 of it, but it can still recover. According to the stats , most small businesses fail within a decade. I would not say it's less risky --probably more risky because you are putting up more capital, with a 50% chance of a total loss (or even more if you continue to add money) within 5-10 years, going by the stats. Or in terms of risk, this is a highly skewed strategy in which the mean is boosted by a few outliers (like founding the next Starbucks) but the median is negative. Rental properties are probably better than $500k in business, imho, in terms of maximizing risk-adjusted returns and good median vs. mean returns.

This guy did not only risk 50k. He invested several thousand a month throughout. 8k/month in 2022 and 12k/month in 2023

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