Status vs. Wealth: Why the Rich Don't Act Rich(wealest.com)
wealest.com
Status vs. Wealth: Why the Rich Don't Act Rich
https://www.wealest.com/articles/status-vs-wealth
124 comments
While i'm on my soapbox, i dont understand this mentality that wealth creation is a positive-sum game. Me buying a property to turn it into an Airbnb that I lease out to generate money directly takes away supply from someone trying to buy a house or a similar asset.
I would love to hear some examples of wealth generation that do not take away opportunity or money directly or indirectly from other people
[edit] below commenters have some great points, i'm reconsidering my stance on this point
I would love to hear some examples of wealth generation that do not take away opportunity or money directly or indirectly from other people
[edit] below commenters have some great points, i'm reconsidering my stance on this point
A business I'm building makes data monitoring hardware and software to help farmers/growers reduce water/fertiliser usage and prevent externalities like pesticide spray drift and grass fires. If I create "wealth" for myself from this company, it will only be because I've succeeded at helping large numbers of growers achieve the above outcomes.
I'm unaware of anyone whose money or opportunity is being reduced through this, perhaps apart from some minor reductions in turnover for fertiliser and pesticide companies.
I'm unaware of anyone whose money or opportunity is being reduced through this, perhaps apart from some minor reductions in turnover for fertiliser and pesticide companies.
Me creating a self-driving car will take away revenue from drivers. However the rest of society will gain much more than the loss that the drivers suffers. On net humanity is better off.
This is true when the computer replaced secretaries, when cars replaced the horse, when planes replaced the boats, internet replaced fax and phone calls, etc. Overall the quality of life of everyone improved even if a select few suffered each time progress was made, making even fewer rich, but everyone else better off.
You create wealth by providing value to others, value that exceeds the competition you have displaced. That's why wealth creation is a positive sum game.
This is true when the computer replaced secretaries, when cars replaced the horse, when planes replaced the boats, internet replaced fax and phone calls, etc. Overall the quality of life of everyone improved even if a select few suffered each time progress was made, making even fewer rich, but everyone else better off.
You create wealth by providing value to others, value that exceeds the competition you have displaced. That's why wealth creation is a positive sum game.
I think it'd be more accurate to say "play the value creation game" then. The author specifically references wealth accumulation (ie. the accumulation of assets)
> I would love to hear some examples of wealth generation that do not take away opportunity or money directly or indirectly from other people
Is there more wealth in the world today than 100 years ago? More than 1000 years ago?
If so, where did it come from?
Is there more wealth in the world today than 100 years ago? More than 1000 years ago?
If so, where did it come from?
To explore what wealth is I recommend The Origin Of Wealth by Eric D. Beinhocker.
In essence, wealth is a process that creates low entropy.
He posits three conditions that need to be met:
All value creating economic transformations and transactions
1) Irreversibility - are thermodynamically irreversible
2) Entropy - reduce entropy locally while increasing it globally
3) Fitness - need to be fit for human purposes.
On my recent trip, I saw mountains being broken and shipped off to distant places for construction. If it goes on, within a few decades they will cease to exist. The last one tells us that we can define what wealth means - to some the mountains and the ecosystem they harbour are wealth, to some the buildings and the resulting economic activity is wealth.
In essence, wealth is a process that creates low entropy.
He posits three conditions that need to be met:
All value creating economic transformations and transactions
1) Irreversibility - are thermodynamically irreversible
2) Entropy - reduce entropy locally while increasing it globally
3) Fitness - need to be fit for human purposes.
On my recent trip, I saw mountains being broken and shipped off to distant places for construction. If it goes on, within a few decades they will cease to exist. The last one tells us that we can define what wealth means - to some the mountains and the ecosystem they harbour are wealth, to some the buildings and the resulting economic activity is wealth.
Arguably due to the depletion of natural resources, we actually have far less wealth today than we did 100 years ago.
I don’t think this is arguable. A forest of unchopped trees is only ”wealth” in the sense that all the minerals on the Moon are. It’s really potential wealth — it becomes wealth when we extract the resources. That’s why they’re resources and not just stuff. (Whether we have done a good or bad job managing the Earth’s resources is a separate matter)
I am going by this definition of wealth https://www.thefreedictionary.com/wealth:
An abundance of valuable material possessions or resources; riches.
> It’s really potential wealth
That's like saying that potential energy doesn't count as energy. If we extract our resources to create "wealth" that prevents us from doing something substantially more valuable in the future, we didn't create wealth. We destroyed it. But collectively we have such a short term mindset that this is hard to see.
> It’s really potential wealth
That's like saying that potential energy doesn't count as energy. If we extract our resources to create "wealth" that prevents us from doing something substantially more valuable in the future, we didn't create wealth. We destroyed it. But collectively we have such a short term mindset that this is hard to see.
By that logic are we unfathomably wealthy because there are billions of planets out there teaming with resources?
Do you think people 1000 years ago felt wealthy because of their natural resources and would feel that modern times are comparatively impoverished?
What are the wealthiest countries in the world?
I don't think the usage you're proposing matches any real usage of the word.
Do you think people 1000 years ago felt wealthy because of their natural resources and would feel that modern times are comparatively impoverished?
What are the wealthiest countries in the world?
I don't think the usage you're proposing matches any real usage of the word.
> By that logic are we unfathomably wealthy because there are billions of planets out there teaming with resources?
No, because we don't have access to those resources.
> Do you think people 1000 years ago felt wealthy because of their natural resources and would feel that modern times are comparatively impoverished?
I have no idea what people 1000 years ago felt like. I do know what it feels like to live in 2022.
> What are the wealthiest countries in the world?
I don't know.
> I don't think the usage you're proposing matches any real usage of the word.
I am being very literal with the dictionary definition. With every gallon of oil that we burn, we are destroying wealth. We are taking a material resource that has value, extracting that value and preventing it from ever being used again. You can argue that the byproduct of that extraction is more valuable than the oil, but I find that very unlikely given that technology is likely to improve over time. In other words, we should try to conserve as many natural resources as we can today because they will be even more valuable in the future when we can use them more efficiently.
No, because we don't have access to those resources.
> Do you think people 1000 years ago felt wealthy because of their natural resources and would feel that modern times are comparatively impoverished?
I have no idea what people 1000 years ago felt like. I do know what it feels like to live in 2022.
> What are the wealthiest countries in the world?
I don't know.
> I don't think the usage you're proposing matches any real usage of the word.
I am being very literal with the dictionary definition. With every gallon of oil that we burn, we are destroying wealth. We are taking a material resource that has value, extracting that value and preventing it from ever being used again. You can argue that the byproduct of that extraction is more valuable than the oil, but I find that very unlikely given that technology is likely to improve over time. In other words, we should try to conserve as many natural resources as we can today because they will be even more valuable in the future when we can use them more efficiently.
> We destroyed it.
I haven't researched it, but isn't a large portion (vast majority) of lumber we use these days to build things from forests that we plant and grow?
I haven't researched it, but isn't a large portion (vast majority) of lumber we use these days to build things from forests that we plant and grow?
I'm not an expert on the timber industry. I'm sure that there are sustainable lumber practices, but I have no idea what the dominant sources are today. Still, tree farms are not a replacement for the old growth forests that were destroyed throughout the US. It takes hundreds of years for an old growth forest to regenerate, if ever.
There's also the example of an iPhone vs piles of the exact same amount of elements making it up.
Which is more valuable? Which would you rather want?
Essentially by just rearranging matter you can create wealth.
Which is more valuable? Which would you rather want?
Essentially by just rearranging matter you can create wealth.
> Which is more valuable? Which would you rather want?
Today or in 50 years? I'm pretty sure an iphone in 50 years will be worthless but the raw materials that made it will probably be even more valuable than they are today.
Today or in 50 years? I'm pretty sure an iphone in 50 years will be worthless but the raw materials that made it will probably be even more valuable than they are today.
This being HN, writing a piece of software to do something that hasn't been done before. That increases the total number of goods and services in the world.
Variations: synthesising a new chemical, teaching someone a new skill.
Variations: synthesising a new chemical, teaching someone a new skill.
When you buy a house, for whatever reason, it opens up the opportunity for a developer to build a new house.
House building is clearly a positive-sum game that benefits everyone.
The developer makes money building houses. Furniture maker makes money making furniture. Utilities make money providing power, water and plumbing. You make money renting your AirBnB or using it as a house for your family.
House building is clearly a positive-sum game that benefits everyone.
The developer makes money building houses. Furniture maker makes money making furniture. Utilities make money providing power, water and plumbing. You make money renting your AirBnB or using it as a house for your family.
> House building is clearly a positive-sum game that benefits everyone.
Not so fast. For any given project, what are the associated externalities? You can't build a house without exploiting the earth's resources. You can't build furniture without chopping down trees or digging up oil. You can't harvest energy without disrupting the environment in one way or another. Your renting your house on AirBnB is extracting more money from your guests than the time value of the house. Your guest must then do something exploitative to earn the money to pay you. The chain eventually will make its way back to the extraction of natural resources. It isn't possible to turn a profit without exploitation.
Do we really not care that we have burned up an unfathomable amount of precious, irreplaceable fossil fuels to prop up our industrial economy? We should be worshipping fossil fuels, and using them as sparingly as possibly, not frivolously wasting them.
Until we have an economy that doesn't rely on unsustainable extraction, it's hard to see any form of wealth creation as positive sum.
Not so fast. For any given project, what are the associated externalities? You can't build a house without exploiting the earth's resources. You can't build furniture without chopping down trees or digging up oil. You can't harvest energy without disrupting the environment in one way or another. Your renting your house on AirBnB is extracting more money from your guests than the time value of the house. Your guest must then do something exploitative to earn the money to pay you. The chain eventually will make its way back to the extraction of natural resources. It isn't possible to turn a profit without exploitation.
Do we really not care that we have burned up an unfathomable amount of precious, irreplaceable fossil fuels to prop up our industrial economy? We should be worshipping fossil fuels, and using them as sparingly as possibly, not frivolously wasting them.
Until we have an economy that doesn't rely on unsustainable extraction, it's hard to see any form of wealth creation as positive sum.
Nothing is sustainable. The universe eventually goes cold. Are you saying anything more?
> Nothing is sustainable. The universe eventually goes cold. Are you saying anything more?
Our civilization is going to collapse long before the heat death of the universe, and honestly probably within the lifespan of people living today. We could at least try and soften the blow and stop doubling down on the same mindset that created most of the existential crises that face us today.
Our civilization is going to collapse long before the heat death of the universe, and honestly probably within the lifespan of people living today. We could at least try and soften the blow and stop doubling down on the same mindset that created most of the existential crises that face us today.
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Developing a green hydrogen (not blue) generation industry to expand the current hydrogen generation capacity w/out adding to fossil fuel usage.
It will take near term lithium (and other) resources away from others competing for them but will benefit more overall in the long run.
Just a local (W.Australia) example.
It will take near term lithium (and other) resources away from others competing for them but will benefit more overall in the long run.
Just a local (W.Australia) example.
creating content that goes viral is probably a good example
yes people pay for it, but they get value from that time and money
though long term you capitalizing on a specific set of content takes away revenue from others looking to do the same, almost like a pyramid (i.e. MKBHD and Linus Tech Tips making loads of money for their reviews making it almost impossible to make a successful reviews channel, at least on YouTube. Same with the beauty vloggers like Tati), so I suppose all wealth generation approximates to positive-sum
yes people pay for it, but they get value from that time and money
though long term you capitalizing on a specific set of content takes away revenue from others looking to do the same, almost like a pyramid (i.e. MKBHD and Linus Tech Tips making loads of money for their reviews making it almost impossible to make a successful reviews channel, at least on YouTube. Same with the beauty vloggers like Tati), so I suppose all wealth generation approximates to positive-sum
he's also quoting himself, which is a little odd
he's doing it to pump up his twitter followers, which is why this whole article bugs me. It's a rather transparent attempt to gain followers without adding anything of real value
This is a lesson most people don't learn till they are older (if ever). It's hard to convince someone in their 20's that they shouldn't be spending money on status things in order to gain friends or a romantic partner. When you are older and settled down it's much easier to not care what other people think of you.
But friends or romantic partner is actually what's important in life. Wealth is just a number on a ledger. We can debate whether friends gained through status or partners gained through status are ideal friends or ideal partners. But its undeniable that friends and romantic partner is much more important to life than wealth.
No? It is not undeniable. Maybe for a huge chunk of people who require socialization or they eat themselves. But this bizarre idea that you HAVE to have friends and romance to be healthy is ridiculous.
Eventually you realize that if you need to prove status or wealth to gain friends or a romantic partner...then those aren't really the people you want to surround yourself with. Or maybe you don't realize this and will remain poor trying to always show how much money you have to people so that they will be impressed.
quick, someone go tell those in poverty that wealth is just a number on a ledger!
You're right, it feels like spitting in someone's face while they're down.
But almost always people are well-meaning when they make these comments about wealth as an abstract concept. It's just that their privilege makes it difficult for them to see how condescending it can come off as.
I think your reminder is valuable, and I appreciate you highlighting that. Maybe you might be able to give that perspective to people who don't have it yet.
But almost always people are well-meaning when they make these comments about wealth as an abstract concept. It's just that their privilege makes it difficult for them to see how condescending it can come off as.
I think your reminder is valuable, and I appreciate you highlighting that. Maybe you might be able to give that perspective to people who don't have it yet.
>> When you are older and settled down
In general when you are settled down it is easier to care less about trying to gain additional romantic partners.
In general when you are settled down it is easier to care less about trying to gain additional romantic partners.
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Not sure how much age helps. My granddad was fond of saying that young fools grow up to be old fools.
There is a more serious and thorough treatment in this area in the many books by the late wealth researcher Thomas J. Stanley.
Common points he would repeat:
- There is no magic formula to find rich people or to become one
- They don't live above their means
- Beside poor impulse control, a habit of lottery ticket purchasing is the strongest signal negatively correlated with long-term wealth
- Rich people often married but rarely divorce because it's a more efficient lifestyle and financial suicide to split
- Rich people tend to meet their spouses in college where there's a better cohort to meet
"Stop Acting Rich" was a title of one of his books. Not sure if it's an accident or the remote possibility of a ripoff. It's an obvious title.
One interesting positive correlation with single-family, suburban, non-forest-interface home property values is the number of trees. It's not a perfect rule, but single-family home areas without trees tend to appear unappealing and are statistically less affluent (i.e., fake grass, plastic flamingos, wrought iron fencing, and bars on the windows). The exception to the rule is San Jose, California which is a horrible mix of unmaintained houses with overgrown weeds beside nice homes. If property owners there had leadership sense and wanted to maintain their property values, they would influence code enforcement to cite unkempt properties.
Common points he would repeat:
- There is no magic formula to find rich people or to become one
- They don't live above their means
- Beside poor impulse control, a habit of lottery ticket purchasing is the strongest signal negatively correlated with long-term wealth
- Rich people often married but rarely divorce because it's a more efficient lifestyle and financial suicide to split
- Rich people tend to meet their spouses in college where there's a better cohort to meet
"Stop Acting Rich" was a title of one of his books. Not sure if it's an accident or the remote possibility of a ripoff. It's an obvious title.
One interesting positive correlation with single-family, suburban, non-forest-interface home property values is the number of trees. It's not a perfect rule, but single-family home areas without trees tend to appear unappealing and are statistically less affluent (i.e., fake grass, plastic flamingos, wrought iron fencing, and bars on the windows). The exception to the rule is San Jose, California which is a horrible mix of unmaintained houses with overgrown weeds beside nice homes. If property owners there had leadership sense and wanted to maintain their property values, they would influence code enforcement to cite unkempt properties.
isn't wealth accumulation inherently zero-sum? like, there's a fixed amount of capital and resources in the system. accumulating it for yourself means someone else won't have it, right?
Clearly not, or the wealth of the world would be constant through history.
I could argue that most wealth comes from optimizing the efforts to extract and transport resources, plus all the other optimizations on the paper shuffling we do after (e. g., Communication, entertainment, etc.).
I could argue that most wealth comes from optimizing the efforts to extract and transport resources, plus all the other optimizations on the paper shuffling we do after (e. g., Communication, entertainment, etc.).
honestly, after you buy all of the expensive toys, then what? i suppose some people seek more exclusive and expensive things to get that high from buying stuff or chasing clout, but others just get tired of it and find stasis in their life.
Few people seek Love? Hmm.
This was discovered and explored 25 years ago in The Millionaire Next Door: https://en.wikipedia.org/wiki/The_Millionaire_Next_Door
The rich generally do act rich.
The existence of instagrammers who rent $5 million apartments for a half hour photoshoot hardly refutes this.
The existence of instagrammers who rent $5 million apartments for a half hour photoshoot hardly refutes this.
This is literally indistinguishable from the opinion of a person who does not know any wealthy people personally, and bases their understanding of “the rich” on the behavior of social media influencers.
I’m sorry to put it so bluntly, but the “understating wealth” pattern of behavior is quite real and common.
I’m sorry to put it so bluntly, but the “understating wealth” pattern of behavior is quite real and common.
This might be my own bias here, but "the rich generally do act rich" seems tautologically true to me. IOW, however the rich act is definitionally how the rich act, which is what I think GP might have been getting at.
Whether the way they act is congruent with the way the average person thinks they act is the question. From knowing a few "never going to have to worry about money in this or the next couple generations" families, they mostly fly private but go to great lengths to not post or boast about that.
Whether the way they act is congruent with the way the average person thinks they act is the question. From knowing a few "never going to have to worry about money in this or the next couple generations" families, they mostly fly private but go to great lengths to not post or boast about that.
Pretty much. I was referring to attempts to display status, whether covert or overt.
I think he thought I was referring to ostentatious displays of status like top hats and monocles.
I think he thought I was referring to ostentatious displays of status like top hats and monocles.
By definition, the rich can only act rich. Whatever they do, that's what acting rich looks like.
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Some rich act rich. Trump is an obvious example of someone with a lot of money who acts it. Though I suspect he has enough that it is still living within his means. (I'm not sure if his bankruptcy was personal or just a business venture)
Most rich though are not as obvious about it. Warren buffet isn't the only one living in a modest house, you just don't know the rest.
Most rich are not at the level of the above either. Several million in various investment is enough for a comfortable modest life, but acting like money isn't a problem will soon spend it all.
Most rich though are not as obvious about it. Warren buffet isn't the only one living in a modest house, you just don't know the rest.
Most rich are not at the level of the above either. Several million in various investment is enough for a comfortable modest life, but acting like money isn't a problem will soon spend it all.
Trump is a prime example of money brings money as he isn’t even /that/ rich but dipshits keep giving him money. It’s bizarre.
Anyways, I have a family friend who is a doctor. He lives in a quiet neighborhood in a $400k house. It’s unassuming. He does drive a Panamera but he actually loves it and drives it because he loves it.
If you saw them in public you’d think they were just a regular middle class couple.
Last time I saw their /bank accounts/ (I do their IT work), not other assets like stocks or whatever, they had over $15million in cash.
It’s pretty wild. They probably have more money than most of the assholes living in the Country Club in McMansions here. And no debt.
Anyways, I have a family friend who is a doctor. He lives in a quiet neighborhood in a $400k house. It’s unassuming. He does drive a Panamera but he actually loves it and drives it because he loves it.
If you saw them in public you’d think they were just a regular middle class couple.
Last time I saw their /bank accounts/ (I do their IT work), not other assets like stocks or whatever, they had over $15million in cash.
It’s pretty wild. They probably have more money than most of the assholes living in the Country Club in McMansions here. And no debt.
The article focuses on the internal goods of 'stealth wealth', but I think it's also worth mentioning the external benefits of not appearing wealthy. Namely, good cover from the behaviors of those who do focus on status.
And don't forget: no fear of door dinks or car getting stolen. Of course, that goes back to Epictetus and his prized lantern...
How do you get wealth without money? You need to start by chasing money…
No. You start by maximizing your corporate benefits. Then you focus on spending (much) less than you earn. Then you move the money you saved into compounding investments. Then you maximized your tax advantaged accounts. Then you use leverage to further accelerate your savings. Then you develop an exit strategy. Rinse and repeat prior steps until exit criteria are met.
Chasing for money rarely is successful, though. Inheriting a fortune is a way which worked for many of the rich, though. For some it was work on a good idea and producing a good product.
Most rich people in the US didn't inherit much money, they had to build it. A few prominent super wealthy did, but for the most part it is create it yourself.
This is false; people end up with tons of money all sorts of different ways, from inheritance, to luck, divorce, lawsuits, hard-work hustling and grinding, or even criminal activity like fraud or embezzlement.
You generally can't know for certain, except in some cases such as a public figure. Lots of people expend vast amounts of energy projecting the image of wealth in a [pathetic] attempt to gain status, and they're faking it to the max.
As the saying goes:
"Mo' money, mo' problems."
You generally can't know for certain, except in some cases such as a public figure. Lots of people expend vast amounts of energy projecting the image of wealth in a [pathetic] attempt to gain status, and they're faking it to the max.
As the saying goes:
"Mo' money, mo' problems."
All kinds of ways, but most by their own efforts. https://www.economist.com/special-report/2011/01/22/more-mil...
A good education in a good field is a good start. If you are reading this you probably already have that. All it takes is living like you are poor, and investing the difference.
Some years ago my wife was talking about a poor family we know: while looking their finacnces over realised if you subtract 401k (which they don't have) and house payment (my house was a lot nicer, though both of us should have it paid for in 30 years) I actually have less take home pay to live on in a month. Of course that difference means a nicer house to live in, and a very comfortable retirement plan.
Some years ago my wife was talking about a poor family we know: while looking their finacnces over realised if you subtract 401k (which they don't have) and house payment (my house was a lot nicer, though both of us should have it paid for in 30 years) I actually have less take home pay to live on in a month. Of course that difference means a nicer house to live in, and a very comfortable retirement plan.
Make something people want.
As plane prices went down and most travel can be done with much less money than before, professional photos are easy to take, the hardest to fake part of social status remaining is looks.
Naval won't have the status of Leonardo DiCaprio because he was never looking like him.
Naval won't have the status of Leonardo DiCaprio because he was never looking like him.
The hardest part of social status is respect of others in high social standing. Looks gets you the opposite sex, and having access, perhaps even sharing that circle, gains you respect. Nothing else really matters in the status game except respect.
There's that old essay that says *power" is the strongest, most unquenchable desire by those afflicted from it.
(Shaw? Nobel prize speech iirc, Acquisition<rivalry<vanity<power)
(Shaw? Nobel prize speech iirc, Acquisition<rivalry<vanity<power)
Better covered by works like Fussell's Class. This just reads like low-content hustle porn.
Great book although I don't really agree his concluding chapter of Category X. I don't think one can materially participate in society and also fully extricate themselves from the hierarchies.
Yeah he let his optimism blind him on that part. There's always been a "Bohemian" set, his Class X was no revolution.
FYI if anyone wants to pick up the kindle version of this book from Amazon, don't bother. It is an incredibly poor quality scan of a physical book, compiled horizontally and full of pencil markings. I can't for the life of me see a way to report the listing, and the comments about this issue are drowned out by comments about the book contents and being ignored
In fairness, I would likely never been recommended that book unless this article had been published and remarked upon by you, so I think there was some value even if you consider it ancillary.
Your Money or your Life is another classic.
While I agree with most of what's written, I think that revenue from volatile stocks does come at others' expense and, thus, might not be an example the author should be including.
Building companies are not necessarily zero sum tho. You can win over your competition by delivering value. The value delivered to society generally more than cover of the loss your competition encounters. On net its a positive sum game that the more this is done, the more net positive society sees.
Assuming fair competition based on innovation on efficiency of course. Corruption and coercion not apply
Assuming fair competition based on innovation on efficiency of course. Corruption and coercion not apply
> The Rich Don’t Act Rich Because They Buy Assets, Not More Stuff
Not sure this makes much sense. Do rich live in a cave and literally sit on their money and wait until they die? I don’t think so, they buy flight tickets, a house in the beach, a bigger yard to do gardening, better health care to live longer, pay a baby sitter,…
I feel money buys high quality time, not just time
Not sure this makes much sense. Do rich live in a cave and literally sit on their money and wait until they die? I don’t think so, they buy flight tickets, a house in the beach, a bigger yard to do gardening, better health care to live longer, pay a baby sitter,…
I feel money buys high quality time, not just time
I think you're missing the essential point (charitably read). The point is that the rich don't flaunt their wealth. They're not ostentatious. That's what people who aren't rich, or the nouveau riche, do. They're compensating (and frankly, lack the taste to know what to spend money on).
That isn't to say that the rich don't spend on better things. It's that someone who's looking for a flashy sign of that wealth won't find one. If someone is flashy, the likelihood they're rich drops.
That isn't to say that the rich don't spend on better things. It's that someone who's looking for a flashy sign of that wealth won't find one. If someone is flashy, the likelihood they're rich drops.
Many do die rich because they didn’t quite learn how to spend their wealth in ways other people would. (Which is what made them rich I the first place )
Point being, they will still have a look and feel of an upper middle class while being magnitudes more wealthy.
That's a good tactics because middle class stuff has the best bang for the buck. Rich, status-displaying stuff delivers diminishing benefits for exponentially growing price.
That's a good tactics because middle class stuff has the best bang for the buck. Rich, status-displaying stuff delivers diminishing benefits for exponentially growing price.
I was just out in New England visiting some friends.
In the area we were in[1], almost all the houses look the same, seriously unimposing, aggressively bland.
They'd point over to a (admittedly large sqft) boring looking house and say "oh yeah, some super rich guy lives there, heir to some fortune or another."
It was weird coming from the west coast where the front facade[2] of a house is itself a status symbol of sorts.
[1] A generally well to do nice area with a bit of history to it. [2] And sometimes just the front, hah! Horrible vinyl siding everywhere else...
In the area we were in[1], almost all the houses look the same, seriously unimposing, aggressively bland.
They'd point over to a (admittedly large sqft) boring looking house and say "oh yeah, some super rich guy lives there, heir to some fortune or another."
It was weird coming from the west coast where the front facade[2] of a house is itself a status symbol of sorts.
[1] A generally well to do nice area with a bit of history to it. [2] And sometimes just the front, hah! Horrible vinyl siding everywhere else...
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money buys the ability to build empire.
I took a hotel shuttle from the airport recently. Got to chatting with the driver. He’s an immigrant who owns 6 industrial rental properties and a few single family rentals.
You’d never know it, given his attire and evening job. But he is focused on keeping the cash flow growing.
His net worth is probably in the millions but few know it unless they really get him to open up (something I tend to be naturally good at).
I know a few folks like this. I call them the stealthy wealthy.
You’d never know it, given his attire and evening job. But he is focused on keeping the cash flow growing.
His net worth is probably in the millions but few know it unless they really get him to open up (something I tend to be naturally good at).
I know a few folks like this. I call them the stealthy wealthy.
Why is he driving a hotel shuttle? Unless he’s just retired and looking for something engaging to do, that’s a horrible waste of his clear talent for building wealth
I don't know if the parent story is apocryphal (sure sounds like it), but having done that job (high school gig), I can testify that it's pretty great: flexible, easy, and you get paid, in cash, for every quantum of work. Plus it can just be really fun -- tons of great stories, and there were nights where I rolled away with hundreds of dollars in cash in my pocket.
Easily one of the best jobs of my life. I like to say that my career satisfaction peaked early. It would actually be a pretty good gig if you're otherwise well-off and just looking for some socialization in your life.
Easily one of the best jobs of my life. I like to say that my career satisfaction peaked early. It would actually be a pretty good gig if you're otherwise well-off and just looking for some socialization in your life.
Because he is in debt to his eyeballs on those rental properties. In 30 years when they are paid off he will be rich, but right now he probably can't make ends meet without that income.
I would imagine in the current climate the properties are operating at a profit, don't you?
Hard to say, it only takes one month without a tenant to lose money. You better have the cash flow to counter that. The landlords I know (not a representative sample) all have lost a lot of money as covid meant they couldn't evict tenants that were not paying rent. There are programs to get some back, but if you evict before getting money you get nothing.
In the long run you make a lot of money, but it is a long time before profits are enough to live off of. For the first years the money goes to paying the bank, insurance, taxes, and if you are lucky there is enough left to cover basic repairs.
In the long run you make a lot of money, but it is a long time before profits are enough to live off of. For the first years the money goes to paying the bank, insurance, taxes, and if you are lucky there is enough left to cover basic repairs.
I have a family member who is pretty wealthy from shares in a large tech company and, later, real estate/rental properties. He moonlighted at the weekends driving trucks for a supermarket because he enjoys truck driving, and now is just doing that full time.
> that’s a horrible waste of his clear talent for building wealth
I'd love to quit my job and do what I like, gardening, music, painting, whatever. If the guy enjoys driving shuttles then he shouldn't waste his life doing something else, given the opportunity.
> that’s a horrible waste of his clear talent for building wealth
I'd love to quit my job and do what I like, gardening, music, painting, whatever. If the guy enjoys driving shuttles then he shouldn't waste his life doing something else, given the opportunity.
Because extracting rent does not scale with effort (and, in fact, requires none of it). It's called "passive income" for a reason.
What does scale is his skills. If he’s able to pull off what he’s already done, get investors and do it on a larger scale.
I'd be suspicious of those claims with that job, but hotel shuttles are a great way to network in a large city near a busy airport.
He owned and operated a convenience store. Hated it. Sold it for a premium, found some other properties, and bought some (via loans, so he has debt). Over time, he took the cash flow and rolled it into new loans and bought more properties, etc.
He loves the shuttle job and makes good money— I tipped him well, for example.
I ended up grilling him about his commercial properties and how he did it, and it checks out. I know the town where he operates pretty well, and a familiar enough with the business he’s in to see that he knew his stuff.
He hates the single family homes. Way more hassle. So, he’s looking to exit that. The commercial properties are net leases with pretty long lease periods. No hassle at all: just cash flow.
He’s got a convenience store, a restaurant, a church, a strip mall, and I forget what else.
Anyway, I know a handful of people like him who are for a fact millionaires, with lots of cash flowing businesses (such as storage units) but who still hold down jobs that might surprise you.
¯\_(ツ)_/¯
He loves the shuttle job and makes good money— I tipped him well, for example.
I ended up grilling him about his commercial properties and how he did it, and it checks out. I know the town where he operates pretty well, and a familiar enough with the business he’s in to see that he knew his stuff.
He hates the single family homes. Way more hassle. So, he’s looking to exit that. The commercial properties are net leases with pretty long lease periods. No hassle at all: just cash flow.
He’s got a convenience store, a restaurant, a church, a strip mall, and I forget what else.
Anyway, I know a handful of people like him who are for a fact millionaires, with lots of cash flowing businesses (such as storage units) but who still hold down jobs that might surprise you.
¯\_(ツ)_/¯
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There is another possibility, he doesn’t actually own those properties. He invested in an LLC that owns those properties. Many passive real estate investors claim they own the property.
I have a few friends who are into passive real estate investing, they claim they own an apartment complex. What they did is they gave money to a group of guys who pooled money got a loan and then bought an apartment complex under an LLC. My friends owns 0.001 percent of the LLC with no operational control of the apartment complex. My understanding they are called real-estate syndicates. It is a scam if you ask me. I don’t think most investors will get good returns on their investment.
I have a few friends who are into passive real estate investing, they claim they own an apartment complex. What they did is they gave money to a group of guys who pooled money got a loan and then bought an apartment complex under an LLC. My friends owns 0.001 percent of the LLC with no operational control of the apartment complex. My understanding they are called real-estate syndicates. It is a scam if you ask me. I don’t think most investors will get good returns on their investment.
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He owns it? or bank owns it? I know people that have multiple rental properties, mortage on all of them, if suddenly they lose a few of the renters they can't pay mortages on these properties anymore. They also say they own all of their properties.
guaranteed his wealth is super high but he does nothing but work. his heirs will enjoy his fortune. depends on what you value i guess.
also those rentals don't cash flow until they pay off their mortgage, so might be a long game kind of thing.
also those rentals don't cash flow until they pay off their mortgage, so might be a long game kind of thing.
We also peak bubble right now. There were similar stories 2006 and before.
I used to know someone who’s family was worth at least 100million dollars. His family were shipping magnates out of Syria. Genuinely the nicest person. Other than dressing well and not obnoxiously so, you’d probably never know. It’s a shame that the city/our college gave him panic attacks, we lost touch when he moved to Germany and I wound up somewhat immaturely cutting the friendship short after initially keeping contact in my early 20s.
Ironically he taught me the importance of relationships and people after otherwise being the type of techy that only values technical acumen. Legitimately changed my whole life direction. Shame I didn’t take to the lesson entirely before I cut things off.
One of my few regrets.
Ironically he taught me the importance of relationships and people after otherwise being the type of techy that only values technical acumen. Legitimately changed my whole life direction. Shame I didn’t take to the lesson entirely before I cut things off.
One of my few regrets.
Just be careful, you can't take it's with you (this is a religious statement, most religions agree but if you believe an exception I guess this comment doesn't apply). As such there is no point in saving too much. Enjoy what you have, save money, but plan on spending that money before you die. (Since you don't know when you will die have some insurance for long life )
I think this is a bad, muddled version of these lessons.
> Play wealth accumulation games, not status games.
> Twitter is the ultimate battleground for status games.
... and then proceeds to quote his own tweets.
He talks about the importance of living by an inner scorecard an then immediately transitions to claiming "the only game worth playing is the wealth accumulation game", which sounds a lot like an external scorecard.
> Play wealth accumulation games, not status games.
> Twitter is the ultimate battleground for status games.
... and then proceeds to quote his own tweets.
He talks about the importance of living by an inner scorecard an then immediately transitions to claiming "the only game worth playing is the wealth accumulation game", which sounds a lot like an external scorecard.
"external scorecard" no:
Wealth is/can be private knowledge.
You assess your own score based on your own internal guidelines, not what other people think. The amount of wealth I feel I need to "pass" is unrelated to yours.
Wealth is/can be private knowledge.
You assess your own score based on your own internal guidelines, not what other people think. The amount of wealth I feel I need to "pass" is unrelated to yours.
Is this really true, though?
I mean, superyachts do exist. Mansions also visibly exist. Jeff Bezos does have not one but two private jets.
Now, I know some of this stuff is illusionary - there are private jets that don't fly and just act as photo studios. Loads of people can qualify for a loan to get a fancy car, if they're willing to pay a lot in interest.
I mean, I'd call someone with $10 million in the bank rich - but that's not enough money to own a superyacht. People who own superyachts aren't in my social circles, but they clearly exist.
I mean, superyachts do exist. Mansions also visibly exist. Jeff Bezos does have not one but two private jets.
Now, I know some of this stuff is illusionary - there are private jets that don't fly and just act as photo studios. Loads of people can qualify for a loan to get a fancy car, if they're willing to pay a lot in interest.
I mean, I'd call someone with $10 million in the bank rich - but that's not enough money to own a superyacht. People who own superyachts aren't in my social circles, but they clearly exist.
Jeff Bezos' $500M yacht is like 0.4% of his net worth. I don't know how many properties he has, but I'd be shocked if it's more than a few percent. The man could buy Rolexes and Audemars Piguets on a whim, and it wouldn't even move the needle.
Compare that yacht to the equivalent purchase of a well-off, working engineer (with, say, a $1M net worth): that's a $4000 purchase. It's a nice computer.
Point being, some people are so wealthy that even relatively "conservative" expenditures look extravagant.
Compare that yacht to the equivalent purchase of a well-off, working engineer (with, say, a $1M net worth): that's a $4000 purchase. It's a nice computer.
Point being, some people are so wealthy that even relatively "conservative" expenditures look extravagant.
Don't confuse rich with super rich. Some people have enough to afford that. The next step down can make the payments so long as things stay good, and look like they are just as rich.
Where the line between rich and middle class is, isn't well defined, but most of us could cross that line, but only those who don't act like will. However the total number of people just over the line is vastly greater than those well over who can afford the expensive toys.
Where the line between rich and middle class is, isn't well defined, but most of us could cross that line, but only those who don't act like will. However the total number of people just over the line is vastly greater than those well over who can afford the expensive toys.
> Wealth creation is a positive-sum game.
Is it though? Even if it were true in aggregate, which I'm not ready to grant, there are clearly individual losers in the the "wealth creation" game.
Is it though? Even if it were true in aggregate, which I'm not ready to grant, there are clearly individual losers in the the "wealth creation" game.
Not really, this is about creation. When you turn a tree into a house you create value. The losers in this game either fall to vandals, or create something that isn't valuable.
When you gamble money there are winners and losers. When you create something that creates wealth.
When you gamble money there are winners and losers. When you create something that creates wealth.
> When you turn a tree into a house you create value.
Of course, because the tree has no value, right? As long as you call things you don't care about "externalities" you can trivially prove anything is a positive-sum game.
Of course, because the tree has no value, right? As long as you call things you don't care about "externalities" you can trivially prove anything is a positive-sum game.
What's even worse is the poster didn't realize this obvious rebuttal existed.
And I'm with you, I actually dislike the word "externalities", it smacks of calling employees "resources".
And I'm with you, I actually dislike the word "externalities", it smacks of calling employees "resources".
What is pathetic is you think that rebuts anything.
This framing assumes that the tree has more value as a part of the house than it did as a tree. Every act of wealth creation is simultaneously an act of wealth destruction. Whether it is a positive or negative action is as much a statement of individual values as it is an objective, universal fact.
Not individual values, it is the value of society as a whole.
I'm sure Naval gets a lot of high-status from his job and general interactions with people. So it's easy for him to "ignore" the need/drive for status.
I wonder if most people who appear to be concerned with status are actually worried about belonging. They seem to be playing a zero-sum game with their peers, but they really just want to be secure within that group and not at the margins or in the out-group. I've certainly known people who want to be recognized for their expensive car or clothes, but I think most people just want to fit in and they've been convinced that what they wear or drive is an important part of that.
Exactly. Viewing status acquisition as worthless assumes that people do not want social attachment and that social standing within groups or society doesn't matter. I'd argue they matter more, and wealth is actually just the mean to this end.
A different metric: If you lack for nothing you are wealthy. If you yearn for more you are poor...
the genuine reason why certain rich people don't act rich has nothing to do with status gains or zero sum games. There's plenty of rich people who do indeed act rich. Pick your favorite sports superstar.
The real difference is between new and old money. The nouveau riche like to show off because they're fixated with the idea that they've earned it themselves, very much on display among super rich techies. It's precisely the "non zero-sum" people who love to signal their wealth openly because they take it for granted that their wealth is based on merit.
It's your old money folks who have some sense of noblesse oblige who understand that wealth most of the time is indeed pretty zero sum and who think of flaunting wealth one as distasteful and secondly as potentially stupid if it attracts attention, which new money craves and old money does not.
The real difference is between new and old money. The nouveau riche like to show off because they're fixated with the idea that they've earned it themselves, very much on display among super rich techies. It's precisely the "non zero-sum" people who love to signal their wealth openly because they take it for granted that their wealth is based on merit.
It's your old money folks who have some sense of noblesse oblige who understand that wealth most of the time is indeed pretty zero sum and who think of flaunting wealth one as distasteful and secondly as potentially stupid if it attracts attention, which new money craves and old money does not.
All of them play the status game, old money is just more subtle and hidden about it but they are even more viscous with their status games. It depends a lot on the person, but there is no getting away from it. To a certain extent, every person must play the status game in order get what they want from the world in their business and personal lives. There is no need for black and white, all or nothing thinking, everything in moderation is okay.
“They were new money, without a doubt: so new it shrieked. Their clothes looked as it they'd covered themselves in glue, then rolled around in hundred-dollar bills.”
― Margaret Atwood, The Blind Assassin
I feel like you could easily write something like this by doing a scrape(Naval's twitter) + scrape(buffet's wiki page) -> GPT3_summarize(that content) and you'd get this article.