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Old 05-12-2009, 11:03 PM   #41
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I don't know. It is a paradox in some sense. Plenty of people who don't NEED to take the risk do so anyway, largely because they are willing to accept the risk of loss knowing that if their "bets" were wiped out, they'd still be okay. Maybe they have millions in non-risky stuff. Maybe they calculated that the combination of a COLA'd pension and SS would be more than enough to live on. But the point is this: they have the *ability* to assume the risk if they were up to it, but unlike most of us middle-class 401K-dependent schmucks, they don't NEED to take the risk if they'd rather not.
i dont see the paradox at all, by statements made earlier about "not risking more (be it in business, hi risk investing or gambling) then you can afford to lose" by definition only people who dont need the result of the risk can afford to take it. that makes it an axiom not a paradox.
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Old 05-13-2009, 01:20 AM   #42
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True but people who frequent this board also tend to be the exact opposite of your typical entreprenuer. Lot's of gov-corp slave types working in one niche their entire career, and becoming fixated on early retirement.
Hey, if the shoe fits, wear it (but, remember; don't spend $200 for them)
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Old 05-13-2009, 05:34 AM   #43
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That's certainly true, and it's also amplified by paradox: to a large degree, the people who can most afford to take risks with their money tend to be the same people who don't need to.
I can see Ziggy's point and I think it is a good one. At least, I can relate to it in my own attitudes at various stages in my life.

I have always been very risk-averse by nature, but from late 2003 through 2006 I was 55-58 years old and way, way behind in my retirement preparation (due to circumstances that are irrelevant to this post), and 100% in equities. It was an all-or-nothing bet, and felt almost like putting all my money on red at the casino. Luckily we had a bull market during that time, and I "won", at least enough that I was able to envision actually retiring. Once that was the case, I pulled back to a more conservative asset allocation.

So, when I could not afford to lose I bet the farm even though I couldn't afford it. I NEEDED to take these risks even though I did not have the ability to withstand losses, should they have occurred.

When I could better afford it my asset allocation was more conservative because even though I could afford some losses, I didn't NEED to take those risks.
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Old 05-13-2009, 07:12 PM   #44
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I can see Ziggy's point and I think it is a good one. At least, I can relate to it in my own attitudes at various stages in my life.

I have always been very risk-averse by nature, but from late 2003 through 2006 I was 55-58 years old and way, way behind in my retirement preparation (due to circumstances that are irrelevant to this post), and 100% in equities. It was an all-or-nothing bet, and felt almost like putting all my money on red at the casino. Luckily we had a bull market during that time, and I "won", at least enough that I was able to envision actually retiring. Once that was the case, I pulled back to a more conservative asset allocation.

So, when I could not afford to lose I bet the farm even though I couldn't afford it. I NEEDED to take these risks even though I did not have the ability to withstand losses, should they have occurred.

When I could better afford it my asset allocation was more conservative because even though I could afford some losses, I didn't NEED to take those risks.
All I can say is, Wow. I'm SO GLAD it worked out for you, W2R. I would have been in the same position if my divorce settlement hadn't worked out well, but it would have been in 2004-2008. I might have been one of the people in that article.
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Old 05-13-2009, 07:24 PM   #45
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True but people who frequent this board also tend to be the exact opposite of your typical entreprenuer. Lot's of gov-corp slave types working in one niche their entire career, and becoming fixated on early retirement.

You could make a case that most companies in the world, and our whole standard of living for that matter, is based on entreprenuers risking their personal wealth on starting new businesses. Many fail but enough suceed to fuel the economic growth that allows us the opportunity to retire early in the first place.
I have never worked for the govt or a big corp. Always entrepreneurs. I know enough about how that works to chose not to be in business for myself but I am quite happy working for those entrepreneurial types.
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Old 05-13-2009, 07:45 PM   #46
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I have never worked for the govt or a big corp. Always entrepreneurs. I know enough about how that works to chose not to be in business for myself but I am quite happy working for those entrepreneurial types.
I worked at a second job for a while (waitress in a pizza place) and watched the idiot running it do everything wrong and run the place into the ground (and that was not just my opinion).
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What a Great Thread
Old 05-13-2009, 08:04 PM   #47
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What a Great Thread

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Originally Posted by calmloki View Post
So Kipling wasn't really thinking of investors?

"If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss";

Or maybe If is good poetry but poor investment advice.
What a great thread. Much better stories in the thread than the OP story. Always great when you can slip a little Kipling in there.

This made me think of a story of my neighbor's retirement. He was retired nicely. Then he inhereted some money. He decided to try business again. Lost the inheretance and his house (and I assume his ability to retire). I was shocked when I heard what had happened.

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Old 05-13-2009, 08:24 PM   #48
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He was retired nicely. Then he inhereted some money. He decided to try business again. Lost the inheretance and his house (and I assume his ability to retire). I was shocked when I heard what had happened.
Another "senior entrepreneur" with the opportunity to punt...
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Old 05-13-2009, 08:49 PM   #49
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I guess my wife and I fit in the "corp slaves" category. My In-laws always had grand dreams of striking it rich and after years of slaving at a (well paying) j*b, FIL put it all on the line at the age of 58 and started his own business. It was, according to him, the only way he could make enough money to be able to retire one day (which was not entirely true as I found out later; Between his/her SS and their savings they could have grossed about $60K annual in retirement). His ego ballooned as he met some early success. At the time, he used to make fun of us "corporate drones" and of our "lack of vision, drive and entrepreneurial spirit". Of course, the story does not end well. Broken dreams, divorce, financial losses... When my in-laws divorced in their early 60s, their networth was lower than ours despite FIL working for 40 years at a job paying more than our 2 jobs combined. Sometimes being a corporate slave has its perks.

FIL is back at it again, trying to setup a multi-million dollar company in a midst of a severe recession. He has no capital to contribute to the new venture and depends entirely on other investors' good will, which of course is in short supply right now. But he's still talking a big game... I wish him luck though. I don't want him to become destitute and move permanently in our guest room.
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Old 05-13-2009, 09:07 PM   #50
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I guess my wife and I fit in the "corp slaves" category. My In-laws always had grand dreams of striking it rich and after years of slaving at a (well paying) j*b, FIL put it all on the line at the age of 58 and started his own business. It was, according to him, the only way he could make enough money to be able to retire one day (which was not entirely true as I found out later). His ego ballooned as he met some early success. At the time, he used to make fun of us "corporate drones" and of our "lack of vision, drive and entrepreneurial spirit". Of course, the story does not end well. Broken dreams, divorce, financial losses... When my in-laws divorced in their early 60s, their networth was lower than ours despite FIL working for 40 years at a job paying more than our 2 jobs combined. Sometimes being a corporate slave has its perks.

FIL is back at it again, trying to setup a multi-million dollar company in a midst of a severe recession. He has no capital to contribute to the new venture and depends entirely on other investors' good will, which of course is in short supply right now. But he's still talking a big game... I wish him luck though. I don't want him to become destitute and move permanently in our guest room.
In America we sometimes feel that entrepreneurial successes are somehow superior to putting in one’s time in large organization. At the same time, we tend to disparage those whose fail in these endeavors. There is a lot of "I told you so" in some of the posts in this thread.

Likely as not the risk taking urge, or the inability to function smoothly and happily in a more bureaucratic structure is mostly beyond the control of the individual, an accident of genes and perhaps upbringing. Just like the guy who becomes a Navy Seal is a very different guy from the careerist serviceman who always has his eye on advancement and eventual retirement.

Similarly the risk avoidance found in many people who pursue organizational careers is usually not a choice, it's mostly given by their genes.

Ha
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Old 05-13-2009, 09:23 PM   #51
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In America we sometimes feel that entrepreneurial successes are somehow superior to putting in one’s time in large organization. At the same time, we tend to disparage those whose fail in these endeavors. There is a lot of "I told you so" in some of the posts in this thread.

Likely as not the risk taking urge, or the inability to function smoothly and happily in a more bureaucratic structure is mostly beyond the control of the individual, an accident of genes and perhaps upbringing. Just like the guy who becomes a Navy Seal is a very different guy from the careerist serviceman who always has his eye on advancement and eventual retirement.

Similarly the risk avoidance found in many people who pursue organizational careers is usually not a choice, it's mostly given by their genes.

Ha
I would disagree with your assessment that "people who pursue organizational careers" avoid risk. It's just a different kind of risk. I don't invest my money in a business I own (as many entrepreneurs do), but I invest it in other people's businesses (via stocks, bonds, etc...) which can be very risky as we all know. And working for someone else carries plenty of risks too.
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Old 05-13-2009, 09:27 PM   #52
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Right. Working with ex/retired fighter pilots was way different than ex bomber jocks.

heh heh heh - The bomber pilots were more organizationally aware - if there is such a term.
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Old 05-14-2009, 07:12 PM   #53
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I enjoy working for others because I'm basically pretty lazy, and if I was in business for myself I assume that would lead to failure.

I don't mean lazy as in doesn't can't hold a job or shows up late all the time, but I do like to clock my 40 hours and be done with it. In fact that 40 hours is only tolerable with a reasonable share of web surfing or chit-chatting along the way.

I'm pretty good at what I do so I believe my reputation as a solid performer stands despite my not being the 7am to 6pm type, and that's a trade off I'm willing to make for realizing I'll never be someone with 5 million dollars in the bank and a mercedes in the driveway. Do my 20-25 years and get out in my late 40s, done deal.
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Old 05-15-2009, 02:08 PM   #54
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I enjoy working for others because I'm basically pretty lazy, and if I was in business for myself I assume that would lead to failure.

I don't mean lazy as in doesn't can't hold a job or shows up late all the time, but I do like to clock my 40 hours and be done with it. In fact that 40 hours is only tolerable with a reasonable share of web surfing or chit-chatting along the way.

I'm pretty good at what I do so I believe my reputation as a solid performer stands despite my not being the 7am to 6pm type, and that's a trade off I'm willing to make for realizing I'll never be someone with 5 million dollars in the bank and a mercedes in the driveway. Do my 20-25 years and get out in my late 40s, done deal.
Yeah, exactly. What you said! You reading my mail, Tiu?
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Old 05-15-2009, 07:36 PM   #55
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Another fine point is that it is not just entrepreneurial *successes* that create jobs and advance the overall economy - even *failures* often add value. A favorite example of Andy Grove, founder of Intel, is the "railroad fever" that swept the U.S. in the 19th century. Far more railroads were built than was economically viable. And while some "railroad barons" of course made fortunes, many others went bust, along with their investors. Yet, this in turn stimulated all kinds of other industrial development, not to mention modern retailing (Sears, Roebuck etc.). Arguably the "dot com" boom of the late 1990s had a similar effect of, while losing money for many, creating a fertile field for other innovations and efficiencies.

My personal example is restaurants. While most lose money for their owners, these labors of love (aka "foolhardy investments") keep the variety higher and the prices lower for all of us patrons.
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Old 05-15-2009, 07:43 PM   #56
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My personal example is restaurants. While most lose money for their owners, these labors of love (aka "foolhardy investments") keep the variety higher and the prices lower for all of us patrons.
Your saying it's OK for folks in their 60's to use their retirement savings to start restaurants so the rest of us can eat out for less?
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Old 05-16-2009, 09:23 AM   #57
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I enjoy working for others because I'm basically pretty lazy, and if I was in business for myself I assume that would lead to failure.

I don't mean lazy as in doesn't can't hold a job or shows up late all the time, but I do like to clock my 40 hours and be done with it. In fact that 40 hours is only tolerable with a reasonable share of web surfing or chit-chatting along the way.

I'm pretty good at what I do so I believe my reputation as a solid performer stands despite my not being the 7am to 6pm type, and that's a trade off I'm willing to make for realizing I'll never be someone with 5 million dollars in the bank and a mercedes in the driveway. Do my 20-25 years and get out in my late 40s, done deal.
My MIL used to tell me that I should start my own restaurant. Im a fairly decent cook. Im smart enough to know that I wouldn't work hard enough for myself to ever make it a success
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Old 05-16-2009, 12:48 PM   #58
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I bet my entire life savings in equities because I don't know what else will allow me to ever retire. I did lose a lot in the last two years and now at 61 I am still afraid to get out of equities. I am saving as fast as I can but putting my life savings in a passbook savings account will mean I never have enough. The thing is you can retire with nothing at all and live on social security if you have to. A coworker is 63, no home, childless, about 60K in the 401K and saving 125 per week for retirement. Her plan for retirement is for her sister to buy a house in a tiny town in the middle of nowhere that she can get for $250 a month and live with her sister. She was living with her sister and BIL before but now is living with a woman in her 90s as a caregiver. Her sister will be a widow soon and is older, their kids are on drugs. I see the chosen lifestyle as a prison it is about 100 miles to the nearest larger town so they will be stuck in a town about 4 blocks long, no medical care without a major trip. But her retirement is planned and she seems to like the plan.
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Old 05-16-2009, 01:01 PM   #59
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who sent pictures of her foot-high ceramic chicken, .
What is a foot high ceramic chicken ?

I don't have one.
I want one.
I NEED one.....
I'll borrow to get one !!!!!!!!
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Old 05-16-2009, 05:18 PM   #60
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Her plan for retirement is for her sister to buy a house in a tiny town in the middle of nowhere that she can get for $250 a month and live with her sister.
Very off topic: OK, I have to ask, just in general if you do not want to give specifics, where does she plan to get this $250/month house?
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