Comments by "Magic Beans" (@Magic_beans_) on "How Money Works" channel.

  1. Point 3 is important: saying the CEO gets paid 200x what the media worker does is too abstract for folks to really get worked up about. What’ll hit home is an example of the CEO spending the average worker’s annual salary on something frivolous.
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  2. I’d say celebrity is a big part of it too. Who’s the CEO of United Healthcare or Wells Fargo? Unless you’re an investor you probably have no idea. Tech companies are much more identified with an individual, the visionary CEOs who was often a founder as well. Negative press coverage of the individual is bad for the company, so they have more of a reason to appear like normal folks who aren’t exploiting the system.
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  3. Part of it to me is that colloquially we’ve overused “scam” to the point of it losing meaning. Anything that doesn’t appeal to me personally or that’s more expensive than I’d prefer is a scam.
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  4. That too, but also what the host meant by “proceeds of crime” is that we have laws against keeping the profits of a crime for which one has been convicted. Whether that includes publishing media about your crime or selling the rights to your story, that’s a legal grey area. Several states passed “Son of Sam” laws saying any proceeds must go to the victims rather than the perp, but those laws have been struck down by the Supreme Court and several lower courts. They could probably be rewritten though to be more airtight. [You may recall that OJ Simpson wrote a totally hypothetical narrative of how someone might hypothetically have killed his ex-wife and her friend. That was kind of a special case: OJ had declared bankruptcy, and the book was an income-producing asset.]
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  5. Be careful with that. Sometimes people think something has no effect on them, but really they’re just not aware of the effect.
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  6. Frugality can be hard to let go of though. I came back to this video after watching one by Ramit Sethi titled “We achieved FIRE with $4.3M. Why can’t we enjoy it?” It’s just what it sounds like: Sethi interviews a couple who’ve been very frugal and built up a great nest egg. They got there by focusing on cost-saving behaviors and taking comfort in seeing the number go up, but now they’re having trouble letting go of that.
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  7. 7:50 As of early 2024 this is happening in the grocery store industry. Kroger trying to buy Albertsons and the authorities want to make sure that doesn’t exacerbate local monopolies.
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  8. For sure, that’s basically the “stealth wealth” our host referred to. They buy experiences or things that provide security, much less so things for showing off. Apparently there are even some billionaires who pull this off because Forbes doesn’t know who they are. But then you have these folks who deliberately cultivate an image of humility because it’s good PR.
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  9. My Intermediate professor told us “Embrace the boredom. That’s why we get paid what we do, nobody else wants to deal with this stuff.”
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  10. 9:36 Here I think it’s worth pointing out that homelessness declined steadily from 2007 to 2020 for the nation as a whole, then started trending up again for reasons you can probably guess. However, the current population of homeless individuals are increasingly concentrated in high-cost areas like major cities. Also a larger share are entirely unhoused (as opposed to slightly more comfortable but still precarious situations like shelters or couch-surfing). Today’s unhoused population is smaller than even in recent history, but they’re more visible, which contributes to the sense of crisis. (Which hopefully leads to meaningful action but probably a lot of bureaucracy and NIMBYism as well.)
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  11. 9:00 This is important to the whole “startup refuses venture capitalist’s offer to invest” thing. The VC is buying an ownership stake, and in many cases they’re going to act like it.
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  12. That too, there’s famous and then there’s Musk-Zuck-Bezos famous. Tech and media companies have to sell a vision, so their image is far more tied to their CEO individually (especially if they’re also a founder) than is the case with other more established companies. For example: Indra Nooyi spent 18 years as one of PepsiCo’s top executives (CFO, CEO, President, and/or Chair). She was making $15-20M a year including stock-based compensation, so she’s easily worth hundreds of millions if not a billion. Forbes would know about her for sure — Pepsi is a household name and the 40th biggest company in the world by market capitalization — but the average person wouldn’t recognize her.
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  13. 0:01 He’s not wrong, he’s just conflating cause and effect.
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  14. Bear in mind that the purpose of most ads isn't to get you to rush out and buy something right now. Typically it's just the company reminding you that they exist or associating a certain image or feeling with their brand so that when you do want something, they come to mind. Take something simple like bread: where do you buy yours and why? Like really why? Why do people pay $6 at the local bakery rather than $4 for mass-market bread or $2 for store-brand bread? Usually because of an idea, somewhat based in fact and somewhat in feeling, that the more expensive option is better: more nutritious, more ethical, more befitting their lifestyle, or whatever else. Those ideas seep in over time through advertising and branding.
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  15. Related to these, I think people who are smart in “hard” topics like physics or medicine make the mistake of assuming that because nutrition or finance is “easier”, they don’t need to take the time to develop the relevant expertise. As a result they do what so many of us did as university freshmen: read a handful of articles and think we’ve cracked the code.
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  16. 1:38 How do we know you’re not doing this already, disembodied YouTube voice?
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  17. “Financially comfortable” is fine with me. I wouldn’t even know what to do with tens of millions of dollars.
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  18. You can still have that stuff if you want it, just do it for yourself, not to show off. There’s a quote supposedly by Bill Murray: “I always want to say to people who want to be rich and famous: ‘try being rich first.’ See if that doesn’t cover most of it.” Showing off wealth is a great way to earn envy and admiration, but is it worth the gold diggers, scam artists, and sometimes even extortion schemes? Probably not.
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  19.  @nadadur No way to be sure, but at least we’re not pitching anything.
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  20. 10:57 I got a podcast about… something, and a nutrition supplement.
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  21. If I were a billionaire, I wouldn’t be for long. I got no need for that kind of money.
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  22. I would disagree a bit on the idea of fan pushback for endorsing garbage products. Online fandoms are so fleeting that nothing sticks for long. Even the outright scams are soon forgotten.
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  23. Another tool is to find an employer who’ll reimburse tuition. Unless for some reason you need a Master’s to get started in your field, save it until you’re working and then peck away at it over 4-6 years. It’ll cost way less out of pocket, and you’ll probably have a better idea of what you want to do long term. That transition is a perfect opportunity to either specialize (Biology to Botany, for example) or change course (like Psychology to Public Health). One word of warning, some employers include a clause that if you quit you have to give back any reimbursement you received in the prior 6-12 months. I wouldn’t not use the program over that, it’s just something to be aware of.
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  24. Owning a business isn’t likely to make you rich. I’ll pull from an article in Entrepreneur magazine, so you know I’m not data mining to make business ownership look bad. According to them and the AmEx study they cited: - Median individual income in the US for 2017 was around $52,000 and median household income was $62,000. - Median entrepreneurial income at the same time was $68,000 per year. (“Will Entrepreneurship Make You Rich? A Realistic Perspective” by Dan Bova, May 8, 2017) It’s an honest living, above average even. But the fact that the wealthiest people are mostly business owners doesn’t mean most business owners become wealthy.
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  25.  @jo2305 Exactly, people are confusing pain relief with happiness. The first is important for sure and can free up resources toward pursuing the second, but they’re not the same. Research on what brings happiness typically finds the same few things: meaningful relationships, helping others, and having a sense of purpose to your life. A certain amount of money can help with that; if you’re working 60+ hours a week just to get by, you won’t have much time for relationships or helping others, and those jobs may not align with your purpose, they just pay the bills. So yeah, get that person a basic income or a living wage and they probably would be happier. Beyond that though, it tapers off. Going from a salary of $50K to $100K a year helps somewhat, but $100K to $1M a year doesn’t. Once you’ve removed the obstacles to pursuing happiness, money doesn’t help much. In fact some people horseshoe around to where they’re working such long hours that they have no time for relationships.
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  26. 11:23 This doesn’t surprise me at all. HOAs can be a pain for sure, especially when they get to nitpicking over lawn ornaments or whatever*. This is what they’re meant for though; they’re a channel for neighbors to resolve grievances peacefully and to hold disruptive neighbors accountable. 8:50 I’m glad you mention this. People are hearing to avoid AirBnBs so they stay off that particular site, but those same properties are being listed elsewhere. It’s not AirBnB alone, nor even short-term rentals alone (those do have their use cases), it’s more about the gold rush mentality. * I would say though that a good half the time the homeowner’s entire case is “I should be the exception.”
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  27. Sure, but is starting a business any more certain? Even the stats passed around by entrepreneurs say 7.5% of businesses fail each year, with the first year higher at 12.5%. A company or industry laying off 7% of their workforce is seen as severe (that was the tech layoffs of 2023). If layoffs reach 10% that’s crisis management (Boeing 2024-25). And of course those don’t happen every year; nationwide the only time we’ve had more than 2% of the population laid off was Q2 2020, and you probably remember what happened then. If you think you’ll beat the odds, or at least that you’ll enjoy the process whether it pays off or not, great. I’m not here to discourage you. I’m saying that the people who promote business ownership as easy, lucrative, and safer than a W-2 job are full of it.
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  28. I think a lot of people would have been interested to understand how an IPO works. For a lot of people it just means some kind of automatic windfall for the people who (work at? manage? founded?) a startup.
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  29. We probably will need to reframe our notion of retirement. Personally, my goal isn’t to stop working entirely, just to be able to work on my own terms. Let’s say I get $1,000,000 saved up, giving me a $40,000 baseline income. With that in place I could get by on part-time or seasonal work.
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  30. 8:23 Many cultures figured this out on their own. In the Bible there are several mentions of the oldest son having (and sometimes losing) the right to twice the inheritance that his siblings would get. Another place you can see this division of resources is farmland. Sometimes you’ll see it arranged in thin strips. This happens because long ago someone had a big parcel where one side faced the road or a river, then when they passed it got split up. It wouldn’t be much of a farm without access to that road or river, so they kept slicing the land thinner.
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  31. Oversharing too, e.g., "It's not just you, LinkedIn has gotten really weird.", Business Insider, 9/25/22.
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  32. 13:34 I’m glad you mention this, but I’d take it a step further. What I see in finance social media is kind of a self-fulfilling version of the vanishing middle class. According to these gurus it’s not good enough to save up and build a comfortable life over 30 years. The goal is to get rich quick. Like absurdly rich, casually buying another sports car rich.
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  33. I’d love for my current job to become redundant. That would mean that behavioral health services could get enough money to keep the doors open without begging the state for grants or navigating dozens of insurance bureaucracies.
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  34. 0:45 Be careful with making your hobby into a job. The sense of obligation can suck the fun right out of it, and then how do you unwind?
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  35. ​ @vegbeg9170  Even today the major networks are filled with advertising. A primetime half-hour sitcom in the US these days is 18-21 minutes of show and 9-12 of ads. That's up to 40% ads. See also: "Fast forward: Networks speed up TV shows to play more ads" (2015) on CBS News, or "CBS's Mom has an ingenious solution to TV sitcoms' biggest problem" (2016) on Vox, where they compare the runtimes of the sitcoms "Cheers", "Friends", and "Mom" to illustrate how sitcoms have gotten more compressed.
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  36. Tangent to my other comment: Advertising during NFL games often gets called out, but there's a bit of a mitigating factor there. The contract between the network and the league specifies something like 10 ad breaks per half, and the networks front-load those ad breaks so they don't have to be wedged in at crucial moments, which tend to be toward the end of each half. So yes, you are seeing kickoff - ads - 3 & out - ads - touchdown - ads, but what you may have noticed is where they didn't take an ad break during a two-minute drill.
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  37.  @GhostlyNomad130 Semi-retirement is pretty much what it sounds like: you get some level of income, maybe not enough to live off of entirely but enough that you don’t have to work a “normal” job. Instead you can dial back to part-time or seasonal work. Sometimes it works the other way around, people go back to working out of economic necessity, but for others it’s a way to “downshift” to a less stressful life. Not everybody hates working in and of itself. UBI experiments and workplace survey suggest many people like work; it’s a good outlet for their talents or a way to contribute to society. What sours the deal is the obligation of it all, the idea that they have to put in 40-plus hours a week 50 weeks a year for 40 years, basically nonstop, or else risk a swift descent into homelessness. Semi-retirement is essentially being able to work on your own terms. I knew some Silicon Valley guys who did that. Not the folks who got IPO windfalls, but regular programmers and designers. They’d grind for ten years and live as cheaply as possible, saving up half a million dollars or whatever. Then they’d move somewhere cheaper like Oregon (cheaper relative to Silicon Valley, of course). They could partly live off their nest egg, supplementing it with a couple days a week working at a coffee shop. Or maybe they’d keep programming but as a contractor, only taking as many gigs as they felt like. That leaves plenty of time to put toward parenting or hobbies.
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  38. I’d also recommend the Whitehall Studies. They looked at British government workers (to normalize for workplace hazards and access to healthcare), and found that higher-income workers lived longer. One of their hypotheses was that higher-income workers (often being higher-ranking too) generally had more of a sense of control over their lives. You can call that happiness, but I’d say it’s more like stress relief. On the low end, just getting up to a living wage means you don’t have to do without necessities (pretty much by definition). Above that you can get out of debt and save for emergencies, which take a further load off. Then you get the nice-to-haves like a proper vacation. So it totally makes sense that there would be diminishing returns in that respect. The research on happiness finds that the same few things matter: meaningful personal connections and a sense that they’re doing something meaningful with their life. Money can’t buy that, it’s more a matter of having enough money to remove the obstacles.
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  39. Publicity. If they shout you out on social media or a picture gets published of them using your product, that’s great exposure.
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  40. ⁠ @midnightfun1277 I think that contributes to the popularity of apocalyptic media like The Walking Dead and so forth. It shows that in some respects it’s the top social tier, not the bottom, that depends the most on society’s support.
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  41. Doing it for views is crappy, but I will say sometimes coaching be like that. Some clients act like (and maybe honestly believe) a good enough coach will fix their problem for them without them having to do anything. That’s not how it works, so you have to set them straight, and maybe be a bit of a jerk in the process.
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  42. Footnoting the Mr. Consistent example: Dividends help, but over a long timeline it’s going to be close no matter what, because whenever it is that you invested in that first year, you’d stay invested for all subsequent years. To use a more dramatic example let’s say you bought Microsoft at some point in 2015. Depending on your timing you would have gotten in somewhere between $40 and $57. As of this writing it’s trading around $370. Granted that’s a 40% difference in entry price, so you could be sitting on anywhere from a 550% to 825% gain. Still, you’re in great shape no matter what because you were there for all of 2016, 2017, 2018…
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  43. I wouldn’t stop working entirely, I’d just dial back. I could self-employ, do what I do now but as a contractor. If you’re fully dependent on self-employment for income it can be full-time and then some, but with a baseline income in place I could just take on as much work as I felt like. Workplace surveys and UBI experiments suggest that most people are fine with work as a concept, and about 1/3 actively like their current job. It’s the obligation that sticks in people’s craw. What wouldn’t get old if you had to do it 40+ hours a week for basically your whole adult life? Many retirees have observed that even leisure time gets old. A 2021 study combining correlational and experimental data [PMID 34498892] found that 2-5 hours a day of leisure time seems to be the sweet spot. Below that and people tend to get stressed, above that and they feel like they’re not doing anything with their lives. Of course you can always split the difference and find something you enjoy that also builds a skill or helps others.
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  44. 1:20 I felt that just from watching my investments increase during the plague years. 2:45 I need to rewatch “Brewster’s Millions”. I’m kind of surprised it hasn’t been remade since the Richard Pryor version.
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  45. That bears absolutely no resemblance to what the host said.
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  46. I agree we can and should do better, but historically few people have ever been able to retire. Soldiers have long received a pension, then union and government jobs starting in the late 19th century. Prussia provided the first government financial support for senior civilians in 1889, though they set the qualification age to 70 so few people got it for very long. Your best hope to not work in your elder years was to make enough money to become a landlord or a minority business owner (see also: George Orwell's 1936 novel "Keep the Apidastra Flying"). Otherwise you were working the farm until you couldn't anymore and your kids had to take it over.
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  47. For sure. If you’re not really interested in owning a sliver of 20ish businesses and keeping tabs on those businesses, just drop that cash in an index fund and let it do its thing. Average returns over a long timeline are still great returns. Speaking of which, there’s a lot of buzz about exchange-traded funds (ETFs), but if you want to be Mr. Consistent, mutual funds have a really helpful trait: automatic investment. My IRA is invested in ETFs, so every couple weeks I have to log in to my brokerage and say “See that $250 I deposited? Use that to buy [ticker]. With a mutual fund I could just set it up once and not worry about it. Deposits get added to the fund at whatever that day’s price is, and I could just pop in every few months (or less) to make sure everything’s okay.
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  48. I wouldn’t pin it just on him. Boeing is a good example of why the firing of a figurehead can be little more than a distraction. Boeing’s R&D spending relative to its peers has been low for decades. Muilenburg took office in 2015, two years after the latest wave share buybacks had started, and earlier waves go back to the late 90s. Those buybacks were generally proposed at the insistence of their existing institutional shareholders. So it was greed and failure all around. Still, the CEOs and Board members during that time, including Muilenburg, could have done something about it, or to at least called attention to the risk of leaning on an old product line rather than build anything new. That’s what executives are supposed to do, to make those hard and unpopular decisions.
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  49. What I don’t get is the desire to accumulate more wealth than you could possibly spend. Not because you love being a business shark or whatever, that’s kinda messed up but I can understand. I mean amassing money and stuff for its own sake. If I got a $5M windfall, I think I’d actually have trouble spending it all.
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  50.  @wholeNwon Realistically yes, if I personally got a one-time $5M windfall I’d invest it and have a $150,000/year base income for life. But that’s kind of my point: I’d like to think I’d be done accumulating. I’d probably work in some respect to remain socially & mentally engaged, but not to make more money. Then of course there are the people who earn and spend millions of dollars per year . I don’t even know how that works other than pissing it away on vanity projects.
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