[fakedang]

Again, read my last line. The SWF is responsible for all the subsidies in the UAE, and if they collapse, it would mean we have far bigger problems. The SWF invests in all major indices across all major markets, and even in multiple private equity firms (including my old firm, which was one of the biggest in the world). The collapse of $1.1T worth of investments would be the signal of a global collapse. Imagine if Blackrock or Vanguard declared themselves bankrupt one fine morning - that's what you're implying.

Also Norway would collapse too, since both the Norwegian and Abu Dhabi SWF have very similar investment profiles.

Last time I checked, the British Empire hadn't invested a dime into either the US or Chinese stock markets. Or even had a sovereign wealth fund for that matter.

[ben_w]

I read you last line, but “if it collapses we have bigger things to worry about” was essentially the same argument my father used when he advised me to invest in Lloyds bank — those shares lost 95% of their value since I bought them precisely because “something bigger to worry about” did in fact happen.

Now I’m a software dev not an economist, so perhaps you know better, but I have been told that WW2 essentially bankrupted the British Empire, which was 36.54% of global GDP in 1913.

I am happy to assume the SWF is invested wisely, but even if the manager’s kids and grandkids continue to invest wisely and learn the explicit lessons of the mistakes of others without ever falling into the mindset that they’re “too big [for anyone else to allow them to] fail” and therefore take risks that make failure more likely, black swan events are an ever-present risk. Indeed, one reason I referenced British Empire is the phrase “the empire on which the sun never sets” — it set on the British, and one day it will set on all the nations that now exist, including UAE.

[fakedang]

You're willfully ignoring statements. Your father asked you to invest in one company's single security. The UAE, Singaporean and Norwegian wealth funds are invested in everything from real estate to stocks to bonds to private equity. If those funds were to fail, the cause of that would be because the underlying securities failed, which would imply a collapse of the global financial system.

As for the managers' capabilities, it's not some dude sitting in an office managing a trillion dollars - it's a team of highly brilliant investors who either invest directly or outsource the investing to multiple megafund investor firms across multiple risk profiles such as Blackrock or Blackstone or Vanguard or Citadel, all of whom hire really talented folks (unlike the typical investment banking industry). Nowhere near your dad advising you to invest in LBG.

Also the term "The Sun never sets on the British empire" implied geographical dominance across the world, not immortal dominance. Before you guys, it was the Spanish claiming that.

[ben_w]

> You're willfully ignoring statements.

There is no need for that kind of language.

I give the example of my father’s advice because, to repeat myself for emphasis, the global financial system did in fact go very very badly wrong (and not for the first time).

The fact that his argument was also your argument is the segue, not the point.

> it's not some dude sitting in an office managing a trillion dollars - it's a team of highly brilliant investors who either invest directly or outsource the investing to multiple megafund investor firms across multiple risk profiles

I did not wish to imply that it was merely “some dude”, and I am disappointed that you chose to interpret my words as such. After all, I would not imply that you think that Lloyds bank lost so much market cap because “some dude” was planning their business strategy.

I wish to imply that (1) things change, and (2) that a current state of competent management is not something that can be assured forever.

This implication was illustrated with one of many historical examples of nations and empires thought indefatigable at their peak which are now no more.

I also illustrated it with the example of the global financial crisis which led to Lloyds losing so much value. I believe that was caused by teams of highly brilliant investors applying a Nobel-prize winning formula.

> Also the term "The Sun never sets on the British empire" implied geographical dominance across the world, not immortal dominance. Before you guys, it was the Spanish claiming that.

I was already aware both that it was previously used by the Spanish and that one usage was geographical, however it was also used by British people in the sense of never ending dominance - https://access-socialstudies.cappelendamm.no/c316302/tekstop...

[fakedang]

> the global financial system did in fact go very very badly wrong (and not for the first time).

And has since tripled from pre-GFC peaks. Markets are cyclical, you think funds haven't baked that into their models?

> I wish to imply that (1) things change, and (2) that a current state of competent management is not something that can be assured forever.

Competency in management is a passed down skill, not an innate skill that someone alone possesses. From what I've observed by working with them directly, all SWFs hire the best people across the world, without discriminating based on nationality (except for Chairmanship). As long as the global talent pool exists at the same standards or higher, these funds will have the manpower required to manage. In most cases, they even paid better than most private investment firms, and all of them paid more than tech, management consulting or investment banking. A lot of their venture arms were led/advised by former tech entrepreneurs for instance.

> After all, I would not imply that you think that Lloyds bank lost so much market cap because “some dude” was planning their business strategy

LBG lost so much market cap precisely because some dudes, the CEOs, failed in planning their business strategy well. All of the UK banks messed up big time during the GFC, and hence all of them are failures right now. Barclay's is only standing now because the Qataris bought into it. But that's one sector in one country alone.

> This implication was illustrated with one of many historical examples of nations and empires thought indefatigable at their peak which are now no more

None of Norway, the UAE or Singapore are empires. If you want to talk about nations, France, Spain, Norway, Sweden, etc still exist as independent nations even after so many centuries right? In almost all cases, they've even bumped up their GDP, even if not by much, in spite of losing their colonial holdings.

> I believe that was caused by teams of highly brilliant investors applying a Nobel-prize winning formula.

You're talking about Long Term Capital Management (LTCM) collapsing, which happened in 1997. Those Nobel-winning guys failed by betting massively on Russian securities, believing that Russia would open up after USSR dissolution. Again, the focus on one strategy alone.

Point was, you are focusing on one investment alone in all examples. Meanwhile, these SWFs are vastly diversified across various security products. As I said before, if you want to take down any SWF, you would have to take down the global economy. That would mean taking down BOTH USA and China, which these countries are invested into. Even if only one country collapsed, these funds will survive because they are that diversified. While the GFC punished most of the finance industry, these funds survived because they were highly spread out. If the USA AND China were to collapse though, I doubt the free market concept would even exist by then. That would mean no more FAANG, no more tech companies, no more cushy SV jobs, heck, no more HackerNews. I doubt (and they doubt too) that the USA and China would let such a collapse happen though - as we've seen in the GFC era, and currently in the C19 era.

> however it was also used by British people in the sense of never ending dominance

Their mistake, classic British hubris. Not to mention, as I've said before, neither the UAE, Norway, Singapore, etc consider themselves as empires in this day and age. On the contrary, all of these places are extremely cautious about the future - the UAE fund constantly worries about oil drying up and began investing into renewables research around the world since the early 2000s, Singapore worries constantly about global warming and Malaysia cutting them off, Norway's SWF worries too much about being too dependent on oil revenues...

[ikerdanzel]

You making an assumption UAE will never dip their hand into their golden goose. Money come and go. Just go ask Rothschild and Rockefeller when they had wealth beyond imagination back then. I wouldn't put too much faith in SWF. Nokia gone. Lehman gone. They take along a lot of billionaire money too. So SWF will have to be incredibily lucky like Buffet to keep their wealth. Let just say in 50 years, it will be very different than what you praised about SWF today.

[fakedang]

Fun fact, the Rothschild and Rockefeller wealth still exists, although it's heavily fragmented. For the Rockefellers, the US government explicitly stepped in and split their golden goose (Standard Oil - > Exxon + Chevron + Texaco). The Rothschild money permeates Europe throughout. The split is because that's what happens when you get a family spanning more than thousands of members. And each of their branches are massively wealthy.

You mention the UAE dipping into its SWF, except it already does that. The SWF accumulates the oil wealth from exports, which is reinvested into various investments around the world. A fraction (about 50B USD) of the annual returns from that wealth is what is used to run the UAE and all of its welfare programmes, its military, etc. Unlike the Saudis, UAE and Qatar both benefit from really small local populations - there are about 300k Qatari citizens and 1M Emirati citizens worldwide.

And Buffett is not lucky. He made a lot of successful bets everywhere year - I recommend reading his investor letters if you can, where he explains his rationale behind every investment decision, including the ones that turned out to be duds.

Just as you say that SWFs won't exist in 50 years, there are banks in Switzerland that have existed for hundreds of years. Oxford and Cambridge are just as prestigious today as they were 800 years ago. Once a culture is established and buttressed, it will be hard to shake it off.