[daseiner1]

> Investing in a diversified index is NOT gambling, because it isn't a zero-sum game, where you have winners and losers. You are investing in the growth of the economy as a whole.

I’ve genuinely never understood why this is so unintuitive to many otherwise intelligent people I’ve known. Over a long enough time horizon (and with prudent management of risk as one ages/approaches retirement) serious increase in wealth is all but guaranteed short of the US absolutely collapsing. And if that happens, then we’d all have bigger fish to fry.

[cortesoft]

> all but guaranteed short of the US absolutely collapsing. And if that happens, then we’d all have bigger fish to fry.

I mostly agree with your assessment, but lots of governments have collapsed, and that doesn't mean that everyone loses EVERYTHING. Some people are able to retain some assets, if they have them in the right form.

I do think some of the hedges people take don't make sense, though... if your hedge is to keep a bunch of cash around, you aren't hedging against your risk because your risks are correlated - the event that will cause all your stocks to go to zero will also cause the dollar to go to zero.

If you are truly hedging against the collapse of the US, you would try to get assets that would survive that... lots of possibilities, and some of them make more sense than others, but all of them have their own risks, and some of those risks are way more correlated than people realize.

[Ekaros]

Because there are real world counter-examples take Japan and stock performance there.

It has worked to this point, but past returns are not guarantee of future returns. On other hand well both political parties really enjoy line going up, so even if it leads to inevitable destruction lot will be done to keep it going up.

[cortesoft]

By this definition EVERYTHING is gambling.

Take all your life savings into a savings account? Well, you could lose it all if the FDIC and your bank collapse.

Take it all into cash under your basement? You are gambling that you won't have a house fire, that you won't be robbed, etc.

Keeping US dollars at all is gambling that the US dollar retains value - there are plenty of examples of currencies completely collapsing.

[daseiner1]

your comment reminds me of when i interned at a large cloud services provider

i was very much infatuated by the idea of total reliability on a global scale and couldn't wait to talk about the CAP theorem with anyone who would listen. Read much of the research. I still love to flip through Designing Data-Intensive Applications by Martin Kleppmann occasionally.

As I was learning about said company's server racks there was a component that I asked an engineer on my team about – "Isn't that a single point of failure?"

He looked at me, exhausted and stressed out, and just said "Take it far enough, the Earth is a single point of failure."

I got the point.

[bregma]

It's because intelligent people understand the truth: the market can stay irrational longer than you can stay solvent and in the long run we're all dead.

There are no guarantees (other than maybe death and taxes). There's only the likelihood that as long as the market is rational you will make money in the long run. As soon as you start setting odds on success, it becomes gambling.

[daseiner1]

Investing in the market at-large, though, is based on so many presuppositions of general global order that I struggle to understand what the entire market being “irrational” over an investing period of 30-40 years would look like short of a new world war. And I mean that sincerely and without hyperbole.

[giantg2]

It's unintuitive because it's technically not true. All that suff about time horizon is right, but there's a legitimate reason that the fine print on the perspectus says you could lose your entire investment.

[daseiner1]

I’ll allow that I have the misguided presumption that I’d’ve been so smart as to have pulled my money out of the market just before Black Monday in 1929. But I still stand by the belief that the “gamble”, if following the Vanguard model of DCA and prudently managing risk over time to gradually shift from stocks to more stable “receptacles of wealth” whether bonds/gold/cash, is only a gamble that the United States (and thereby the world economy) will not utterly collapse on the scale of world war.