Arnold's view of the economy in terms of specialization and trade seems far superior to conventional macroeconomics, but is unlikely to ever gain much traction because the latter provides the ideological framework that justifies the system of grift under which we live. Theories of market failure as justifying government intervention are the economic aspect of the general meliorism that characterizes Leftism and owe their popularity not only to their serving as a vessel of hopes and aspirations, but providing moral cover for social predation. The essential fraudulence of the enterprise is demonstrated in part by the fact that the interventions take the counter-productive form of supply restriction and demand stimulation.
Regarding investor diversity and risk aversion, Investors can be classified into two broad types: principals and agents. Principals invest their own money, while agents invest on behalf of others. They have different motivations and incentives. Agents or professional money managers care more about relative performance, which means how they compare to their peers and the market averages. Their main goal is to keep their job. Principals or individual investors care more about absolute performance, which means how much money they make or lose. They are less concerned with beating a market benchmark. Agents and principals also have different views on risk. For agents, the risk is to perform worse than the market or their peers, which can cost them their job. For principals, the risk is to lose money, which can affect their financial well-being. Agents tend to stay invested in the market even if they are bearish, while principals may exit the market entirely. Agents risk getting fired if they miss out on a bull market, while principals may just have regrets. Agents’ portfolios are usually more diversified and resemble their benchmarks, while principals’ portfolios are more random and reflect their personal preferences. These two broad groups can be further dissected into different investment styles, which have their own risk tolerances.
Arnold's view of the economy in terms of specialization and trade seems far superior to conventional macroeconomics, but is unlikely to ever gain much traction because the latter provides the ideological framework that justifies the system of grift under which we live. Theories of market failure as justifying government intervention are the economic aspect of the general meliorism that characterizes Leftism and owe their popularity not only to their serving as a vessel of hopes and aspirations, but providing moral cover for social predation. The essential fraudulence of the enterprise is demonstrated in part by the fact that the interventions take the counter-productive form of supply restriction and demand stimulation.
Thank you for this.
Regarding investor diversity and risk aversion, Investors can be classified into two broad types: principals and agents. Principals invest their own money, while agents invest on behalf of others. They have different motivations and incentives. Agents or professional money managers care more about relative performance, which means how they compare to their peers and the market averages. Their main goal is to keep their job. Principals or individual investors care more about absolute performance, which means how much money they make or lose. They are less concerned with beating a market benchmark. Agents and principals also have different views on risk. For agents, the risk is to perform worse than the market or their peers, which can cost them their job. For principals, the risk is to lose money, which can affect their financial well-being. Agents tend to stay invested in the market even if they are bearish, while principals may exit the market entirely. Agents risk getting fired if they miss out on a bull market, while principals may just have regrets. Agents’ portfolios are usually more diversified and resemble their benchmarks, while principals’ portfolios are more random and reflect their personal preferences. These two broad groups can be further dissected into different investment styles, which have their own risk tolerances.