Senior...looks like you missed a few points and you should have read second post to better understand my outlook on people who are so called "experts". As an anonymous poster, I have no reason to say anything other than what I've see from my experience. I'm sensing some naivaty on your part, but that's ok. You are merely a speculator, getting pretty damn lucky (or using some sort of inside info based on your stated returns) or simply exaggerating.Further:1) My job and salary: Did you not see my last sentence of my post? I am a banker (for now). I'm still trying to make my post MBA plans, but given my background and school, $150k is a safe number via multiple industries I could enter. With that said, I am not in a sales role in banking. My background is in credit and restructuring, which actually requires hard skills (math and strategic thinking). The lending of money will always have a demand, so unless the world gets rid of credit markets, I'll always be needed. The level of salary is arguable, but I am actually at the lower end of the market given I am not a pure player in investment banking. I'll grant that pure I-bankers are basically sales jobs and the first to go in a downturn, which is why I avoid those jobs. Restructuring jobs are actually countercyclical in demand. Hiring goes up during downturns. But you're an engineer, not a banker so I forgive your ignorance of the industry dynamics.2) Regarding commodities, let’s just say my past experience covering the Metals industry has soured me on commodities. You don't want to know how many loans I had to restructure when steel prices fell on their ass once China stopped buying it to build up for the Olympics (among other factors). I am glad that you are making some money investing into an asset bubble. People flipping houses could say the same thing from 2005-2006. However, I caution you to consider what part of the demand cycle commodities are in. Inventories just got replenished over the past year or so, which spiked demand for commodities. However, retail/consumer sales (which drivers B2B sales) are expected to be tepid for the coming period. Therefore, business spending on inventory should decrease, which will drive down commodities. Gold may be an exception, but eventually, that bubble will bust unless society uses that as a currency basis (which I would be in favor off - well at least some limiting factor on printing money, but I'm not really sure what the best factor is for that purpose to be honest).A greater point to consider. Investors have to invest in something. While a lot of cash is currently parked on the sidelines compared to historic levels, investors will get pissed at their advisors/money managers if it sits on the sideline too long. Since housing/mortgage backed securities are out of vogues, commodities look like the safest choice. Asset chasing is what creates bubbles. Also, an inside tip on investment advisors; they can lose money without pissing off their investor base, so long as they were on par with losses of the market/segment. In other words, investors will say, hey money manager, it's ok you jumped off that bridge, all the other lemmings were doing it too. I'm just glad you didn't jump off a different bridge. 3) Consumption and debt: I didn't spell it out but it appears I need to. I mention a 10-year time frame for deprecating dollar values and 2-3 decade investments for tax shields. Both time frames insinuate the use of debt for long-term assets/consumption, which for most consumers would equate to student loans and a mortgage, which represent interest debt tax shields. For the bulk of consumers, the only debt they can get for this long of a term are student loans and mortgages.Personally, I don't want to buy a house. I think its fine if you have a family and really like your neighborhood. For instance, you buy a house in the same town you grew up in because the rest of your family is there and you really like it. Then you get all the benefits of controlling your rents, being able to modify it how you want, debt tax shield, stability, all that good stuff. I just happen to like the mobility that not owning gives me so that I can move to where my skills are in most demand (I've moved approximately every 18 months since graduation). Renting is what qualifies as a "real option". If you don’t' know the term, look it up on investopedia or wikipedia. It has real value. Just ask any schlep who lost his/her job in the past few years and would love to take a job in some other town but can't because their mortgage/unsellable house is holding them down. I lost a brother in his 20's. He was very professionally successful and deferred a lot of consumption because he had certain goals for saving. The one thing he splurged on was a really nice truck, paid cash. It made him smile every time he drove it. This was VERY out of his normal behavior to splurge like this, but looking back on it, it gives me piece of mine that he did. After passing, he left a lot of money (no kids) and it kinda got pissed away by his spouse visa vie her parents. It makes me smile knowing he at least got to enjoy part of it himself through that truck. Moral of the story, live a little. Once you see someone you are close to pass away, it makes you realize what happens to your stuff once you are gone. If you die with a lot, maybe you should have enjoyed yourself more or enjoyed it with others while you were still around.Also, I still have $95k stuffed away at 30. I'm ok with that number for my needs. It'd be about $75k higher if I wasn't paying for school with cash as I go, so your remark about spending away is off base. Similar to rent, happiness is also a real option, with real value. 4) Banking industry and parasites: I couldn't agree more that there needs to be house cleaning. I work for a finance company. The money I lend is profit generated from our industrial divisions and the profits made from our lending. I don't put consumer deposits at risk. I think those that do, need to be even more conservative. Also, I know it is harder to gain my credit/strategy/workout skillset than some of the pump and dump i-bank job. They make multiples of what I make but bear little liability/accountability in their decisions relative to people in my field.In general, like any stereo types, the bad seeds give the good ones a bad rep, and right now there are a lot of bad seeds. However, lending is a needed industry. It is a useful industry. It a conduit for matching people who have money they want with those that need money to invest. I've literally lent money to companies so that they could make payroll. It makes me feel good knowing those people won't get f***ed out of a paycheck due to poor management/industry downturns. (Disclaimer: when I do this, it's part of a restructuring plan with many parameters for saving the business as a whole).Also, lending helps with timing. For instance, Wal-Mart demands immediate delivery of goods but pays its receivables in 90+ days. So what is the supplier supposed to do for cash (payroll, electricity, vendors, etch) during those 90 days? They use their revolving line of credit to carry the float and pay it back once Walmart pays down the receivable.5) Your job: Have you ever studied a return to labor or international trade model? The international trade model states that whoever has the advantage, in terms of labor and/or inputs (commodities), should produce the good. So if Country A can make X for $5 and Y for $10, but Company B can make X for $7 and Y for $7, then A should specialize in X and B in Y. The model specifically states when this specialization occurs, THERE WILL BE LOSERS, AND, THEY MUST BE COMPENSATED. Why do I capitalize? B/c this is the key part that most people miss. So when NAFTA occurred and a bunch of high paying Auto industry jobs went to Mexico, those workers were compensated (severance, retraining). The assumption is that the Mexico is better at manufacturing and that we should retrain our Auto workers to get higher skilled/higher paying white collar jobs. So what happened is that demand for U.S. auto labor fell. Wages should have fallen in the U.S. but Labor contracts prevented that. So what happened, is that as demand went up in Mexico, and Mexican wages went up. As Mexican wages went up, combined with the increased shipping/logistics cost of building in Mexico versus Detroit, U.S. labor started to appear more attractive. So what happened (I know I'm leaving out some details, but the heart of this is what matters), is that Unions conceded lower wages in the U.S. to match demand, and now all of a sudden a world wage is created. If you look at U.S Auto labor, their wage went from about $25/hour down to $12/per hour due to globalization. This is much more comparable to Japanese labor rates and comparable to the combined cost of Mexican labor plus logistics costs. When international trade occurs, an international wage is created. You don't need to worry about learning Chinese. You need to worry about people learning English/software programs. While your skills may remain in demand, your wage is just as susceptible to diminishment as mine is, or the Autor worker’s was. Sorry Pal.In summary, I think there is still a TON of risk/instability in the world financial system. There needs to be a ton of stuff done to fix it, but it boils down to creating some new rules/parameters to reestablish trust and credibility in the system. I have no alternative motive but to educate those that might not be able to get this kind of industry perspective through other means. If you want to invest in commodities, that's fine, just recognize that it is an asset bubble driven by the limited number of feasible alternative investments and that there is a time limit on that investment. I hope you time it right.
Senior Software Engineer wrote:
"Inflated P. Nis" was getting it right until he laughed about commodities and talked about just spend away using debt. His assumption that he will keep his overpaying job indefinitely will be proven way off the mark. The parasitic industries such as banking/finance will be in complete shambles as America is forced to start producing again and shed the fluff jobs that don't add value. So it would be wise to squirrel away real value since bankers really are worthless outside of their worthless industry.
As for me, I could develop software for a Chinese company if I need to. It would take over 20 years to move the programming standards away from English, so not knowing Chinese would not be that problematic.