This probably comes as a shock to people outside the quant finance industry, but RenTech isn't the only game in town when it comes to regularly beating the market by one or two standard deviations, year after year. They're just the most famous and have a certain je nais se quois.
The red flag to look out for is extraordinarily low variance of returns, not extraordinarily high mean of returns. Madoff never promised more than about 12%, but he promised to be within 1% of that all the time. If you look at RenTech's Medallion returns since 1988, they're consistently between 30% and 120%. They're not slamming down the same percentile every year.
It's one thing to beat the market - it's still an incredibly difficult feat to do it consistently, but there's an element of chance involved. You won't beat by the same margin every year, even if you do beat every year. If you're hitting similar returns year after year, that implies your work is completely decoupled from the inherent randomness of market dynamics.
IIRC the folks who tried to raise the red flag on Madoff early on was because of what you describe. The numbers just didn't follow any kind of market change often enough / have enough fluctuation to make sense at all.
Basically any established HFT, though they're market making instead of market taking. TGS. Baupost. Soros had an excellent run for like 30 years. Simons' family office, Euclidean, does well. A lot of under the radar family offices which don't have stringent reporting requirements. Various groups in Citadel, Point72 and Millenium. Appaloosa. A bunch of prop trading groups in the Chicago area. And outside of quant, the top long/short equity funds regularly do well. Like Coatue.
I looked at a few of these; none seems to take investment from average joes. Even if i show up with $1M in cash, doesn't look like any doors are open. Is that accurate?
With Renaissance (and a few others) a significant number of employees have an above average net worth, and choose to invest their spare capital with the fund, slowly crowding out any outsiders.
Bona fide lack of access for outside investors is probably a strongly positive signal in this industry.
To most of these firms, a new client with $1mln is not worth the hassle at all. On the off chance some capacity is freed up, its given as priority to clients who have 100s of millions invested already. To a degree it's a privilege to invest in this league.
Yeah. A well-performing fund will never open its books for a seven figure check. They could likely find a senior employee (not even a partner) willing to invest that.
Another investor is another person you have to have a relationship with.
Actually, it doesn't sound impressive to me at all. If a fund gets 30% ROI per year then I assume that the fund is severely underfunded. After all, if they were truly that good at allocating capital then just give them 100 billion dollars and let them single handedly run the entirety of the US economy.
Scale is a large factor in how well these funds can perform. Even Buffet famously talks about how difficult it is to allocate order-of-magnitude larger amounts of money, because the opportunities are harder to find and you affect the market more as you increase your buying.
There's a good amount of funds who actively keep their AUM low. If they have too much money in their strategy, it will discovered and that kills the golden goose. Or, there's just not enough liquidity in the instruments traded and the money would just be idle. Lots of high alpha funds have forced redemption just for these reasons alone.
That's not a Ponzi scheme, and you diminish the fraud of real Ponzi schemes by equating them with a frothy venture capital market. Very few startups deliberately commit fraud by paying out old investors with new investors. Just because seed and Series A round investors can liquidate earlier doesn't mean it's a fraudulent operation.
Former fraudster here. It's a stealth ponzi scheme. An advanced ponzi scheme should not look like what it was centuries ago. A ponzi scheme can be polymorphic and stealth.
It's like saying you are not a human because you're not white. Ponzi can have same structure and look legit perhaps play longer.
I don't really care if you're a former fraudster or not. I am still outright rejecting the claim that the venture capital industry is engaged in, or equivalent to, a systematic Ponzi scheme. If you want to critique it, fine, but don't commit an abuse of terminology.
At this point I've worked for, worked with or invested in over 50 different VC-backed startups. I have been brought in to see their code and the internals of their products. Yeah sure some opportunistic sociopaths like to raise stupid seed rounds on a fugazzi pitch deck. And the industry is frothy with fundraising. But you can't categorically classify the industry as fraudulent.
There exist many varieties of high risk investments with a long time horizon which are not fraudulent. Everyone knows what they're getting into. Cases like Theranos are not the norm, which is why they received outsized attention when they're uncovered.
The only legal difference between an MLM and a Ponzi scheme is that the MLM has a product. It might be closer to the truth to say startups bear a large resemblance to MLMs.
There are a lot of anti-MLM people who think they should just be called Ponzi schemes. I'm on the fence about the terminology, but I think both should be illegal at any rate.
Once it gets too big the chance to get away with it gets really slim. If you steal some millions you can dissapear and If you aren't too stupid no one will find you and after a while everyone will forget you.
But with hundreds of millions you won't bei forgotten and the agencies will put enough manpower in finding you.
Yeah, it seems the key is in exploiting the lack of law enforcement resources. I read an article yesterday about Canadian doctors trafficking fentanyl patches. The,now retired, agent who busted a small ring said he could have gotten 1000 doctors if he had the resources. He also mentioned the courts would not back him up on a large bust either. If he brought them 100 doctors he said they would tell him to pick the worst seven.
Which is why you use domain scoping, httpOnly and Secure cookie flags so they can only be read by matching hosts (with greater granularity than same-origin policy) over HTTPS and can’t be read by JavaScript. The Web Storage API does not offer these protections.
They can't be read BUT the browser will send the cookie with every request. If you have an XSS, it is game over. The attacker can just send requests from your browser. Slightly less convenient. You are merely taking away the convenience of the attacker doing the attack manually on his own browser, which he probably doesn't want to do anyways. If he can inject js into your site, he will make your browser send the request(s) to do the actions with your credentials in an automated and quick way. Your browser will send the cookie automatically. From the attacker, it would merely be nice if he could read your tokens, but it is absolutely not necessary.
Like some here, I don't understand the hate around keeping tokens in localstorage. People immediately say "but js can read it!" but so what? If someone can put malicious js in my site, it is GAME OVER, secure http-only cookie or not. When that is the case, the saner option is doing away with an old and misused invention called cookies. The upside with ditching cookies is that you are an order of magnitude safer against CSRF since your browser does not send anything automatically. You don't need to keep CSRF token state in your server(s) either (helps with scale, one less state to worry about), it is a win.
http-only secure cookies do not give you any additional security. Ditching cookies does.
I think some people don't realize that CSRF tokens are basically the same thing as bearer tokens (which JWT also does), but it's just that they get re-generated every time you open a new page usually. So it's a bit ironic when everyone screams that tokens are bad, but they're all using them to protect against confused deputy attacks.
I am talking about a much more general class of security than just XSS. You’re making perfect the enemy of good here - yes, of course XSS is not completely mitigated by httpOnly. That was not my point.
My actual point stands, the Web Storage API doesn’t offer the same protections as cookies. Don’t store sensitive data in localStorage, that is emphatically not it’s intended use.
>I am talking about a much more general class of security than just XSS.
And what would those be that are relevant to this discussion? The way we (ab)use cookies is arguably not their intended use either.
I can't think of a scenario in this context where an attacker says "damn he is using http-only cookies, I won't be able to do what I want to do"
The only pragmatic difference between both is js accessibility. That only matters when someone can inject scripts into your site. My point is, when that happens, cookies are also bust.
Store a security token in localStorage and additionally store a secure signature for it in a secure, HTTP-only cookie. On your backend, verify validity of both the token and its additional signature contained in the cookie.
I don't believe it adds any meaningful security that justifies the cost (development, testing, hardening, scaling the state across servers if necessary etc.) With security "more complicated" does not necessarily mean "more secure". Doing it without multiplying the number of ways things can go wrong is deceptively hard.
Yes, just that with regards to security I've seen to many burned by "it can't hurt" processes. With your suggestion, assuming perfect implementation, I personally can't see where it would help. Like, if attacker can run js in your site, they can just set the cookie as necessary before making requests (if the cookie does not exist already) since that is something they can already do. If the cookie exists (most likely scenario), the browser will send it with each request anyways so no added security there either.
I don't think the author is drawing any connection between great company culture and great company ethics. The culture refers more to group dynamics, which values are embraced and which are ignored, the kind of leadership, etc.
In this context, great has more to do with efficacy and consistency. The author would probably say a company can have a great culture and still be very polarizing or controversial.
> But to be fair, Bill Gates is probably the only prominent example of a billionaire who quit the industry completely and dedicated his whole life towards charity.
James Simons has more or less done this for the past 15 years.
> Be it Billy Gates, Bezos, or one of the many Midwestern Financial Gurus—-their use of 901c3‘s are basically tax dodges.
Do you mean 501c3? How are these a tax dodge? How does someone end up financially better off than just keeping and investing their wealth if they choose to donate it or deploy it in a donor advised fund?
> Gates foundation gives back less than 1% of the wife’s fund to the nation that birthed him, and provided a comfy launching pad for that privileged life. (I get you need to help developing nations, but America is dying. I have never seen so many homeless.)
If you think America is dying, boy do I have news for you about the state of most of the world. I also deploy most of my personal donations outside America, through GiveWell and Watsi (and more targeted donations independently).
America has a lot of problems. I live in NYC and can empathize with the dissonance of seeing the homeless sleeping in the cold on Madison Ave. I don't want to diminutize that, and this is something I also care about.
But the blunt fact of the matter is that America is far better off than the countries Gates focuses on. It's not even a fair comparison in terms of poverty and healthcare. Gates deploys his wealth primarily in regions that have never or only rarely "birthed" billionaires like Gates, in your words.
It is uniquely selfish to criticize billionaires for hoarding their wealth while also insisting they focus their charity on one of the richest countries in the world by median.
> From what I gather, Archegos had $10B of equity in total? Typically (sensibly) you don't put all your eggs in one basket as a fund, even a quite concentrated fund.
It was $20B. Hwang's whole schtick from the outset of his family office was to hyper lever up on high growth companies. By doing this he went from $1B to $20B of actual capital in about 2 years. Then he blew up spectacularly because he was levered up about 5x in a ridiculous concentration.
There's no royal road to excess returns, etc. He probably could have kept this going longer, but sooner or later one of his superholdings was going to have a market event sparking a loss (like VIAC) and even his volume wasn't going to be able to prop up the price anymore. Chain reaction from there.
This is a good cautionary tale: going around to a bunch of banks and getting crazy leverage Big Short style doesn't always end in a lionizing outcome. In fact it usually doesn't. What sucks is the leverage is going to be demonized here, when the actual problem is Hwang's lack of transparency (albeit legal) to his brokers and his frankly stupid risk management.
Plenty of funds safely chug along for years running at 3-4x leverage, they just have the good sense to keep beta < 1 and stay roughly market neutral in their long/short holdings...
> Big Short style doesn't always end in a lionizing outcome.
That movie was the worse thing that ever happened for a generation of traders. It reinforces all the worse biases traders tend to have. The moral of the story was to make a single concentrated bet, to throw risk management to the wind, to double down as you lost money, and to completely ignore any expert that disagreed with your investment thesis.
In reality for every Michael Burry, there's 100 stubborn overconfident idiots who YOLO everything into a bet that blows up in their face. First off, it's much better to make as many small independent bets than to have one big trade. It's also better to make trades with a fixed, ideally short, time horizon. Even if you're ultimately right, without a catalyst, the market can remain irrational longer than you can remain solvent.
Finally the best traders tend to be extremely open minded and willing to change their views on a dime. The human mind is heavily biased towards overconfidence. Good traders should be flipping their views as evidence comes in. This has been empirically verified by Philip Tetlock. The best forecasters are those who are quickest to change their mind. If they hear some expert with an opposing opinion, they don't dig in their heels like the heroes of The Big Short.
The problem is the qualities that make a great narrative hero are almost exactly the opposite of those that make a great trader or forecaster. We love a story about a bold contrarian, who goes all in on a single bet, and sticks to his guns no matter what obstacles come his way. The story practically writes itself.
But it's precisely this mythologizing that causes this style of trading to be the least rewarded in the market. Everybody wants to be the hero of their own story. There's way too many Michael Burry wannabes, and not nearly enough George Soroses.
Personally I don’t understand why so many people are blaming Hwang and Archegos. He lost his own money and the money of the banks who gave him leverage _without_ a proper risk assessment. I haven’t seen any claims that Hwang lied to the banks and it’s the banks’ job to do due diligence and apply sane risk management practices.
I don't personally have any skin in the game, but of course I blame him for losing his money. It's his fault, who else would I blame? Pretty cut and dry case of terrible risk management here. What seems controversial?
Nobody held a gun to his head and told him to load up crazy leverage on a highly concentrated basket of equities... And the banks that lent him money didn't have transparency as to his leverage elsewhere.
I think it's more an awe for the scale of capital destruction.
In the end this isn't a domino that topples the whole financial system, risk was taken by a guy who had money, and banks who are capitalized to lose money now and again.
>What sucks is the leverage is going to be demonized here, when the actual problem is Hwang's lack of transparency (albeit legal) to his brokers and his frankly stupid risk management.
Seems to me the onus is on CS and other prime brokers to require Hwang to disclose or otherwise do due diligence on his other bets.
They can wag their finger, but they don't legally have recourse for finding out this information ahead of time if Hwang and his existing lenders don't volunteer it. That's just the current state of play with margin lending.
yeah, that's just called gambling and stupid money. a basic task of money management is monitoring how correlated a portfolio is, and putting all of it in one basket is the opposite being mindful in that way.
it's also a good reminder of an economic reason for why we don't want wealth concentrating, because the chances of it be allocated efficiently fall. concentration worsens the effect of poor allocation. if that money was split among 1000 investors, a few would act stupidly, but a few would allocate exceptionally, and the many would be somewhat average, giving a much better overall outcome for the same amount of capital.
the more widely dispersed capital is, and the more dynamic an economy is, the more opportunities for capital to find its best use. it makes sense then why efforts along these lines (dispersion and dynamism) are vehemently opposed by the already wealthy. it's not because of capitalistic purity, but the threat it represents to their own power and influence.
> But such reviews turn up very little evidence of evasion among the extremely wealthy, in part because the rich use sophisticated accounting techniques that are difficult to trace, such as offshore tax shelters, pass-through businesses and complex conservation easements.
This is a weird set of examples.
To start with - the top 1% is a relatively accessible level of "rich." That's an L5/L6 software engineer at Google, or a mid career doctor. Are offshore tax shelters actually available and economically feasible to these people?
As for pass-through businesses: I had a pass-through LLC when I ran a consultancy. Was I engaged in tax evasion? I'm pretty sure I wasn't - as I understood, this was exactly what I was supposed to be doing. I think you're essentially required to do this if you run businesses where you're the only partner (but I could be wrong).
But even if you're not - that's not a 1% thing. That's basically the best practice pursued by anyone running a single member LLC...which describes a huge number of small businesses. A struggling bakery would realistically have pass-through income.
I don't know what "complex conservation easements" are so I can't speak to that.
Looking at income alone is misleading. To be in the top 1% of income you only need to make about $500k per year. But to be in the top 1% of net worth, you need to have almost $12M.
Just to make the math simple, supposing you made $500k/year and saved every penny that’s 24 years of savings before you crack the top 1% in net worth. Of course in reality you don’t save every penny, and you may have a lot of student loans to pay off, and some of your savings is surely investments that compound so it’s impossible to say how long this would take in practice, but it’s still fair to say at least a decade if not multiple decades.
This is why I think it’s misleading to say that FAANG engineers are all 1%ers. There’s a huge difference in someone who just cracked $500k in income for the first time at age 35 and someone who has been earning that foe their career and has more than $10M net worth at the end of their career. Even more difference with someone who started off with a $5M starter fund from mom and dad.
Wealth of $4.4 million USD seems to get you to top 1% globally[0].
If you earn $500k and put $300k into a total market index fund that earns you 7% net growth per year over 10 years, after 10 years, your wealth will have grown to $4.4 million[1]. (If you use the $200k the article uses for top 5%, assuming all income could somehow be invested, it'll take a bit over 13 years.)
Is this extending the OP example that you have no living expenses? The effective tax rate from what I could quickly find ranges from 32% (Texas) to 43% (NYC). In the latter, your take home isn’t enough to cover $300k/yr and in the former you’re left with $35k/yr. Maybe doable in the latter case but not the most likely lifestyle for someone making over 10x the median salary.
Maybe this is pedantic to some but I despise the inequality comparisons with pure savings.
Sure, if you stuffed your post-tax $500k into a savings account it’d take 2 and half decades to be in the 1%. More realistically, if you simply invested each month with a historical return of 7%, you’d get there 10 years faster.
It just serves to be disingenuous about inequality. Zuck didn’t stuff a big paycheck into a savings account, because he wouldn’t be that rich either if he had. Level the hypothetical playing field so comparisons are actually reasonable.
I would agree with you, but the article itself is examining percentiles of income, not net worth.
> But evasion peaks among the richest 5 percent, who have an income of at least $200,000 and who, as a cohort, capture more than one-third of total national earnings. Taxpayers in this group hide more than 20 percent of their income from tax collectors.
To start with - the top 1% is a relatively accessible level of "rich." That's an L5/L6 software engineer at Google, or a mid career doctor. Are offshore tax shelters actually available and economically feasible to these people?
The article's use of $200K is very weird, and the top 1%-5% definitely make much more than that (and they don't depend on an annual income/salary). $200K after taxes is not that much, especially if you have a house, more than one car, children, student loan debt, want to save, etc. I don't know of anyone at $200K or even more to be involved in any sort of offshore tax shelters.
As for pass-through businesses: I had a pass-through LLC when I ran a consultancy. Was I engaged in tax evasion? I'm pretty sure I wasn't - as I understood, this was exactly what I was supposed to be doing.
Pass-through isn't tax evasion, but as an example opposite to yours, I used to know someone who created an LLC and then bought things as LLC expenses (like computers, printers, etc) that were really for personal use.
>$200K after taxes is not that much, especially if you have a house, more than one car, children, student loan debt, want to save, etc.
I understand your point, particularly if you are referencing a high COL area like SV. But this reads as a bit tone deaf when the median salary in the US is a shade under $40k/yr [1]
Honestly I think a global or national percentile is not very informative.
If you make $40k in a small town, you’re doing okay. If you make $80k in a mid-major city like Indianapolis or Raleigh, you’re doing okay. If you make $160k in San Francisco you’re doing okay. From my own life experience, all of those feel like about the same amount of purchasing power after you’ve paid your bills.
However if you’re making $40k in SF your housing situation is borderline desperate. At $80k you’re just scraping by.
The US has really fractured into a few different economies, and it’s as hard to make comparisons of income, wealth, and quality of life between San Francisco and rural Kansas as it is to make comparisons between the rural US and rural Guatemala (or any number of other countries).
I agree 100%. That’s why I don’t think statements like “$X amount is really not that much” are very useful.
In many places in the US $200k is doing really, really well. Sometimes those arguments are still used in those areas, but I think it says more about lifestyle inflation than the ability to live on that income. (E.g., it’s not much IF you get a new car every few years and IF you have a mortgage on a 4K Sqft home and IF you send your kids to private school). The tone deaf comment relates to how those self-imposed lifestyle constraints are out of touch for most people anyway.
I don’t see an issue with saying both that $200k is not that much and that the median salary in the US is ABSOLUTELY TOO LOW. Both can be true and not tone deaf. Do you disagree? Or put another way: why did you find the comment tone deaf?
It can potentially be true but probably only to a certain extent. I find it tone deaf because the vast majority of people are getting by on much, much less. Which means almost by definition, it IS quite a bit. So to say it isn’t much comes across as oblivious to the way most people live, and potentially not aware of the problems that the average person faces. Would you complain to a person in a wheelchair about how bad it sucks to have to take the stairs to work even though it may still be true?
Giving the OP the benefit of the doubt, it may be COL dependent. But even in SV, $200k is nearly double the median household income and nearly 4x the median personal income. It reminds me of an article I read during the financial crises of 2007-2009 written by someone who was making the case that being a one-percenter doesn’t mean you have lots of money. She then later described her new Lexus payment, costs of private school, oversized mortgage etc. Both can be true iff that is considered a reasonable lifestyle for the average person. To be generous to the OP, the average way an American lives is probably not the best measuring stick (e.g., something like 60+% can’t meet an unexpected $500 bill. However, just like the OPs statement, I tend to think this is related more to lifestyle choices)
That makes total sense. I disagree with your takeaway but it seems like a valid one to have.
From my experience coming from homelessness type of poverty to making 6 figures, I have access to many things and don’t have to worry about food anymore. But. I still don’t have enough savings to live off of if I lose my job, am still one serious accident away from bankruptcy, etc. the way I’ve explained it is that I now have something to lose, not that I’ve gained all that much outside of benefits (I now have two front teeth!)
Maybe the point I’m trying to make with my anecdote is that making $$$ isn’t the same as having $$$, high CoL or not.
>the point I’m trying to make with my anecdote is that making $$$ isn’t the same as having $$$
This is very true but I feel like it misses the point. Making $$$ gives you resources to have many things that are outside the grasp of the majority. (Whether you squander that opportunity or not is up to you) There’s nothing wrong with that, but feeling like you are disadvantaged when you have access to more than most comes across as out of touch.
I think there’s probably some hedonic treadmill effects here. Thinking at one point in your life “if I can make $200k a year, I’ll be rich” and “feeling rich” once you get there may not align as often as we’d hope. But you likely live a rather “rich” lifestyle compared to those making $40k/yr. I also think there’s often comparative effects that reduce how it feels. $200k feels low once you realize your neighbor who owns a landscaping company pulls $400k.
I find it tone deaf because the vast majority of people are getting by on much, much less.
I said $200K isn't that much because I was responding to the article saying $200K is in the 1%-5% and those making that much use offshore tax shelters and other practices. $200K immediately becomes what, $140K or less after taxes? My original comment still stands; I don't think someone making $140K is in the top percentages of wealth and hiding their money in offshore schemes.
So to say it isn’t much comes across as oblivious to the way most people live, and potentially not aware of the problems that the average person faces.
I spent a decade working in the nonprofit sector with low-income, homeless, addicts, etc., with my first job at $24K and my last job in the sector at $55K. I think I'm somewhat aware of what the average person faces. You and others on my post have covered things adequately, but I would just add that sometimes things aren't about lifestyle choices/sometimes there are no "good" choices -- If you have to pay $3K for rent in an average apartment because it's close to your new job that pays more, really the only other option besides not taking the job is to move farther out, but then you pay more in transportation, insurance, parking, etc.
>I don't think someone making $140K is in the top percentages of wealth and hiding their money in offshore schemes.
I agree, this income doesn't feel indicative of those type of tax avoidance plays. But I think making $200k is still objectively "a lot", if for no other reason than it is statistically proving one to be in the top 5%. I don't know a better way to define it because the subjective scale will always hold true; someone in the top 1% will feel inadequate to someone in top 0.1% who will feel inadequate compared to a Saudi prince.
I guess what I'm trying to get across is that both can be true: 1) a salary of $X amount can objectively be high and 2) somebody earning $X can subjectively not feel like it's enough. The dissonance between the two is created because of the way we're wired to gauge our position relative to those around us.
Those are both household numbers. So, the top 1% wouldn't be unusual for a couple in mid-career working for a FAANG on the West Coast. But, definitely not normal or easy, especially anywhere else in the country.
Top 5% would be just about any dual-income, white-collar household in a reasonably sized metro area.
Pass-through isn't tax evasion, but as an example opposite to yours, I used to know someone who created an LLC and then bought things as LLC expenses (like computers, printers, etc) that were really for personal use.
Not necessarily a pass-through technique, but the example that pops to mind is the tax treatment of vehicles over 6500lbs GVWR. It's a major incentive for any business owner to over-spend on luxury SUVs when either a nice sedan (realtor, sales people, etc entertaining clients) or a smaller van/truck (many painters, florists, etc) would be more than sufficient.
> To start with - the top 1% is a relatively accessible level of "rich." That's an L5/L6 software engineer at Google, or a mid career doctor. Are offshore tax shelters actually available and economically feasible to these people?
I wonder if "1%" is just a number that is repeated when talking about this subject. Another article debated on HN:
EDIT: It seems to me that 1% is beyond accessibility. I think that 10% is a (very generic, rough) threshold that can be reached with effort, but not 1%.
Keep in mind the level of churn. An implicit bias easy to make is forgetting that these are percentiles, not people, and most people move through different percentiles at different times in their life.
11% of Americans will be in the 1% for at least 1 year in their life, 39% will be in the top 10% at some point, 61% in the top 20%[1][2].
94% of those in the top 1% fall out in a year, 99% within a decade[1].
In other words: being a 1%er is a very transient title for the vast majority of even the rich who make it there.
What matters more, I believe, is wealth rather than income. It’s been awhile since I’ve read it, but The Meritocracy Trap outlines the case that wealth can be less transitory.
Is 11% earning $500k for at least one year really that surprising? For example, a mom and pop small business selling their store in order to retire could qualify for one year, but that money would likely be the bulk of their retirement savings. It's probably not a useful metric though, if most of those people break $500k due to one-off lump sum payments.
They use 1% because number 1 is an integer and it can represent a whole person.
This is useful for scapegoating and hatred.
"The 99% vs. the 1% is the modern articulation of this classic scapegoating mechanism. It is all minus one versus the one. And it has to just be the one. 99.99 people or percent is too granular. Scapegoating 0.1 doesn’t really work. You need a whole person to play the victim. Similarly, 98-2 doesn’t quite have the same ring to it either. "
The "1%" slogan arose in the Occupy movement, from statistics such "1% of the people own 50% of global wealth", which such an inexcusable level of inequality.
There are a lot of people making 360k+ with effort.
You most likely need to be talented and have very good work ethic (rare combination) and then focus on right industry. Big trading firms, programming if you're very good or not that good but not risk averse and willing to take shots to start businesses.
Of course not everyone can get there, it's 1% after all but you don't need to be born into it or one in a million genius.
>I wonder if "1%" is just a number that is repeated when talking about this subject.
I'm inclined to think it is. Often times I'll see 1% discussed in articles and the threshold is different each time. At this point, I'm certain that 1% is just a rhetorical device used to mean "bad people with money".
I'm pretty sure you are projecting. The "1%" became a slogan around the time of the Occupy movement, coming frkm the fact that 1% of the world's population owns 50% of its wealth, which is such a hilariously skewed proportion.
> The "1%" became a slogan around the time of the Occupy movement
This is correct. Since then it's become more of a slogan like "power to the people" than a useful statistic.
In some countries, 1% would include a couple who are both mid level engineers -- that's well off, but not "ultra rich" by any rational standard. The main reason is that the 1% figure often refers to households, rather than single individuals.
It's more a short hand for "ultra rich", rather than an actual measurement of what portion is actually "ultra rich".
Did you read what I said? The top 1% of income is ~750,000$ individual, hardly mid-level engineers... As for top 1% net worth, it's ~11 mil$, again hardly "upper-middle class".
In the USA, sure, where I'm from it's $300,000 gross household. The United States isn't the representative of the entire world. That's why I specified in some countries.
The red flag to look out for is extraordinarily low variance of returns, not extraordinarily high mean of returns. Madoff never promised more than about 12%, but he promised to be within 1% of that all the time. If you look at RenTech's Medallion returns since 1988, they're consistently between 30% and 120%. They're not slamming down the same percentile every year.
It's one thing to beat the market - it's still an incredibly difficult feat to do it consistently, but there's an element of chance involved. You won't beat by the same margin every year, even if you do beat every year. If you're hitting similar returns year after year, that implies your work is completely decoupled from the inherent randomness of market dynamics.