Dawn of Autonomous Corporations, Powered by Bitcoin - <AUTHOR> http://btcgeek.com/dawn-of-autonomous-corporations/ <comment><USER3> With AI and advanced automation, and possibly crowdsourcing, it becomes credible that any type of economic value could eventually be produced in a decentralized fashion. And one can imagine that such autonomous corporations would evolve to be so competitive (since they can afford to) that they would put all profit-driven concurrents out of business.

The economy would eventually transform into a landscape of owner-less providers of economic value, perfectly "efficient" in the capitalistic sense. That might even happen sooner than fully decentralized governments.

<comment><USER4> For starters, markets cannot be perfectly efficient unless P = NP: [http://arxiv.org/pdf/1002.2284.pdf](http://arxiv.org/pdf/1002.2284.pdf)

<comment><USER5> That paper is probably using a bogus definition of "efficient" (albeit probably one commonly accepted by economists---those people can be very slippery).

It defines "efficient" as: "current prices fully reflect all information available in past prices."

Well, all information available in past prices, is not all information available. So, even hypothetically, this is not true "efficiency."

Of course, asking for "efficiency" to be that _kind_ of thing is wrong, anyhow. When I invest in bitcoin months ago, all the information available to me was available to everyone else.

<comment><USER6> Using the word "efficiency" anywhere close to the word "market" and not using an economic definition is bogus. You may as well make the rest up too. Those words have a very well defined and useful meaning (theoretically and practically) to most who interact with or study the markets.

<comment><USER5> And it's highly misleading for economists to use those words to mean something other than the English definition of those words.

To some degree, that is intentional, and we have a word for that: dishonesy.

English words also have established meanings.

There is a basic rule in language, which is don't overload words in a confusing way. Breaking this rule is never excusable.

If we were on an economics board, I would not complain about this, but well, we're not.

<comment><USER7> _English words also have established meanings._

They have no such thing. Grab a decent dictionary and start looking up random words. Many have at least 2 or 3 different definitions, often unrelated and sometimes even contradictory.

Are mathematicians dishonest as well when they use phrases like "almost everywhere" or computer scientist when they describe a problem as "Hard" or ballet dancers talk about an "adagio"? All those words have very specific generally understood meanings in the field which might confuse someone with no background in the field.

What alternative to you propose? That they make up new words each time they want a short hand to describe a specific concept, or that they use always a long descriptive phrase each time they want to talk about these concepts?

</comment></comment></comment></comment></comment></comment><comment><USER8> An important property of corporations is that they are _always_ resolvable to a natural person. This is true even in jurisdictions like Nevada where the corporate laws allow arbitrary levels of blinding and indirection. The "autonomy" would be illusory.

Basically, you can't do much that is interesting unless a computer system ultimately resolves, or is imputed by law to resolve, to a specific natural person.

(EDIT: People are missing the point. What you call it is immaterial. All the handwaving aside, these "autonomous systems" including the ones described by the author are legally not autonomous. It is not possible under the law to construct such a thing. You may claim that it is "autonomous" but no government will recognize that claim as suggesting legal independence from a natural person. True AI would make this weird but we do not have AI today and the underlying fact still remains.)

<comment><USER9> Actually, that's really really _not_ true, outside of the USA.

It's trivially easy to set up a USA corporation that is: managed by a laywer, that is is owned by a trust in the Caymans, or a similar secrecy jurisdiction, where the beneficiaries of that trust, a.k.a. the owners, are unknown - protected by client-attorney privilege. For an added layer of security, this trust's beneficiaries could be another trust that is governed by bearer bonds. That is, whoever owns the bond, an actual piece of paper, is entitled to the benefits of that trust. They are only legal in some countries.

Make this harder to follow, and you have a series of shell companies in many countries, all with secrecy jurisdictions, and I've just described how organized crime can own lots of very legal and real looking USA companies, with almost 100% chance that you'll never find out who is controlling them. Ones that make large political donations to lobby groups and politicians - <USER2> bribes you understand.

EDIT: I think you're all missing the point that this can be done today with the right lawyers and enough USD, but bitcoin just makes it easier. Though the fact that bitcoins can be traced MUCH easier than the flow of USD, is somewhat of a downside.

<comment><USER10> Interesting read to me, I did not know this. Good to read from someone who knows much more about corporate structure than I do.

I want to add one important point. Bitcoin not only makes it much easier to setup this kind of autonomous corporation, it also makes it transparent and verifiable by outside. It does so through being open source. And since no one actually owns it, it is completely transparent.

<comment><USER9> I first learned of this world in popular non-fiction: Emergency by Neil Strauss. An excellent book if you want to know more about secrecy jurisdictions, state regulatory capture, the basics of transfer pricing, etc. is Treasure Islands by Nick Shaxson ([http://treasureislands.org/](http://treasureislands.org/)).

</comment></comment></comment></comment><comment><USER11> Reminds me of Charles Stross "Accelerando", where autonomous corporations take over the world and humans are driven away from it because we can't understand Economics 2.0.

<comment><USER12> [http://www.antipope.org/charlie/blog- static/fiction/accelera...](http://www.antipope.org/charlie/blog- static/fiction/accelerando/accelerando-intro.html) It's here in full, if anyone wants to read it.

</comment></comment><comment><USER13> The author believes that Bitcoin is the first of many future 'autonomous corporations' that are defined by their nature; they run themselves.

Of Bitcoin in particular it says

        this corporation has revenues, expenditures and profits.
        However... no one owns this entity, it owns itself
        ...it provides a payment protocol and employs miners to maintain that protocol.
        The employs are rewarded with 'stock' that is split at most into 21 million units

I really like this concept, but I struggle to link it to the thesis that Bitcoin removes 'the major missing piece of the equation – payments'.

I think Bitcoin is able to be distributed and autonomous by its nature, and that any future autonomous corporations will similarly need to be autonomous by nature. Thus, while allowing for the kinds of payments and receipts an autonomous corporation will require, I don't think Bitcoin is the only thing such a corporation will need, nor the most important.

Instead, it will be innovative solutions that by their nature require decentralisation and autonomy that eventuate in this 'next generation of corporations'. Bitcoin will be an important model going forward; I'm really looking forward to solutions to other problems that surely will be inspired by it in the coming years.

<comment><USER14> Before bitcoin, a corporation needed a person to open bank accounts, sign off on payroll, write checks to suppliers, etc. With bitcoin, a set of algorithms can do all of those things. A profit making system doesn't need any human contact anymore.

</comment></comment><comment><USER6> If Bitcoin ever graduates to anything more than a toy currency (last count was a billion or two USD globally?) then it's going to have to deal with graduate level problems. The business cycle is a thing I'm afraid, and the management of a recession to prevent it's becoming a depression is as close to a fusion of science and art as you'll ever see. The necessity for this isn't going to change as long as the human brain continues to function as it does.

In good times people want more money - a discussion on what they _should_ want is irrelevant, lets stick to the facts - and in bad times people want to protect what they have (aggressively so). Now consider that what makes times good vs bad is not determined by money - it's determined and prolonged by some other shock like an asset misvaluation, the destruction of a massive crop, or some combination of external factors underlying the real or nominal non-money _thing_.

Let's say it's a rice crop. Those dependent on rice freak out, and push all their money into safe assets, those dependent on those dependent on rice do the same. The chain reaction continues until all the economy's money is tied up in safe assets, not being spent, and everyone is sat at home waiting for it to blow over. If policymakers do not intervene correctly at this point, this situation will become a depression, and much misery will ensue.

So what do we do? We make safe assets more expensive to lower the risk/reward ratio for commercial activities: we make bank holdings very unrewarding (lower interest rates), we devalue the money in circulation _and_ provide liquidity in one move (print money), and government invests in big infrastructure (liquidity, jobs, momentum, signalling etc). All of this is designed to keep things moving and ward off a depression. And it works - this is why we abandoned the gold standard.

So given that Bitcoin means nothing to rice, or most other external factors, and not to the rigidities that exacerbate recessions - how exactly do we deal with this in the described autonomous utopia?

I very much agree that the regulators of currency leave a tremendous amount to be desired, but unfortunately this appears to be one of very few economic problems where decentralisation is not the answer.

<comment><USER5> This is a completely backwards view of the economy.

There is a reason there are rice futures: those that depend on the price of rice, which is people that _sell_ rice, can hedge.

There is a reason India is constantly running out of onions: Online futures are illegal. [http://en.wikipedia.org/wiki/Onion_Futures_Act](http://en.wikipedia.org/wiki/Onion_Futures_Act)

There is a reason we need to have a global economy for food production. Bad weather in one region? Import from elsewhere. (Same applies to all commodities and services.)

The economy works quite well naturally, but for massive government invervention, such as what you are proposing, which would have massive unforseen consequences (such as improverishing people, which punishes the poor the most).

By the way, were it not for abandoning the gold standard, the US would not be able to finance a perpetual state of war. (It would have to pick wars with terminal conditions and actually win them.) It would also be much harder to finance 1984.Net.

The typical response to this is for me to get screamed at about how I am obviously wrong because all economists disagree with me and because it's just obvious. I don't think that's a legitimate response.

<comment><USER6> Rice was an example that was palatable to both my lazy fingers and I hoped to those who may not have appreciated a jargon filled response. It does not detract from the clearly presented general case which you are more than encouraged to investigate, I have done my part in spelling it out for you.

> but for massive government invervention, such as what you are proposing

I am not proposing anything, I am merely _describing_. The issue at hand is _not_ readily solved by the markets, which in this situation a) are in a state of risk aversion and b) possess very bad quality information that is difficult to reason about. This is classic market failure that is documented in places better than my mind - go forth and google.

If you are so used to receiving that response that you describe it as "typical" then I would suggest that you are either quite the revolutionary thinker, or that you are, in fact, typically wrong. Which do you think it is?

<comment><USER5> > Rice was an example that was palatable to both my lazy fingers and I hoped > to those who may not have appreciated a jargon filled response. It does not > detract from the clearly presented general case which you are more than > encouraged to investigate

I am also using rice as a stand-in for the general case.

> I am not proposing anything, I am merely describing.

That's a meaningless distinction. Academic communists who supported Stalinism also claimed innocence when Stalinism resulted in the deaths of millions. I am not accusing you of anything on that scale, but I am saying that ideas have consequences. You are responsible for the consequences of the ideas you support and promulgate.

> This is classic market failure

Right, and I don't think markets are inherently failure-prone. If I drive my car into a light pole, is that a classic automobile failure? So I dispute the very terminology here.

Case in point: The 2008 mortgage crisis was caused by a massively distorted market for mortgages and easy credit. The first was created by Barney Frank with Freddie and Fannie, the second by the Fed. Future generations will remember this as a "market failure" and use it to justify the existence of future incarnations of Freddie, Fannie and the Fed.

> I would suggest that you are either quite the revolutionary thinker, or that > you are, in fact, typically wrong.

There is a third possibility, which is that lots and lots of people think like me.

<comment><USER6> > I am also using rice as a stand-in for the general case.

The existence of futures, commoditised goods, integrated markets and all the rest have _clearly_ not eliminated shocks of the type I describe. What's your point?

> You are responsible for the consequences of the ideas you support and > promulgate.

Again, you appear to be having issues with the concept of _description_. What I explained is how things actually work, why they need solved, and how they are currently solved by intervention. There is no argument here. I could very easily describe your arguments, and why they're flawed, and in no way would that amount to my supporting or promulgating them.

> I dispute the very terminology here

Dispute the terminology all you like, it's just a name for the what I described, it has no bearing on the concepts which you have failed to address cogently at all.

> There is a third possibility, which is that lots and lots of people think > like me.

I think you mean that lots and lots of people think like _me_ , and I would ordinarily dispute that too.

<comment><USER15> > What I explained is how things actually work, why they need solved, and how > __they are currently solved by intervention __.

Except that the people who disagree with your "description" would point out that they are _not_ solved by intervention, the underlying problems are simply exacerbated until they spiral out of control and experience a black swan event and the entire edifice collapses into an orgy of post hoc problem fixing that just messes things up more and more all the time.

At best this is just delaying the inevitable, and at worst drastically increasing the magnitude of how bad it's going to be when it becomes impossible to delay it further.

In theological terms, your claims are equivalent to appeals for plenary indulgences as effective as an effective long term strategy for the mitigation of sin. ;)

> I think you mean that lots and lots of people think like me, and I would > ordinarily dispute that too.

Lots and lots of people think like both of you. Bitcoin takes the question out of the political realm and into the technical realm. If you don't buy keynesian economics and want no part of it, then for the first time in modern history it is largely possible for you to circumvent systems based around those assumptions and management strategies.

There might be arguments that the very fact this is now possible eliminates the ability of keynesian systems to act in what they describe as a benevolent fashion, but it's largely irrelevant now. The cat is out of the bag and nothing is going to put it back in.

<comment><USER6> > Except that the people who disagree with your "description" would point out > that they are not solved by intervention

If the problem is warding off a depression, then the solution I described is indeed a true solution. It may not be optimal, but starting to discuss optimality of the potential solutions was a little beyond the scope of the point I was making.

> At best this is just delaying the inevitable

Let me explain to you what a business cycle is. Here is an example long term growth trend: [http://wolfr.am/17dwVbt](http://wolfr.am/17dwVbt) and here is the same with business cycles [http://wolfr.am/1iaDMSa](http://wolfr.am/1iaDMSa) \- if there is an inevitability, it's the trend. I can't comment on your inevitability, because you didn't actually say what it was.

> at worst drastically increasing the magnitude of how bad it's going to be > when it becomes impossible to delay it further

Money is nominal, it has no long run effects. Everything I've described has been the use of a nominal tool in the smoothing of short-run fluctuations. The long term trend is unaffected.

> If you don't buy keynesian economics and want no part of it, then for the > first time in modern history it is largely possible for you to circumvent > systems based around those assumptions and management strategies

This is not relevant to what I said. If sufficiently large your Bitcoin utopia _will_ suffer these problems and you won't have a solution. God help you if all your eggs are in that basket when reality strikes.

<comment><USER15> > If the problem is warding off a depression, then the solution I described is > indeed a true solution.

If the problem is warding off an invocation of oomkiller at the kernel level, then just setting the jvm heap size lower is indeed a true solution. We'll just ignore the fact that it doesn't actually address the problem and the memory leak still exists and has actual consequences, because we stopped oomkiller from randomly killing innocent processes which is definitely a noble goal.

Keynesian solutions have consequences, they are not magic. And they are not really solutions at all if you're not deceived by the simple sophistry of them, they're band-aids. That

> The long term trend is unaffected.

Is terribly amusing, I guess that's why we don't have financial crisis anymore or hyperinflation or sovereign debt defaults or poorly managed national economies or anything of the kind.

> If sufficiently large your Bitcoin utopia will suffer these problems and you > won't have a solution.

That's because setting a shitty raft on fire so you're forced to deploy life vests instead of drowning is simply not a solution, and pretending otherwise is just stupidity masquerading as tactics.

Whatever, as long as it works for you hope you're happy with it, I'm not buying.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER16> This article is a scaled-down version of the original one in Bitcoin Magazine by Vitalik Buterin. You can find it here:

[http://bitcoinmagazine.com/7050/bootstrapping-a- decentralize...](http://bitcoinmagazine.com/7050/bootstrapping-a- decentralized-autonomous-corporation-part-i/)

<comment><USER17> Cheers, that three-parter is _way_ better.

</comment></comment><comment><USER12> I think an autonomous corporation is more likely to happen thusly:

* Person comes up with a business model. * Person automates it as much as possible, eventually automating all of it. * Person ends up being in a car accident.

There's no reason why the AI he wrote shouldn't be able to keep "living" (aka paying its bills) for a while, if the idea was of the right sort.

<comment><USER18> I was thinking about this too. That "pay us 300 dollars in bitcoins to get a key to your data" virus could be like that.

If the payment -> key sent part was automated then money would just build up in the bitcoin account over time.

<comment><USER19> You could also automate the backend – set it up so that the botnet could draw on the BTC account to purchase new VPS hosting for its command and control servers, migrate when the old ones get taken down, etc.

Of course, without the creativity to come up with new C&C mechanisms, the pattern of migration and purchases might eventually become predictable enough to stop the botnet.

</comment></comment></comment><comment> sans-serif I for one welcome our new autonomous corporation overlord, which would hire people via TaskRabbit to become its shareholders, and hire lawyers via emails to protect its interests. It would commission new servers on various cloud providers on the fly to avoid being shut down. It would generate revenue by running a SilkRoad that cannot be stopped. It would employ security guards and hitmen to stop people going after it. It would commission black hat hackers to help it infiltrate various intelligence networks, and rely on Mechanical Turk to translate human language into something that makes semantic sense for it to act upon.

<comment><USER20> That's scary, but it sounds like something that could actually work. Very good.

</comment></comment><comment><USER21> This is a bad idea, just as bad and pernicious as autonomous robots with authority to commit lethal violence on their own say so.

When they ask how the humans went extinct, the answer will be; gradually and then suddenly.

<comment><USER14> If it can only profit by providing a service for which people are willing to pay, it might not be able to get out of hand.

<comment><USER22> > a service for which people are willing to pay

... people are willing to pay for terrible things, especially if they're provided by autonomous businesses. And people will do anything for money including working for an autonomous business doing terrible things. And who's to say that an autonomous business providing a nice service, such as electricity, won't keep trade secrets and also needs no human workers (thus robots could be doing, in secret, some terrible deed hated by humans to provide a resulting service liked by humans... and that secret business plan might have been concocted by an algorithm with no human intervention).

<comment><USER23> And how is any of that different from the status quo?

</comment></comment></comment></comment><comment><USER24> The conviction some commentators have that somehow Bitcoin is more _secure_ , _ethical_ and _predictable_ than FIAT (central-bank-controlled) currency is hilarious.

Given the fact that 98% of BTC belong to 2% of portfolios and there's a way stronger anonymity compared to fiat currency ( _you all know who Bernanke is and where his power comes from_ ) and early adopters can drive easily the market up or down. Personally I believe that's the main reason BTC didn't fall after SR bust. Because, what most believe is _not controlled_ is TOTALLY controlled (big players didn't opt out).

That said I can see how BTC is useful and has awesome qualities, especially for people who understand technicalities of a digital currency and how money works.

However, BTC is a hoarding system. Much like gold and nothing like fiat. BTC is not inflationary, by design. Inflation is the first quality a fiat currency must have, in order make people willing to spend.

<comment><USER25> > Inflation is the first quality a fiat currency must have, in order make > people willing to spend.

If that were true, no-one would have bought an iPhone and Apple would be penniless (USD etc are deflationary relative to technology items).

<comment><USER24> That is true and should (at this point in history) be taken for granted.

The iPhones in Europe had for years the same price. So I don't really understand your example. Could you elaborate ?

<comment><USER25> Well, Apple was perhaps a bad example since they tend to hold their value for a little longer than most brands, but iPhones weren't the same price for years. I really don't know where you got that from. An iPhone 4 is _far_ cheaper now than it was on release 3 years ago.

<comment><USER24> I live in Greece I don't know the exact amount but basically every new version of the iPhone had the same price (say 620 € for 16GB). However, inflation is measured against CPI (consumer price index) not a single product which might have specific market niche (i.e. Luxury goods).

Now, a currency that doesn't slightly inflated tends to be seen as an investment by consumers rather than an exchange medium. I would very much welcome bitcoins as a payment since I believe their value will go up in the future, but how many people are willing to end bit coins instead of dollars?

</comment></comment></comment></comment></comment><comment><USER26> I don't think autonomous 'corporations' are anything new. If you replace Bitcoin with the gold market , most of the statements in the article still apply.

""" Gold can be thought of as the first real autonomous 'corporation' although you probably don't see it that way. Think about it – it provides a payment protocol and employs traders to maintain that protocol.

The idea is the same – this corporation has revenues, expenditures and profits. However, once again, no one owns this entity, it owns itself. """

<comment><USER27> I think you're probably right. Except in this case, bitcoin was actually designed. Gold and gold deposits just naturally had the right characteristics to work as a currency.

</comment></comment><comment><USER28> There is an article on that topic in the Bitcoin wiki: [https://en.bitcoin.it/wiki/Agents](https://en.bitcoin.it/wiki/Agents).

I am deeply interested in the subject and would love to discuss the topic and brainstorm some possible implementations with like minded people on Freenode (#bitcoin-agent).

<comment><USER29> Love the idea of Bitcoin Agents. Been reading up heavily on schemes to automate transactions on a trust-less level, including proof of sacrifice to establish automatic identities ([https://bitcointalk.org/index.php?topic=140711](https://bitcointalk.org/index.php?topic=140711)).

</comment></comment><comment><USER30> There's one major flaw in this spectre of the unstoppable killing machine known as the "autonomous corporation":

If the whole premise of its autonomy rests solely on it's ability to engage in metered economic exchanges by way of some kind of bitcoin-style protocol, then an "autonomous corporation" MUST, by definition, persist on a distributed global network of continously available computers. So, if this entity has that dependency, then who's providing the hosting?

He who opts in on hosting the protocol, carries a say in the fate of the entity, thus this is no more "autonomous" than any other body of distributed human decision making. Whether it be voting, the purchase of publicly traded shares, or the organization of a bond to fund a bridge to nowhere.

It comes down to this: In order to mine bitcoins, or rather, add value to the system, you have to be constantly connected tothe internet. You can't mine a bitcoin in isolation. You can't power up a stand-alone, air-gapped machine, and mine bitcoins and expect them to have value when you connect it to the internet.

If you can't mine your own bitcoins in a vacuum, then very obviously, this requires you to interact with the world at large, over public networks. Those other systems must be available and complicit in such activities. That certainly doesn't fit my definition of "autonomous" in the sense of some massive force-of-nature style artificial intelligence boogey man. These systems need to be switched on, activated and tended to by someone. Someone will eventually want to extract value from these economic crypto-currencies.

So, here we are, coming back to the drone/remote control debate. Is a drone really "autonomous" when there's a pilot manning a set of remote controls from a bunker? Similarly, is this truly an "autonomous" corporation, when there are people deploying agents onto client hosts and services onto servers, all with the goal of gaining wealth? However you want to encapsulate the skill sets involved, that still requires expertise, and human intervention in my book, and certainly doesn't sound autonomous at all, to me.

Autonomy is a relative term. Whose autonomy are we talking about, here? And autonomy from "what" precisely?

<comment><USER31> Here's a related question: is _anything_ in our society currently autonomous?

<comment><USER32> At the risk of sounding like a hippie - mother nature. Forests, savannahs, and oceans have been doing their thing long before humans arrived, and will continue doing their thing long after we perish.

<comment><USER33> The planet has a whole is... largely autonomous but is still affected by the sun, meteors, the moon.

Oceans are affected by those above as well, and by us. We have managed to affect the oceans quite a lot during our short time on earth, mainly by pollution it and the environment in general.

Nothing is really autonomous in that sense. Yes, the earth will probably be here after we perish and it will probably survive, more or less, intact so in that sense it is probably quite autonomous.

</comment></comment></comment></comment><comment><USER34> Yeah, only a few people have come to this realization:

       1. It's IMPOSSIBLE to have a corporation without money
       2. So far it's been impossible to receive money online anonymously

Therefore:

       3. Corporations can't be anonymous

Bitcoin finally gets rid of this barrier and makes anonymous corporations possible (whether autonomous or human-operated)

<comment><USER35> Anonymity is not really a feature of Bitcoin, and in fact the design of Bitcoin makes anonymity difficult.

<comment><USER36> You are not attaching any form of ID to the transactions. Bitcoin is anonymous.

The fact that the NSA can track you down by various means is a whole different thing. And by that logic nothing in the Universe is anonymous, since it's deterministic and it doesn't lose information, so theoretically everything could be traced back to its origin.

<comment><USER35> "You are not attaching any form of ID to the transactions. Bitcoin is anonymous."

That is kind of like saying, "StackOverflow is anonymous. You do not attach any form of ID to your questions!" Of course, that worked out pretty badly for a certain high-profile Bitcoin user recently (yes, he leaked his real name at one point; however, he had also used his pseudonym in many other places, which was part of the problem):

[https://medium.com/p/d48995e8eb5a](https://medium.com/p/d48995e8eb5a)

"by that logic nothing in the Universe is anonymous, since it's deterministic"

Hardly, in fact, all the evidence points to a probabilistic universe; by extension, probabilistic approaches to anonymity might be possible. It just so happens that in the context of electronic payments, that is _entirely possible_ , and for more than 25 years cryptographers have been studying such things (and there is a pile of published research). Yes, you can even have an electronic payments system that protects your privacy from the NSA.

<comment><USER36> > yes, he leaked his real name at one point

So either he attached his ID, or he was traced by other means. Stackoverflow _can_ be anonymous. It doesn't require an ID verification. But you can put your real name if you want to, nothing is stopping you.

And again, by your logic you won't be able to give me an example of something that is anonymous: Whatever you say, I will say that the NSA planted a cam in your home. BOOM! Not anonymous anymore.

> Hardly, in fact, all the evidence points to a probabilistic universe

Not a physicist, but AFAIK that's the old interpretation of quantum mechanics, disproved by some cheap but crazy experiments.

</comment></comment></comment></comment></comment><comment><USER37> 20 years ago at Fringeware, Paco Nathan (is pxn on HN?) had the idea to form a corporation with a board of directors, put an AI on the board, then have all the human directors resign.

</comment><comment><USER38> Nice idea, I've been looking forward to the 'self-operating-business-in-a- shrinkwrap-box' for quite a while, and this discussion sounds a lot like the kinds of things Charles Stross likes to put in his sci-fi stories.

Still, keeping a private key safe for a distributed corporation will be a challenge. One attack I can think of - set up a fake hosting company that claims to offer cheap hosting, wait for the corporation to move some of its agents there, then bam, you've got the private key. That kind of thing might be difficult to pull off, but if any of these corporations controlled significant assets, then the amount of resources an attacker would be prepared to expend would be very high.

I suppose it suggests a mechanism where spending resources requires the cooperation of a number of agents that must be contracted with different hosting companies, and perhaps a period of warm up, where for the first x months, an agent might do useful things but would not be given power to control money.

<comment><USER39> Hmm, I am trying to imagine what the system would look like. Seems like you could borrow some of the features of Bitcoin to create a control structure. Maybe require some type of proof-of-work/approval process by a network of shareholders to approve financial/business transactions. That way, anyone could attempt to participate on behalf of the corporation, but only transactions brought forward by trustworthy agents that are deemed to be beneficial for the corporation are approved. Essentially you would adopt the trust model of bitcoin but apply it more broadly.

</comment></comment><comment><USER40> Fascinating concept. It would need a very specific kind of product for such a cooperation to be able to withstand human competition though. The OP mentions a storage service & autonomous cars, but I'm thinking that a good candidate would be a product with such thin margins, supporting human labor could not be feasible.

<comment><USER28> It does not necessarily have to withstand human competition though.

Let's say there is an agent A whose source is on Github and which makes X BTC/month. If the agent is programmed to pay out dividends to shareholders and auto-update its code, (large) shareholders have a shared interest in improving the agent.

Likewise, an ambitious developer could fork agent A and try to improve it. If he can convince a lot of people that his agent will beat out the other agent, he can get people to invest in it in order to bootstrap agent B (assuming the agent requires an initial investment).

If agent B is more profitable than agent A, people will start investing time and money on it and abandon the other agent.

PS: Agents would not necessarily need investors assuming they can bootstrap themselves to profitability. This is just a possible scenario. However, I think is likely that agents who rely on some form of human input are more likely to beat the competition.

</comment></comment><comment><USER41> Just like the decentralized nature of the internet kept large companies and the government from taking it over. Oh wait...

</comment><comment><USER42> For better or worse, the degree of autonomy that this "autonomous corporation" has is exceptionally weak...

<comment><USER40> Interesting conjecture. Care to elaborate?

</comment></comment><comment><USER43> This is incredibly interesting. Corporations essentially crowdsourced the way bitcoin is. I disagree that these applications will reside in the cloud however, because those are essentially provided and administrated by a central entity.

It's more likely that such an autonomous corporation would provide a cloud service. The protocol could be designed like bitcoin to reject hosts that don't meet certain criteria (such as latency or security). With Homomorphic encryption techniques being advanced these types of clouds could even be somewhat secure.

<comment><USER23> A single cloud service is provided by a central entity, but the application could be spread out across many such services (e.g., a distributed system running on EC2, Rackspace, a bunch of no-name VPSs and even home computers by offering a downloadable application that did something useful in return).

</comment></comment><comment><USER44>
      only way to deal with those corporations will be through
      Bitcoin (that's right, they won't, or rather can't, accept
      fiat like US Dollar)

Bitcoin is fiat.

<comment><USER45> It is not a fiat in a sense "imposed by the ruler". The point of fiat is that someone has control over it. Bitcoin is exactly like gold: people simply agree that it has some value for them, without anyone forcing them to accept it as payment.

</comment></comment><comment><USER14> It's a understandable analogy, but an autonomous profit making systems wouldn't need to act like a corporation. Depending on what it's decision making system is like, it could have behavior for which we don't a prior from which to make an analogy.

</comment><comment><USER46> Any kind of libertarian community/market/state will need to shield itself from all other political states in the world just as well. An army would be required for that, yet it's not clear if libertarians would collectively defend themselves.

</comment><comment><USER10> One thing to note is that bitcoin not only made this autonomous system possible, it also made it transparent to outside (through open-source and public blockchain). In that sense, it could be considered more trustworthy than an actual corporation.

</comment><comment><USER47> The aside in the third sentence really bugged me. It seemed to imply that Bitcoin isn't a fiat currency, but considering it, like the US Dollar which it mentioned, doesn't have any intrinsic value, isn't it also a fiat currency?

<comment><USER48> Depends what is meant by being "fiat". Most people consider fiat to be government/state created money rather than just having no intrinsic value. 3 definitions listed here: [http://en.wikipedia.org/wiki/Fiat_money](http://en.wikipedia.org/wiki/Fiat_money)

I think the intrinsic value argument is pointless. Gold for example, has some value outside of it being a medium of exchange, but the price of gold is very divorced from its usefulness in industry or its attractiveness so the fact that it has "intrinsic" value doesn't mean much.

</comment></comment><comment><USER49> We normally call these _viruses_.

<comment><USER23> Yeah, my first thought was that these already exist as computer worms. Though the difference is that they could actually play "by the rules" instead of using computer time against the owner's wishes.

</comment></comment><comment><USER50> Bitcoin autonomous corporations could use prediction markets to choose code changes.

<comment><USER51> Could you elaborate? I don't see how prediction markets could help decide what code to use.

<comment><USER50> Betting on profits of the agent conditional on various code changes. "Agent profits will increase X% by date Y, given code change Z." If code change Z isn't chosen, money is refunded to the people who bet in the market. If it is chosen, then it stays open until date Y, where it pays off depending on the eventual profits.

</comment></comment></comment><comment><USER52> Cstross has an interesting take on autonomous corporations in his novel Accelerando.

</comment><comment><USER53> It is difficult to keep reading when 'fiat' is used as an expletive.

</comment><comment><USER54> Systems don't work by themselves. You need a person(s) somewhere. That person has to live somewhere, unless he is in space or in the middle of ocean.

</comment><comment><USER55> change the same logic as mining of bitcoin, and transfer it to work:

i mean, mining in this case will be work.. and the amount of work would say how much payment that work diserve..

but how to calculate work in a generic manner without being too linear.. like hours/work.. i mean.. pay for creativity, ideas, less tangible things..

and about other investments. how they would be decided? this requires a good amount of algorithms..

</comment><comment><USER15> a blockchain that finances its ops by access to aquaponic food dispensaries would be an interesting future innovation. Similar to current cryptocurrencies, but the "backing" is that the dispensaries will take the currency for purchasing produce, and the mining process itself is linked to the creation and maintenance of those AP microfarms.

</comment><comment><USER56> It brings a new meaning to paying your monthly bills when failure to do so brings death.

</comment><comment><USER57> As an aside: the title image depicts the Sky Tower in Auckland, New Zealand.

<comment><USER50> Do you know what relation this has to bitcoin or autonomous corporations?

<comment><USER57> None, as far as I can tell. It was probably just selected because it's a pretty picture.

<comment><USER58> I arrived in Auckland today from my home in Australia, and did a massive double-take when I opened the article. Kinda neat, considering I saw that perspective of the Sky Tower just before.

I love life's little coincidences.

</comment></comment></comment></comment><comment><USER59> The existing, politically-controlled system of finance and corporations has numerous and powerful enemies, hellbent on bringing it down, in whatever way possible. Furthermore, even without enemies, it is patently clear that the fiat money system is happily busy destroying itself: raising debt ceilings, engaging in quantitative easing, and so on. The libertarian movement is probably one of their smallest enemies in terms of headcount but at the same time it really looks like the most powerful one. If you read the original paper by Satoshi Nakamoto, you can see that the entire purpose of bitcoin is exactly to bring the current system to its knees. I hope that BTC succeeds in doing that and save its supporters from being dragged along in the quagmire, before the current fiat system finally destroys itself.

<comment><USER45> Fiat system will end without help of Bitcoin. Bitcoin is here as a place where to run when things start falling apart (without it, some other regime's currency would prevail).

Gold is not a solution since it needs to be stored and moved by someone. We tried that in growing ecenomy of 19th century and it lead to a banking cartel and legalized fractional reserve lending. I think gold will collapse with fiat currencies for the exact same reasons: counter-party risk. No one wants to trade in gold/silver coins because they can't be moved and protected like bitcoin.

<comment><USER60> Bitcoin's ease of movement comes with significant disadvantages, too. If I want to steal a ton of gold from a bank, it's going to take a pretty good plan. Stealing some Bitcoins just takes a zero-day.

<comment><USER45> It's a question of comparing cost of protecting 1 ton of gold (vault, armed guards, managers, video surveillance and finger print scanners) with a cost of protecting 200K bitcoins.

No matter how many bitcoins do you have, you can lock them up with M-of-N transaction where N separately generated keys belong to your partners and friends. And the encrypted wallet can be backed up on any number of computers for a very low cost.</comment></comment></comment></comment>


Cracking the 12+ Character Password Barrier, Literally - <AUTHOR> http://www.netmux.com/blog/cracking-12-character-above-passwords <comment><USER2> This is a dupe.

[https://news.ycombinator.com/item?id=13355850](https://news.ycombinator.com/item?id=13355850)</comment>


Did life start with a replicating molecule or a metabolism? - <AUTHOR> http://arstechnica.com/science/2014/01/did-a-life-start-with-a-replicating-molecule-or-a-metabolism/

<comment><USER2> I think that the most important sentence in the article contains the word Mars. Mars cooled first after all. A proto replicator is possible to be carried to earth after some form of collision event with meteor or comet.</comment>


Cpanelskindepot.com customer information leak - <AUTHOR> http://www.webhostingtalk.com/showthread.php?p=7015124

<comment><AUTHOR> I'm Isaac Eiland-Hall - don't mind my name out there because I'm easily findable...

As I said over on WHT - received an email with a link to download a CSV - <USER2> sure enough, I find my information in there, along with more than 5000 others.

ARGH.</comment>


Gmail: Insert a calendar invitation - <AUTHOR> http://gmailblog.blogspot.com/2010/04/insert-calendar-invitation.html <comment><USER2> Long overdue feature. You could do this with Exchange/Outlook more than a decade ago. I wonder if these meeting invites are compatible with Outlook?

</comment><comment><USER3> Finally! Now, all that's left is to have something like Loopt with this, so you can check on your friends to see if they are nearby for that serendipitous outing.

</comment><comment><USER4> I remember having a feature like this in a business office using Microsoft Exchange (the server for which often broke down), so I have been waiting for something like this on Gmail. This could simplify a lot of people's lives if well implemented.</comment>


The Data Science Process: What a data scientist actually does day-to-day - <AUTHOR> https://medium.com/springboard/the-data-science-process-the-complete-laymans-guide-to-what-a-data-scientist-actually-does-ca3e166b7c67#.wphqcza6u <comment><USER2> I love the crystal Ball analogy, LOL!</comment>


Wolfram Alpha: a shortlived fad - <AUTHOR> http://www.google.com/trends?q=wolfram&ctab=0&geo=all&date=ytd&sort=0

<comment><USER2> Not sure that matters. This is how these sorts of things work: Massive publicity at launch/open-beta, then a major drop-off as people realize "Oh, this app isn't the Jesus-app the PR made it seem like", then a gradual, permanent build-up as you slowly iterate and improve your site.

Furthermore, let's get rid of "Google-killer" as a metric. If Alpha can exist in a separate niche and be a useful service to people and make itself money, it's a win. It doesn't have to beat Google all-around to be useful to people or to make money.

We live in a ADHD society. Our 24-hour cable news and blog-centric Interwebz demands that things happen way faster than the real world works. The way people today make it sound, Wikipedia went from launch to "beating Britannica" in a few weeks, when in fact it took several years. Similarly, things like Wolfram Alpha are going to take years to go from launch PR as a "Google- Killer" to actually killing Google. The way our news system works, it expects news stories to unfold over hours, not months, and to be world-changing, not merely big.

<comment><USER3> Also, I think reserving judgment until most schools in the US start again and people realize that Alpha is awesome with math would be a good idea.

</comment></comment><comment><USER4> It was too hard to use. I never knew how to phrase anything properly, so I just gave up on it.

<comment><USER5> Maybe 'cause it's meant for mathematicians, scientists, and engineers?

<comment><USER4> No, that's not the case at all.

This article hit the nail on the head. [http://unqualified- reservations.blogspot.com/2009/07/wolfram...](http://unqualified- reservations.blogspot.com/2009/07/wolfram-alpha-and-hubristic-user.html)

For a while (this seems to resolved now) you could enter "one cup of flour" and it would return the nutrition facts as requested. Enter "two cups of flour" and the engine would choke. Would being a mathmatician or a scientist make that problem disappear? No.

</comment></comment></comment><comment><USER6> Google trends is next to useless for this kind of thing. All I see is a ratio of the peak volume vs. a baseline "normal" traffic volume. Looking at quantcast and compete.. they went from zero to roughly 500k visitors a month in less than two months, plus they survived a massive traffic spike without a glitch. I call that a success in my books.

It's very handy, but specialist tool, almost like an almanac that computes useful facts in real time. Stuff I would normally use my Lee Valley pocket reference for ([http://www.leevalley.com/wood/page.aspx?c=1&p=30039&...](http://www.leevalley.com/wood/page.aspx?c=1&p=30039&cat=1,43513,43556.))

Example: What is the thread count of a no. 6 bolt? [http://www08.wolframalpha.com/input/?i=What+is+the+thread+co...](http://www08.wolframalpha.com/input/?i=What+is+the+thread+count+of+a+coarse+%236+bolt%3F)

Any engineer would love it.

</comment><comment><USER7> I used it a lot during the first week, but I'll admit that I'm down to using it maybe once a week. It's just a cumbersome interface that doesn't really make much sense. I'm sure they'll spiffy it up soon.

</comment><comment><USER8> It was described as a Google Killer by many of the media outlets that covered it. The problem with that description is that it doesn't attempt to do what Google does, so users going to the site hoping to do a search they'd typically send to Google quickly realized it's not for them. Rather than a fad, it will probably continue to be a decent engine that's very useful for a certain segment of users .... but not a viable general-purpose search engine for mainstream users.

<comment><USER9> The people who tried it emphatically haven't liked it. This is just empirical fact based on page hits since launch. Many people have tried it.

The problem isn't that it doesn't do what Google does; it's that it doesn't do what anyone wants.

</comment></comment><comment><USER10> More fun with trends

Wolfram, Cuil & bing [http://www.google.com/trends?q=wolfram%2C+cuil%2C+bing&c...](http://www.google.com/trends?q=wolfram%2C+cuil%2C+bing&ctab=0&geo=all&date=ytd&sort=2)

Actually need an 18 month range bu this will do.

I'm actually suprised at how much higher Cuil's peak was compared to bing considering the current marketing push (is this all over or is MS pushing harder here in the Bay Area)

</comment><comment><USER11> i still love it, but it isn't useful for me on on a daily basis.

</comment><comment><USER12> UI needs to be fixed, here are my thoughts:

[http://codingthriller.blogspot.com/2009/05/fixing- wolframalp...](http://codingthriller.blogspot.com/2009/05/fixing- wolframalpha.html)

</comment><comment><USER13> This is why:

[http://unqualified- reservations.blogspot.com/2009/07/wolfram...](http://unqualified- reservations.blogspot.com/2009/07/wolfram-alpha-and-hubristic-user.html)

</comment><comment><USER14> This is like searching "google" on wolfram alpha trends. Use compete.com if you want to prove a point, not google trends.

</comment><comment><USER15> It's very useful. I use it daily, particularly for date math.

</comment><comment><USER16> I have the firefox plugin, but other than that I just use it for math I'm too lazy to figure out myself - or to check my math.

</comment><comment><USER17> Stupid. Just because traffic is going down doesn't mean the technology or the company doesn't deserve some serious attention:

[http://singularityhub.com/2009/07/27/wolfram-alpha-a- force-t...](http://singularityhub.com/2009/07/27/wolfram-alpha-a-force-to-be- reckoned-with/)

<comment><USER18> If there's no users, why would it deserve so much attention?

<comment><USER19> It is completely irrelevant how many users use it. If it is a great tool for just a minority, then it deserves attention in that minority.

edit: Am I missing about the number of users deciding about the quality of something? Or why on earth am I getting downmodded? I don't have a problem with that, but I feel stupid and I rather not.

<comment><USER18> > If it is a great tool for just a minority, then it deserves attention in > that minority.

Agreed. What I didn't agree was with the "serious attention" you mentioned earlier. btw, I didn't downvote you.</comment></comment></comment></comment>


How to Remember to Do What You Intended - <AUTHOR> https://medium.com/@Therapy4Change/how-to-remember-to-do-what-you-intended-better-life-90c8a8a5a48b

<comment><USER2> You may want to read the Show HN guidelines.</comment>


Go home Google Translate, you're drunk - <AUTHOR> http://translate.google.nl/#no/en/im%20a%2031%20year%20old%20guy%20from%20norway.

<comment><USER2> Would appear to be the "norway." part that confuses the poor translation engine. A better example would be:

[http://translate.google.nl/#no/en/Google%20pay%20TAX%20in%20...](http://translate.google.nl/#no/en/Google%20pay%20TAX%20in%20norway)</comment>


Can we have some first sources, please? - <AUTHOR> http://blogs.law.harvard.edu/doc/2010/01/18/can-we-have-some-first-sources-please/

<comment><USER2> Maybe I'm reading between the lines too much, but this seems to be creating a problem by being overly-general.

Certainly, if you discuss or analyse an article or document which is available online, link to it for the benefit of your audience (and the original author). (Exceptions like discussing a hate crimes page and not wanting to give it google-juice are fine, just let us know you're doing it.)

But the OP seems to blur this with other sources not already available on the web (or, presumably for example, behind a paywall). Are you asking for these to be uploaded, which is potentially copyright infringement and at least may go against the original author's intent?

If I review a book, do you need the primary source included?

<comment><USER3> Jacob, I think you are reading more into it than he said. As far as I can see, he said, if you find it online give a link to it. He didn't even go so far as to ask for a citation if it's not on line.

<comment><USER4> Who says that that piece by Nate Anderson was available online? Very often case law is only accessible by pay-for subscriptions.

<comment><USER5> IANAL but I don't think that applies here. He links to what is essentially a spam submission in the first paragraph so it seems reasonable to expect the other submissions will also be available.</comment></comment></comment></comment>


Ian McKellen turned down $1.5m to officiate as Gandalf at Sean Parker's wedding - <AUTHOR> https://www.theguardian.com/film/2016/aug/23/ian-mckellen-turned-down-15m-to-officiate-as-gandalf-at-sean-parkers-wedding <comment><AUTHOR> No word on whether Elijah Wood was asked to be the Ring Bearer.

</comment><comment><USER2> The closing sentences of The Verge's commentary: "Parker has been married for three years and he now has two children, so his life seems to be going just fine. It is a great comfort, however, to know that at one point a very rich person did not get what he wanted."</comment>


Ask HN: What company would you never work for? And why? - <AUTHOR> What company would you never work for? And why? <comment><USER2> Probably Amazon.com. For one, because I don't want to move to Seattle. And also their reputation for being fairly worker hostile.

</comment><comment><USER3> Google, because I am not in my 20's

</comment><comment><USER4> Palantir, because being able to look at myself in the mirror is a thing I want to remain able to do.

<comment><USER5> Could you elaborate a little more on why you feel that way?

<comment><USER4> They do a lot of really shady stuff. See for example: [https://www.thenation.com/article/how-spy-agency- contractors...](https://www.thenation.com/article/how-spy-agency-contractors- have-already-abused-their-power/)</comment></comment></comment>


Investing Returns on the S&P500 - <AUTHOR> https://github.com/zonination/investing/blob/master/README.md <comment><USER2> I don't think it is fair to say that next 100 years will be same as last 100 years:

1\. GDP growth is not as high as it used to be anywhere in developed world: [http://www.oecd.org/std/productivity-stats/oecd- compendium-o...](http://www.oecd.org/std/productivity-stats/oecd-compendium- of-productivity-indicators-22252126.htm)

2\. USA is superpower at the peak. Plenty of other stock market economies hasn't been so successful. E.g. Argentina used to be one of the richest country in the world. Investing in history is easy, e.g. you can also say about Apple stock that it will always recover based on past data, but plenty of other companies hasn't.

3\. Most of the 100 years we have inflation: [http://inflationdata.com/Inflation/Inflation_Rate/Long_Term_...](http://inflationdata.com/Inflation/Inflation_Rate/Long_Term_Inflation.asp)

Right now interests rate are close to zero, which is rare. Long term trends may change if we continue to operate in those climate.

Edit: Inflation was factored in the graphs. Sorry I was wrong about that.

<comment><USER3> > _" anywhere in developed world"_

I hate this terminology. If the US has, in fact, "finished" developing, then the future of the S&P will be bleak. I don't think that's the case at all, though. I think development has just started and we'll see fantastic advances in bio-informatics, solar power, 3D printing and a number of other fields in the upcoming decades.

When I was a teenager, I pirated music. I seriously hope my children pirate gourmet cheeses and burritos as teenagers. I download apps that organize my notes. May they download the bio-app that lets them dunk from the free throw line.

<comment><USER4> US is far from finishing deveping, fortunately or unfortunately. Take trains, for example, area where US is far behind China, Japan, or European countries, despite the size of its territory. I'm sure there are other examples.

<comment><USER5> Tangent, but the US freight rail networks are much better than Europe. US is good at freight rail and bad at passenger service, Europe is vice versa.

<comment><USER3> Actually, I find Europe's passenger service uninspiring compared to Japan or especially Taiwan.

<comment><USER6> Taiwan's trains are subsidized

<comment><USER3> So are Japan's. The idea isn't to get a profit off of tickets vs operating costs. The idea is to improve the efficiency of the country and economy. It's an investment.

If the US had a similar political climate the east coast would already have high speed rail from New York to Miami.

<comment><USER6> Japan has a very low subsidy and most of its railways are private and receive none.

<comment><USER7> I think that Japan's population density and relatively small size makes it much easier to make money on railways.

</comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER8> Cool, this is very similar to what I had people do at one point as part of the interview process.

Give them a bunch of historical data

\- find me the longest period that we would be flat/negative

\- find the best time to invest

\- find the optimal portfolio off stocks to hold over a given period.

I think I've said this before but I see too many people who think that they need to have a huge public repository of code to show off in an interview.

If you want to be a programmer at a hedge fund just having some very shallow analysis like the above would get a programmer to the top of the resume pile.

Now if you want to be a quant the bar is obviously much higher:)

<comment><USER9> I'm interested in walking the quant path. Just how high is the bar? And would there be an equivalent project that would put a prospective quant to the top of the resume pile?

<comment><USER8> I've attached two pdf's on what you should expect.

The latter was the take home an old company used to give quants as a test. If you can answer the questions on teh practicum then you probably have enough math skills to start as a quant.

[https://drive.google.com/folderview?id=0B1iikX5PwNx4d2dKQ3FT...](https://drive.google.com/folderview?id=0B1iikX5PwNx4d2dKQ3FTSWVRSDA&usp=sharing)

<comment><USER10> Just in case anyone else doesn't know what a "quant" is: quantitative analyst.

[https://en.wikipedia.org/wiki/Quantitative_analyst](https://en.wikipedia.org/wiki/Quantitative_analyst)

</comment></comment></comment></comment><comment><USER11> The NYTimes has a great visualization of S&P 500 returns for money invested any year between 1920 and 2009 and withdrawn between 1921 and 2010:

[http://www.nytimes.com/interactive/2011/01/02/business/20110...](http://www.nytimes.com/interactive/2011/01/02/business/20110102-metrics- graphic.html)

<comment><USER12> I brought up this chart as a counterpoint to the OP's graph in a separate discussion.

The difference is that this one factors in "taxes and fees".

In this chart, it says 1979-1999 is +8.2% per year.

Using the OP's data source, 1979-1999 would be 12.464% (using [https://dqydj.com/sp-500-return-calculator/](https://dqydj.com/sp-500-return- calculator/) which uses the same Schiller data set).

That's 4.2% per year obliterated by "taxes and fees". That seems excessive for "taxes and fees", given that it's buy-and-hold.

I don't know what to make of this discrepancy but I find it aggravating. Either Schiller's data has some strange assumptions built into it, or the OP's analysis draws improperly bullish conclusions from it, or the NYT chart is unreasonably bearish.

Either way, I still strongly believe people should not be generally expecting their investments to quadruple in 20 years. There's a whole investment industry that is based off of bad assumptions, and it's keeping people from investing in actually producing value for themselves and others.

<comment><USER13> > and it's keeping people from investing in actually producing value for > themselves and others.

What do you mean?

<comment><USER12> Well, starting a business is a good example - doing the work to find an actual market opportunity and investing in it. Or, I could scrimp to put that money in the S&P, or I could invest in myself through further education.

</comment></comment></comment></comment><comment><USER14> Looking at the discussions here I find it interesting that even in something as number driven as the stock market everybody argues about the meaning and the validity of the numbers. There really is no clear picture.

But somehow the regular guy is supposed to navigate his way through this jungle of conflicting, confusing or meaningless numbers. And considering the long time frames most people don't have much opportunity for leaning from mistakes and doing better. Once you realize that your strategy doesn't work you have already wasted many, many years and lots of money.

<comment><USER15> 1\. If you're right 51% of the time when you invest you're going to get rich. Unfortunately the odds of you being right 51% of the time are incredibly low. 2\. Heed Rule #1, and put most (if not all) of your money in broad market ETFs. 3\. If you DO decide to actively invest, think about your strengths both in terms of character and industry knowledge and play to those. I don't know jack about healthcare and have had my head handed to me in Biotech because I am willing to hold through a lot of pain. What I AM good at is seeing strong secular trends in tech stocks and value discrepancies there. So most of my cash is in broad market ETFs, and I do a small amount of active investing in tech and telecom. And I work in Equity Research..

It astounds me that so many people think they can be great investors. It would be like me trying to build an ark with no experience in carpentry or ship- building. Really it just strikes me as a legal and socially acceptable way to gamble. Please recognize that this is a zero-sum game, and the other person taking your trade is likely a professional who spends their entire work week doing deep analysis.

<comment><USER16> > If you're right 51% of the time when you invest you're going to get rich.

Sorry, but this is completely incorrect.

The approximate formula for success in investing or trading is "percentage right" * "average win profit" \- "percentage wrong" * "average loss" = overall profit.

Many traders are correct only 20% of the time (I'm looking at you, stock options traders) but make fortunes because they understand this formula.

You can also lose a lot of money even if you are right 90% of the time because you fail to manage a big loss properly.

<comment><USER17> Can confirm. Been trading options for 3 years, lose money on 90% of my trades, but still up 30% for the year.

It's basic expected value, magnify your wins and minimize your loss to what you know you can lose.

<comment><USER18> So your counterparty makes money on 90% of his trades and is down 30% for the year? He must feel like a schmuck.

<comment><USER16> That is not at all how the market works.

</comment></comment></comment></comment></comment></comment><comment><USER19> Does the stock data used suffer from Surviver bias?

That is a free download of historical data that lacks failing, delisted companies of the past.

<comment><USER20> Yes sometimes companies are delisted from the S&P500, but if you invest in an S&P500 _index fund_ , then your investment is also automatically adjusted to remove that company.

Which makes me think: with index funds becoming more and more popular, should we see bigger and bigger crashes of stocks when they are removed from an index?

<comment><USER21> And then that index fund has to take the loss that comes with having bought a stock that failed and sell at a loss, while not capturing the gains of stocks that got big enough to make it on the index.

Shouldn't the index "return" thus diverge from the return of an actual index fund in practice given enough years?

<comment><USER22> That's not how it works, the return of the index is the actual return of the included stocks _while they are in the index_. There will be winners and losers, but the return is actually what you get.

<comment><USER23> I'd appreciate if you could expand on that, because I share the same concern as GP. It seems to me that the index fund has to sell a lousy company at a low price (since it's being delisted) and buy a strong one that's being included in the index. Whereas the index, being just a number, can magically perform the swap without taking a hit.

<comment><USER22> Sometimes it's OK to sell a lousy company at a low price--it's a lousy company! The beauty of a wide index fund like the S&P is that any one company diving won't hurt you. Companies typically last in the S&P for a _long_ time, so the potential gains of adding companies earlier or selling them at a different time average out. Even Facebook has more than doubled since being added to the S&P and that's the definition of a strong growing company. If you really like a company that is being booted from the S&P you can just go buy it directly after the announcement and you'll most likely be able to pick it up on quite a discount.

You can use different indexes if you want to have smaller companies (the Russell 2000 is a good choice), but the whole point of the S&P is that it is made up of established firms. Perhaps lower reward, but also lower risk.

<comment><USER24> Is there any data out there on variations? It would be interesting to see how other strategies compare such as buying the next 100 largest market caps outside the S&P 500, also not selling stocks that are removed.

</comment></comment></comment></comment></comment></comment></comment><comment><USER25> Warren Buffett bet $1mm that S&P500 will outperform a hedge fund over a 10 year period.[1]

That's good enough for me, I'll follow the oracle.

[1] [http://longbets.org/362/](http://longbets.org/362/)

<comment><USER26> This bet ends in less than 2 years. Does anybody know what would be the result if it would end now?

edit: I guess it depends on the detailed terms that they haven't disclosed, but educated guesses are fine

<comment><USER27> 65.67% vs. 21.87% returns so far (net after fees)

[http://fortune.com/2016/05/11/warren-buffett-hedge-fund- bet/](http://fortune.com/2016/05/11/warren-buffett-hedge-fund-bet/)

Almost impossible for Warren to lose at this point.

<comment><USER28> Hedge funds are downstream of money with performance-driven interest.

Markets (the major players that skew the averages) are downstream of banks who use money the Fed's pay the interest on.

His gamble is that the elite would rather give the market unlimited welfare a la Japan to keep the signals of valid global demand alive.

The Fed will not allow a correction... mostly for political reasons.

<comment><USER29> I don't think that was the gamble when Buffet made the bet. The gamble then was, in ten years of completely unknown (at the time) market conditions, the S&P 500 will outperform hedge funds.

If you picked a different 10 years (say, 199X-200X or 200X-201X), I suspect that Buffet wins for most values of X, but I have not checked.

</comment></comment></comment></comment></comment><comment><USER30> Lots of talk in here concerning superpowers falling, and not much about how it's way more favorable for companies to use debt financing in a low interest rate environment... Lol developers should stick to developing

<comment><USER31> Who do you think created HFT (High Frequency Trading) systems? Surely bankers _stick_ to banking but hire developers to give them that competitive edge. The odds are that software engineers would have come up with the idea of and implementation of, a working high frequency trading system before bankers would have despite banking probably not being a software engineer's specialty.

<comment><USER30> I think market makers used technology to do exactly what they've always done at increasingly higher speeds. History also shows you're wrong, for hundreds of years market makers have sought an edge by trying to get information faster and faster. Hell, it used to be carrier pigeons that gave them the edge. There's really not much new here...

<comment><USER32> > for hundreds of years market makers have sought an edge by trying to get > information faster and faster.

And then it spurred the telegraph, and then the telephone, and then... :)

</comment></comment></comment></comment><comment><USER33> I'd be curious to see results for other countries, the graph of "Chance of Losing in the Stock Market" in particular. In the case of Japan, it appears that if you'd still have significant losses if you invested 25-30 years ago: [https://finance.yahoo.com/echarts?s=%5En225+Interactive#{"ra...](https://finance.yahoo.com/echarts?s=%5En225+Interactive#{"range":"max","allowChartStacking":true})

<comment><USER34> this is the biggest fallacy in the investing thesis. buy and hold didn't work in russia, or argetina, or many others. because we live in a country that's prospered (for a plethora of reasons), we assume the prosperity must continue unabated forever.

<comment><USER35> Would investment in a Russian market managed fund panned out any better?

<comment><USER13> I think they're referring to the fact that the Russian stock market collapsed completely (i.e. total loss) in the beginning of the 20th century.

<comment><USER35> Clearly. But they were considering investment strategies (buy&hold vs alternatives). My point was that few if any investment policies would hedge you against market extinction events.

<comment><USER36> I would probably have preferred to own real-estate in Russia... Although If we look back to before ww2, probably not...

</comment></comment></comment></comment></comment></comment><comment><USER37> "Buy and Hold" applied to the S&P500 actually means "sell when an individual company loses enough market cap, buy one that has gained enough".

</comment><comment><USER12> The other reason none of these returns are realistic for an average person:

1) People don't get a lump sum at the beginning of their investment history

2) Ah, but you say, dollar-cost-averaging. The problem there is that people get more money to invest when times are good, and less when times are bad.

3) As a result, even when buying in responsibly, people are buying more when the market is high, and less when the market is low.

It distorts performance. Plus, betting on having average-or-better performance is a risky bet. Don't count on more than 2.5% / year lifetime.

<comment><USER38> A lot of companies offer retirement plans where a % of income is invested monthly, a la dollar cost averaging (e.g. 401k plans). It's really easy to set up and let ride on autopilot.

<comment><USER39> But that still skews the dollars invested. At age 22 (college grad) you might make $50K. You put in 6% and get a 3% match, for $4500 into your retirement fund.

Fast forward to age 50, when you're making 200K (this is 28 years from now, so inflation and pay raises bump you very high), you're putting in the same %, but that equates to $18K/year.

So even with dollar cost averaging, the majority of your money is invested in a small, 10 year time window when you are at peak earnings.

<comment><USER40> Ahem, good comment, but:

At age 22, you make 25k and get 0% matching, and can afford 0 to put into your still-hypothetical retirement fund.

At age 50, if you're the median person, you make 50k. And you need that money to put your kid through college.

</comment></comment></comment></comment><comment><USER41> The stock market isn't some immutable thing. It's the product of economic and social forces, the share of income given to capital and labor, international politics, etc. Basically stocks are a convenience for rentiers that the little people are allowed to access. There's no reason to expect the social forces that underly market returns will deliver the same returns in the future.

<comment><USER42> >There's no reason to expect the social forces that underly market returns will deliver the same returns in the future.

Except human nature is the same, economics is the same.

<comment><USER43> Except that people didn't live under a capitalist economic system with stock exchanges, shares, and private property for the 10000 years of settled urban existence before the 18th century, so, yeah -- apparently "economics is the same" isn't true.

<comment><USER13> I suggest you read A Splendid Exchange. Although humanity didn't have the exact same economic system as today's, it's a mistake to think there weren't complex systems in place in the past.

<comment><USER43> I never said anything of the sort that there were not complex systems in place. Precisely because I can see that I can say that the system we have now is not inevitable, immutable, or eternal.

</comment></comment></comment></comment></comment><comment><USER44> Would be more interesting to compare it against a realistic return from a savings account instead of saying "if the index is worth the same after 20 years then you haven't lost anything". You would have almost 25% more even in a 1.1% savings account.

<comment><USER45> I haven't seen a 1.1% savings account in the better part of a decade. Perhaps that's not useful to theorize about in the modern economic wonderland we've created.

<comment><USER46> [https://www.ally.com/bank/online-savings- account/](https://www.ally.com/bank/online-savings-account/)

</comment></comment></comment><comment><AUTHOR> via this /r/dataisbeautiful post, with added commentary from the author: [https://www.reddit.com/r/dataisbeautiful/comments/4q9iwa/40_...](https://www.reddit.com/r/dataisbeautiful/comments/4q9iwa/40_years_of_investing_returns_in_the_sp500_with/)

</comment><comment><USER47> I really like the write up & simplicity of the explanations. Obviously, choosing Vanguard Index funds and avoiding timing the market it is a great financial advice. One piece that I always find missing is that in my opinion, money is not worth the same as you age.

From my point of view, money in your 20s, 30s have 3x or 4x more value than when you are 50. You can go skydiving, scuba diving... When you are 60 your options to enjoy that money are much more limited. I think that should be factor in financial decisions that it is often overlooked

</comment><comment><USER48> What of opportunity cost? That should be factored in just as inflation is.

> After 20 years, you're almost guaranteed to sell high.

Not if you factor in opportunity cost. If I invest $100K and after 20 years I sell at $110K, which works out to a 0.5% APR, I wouldn't consider that selling high.

</comment><comment><USER49> Funny how his time horizon stretches out to 150 years, where the vast majority of people don't live past 100, and have probably, what 25-35 or so years of investing time in their lives? The insanely long term is a simplified look at the stock market as some money-multiplication machine, but I don't think it is really that to most people.

Given a normal person's time horizon, the difference between "did I start investing in 2007 or in 2009" is significant.

<comment><USER50> A little further down it shows graphs of a "typical investing timeline" from around age 20 to age 60. It still looks pretty solid.

<comment><USER49> Ahh, you're right. My comment is directly addressed in the article--that's what I get for skimming it. My only nit then would be that I don't know too many people in their 20s putting money into the stock market. Most people that age are spending every dollar they make on rent and their student loans. You're probably not in the position to "invest" until you have a professional job, well into your thirties.

<comment><USER51> Typical federal student debt payment is ~$300/mon assuming 6% interest, 10 year repayment, and >$30k of debt. With less than $35k income, that payment drops.

You have to make some really poor decisions about where you live to be spending every dollar on rent and student loans assuming you have a job that does not pay minimum wage.

Making investing a priority can be hard, but it is far from impossible at that age. Even a small amount early on will far out weigh a much larger amount invested later. It is important to communicate that instead of telling people they probably can't do it.

</comment></comment></comment></comment><comment><USER52> By defining the probability distribution as the historical distribution of one-year returns, you're severely warping the possibility space. Imagine two experiments:

Experiment A: you flip a coin 1000 times. You estimate the probability that the coin flips heads, and use this to estimate the odds of flipping 10 heads in a row.

Experiment B: you flip a coin 10 times. You repeat that experiment 100 times. You use the results of that experiment to estimate the odds of flipping 100 heads in a row (by looking at how many times it occurred, and dividing by 100).

Assuming reasonable results and a fair coin, you'll conclude from experiment A that the probability of a heads flip is around 50%, and that the odds of getting 10 heads in a row are (1/2)^10.

In experiment B, ~90% of the time you'll conclude that it's impossible to flip 10 heads in a row, and ~10% of the time (in the cases where you did flip 10 heads in a row at least once) you'll overestimate the likelihood of doing it again by a factor of 10 (at 1%, instead of the true value, <0.1%).

So when you only look at annual returns, you're effectively looking at an aggregate of 365 daily returns (or 365*6.5 hourly returns).

</comment><comment><USER53> It's funny that this is so non-intuitive. My wife continues to try to "time the market" despite me telling her that it's pointless over such a long time horizon. Maybe this will help convince her.

<comment><USER54> That's because most people (perhaps subconsciously) view the market as zero sum. What goes up must come down.

<comment><USER55> Negative sum, all that fun hardware and hard workers live off trading commissions.

Something to think about is the market originally existed to raise capital for massive industrial projects like transcontinental railroads and Ma Bell and steel mills and factories in general.

That's methodically been destroyed and soon will be as economically relevant as selling farm tractors is today.

True its diversified out into providing capital to set up financialization schemes, holding companies, stuff like that. But in the very long run I'm not seeing a purpose in having a stock market. That would tend to make it go away.

Take America 2016 and just turn all the dials up to 20 and call predictions for 2036. The last industrial employer closed years ago so no need to raise money for factories full of workers. The last privately funded construction project was built long ago and all construction not just sports stadiums and corporate HQs are completely government funded, no need for stock market funds if all the money comes from taxpayers. Income inequality has accelerated to the point of there no longer being a consumer economy, no need to finance consumerism like retail stores or car loans by selling stock. That also means no advertising because there's almost no value left to extract once all the blood has been squeezed from the stone, which in a country where no one can afford medical care, higher ed, or housing means they don't need to sell stock because they've crashed and no longer exist for all practical purposes. Of course this sounds all rather negative but theres plenty of good news. I'll continue to front money to my local farmers for my vegetable CSA and my occasionally "half a cow" purchase... although none of that requires stocks. Now that software has eaten the world and no computers cost more than a $5 Raspberry Pi, I can work a startup at my local makerspace with practically no money and certainly no need to raise money by selling stock, capitalist industrialism was so 19th century, I don't need to sell $25K of stock to buy a Sun SunOS minicomputer to serve DNS in a world of cloud computing and $5 raspberry pis. There's no need to invest 401K funds because everyone except the hyper wealthy is dirt poor, so no financial market demand.

Yes yes the interval from 1850 to 2000 or so was an era of needing massive investment to build industrial infrastructure. And we need great piles of cash in say 2050 to build... what? Nothing, would be my guess. So the marketplace to raise great piles of cash will go away, more or less.

The future being unevenly distributed, you should be able to find a country today thats de-industrialized (or never industrialized to begin with) and has wide enough income inequality that the population has mostly gone back to barter (probably computer / smart phone assisted agent bartering, but no currency anyway). One where most of the population works non traditional jobs, more like subsistence farmers or subsistence economy in general. How about subsistence farming in Columbia, how healthy is the fraction of the Columbian stock market that focuses on or works closely with subsistence farmers? Oh there isn't one? Oh. Well that's the future of the NYSE given recent trends.

</comment></comment></comment><comment><USER56> I am not a financial advisor and this is not financial advice!

Robinhood seems like an OK way to keep a free portfolio of ETFs approximating a Vanguard all-in-one fund.

My super-unscientific portfolio is loosely based on Vanguard's LifeStrategy Growth & Moderate Growth funds with a sliver of MGK that seemed to both boost returns and moderate declines.

A $5k portfolio would be 6 MGK (10%), 19 VTI (40%), 23 VXUS (20%), 12 BND (20%), 9 BNDX (10%).

From what I can tell, you can hold this portfolio in Robinhood for free. Shouldn't need to re-balance more than once per year or so.

[https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I...](https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0914)

[https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I...](https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0122)

Pay off your credit cards and max out your 401k/IRA first.

<comment><USER57> I really don't understand the appeal of Robinhood... if you're going to hold stocks for years you really shouldn't be skimping on an $8 commission. Get a proper broker with a reputation.

<comment><USER58> Well for one, it's about disruption and change. The creators are more than familiar with brokerage, and it shouldn't be a shocker that most brokers do not operate trades, it's mostly electronic.[1] If you're going to hold stocks for years, why not skimp on an $8 commission? If you make a purchase of 100 shares of $FB, it could save you at least $800 for that sale.

So the real question is, why not?

[1] [https://www.youtube.com/watch?v=JwpQpFqzoAE](https://www.youtube.com/watch?v=JwpQpFqzoAE)

<comment><USER59> > If you make a purchase of 100 shares of $FB, it could save you at least $800 > for that sale.

That's not how commissions work. They are per order, not per share.

<comment><USER60> Not completely accurate - while most brokers are per order, you can use a broker such as Interactive Brokers which charge per share (with a minimum).

<comment><USER59> Yes, at $0.005 per share. It's pretty obvious that $8 is going to be a per order commission.

</comment></comment></comment></comment></comment></comment><comment><USER61> I wouldn't say this is surprising. If you can extend your horizon, you can weather downturns that reduce your asset value, buy while demand is low, and simply wait for the cycle to reverse. Real estate shows the same pattern. The problem is that not everyone has the means to simply extend their horizon.

</comment><comment><USER62> I am a holder and, as a small stock market investor, this study is gold to me. As a holder, the worst years are the first decade, after that, the interests become explosives.

The difficulty to be a holder is to spend less on the present to get return in a future. Human being is definitely not good on this.

</comment><comment><USER63> Try this on stock markets like the Nikkei, and I think you'll find completely different results.

<comment><USER64> I definitely am interested in seeing this for different stock markets, and the global stock market.

</comment></comment><comment><USER65> The take-away I got from this is: unless you have 30 years, forget the s&p 500 market.

</comment><comment><USER66> Is it possible to do it for dollar cost averaging? That is what happens if one didn't invest in a lumpsum but invested $1000 every month -- how does the returns look like for different time periods?

<comment><USER67> It is only over 10 years, but Vanguard has a short analysis of Dollar Cost Averaging at [https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-c...](https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar- cost_Averaging.pdf)

<comment><USER68> The gist of their analysis was "since the market always goes up eventually, investing all up front will give you higher average returns but significantly higher variability"

</comment></comment></comment><comment><USER69> This is not very interesting. Anyone who has attempted even a cursory inspection of market returns understands this rationale.

The more interesting problem is to attempt to train an investment curve based on some normalized metric for market value, which would be superior to both the lump-sum and DCA strats. What he's not showing you is that gyrations in the market have a tremendous impact on the long-run return outlook and this is extremely detrimental to the lump-sum strategy in particular. DCA is slightly better but still not perfect. You therefore want to pool cash over certain periods of time and invest more, relatively speaking, during periods when the market is trending lower. This is a tough model to construct because there are certain subjective features (how to normalize market value properly) and more complicated variables you have to account for like a negative ROI on holding cash.

All that said, I actually built a model fitting this description a while back and it works swimmingly.

</comment><comment><USER70> One important thing to note is that although the far right end appears to narrow, that is not because returns become more certain over very long time ranges, but rather simply due to lack of samples over those very long periods.

What's more indicative of reality is the relatively constant vertical distribution, in a log scale, across any time range up to about 90 years, when the lack of data starts to play a significant role. So, in relative terms, uncertainty remains fairly constant over time. In absolute terms it actually increases. In a sense risk still does decrease over long time horizons, as the chance of earning over any given amount does increase with time; contrary to common belief though, the distribution of possible returns (another possible definition of risk) actually increases with time - or remains roughly constant on a log scale, as mentioned.

(You can find a great many opinions surrounding this by googling "time diversification".)

</comment><comment><USER71> I like the animation. You can see crises percolate backwards in time

</comment><comment><USER72> These graphs with inflation adjusted returns need a cash line, to show that in inflation adjusted terms cash is not some magical safe option that doesn't go under 1.0.

</comment><comment><USER73> an oft-neglected nugget of info that has great bearing on a buy-and-hold approach, esp with mutual funds: FEES

Fees can kill your returns

There are many low-fee or no-fee options

<comment><USER74> To the best of my knowledge, there are no available to the general public truly no-fee options for having someone else buy a variety of stocks for you. ETFs internalize fees, so many people are not aware of them, but their fees are generally comparable to the equivalent index fund's fees.

</comment></comment><comment><USER75> As somewhat alluded to in the article, some of the graphs here extrapolate historical data and assume it to be a good predictor of the future. Without an understanding about the deep nuances of economics - for which someone else can supply good or bad reasons why this or that might happen - there is no reason why the future should necessarily rely on anecdotal evidence.

</comment><comment><USER42> If you want to know the returns for the next 7 years, GMO has quite a good track record, based on ratios being mean reverting [http://www.gurufocus.com/news/349958/how-to-play-gmos- latest...](http://www.gurufocus.com/news/349958/how-to-play-gmos-latest-7year- asset-class-forecast)

</comment><comment><USER76> <fun-at-parties-mode: on> Ehm it's a bit of a long shot to assume next 100 years will be more or less business as usual. Having said that and after a quick look around the climate frontier, economy and international affairs I'd probably buy (if I had money to burn) defence industries stock. <fun-at- parties-mode: off>

</comment><comment><USER77> Very cool project, but - and I mean no offense by this - these views are taught in basic finance! There are similar graphs in standard finance texts. So it surprises me that so many people here seem to be caught off guard.

I look forward to seeing where the project will be heading next. In fact it is inspiring me to do similar analyses.

</comment><comment><USER78> This is great analysis. Keeping in mind there's more motivation to do this kind of analysis during euphoria phase of the stock market than during capitulation phase of the stock market like in 2009 or 2010, I think this shows investing in the long term will cancel out losses in the short term.

</comment><comment><USER79> It would be great to see the long term results as compared to buying less risky assets, like treasuries. It's not a question of whether the market's returns are positive over the long run, but whether they are positive enough to justify the additional risk.

</comment><comment><USER68> If you want to run your own analysis about what retirement might look like for you, I recommend the extremely powerful [http://cfiresim.com/](http://cfiresim.com/)

<comment><USER16> Wow that site's UI needs some work. Just the wordings are confusing with no explanation.

</comment></comment><comment><USER80> This is a silly analysis in that it ignores investment costs. You can't invest in the S&P 500. You have to either buy an index mutual fund, or buy the individual component stocks. Either way the investment costs will significantly cut into long term returns, even with a fund like VFINX.

<comment><USER81> The expense ratio for VFINX is 0.16%, compared to average yearly returns of 6%.

Over 30 years, that's the difference between 5.74x and 5.48x your starting capital. Noticeable, but insignificant compared to the taxes you'll pay.

<comment><USER82> It can be even cheaper than that. If you buy VOO, the ETF equivalent of VFINX (Vanguard's ETFs hold the same portfolio as their corresponding funds), the expense ratio will be only 0.05%. If you buy this ETF through Vanguard, you will not pay any commissions. It's very close to being free, and definitely the cheapest way to invest in the S&P 500.

</comment></comment></comment><comment><USER83> I have followed [http://www.crossingwallstreet.com/](http://www.crossingwallstreet.com/) for years. I have traded the portfolio he lists and I've done pretty well. His focus is in the long-term...

</comment><comment><USER84> any chance you can show us some of the source code? curious to know how to build these type of graphs.

</comment><comment><USER85> i've made simmiliar visulations in backtest app which shows returns on cash invested > [https://itunes.apple.com/cz/app/backtest-stock-asset- portfol...](https://itunes.apple.com/cz/app/backtest-stock-asset- portfolio/id1064281237?mt=8)

</comment><comment><USER86> Just find out how to do insider trading without getting caught.

This is even better :)

"Give me control of a nation's money supply, and I care not who makes its laws." \--Rothschild, 1744

<comment><USER87> Just buy a baseball bat and threaten to hit people if they don't give you their money. Way better returns than the stock market.

Of course, you won't be able to enjoy that money in prison.

</comment></comment><comment><USER88> There are a lot of issues with this data.

1) Last 100 years has ZERO chance to be the same as the next 100 years.

2) The SP 500 adds and subtracts companies as they grow, fold and go bankrupt. So the only way this would be maybe work is if you invested in the ETF.

3) Macro-economic events are notoriously hard to predict and anticipate, and your returns are very much tied to how you time your entry point. If you invested in the beginning of 2008, you would have a 33% return, same for a 2001 entry. In the beginning of 2009, around 100%.

Or a mid 2013 entry would get you a 17% return for three years, around 5% a year.

And if you invested in mid 2014, you haven't seen ANY return, 0%.

The point is that entry points are insanely important. Getting 33% return for 15 years is horrible, especially given the opportunity costs.

This is the problem that you get when Warren Buffet fools you into "buy and hold". Yes, it has worked for him, but he is an insanely great investor. You can't replicate his returns. You can't even sniff his returns.

So what's the answer? I don't know, do what you want with your money, just don't listen to anyone who thinks they know the answer.

<comment><USER89> I totally disagree with your points.

"2) The SP 500 adds and subtracts companies as they grow, fold and go bankrupt. So the only way this would be maybe work is if you invested in the ETF."

First of all, it's not _the_ ETF, it's _an_ ETF. And this isn't exactly news - this is the basic method of investing always recommended (alternatively, an index fund, which is similar).

"3) Macro-economic events are notoriously hard to predict and anticipate, and your returns are very much tied to how you time your entry point. If you invested in the beginning of 2008, you would have a 33% return, same for a 2001 entry. In the beginning of 2009, around 100%."

Well, yes, but this is kind of the point of the article. It shows what is the chance of coming out ahead out of any 20 year period in the last 100 years.

"This is the problem that you get when Warren Buffet fools you into "buy and hold". Yes, it has worked for him, but he is an insanely great investor. You can't replicate his returns. You can't even sniff his returns."

Warren Buffet _doesn 't_ "buy and hold", but he recommends it for most people exactly because it's relatively easy, and gives you very good returns.</comment></comment>