Are you sure on that last point? There have been some kings with pretty low standards of living historically... :)
I think a big part of the issue is our economy isn't aimed at letting everyone live like a king for just breathing, it's aimed at maximizing how fast we can transform raw resources into things people want and maximizing how much stuff we can get people with money to want to want.
This may thwart kettling but I think it also thwarts protesting.
The whole idea of the kinds of protests which get kettled is to show that a large number of people care about an issue. If the software advises people to disperse if the police show up where is the protesting?
I'd have thought the best response to kettling would be distributed civil disobedience. It could easily be far more economically costly which would hopefully persuade the politicians and police that mass gatherings of people don't require impromptu imprisonment.
So I think the author could do with reading "The long and the short of it" by John Kay. Might help him understand how NNT did what he did.
The extra takeaway is that portfolio construction should be about finding investments that will probably all in the long term give an above inflation return (else what's the point) but, and this is the key. The investments should have low (ideally negative) correlation.
This means you look carefully at the underlying wealth generating machine you plan on investing in to check it's sound, and you consider scenarios to check you're actually diverse. A common strategy is to invest largely in an index of blue chips and have a risky pool of small caps. This hardly helps you at all since a recession is bad for both (and you're most likely to lose your job and need your savings when they're low).
So what does that give us:
* 55% short term US Gov Bonds
* 15% US Short term small caps
* 15% Precious metal ETF
* 15% Oil ETF.
First up, fundamentals - the USG is currently upto it's eyeballs in debt with no obvious political will to cut spending and raise taxes. The debt is all USD denominated so they may well inflate, but they could also default - either way bad for us. You might say 'but my liabilities are all in USD!' but personally if the standard of living in my country drops everyone around me being poor too is going to be scant comfort.
US short term small caps, the US has very pro business labour laws and taxes, it's got lots of well educated workers, whilst there has been a big run up in stocks lately (hello there QE) we're not trying to time the market and can clearly see where the fundamental wealth is generated.
Precious metal ETF - This ETF holds physical gold, silver, platinum and palladium in London and Zurich under custody of JP Morgan it charges a .6% fee. Precious metals have been a store of value for ages. Whilst there's been a big run up lately we're basically betting on bad news and there's obviously still the potential for more bad news. However since we don't hold it ourself we're hoping for bad but not catastrophic news.
Oil ETF - this ones based on short term oil futures and run by DB proshares. It seems to track oil better than some others although it will naturally under-perform the underlying commodity. Oil gets used everywhere. However simply holding oil is not owning a productive asset, this is a bet on future oil shortage not an investment. Personally I agree that shortages and inflation are likely to drive the price of oil higher but it's still a bet.
So that's individual fundamentals, now we look at correlation of these 4 assets. With 55% in a single bond fund any problem with that investment is very bad news. If the fund suffers from fraud, or some of the bonds default (or look like defaulting) you'll lose a large chunk of your savings.
Then we have exposure to the US. A significant slowdown in US economic activity is bad for the price of oil, bad for US taxes (and thus bond default chances) and very bad for US stocks. 85% of the portfolio could get creamed in this scenario. Theoretically GLTR could help us here but we also have to worry in this scenario if JP Morgan will survive. Even if they do other non-physical gold ETFs may not and will our ETF suddenly be under-priced due to perceived risk?
Whilst the concepts in the article are useful, as others have pointed out the portfolio seems to be an excellent example of how smart people can get tripped up in this environment.
Going long on a 2x leveraged oil ETF for the long term IS a surefire bet, just a very bad one.
Going long via a normal oil ETF for the long term is still quite questionable.
What the above poster is saying is - you're doing something with real consequences and, by writing about it you could hurt not just yourself but other people too.
Learn from his mistakes and given you are patently insufficiently informed to do this, don't do it. Given all you're trying to do is implement Scott Adams and NNT's advice why not just link to their articles and leave it at that. Why do you feel the need to pontificate to the world about this subject?
I think a large amount of our monetary inequality is down to the way we've allowed our markets to become warped.
The numerous examples of CEOs who kill their company but still make out like a bandit. The traders who're supposedly part of price discovery mechanisms but who actually just seem to keep blowing bubbles. The musicians who're granted a government monopoly to sell something we already have too much of (pop music). These are alot of the top 10% and mostly they're doing so well because our capitalist systems are broken.
Even when you get to what you might think of as 'real' work. Advertising is generally not informative but emotive - thus these jobs mostly exist to distort markets. Lobbyists are in the same line of work but using government edict to achieve the same distortions.
Yes the EMH demonstrates that markets are efficient at distributing resources, but it assumes products are fungible, actors are rational and have perfect information.
Vast swaths of our economy are about stopping products being fungible (branding, copyright, patents, lobbying) and limiting how rational actors are (marketing, branding).
In order to move this away from debate about semantics I think this meshes nicely with an alternative view of intelligence. Specifically Human intelligence as a social endeavour rather than an individual struggle.
If you look at intelligence in that light we have gone through a huge transformation with the printing press, industrial revolution and now internet revolution.
Basically if you think of it as each human brain just being a small component able to try out new ideas then spread those ideas... Well that massive human spanning brain is undergoing massive ongoing upgrades in memory capacity and speed of communication.