One can typically double one’s financial resources—in nominal terms—over the course of a decade, through equity market index investing.
It seems to me that EAs who have pursued more high-risk entrepreneurial activities have got substantially higher mean returns (see Mathieu Putz’s post). So it’s not clear to me that index investing should be seen as the best or default option.
longtermis[t community-building and research] (broadly understood) has vastly outperformed the stock market over the last twenty years in terms of the resources it has amassed. I then think that individual decisions about giving now vs later should largely be driven by whether the best identifiable marginal opportunities are still good investments.
It seems to me that EAs who have pursued more high-risk entrepreneurial activities have got substantially higher mean returns (see Mathieu Putz’s post). So it’s not clear to me that index investing should be seen as the best or default option.
I’m not quite sure what point you’re trying to make. I haven’t commented on how people should earn money, although agree that we should be willing to take on more risk for more gain. I’m saying that when we’ve earned the money, it then might make a lot of sense to invest it in a long-term fund such as the Patient Philanthropy Fund. Or are you saying it would make sense to use that money to fund further high-risk entrepreneurial activities? That is an interesting idea, although I suppose such ideas will eventually dry up or hit diminishing returns.
longtermis[t community-building and research] (broadly understood) has vastly outperformed the stock market over the last twenty years in terms of the resources it has amassed. I then think that individual decisions about giving now vs later should largely be driven by whether the best identifiable marginal opportunities are still good investments.
I agree we should look at the best marginal opportunities. AppliedDivinityStudies and Ben Todd appear to think that these aren’t as good as they once were i.e. that we have hit diminishing returns.
On the point about community building and research outperforming the stock market—I would like to see some sort of quantification of this rather than just an assertion. I’m not saying it’s wrong, I’m just unsure how to evaluate that claim. Also, how sure can we be that such a trend would continue?
Or are you saying it would make sense to use that money to fund further high-risk entrepreneurial activities?
Yes.
On the point about community building and research outperforming the stock market—I would like to see some sort of quantification of this rather than just an assertion.
In any event, I think it’s a relevant post which would be good to mention in this context. And fwiw I agree with Owen’s estimate that it’s substantially outperformed the stock market in the past. E.g. it has arguably led to many billions of dollars getting dedicated to longtermist causes.
This post is also very relevant. Especially this part which reflects an update away ETG:
Despite these caveats, the model has produced at least one important update for us. As the stock of EA capital has grown more quickly than the stock of EA labor, it has been widely claimed that earning to give is less valuable, relative to direct work, than it used to be. On a March 2020 episode of the 80,000 Hours podcast, Phil had argued that this claim was mistaken, on the grounds that the EA “capital to labor ratio” should simply be expected to fluctuate over time, suggesting that we had no reason to expect a long-run trend in either direction. Earning to give is thus still highly valuable, he argued, in light of the opportunity to invest for a time in which EA projects are again more capital-constrained. The results of our model suggest to us that this particular argument for earning to give was incorrect. It is at least plausible that, relative to direct work, earning to give has indeed grown less valuable, and—temporary fluctuations notwithstanding—will continue to do so.
It seems to me that EAs who have pursued more high-risk entrepreneurial activities have got substantially higher mean returns (see Mathieu Putz’s post). So it’s not clear to me that index investing should be seen as the best or default option.
Btw, Owen Cotton-Barratt has written a post called “Patient vs urgent longtermism” has little direct bearing on giving now vs later which I think is very relevant to the themes of this post. For instance, he argues that
I’m not quite sure what point you’re trying to make. I haven’t commented on how people should earn money, although agree that we should be willing to take on more risk for more gain. I’m saying that when we’ve earned the money, it then might make a lot of sense to invest it in a long-term fund such as the Patient Philanthropy Fund. Or are you saying it would make sense to use that money to fund further high-risk entrepreneurial activities? That is an interesting idea, although I suppose such ideas will eventually dry up or hit diminishing returns.
I agree we should look at the best marginal opportunities. AppliedDivinityStudies and Ben Todd appear to think that these aren’t as good as they once were i.e. that we have hit diminishing returns.
On the point about community building and research outperforming the stock market—I would like to see some sort of quantification of this rather than just an assertion. I’m not saying it’s wrong, I’m just unsure how to evaluate that claim. Also, how sure can we be that such a trend would continue?
Yes.
In any event, I think it’s a relevant post which would be good to mention in this context. And fwiw I agree with Owen’s estimate that it’s substantially outperformed the stock market in the past. E.g. it has arguably led to many billions of dollars getting dedicated to longtermist causes.
Thanks. I agree Owen’s post is relevant.
This post is also very relevant. Especially this part which reflects an update away ETG: