For investments, private investment opportunities are not better than public ones on a after-fees basis (in fact, they’re much worse). Private investments do a lot of shady things to make their returns look better than they actually are—and in the US they can get away with it because they’re much less regulated. A great source of information about the problems with private markets is this podcast.
Having more money shouldn’t necessarily change your risk profile either. While you might be more able to task risk, you also have less need to take risk (people with smaller amounts of money may need to take risk to have a decent chance of meeting future consumption needs during retirement). Additionally, even if a windfall did change how much risk you wanted to take, it wouldn’t change the tools you should use to achieve that level of risk.
I definitely agree that a windfall should change your approach to political giving. However, I’m not sure why switching from being a small donor to an EA org to being a major donor would lead you to change how you give (assuming that the org has room for funding). For any grant makers, even small ones, their room for funding is essentially unlimited because they can always start directing the money to new causes if their existing causes don’t have room.
Lots of EAs made lots of money from early investments in OpenAI and Anthropic. Lots of hedge funds have consistently higher risk-adjusted returns relative to major equity indices, including Walleye Capital (my employer), most famously RenTech, and many more. I know people who’ve built their wealth off of well-timed real estate investments. None of these opportunities are available to people without significant wealth.
On donations, based on your writing that donors “can always start directing the money to new causes if their existing causes don’t have room”, it seems like we’re in agreement? My claim is just that if you’ve gone from funding 1% of your favorite org’s budget to funding 30%+ with a lot of room to spare, that might be the time to research other orgs to diversify your contributions and avoid key-person risk.
Hi Ariel! These are interesting points.
For investments, private investment opportunities are not better than public ones on a after-fees basis (in fact, they’re much worse). Private investments do a lot of shady things to make their returns look better than they actually are—and in the US they can get away with it because they’re much less regulated. A great source of information about the problems with private markets is this podcast.
Having more money shouldn’t necessarily change your risk profile either. While you might be more able to task risk, you also have less need to take risk (people with smaller amounts of money may need to take risk to have a decent chance of meeting future consumption needs during retirement). Additionally, even if a windfall did change how much risk you wanted to take, it wouldn’t change the tools you should use to achieve that level of risk.
I definitely agree that a windfall should change your approach to political giving. However, I’m not sure why switching from being a small donor to an EA org to being a major donor would lead you to change how you give (assuming that the org has room for funding). For any grant makers, even small ones, their room for funding is essentially unlimited because they can always start directing the money to new causes if their existing causes don’t have room.
(I didn’t downvote you btw.)
Lots of EAs made lots of money from early investments in OpenAI and Anthropic. Lots of hedge funds have consistently higher risk-adjusted returns relative to major equity indices, including Walleye Capital (my employer), most famously RenTech, and many more. I know people who’ve built their wealth off of well-timed real estate investments. None of these opportunities are available to people without significant wealth.
On donations, based on your writing that donors “can always start directing the money to new causes if their existing causes don’t have room”, it seems like we’re in agreement? My claim is just that if you’ve gone from funding 1% of your favorite org’s budget to funding 30%+ with a lot of room to spare, that might be the time to research other orgs to diversify your contributions and avoid key-person risk.