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Comment by Mistletoe | Hacker News Reader

Does anyone have an intelligent strategy for investing in a world with low birth rates and an aging population? It's happening everywhere including the USA. I don't think stocks etc. will work in a world without constantly growing GDP.

https://www.afrugaldoctor.com/home/japans-lost-decades-30-ye...

If we look to Japan as the model and forerunner for what is happening to the rest of the world, what investments worked there the past few decades if any?

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> Does anyone have an intelligent strategy for investing in a world with low birth rates and an aging population?

If you read the latest Charles Goodhart's book ageing population would bring period of permanent high inflation. And during high inflation periods trend following (macro) strategies work well [I don't have a link to the paper at the moment]... So this should be rather simple...

Japan seems to be an exception to the rule, there are probably other factors that resulted in deflation during falling population era [I am fan of Richard C. Koo here - 2].

However it is not established yet - there is active discussion going on the topic - falling populations vs inflation/deflation. It is quite interesting actually.

Try Dimitri Kofinas's discussion with Charles Goodhart in this podcast [3] if you can spare an hour...

[1] https://www.amazon.com/Great-Demographic-Reversal-Societies-...

[2] https://www.amazon.com/Holy-Grail-Macroeconomics-Lessons-Rec...

[3] https://hiddenforces.io/podcasts/charles-goodhart-demographi...

Investing in grocery store stocks would seem safe?

>If you read the latest Charles Goodhart's book ageing population would bring period of permanent high inflation.

That is illogical. Aging populations save more because the money needs to last throughout retirement and these old people's bodies are no longer in a state where they can enjoy spending their money. Old people also have already fulfilled most of their wishes and have gotten used to their specific standard of living.

A young society of under 20 year olds is more likely to cause inflation because every child is a pure consumer that does not produce what they consume for the first 18 years of their life. So the demand for labor is relatively high.

> That is illogical.

Perhaps it would be wiser to read Goodhart's argument first.

https://en.wikipedia.org/wiki/Charles_Goodhart

We will have lots of robots soon. AI is getting exponentially better. I expect GDP to go to levels we have never seen before. I'm not sure how long "AI summer" will last before "AI winter"[1] hits but I think there will be many decades of incredible increases in wealth for the average person globally.

[1] skynet or extreme centralization of power

Hmmm I have my doubts about that, sounds like Cathie Wood talk. How will AI increase GDP? Seems like it could reduce GDP just as easily by putting all the writers, artists, coders, out of a job. This estimate is much more modest for AI increases by 2030.

https://www.pwc.com/gx/en/issues/data-and-analytics/publicat...

>The greatest economic gains from AI will be in China (26% boost to GDP in 2030) and North America (14.5% boost)

I think of this article when I hear about decades of incredible growth on top of the already many decades of incredible growth.

https://www.cold-takes.com/this-cant-go-on/

It is pretty simple, really. The size of the economy, GDP and other metrics don't really matter. The real measure is how many hours does a person need to trade to get a particular product or service. If that goes to zero, we will be in good shape even if GDP is high or low. Nice to see that the "this-cant-go-on" author knows how to calculate 1.02^N and shocked themselves when typing a somewhat large N into the calculator. The thing they forgot is the size of the economy doesn't mean anything on its own. It isn't a physical thing that will take up all of the space in the universe eventually as the author seems to fear.

This sounds a bit to Keynes in 1930 predicting we will work 15 hours a week in the future.

I don't know what is going to happen, but less young people and an ever-increasing age in the general population requiring services doesn't sound so good of a combination. Even if your metric "how many hours does a person need to trade to get a particular product or service" goes down.

I am confused how a person is getting wealthier in this world of yours if either a) there are not enough people to fill jobs due to a decline in population or b) robots do begin to replace high value jobs?

Also, with your 0 coefficient you are assuming infinite wealth? That seems...unreasonable.

Ultimately the author makes a good case if the assumption is that we never make it off Earth. Growth could probably be sustained at an exponential pace if we become interplanetary but it certainly won't happen overnight.

"Wealth" is a measure of how many hours of effort need to be traded for a product or a service. The problem is, we've had jobs and money for so long that something seems fundamental about it. I assure you, there is nothing fundamental about these things: if a Ferrari can be 3D printed in the backyard with stuff lying around on the ground then everyone can have one (OK - you can't call it a Ferrari due to trademark issues - everyone can have a "RRRRari").

If we do ever reach "AI/robo summer" I certainly hope we appreciate it. If we don't, we deserve AI winter.

PS - Cathy Woods ETFs perform great. One merely has to turn the chart upside down for a proper analysis.

The average person? No.

For the owners of the robots, yes. People who are de-skilled and pushed out of the workforce not so much.

Unless of course all those people starve to death. Then the average person is an owner of robots.

The only way we've been able to keep people from having cheap products is via regulation. Will governments really regulate that poor people are not allowed to have robots? Maybe, but that is closer to my "AI winter" scenario. My "AI summer" thesis is based on products approaching the cost of raw materials with services approaching the price of electricity.

Need some food:

$ robo make garden

What magical robots are these haha? I love my Roomba but he still gets stuck pretty much every time he sweeps and that is the most simple robot imaginable.

The Roomba could represent humanity’s apex in the robotics field in terms of price / performance but I suspect it is unlikely.

Health care, pharmacies, old people's homes, pet food and health... You get the idea. Invest in things that will benefit from the fact that the population will get more and more older as time goes by, and everybody will have less babies and more pets. On the long run it is as sure fire a strategy as one can hope for in the world of the future.

Aren't stocks supposed to yield dividends or are people only buying it to speculate on the resale value? If it is the latter, then stocks seem to merely be a volatile gold equivalent: valuable, but not because of having much inherent value.

Unfortunately almost always the latter these days.

The P/E ratio of the S&P 500 is somewhat reasonable at the moment.

https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...

Stocks paying dividends or stocks increasing in value is functionally the same thing, but taxed differently. Companies for example sometimes have stock buybacks to increase the value. They could also use the money for dividends, but for tax reasons they don't.

Stocks paying dividends is not the same thing as stocks increasing in value. Stocks increasing in value means that the expected income from holding the shock went up. Stock buybacks accomplish that by decreasing the number of shares (with the assumption that the amount paid in dividends stays the same, so the divididends/share goes up.)

The comments above are right that investing makes much less sense in a world without economic growth. Even if companies continue to pay dividends, the US stock market has had 7% real annual growth over the past hundred years and that drives a huge amount of investment.

Declining birth rate doesn't mean declining GDP.

hunch: real estate in prime areas

I thought this too but this graph doesn't look promising for residential.

https://fred.stlouisfed.org/series/QJPN628BIS

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