“Conspicuous Wealth Under Attack And Not Socially Accepted” is now the world we live in. Always to the extreme.

There were some good comments on that old post about one “doesn’t need” an iPod, or 500$ in food per month, etc. That’s true. What I find it amusing is that, by contrast, many of those that are frugal believe they do “need” the regular 500$ a month coming in their retirement account. Or else (retirement thinking is very fear-based I find, sometimes).

Point being, I think now being frugal or not isn’t good or bad or the other way around. We are simply exchanging cash for goods. Cash saved is good, but cash saved will have to be spent one day, and it will be exchanged for goods at some point. Presumably it can be exchanged for *more* goods later if the cash is invested, but that can also become its own form of vicious circle.

Sometimes the frugality argument turns into “we shouldn’t work so hard since we don’t need all these things” to which I completely disagree. I don’t work for money, I work to provide value. And, though not guaranteed, I find providing great value generally invites people to pay you good money for the service.

I agree with everything with said, though I must add to my last comment. When I say “we cannot be mini macro-economists”, what I mean is analyzing the macro-economy in particular, is not something any of us can go do efficiently.

It is one thing to take a company, understand and trace out where it’s getting his income from, how it offers value, how it may lose or gain more of its stream of income, and so forth. A company is a complicated system, yet it has a defined, limited sets of inputs and outputs. If you read financial documents such as 10-Qs, you will find a long section that will describe all the possible risks that management has identified, and I find, 99% of the time when “bad” stuff happens, it falls squarely into a risk category identified by management. The quantity of risk is hard to determine, but the form of the risk is generally known.

Analyzing the economic outputs of millions of people vs. the economic output of other millions of people is another thing entirely. This is what I mean by being a mini-macro-economist. How could one possibly know with any certitude how millions of people in aggregate will react, especially today when the government and a few key people are making sweeping changes to alter behavior? How can we possibly determine how all the other countries will react, many having diferent cultures to our own? How can we know what happens on this world stage where things are being done behind closed doors by a few key men, many of which we cannot even understand their language or minds?

I say we cannot, and this is why I said “we cannot be mini-macro-economists”. Not because we aren’t smart enough, but because there are too many unknowns for us to really know with degree of certainty. Yet, evaluating individual business, I believe, is a different matter. Analyzing these is more down to earth.

This is the same attitude a business owner would and should take. If one has an opportunity to make a great business, one doesn’t wait five years till the recession is over. One doesn’t shelve a great business to be started back home to replace with a poor business idea to be started in a “better” economic environment (say, China). Know the world, but act locally (locally mean local to what you know, not necessarily geographically local).

So yes, we should, better ourselves, and I don’t think markets are all “gambling”. From day to day, yes perhaps, but at the end of it all, there are real companies and real people working behind these “pieces of paper”.