Connect the dots like AI to make money?

April 27, 2024

So you want to make money? Connect the dots like artificial intelligence (AI) does to figure out what is needed to make money.

Three ways of making money: inheritance; marriage; and trading. There is not much advice that can be given about inheritance. Either you have rich relatives or you don't. Regarding marriage, it would be ill-advised to marry just for money. 

From here, AI would connect some dots easily. 

If a human is not going to either inherit money or marry into it, trading is the only option left to make money. 

• Trading entails exchanging anything of value (products, services, assets) for money. No trade = no money. 
• To make money, the trade must be profitable. Buyers pay for value. Value should be higher than the price, and the price must be higher than the relevant unit cost. V > P > C. 
• Humans can trade their time and skills as employees in a job, as entrepreneurs running a business, or as investors (owners) acquiring property rights over assets that may appreciate over time. 

To make money, humans need to trade. Humans need to get a job that pays more than what it costs them to perform it; become entrepreneurs selling products and/or services for profit (Value > Price > u Cost); or become an investor to own assets that may pay dividends and appreciate over time. 

What is a job?

A job is an activity performed in exchange for payment. A job is typically a specific role or position within an organization, company, or industry that involves certain tasks, responsibilities, and expectations. Jobs can vary widely in terms of the nature of work, level of skill required, working conditions, and compensation.

• Tasks and Responsibilities: A job typically involves a set of tasks, duties, and responsibilities that must be performed to fulfill the requirements of the position. These tasks may include specific actions, projects, assignments, or responsibilities assigned to the individual by their employer.

• Employer-Employee Relationship: A job involves an employer-employee relationship, where the individual (employee) agrees to perform work for the employer in exchange for compensation. The terms and conditions of employment, including wages, benefits, working hours, and expectations, are typically outlined in a formal employment agreement or contract.

• Compensation: Employers hire employees because they need jobs done. Employees typically get jobs to earn compensation and gain experience. Compensation may take various forms, including wages, salaries, bonuses, commissions, benefits, stock options, and other forms of remuneration. The amount and structure of compensation can vary depending on factors such as the type of job, industry norms, and individual performance.

• Skill and Qualifications: Jobs often require specific skills, qualifications, education, training, or experience to perform effectively. Employers may have certain requirements or qualifications that candidates must meet to be considered for a job, such as educational credentials, professional certifications, or relevant work experience.

• Work Environment: The work environment refers to the physical, social, and organizational conditions in which the job is performed. This includes factors such as the location of work (e.g., office, factory, remote, etc.), workplace culture, team dynamics, and organizational policies and practices.

• Career Development: Jobs can provide opportunities for career development, growth, and advancement. Individuals may have the opportunity to acquire new skills, take on additional responsibilities, progress to higher-level positions, or pursue promotions within their organization or industry.

Overall, a job is a fundamental aspect of modern human society allowing organizations to produce products and services, and allowing individuals opportunities to be productive and earn income. 

Why some jobs generate more income than others?

The disparity in pay among different jobs, professions, or trades can be attributed to various factors including: supply and demand dynamics; market and societal valuation; education and experience (skill level); working conditions; licensing requirements and legal protections.  

• Supply and Demand: The principle of supply and demand plays a significant role in determining wages. Professions or trades that require specialized skills or expertise and have a limited supply of qualified workers relative to demand tend to command higher wages. Conversely, occupations with an oversupply of workers or low demand may offer lower wages.

• Skill Level and Education Requirements: Professions or trades that require extensive education or experienced typically pay more due to the interplay of supply and demand dynamics. Highly educated and/or experienced workers tend to be in less supply, and occupations requiring high education and/or skills tend to be high demand. 

• Market Value: The market value of goods or services produced by a profession or trade can influence wages. Occupations that produce high-value products or services or generate significant revenue for employers are more likely to offer higher salaries. Industries with high profit margins or where there is strong demand for their products or services may also pay higher wages to attract and retain skilled workers. Societal perceptions of the value of different professions or trades can influence wage levels. Certain occupations may be perceived as more essential and harder to fulfill and therefore command higher salaries. 

• Working Conditions and Risks: Some professions or trades involve working in hazardous or challenging environments, such as construction, mining, or firefighting, which may require specialized skills, physical endurance, and willingness to accept risk. Jobs that entail greater physical demands, exposure to dangerous conditions, or irregular hours may offer higher compensation to incentivize labor supply.  

• Legal protections such as unionization often result in higher wages, benefits, and workplace protections through collective bargaining agreements between employee organizations and employers. Unionized workers may have greater bargaining power and leverage to demand higher wages and better working conditions compared to non-unionized workers. Licensing protections may increase wages due to the interplay of supply and demand dynamics. Licensing requirements limit and control labor supply, which may result in increased compensation.  

Overall, the interplay of these factors, along with economic, social, and cultural considerations, contributes to the wide variation in wages across different professions and trades. While market forces and economic incentives play a significant role in determining wages, societal values, government policies, and labor market regulations also influence compensation levels and income inequality.

What is to be an entrepreneur?

To be an entrepreneur means to take on the role of an individual who starts, organizes, and manages a business venture or enterprise with the aim of creating value, generating profit, and pursuing opportunities in the marketplace. Entrepreneurs are characterized by their innovation, risk-taking, creativity, and willingness to challenge the status quo. 

• Initiative and Vision: Entrepreneurs typically possess a strong sense of initiative and vision, identifying opportunities or unmet needs in the marketplace and envisioning innovative solutions or products to address them. They are forward-thinking individuals who are proactive in seeking out new business opportunities and pursuing their goals.

• Risk-Taking: Entrepreneurship involves taking risks and venturing into unknown territory. Entrepreneurs are willing to take calculated risks, whether financial, personal, or professional, in pursuit of their business objectives. They understand that entrepreneurship inherently involves uncertainty and are willing to accept the possibility of failure in pursuit of potential rewards.

• Innovation and Creativity: Entrepreneurs are often driven by a desire to innovate and create something new or disrupt existing markets. They are creative problem-solvers who are not afraid to challenge conventional thinking and explore unconventional ideas. Entrepreneurship thrives on innovation, and successful entrepreneurs are constantly seeking out ways to differentiate their products or services and stay ahead of the competition.

• Persistence and Resilience: Building a successful business requires perseverance, determination, and resilience in the face of challenges, setbacks, and obstacles. Entrepreneurs must be prepared to overcome adversity, learn from failures, and adapt to changing circumstances. They tend to possess a "never-give-up" attitude and are willing to put in the hard work and effort required to achieve goals.

• Leadership and Management: Entrepreneurs play a critical role in leading and managing their businesses, whether they are sole proprietors or founders of larger organizations. They must be effective leaders who can inspire and motivate their teams, make strategic decisions, allocate resources, and steer the direction of the business toward success.

• Value Creation and Customer Focus: At the heart of entrepreneurship is the concept of value creation, which involves identifying and meeting the needs and preferences of customers. Successful entrepreneurs are customer-focused individuals who prioritize delivering value and satisfying customer demands. They understand the importance of building strong relationships with customers and providing exceptional products or services that meet or exceed their expectations.

• Sales: Above all, entrepreneurs must develop the ability to sell their visions to others. That includes the visions regarding the value of the enterprise itself and the value of the products and services produced by the enterprise.  

Overall, being an entrepreneur is about seizing opportunities to create value in the marketplace. It requires a combination of skills and mindsets to embrace the enormous challenges of building and growing a business venture.

What is to be an investor?

To be an investor means to allocate capital or resources with the expectation of generating a return or profit over time. Investors typically seek to grow their wealth by deploying funds into various asset classes, such as stocks, bonds, real estate, commodities, or alternative investments. 

• Capital Allocation: Investors allocate their capital or financial resources into different investment opportunities with the goal of achieving financial growth or returns. They may invest in a diverse range of assets, including equities (stocks), fixed-income securities (bonds), real estate properties, mutual funds, exchange-traded funds (ETFs), or alternative investments such as hedge funds, private equity, or venture capital.

• Risk and Return: Investing involves a trade-off between risk and return. Investors must carefully evaluate the risk associated with each investment opportunity and weigh it against the potential return or reward. Generally, investments with higher risk have the potential for higher returns, while investments with lower risk typically offer lower returns. Investors may diversify their portfolios to manage risk and optimize returns by spreading their investments across different asset classes, industries, or geographical regions.

• Long-Term Perspective: Successful investors often adopt a long-term perspective and focus on achieving their financial goals over time. They understand that investing is a marathon, not a sprint, and recognize the importance of patience, discipline, and consistency in building wealth. Long-term investing allows investors to benefit from the power of compounding returns and ride out short-term market fluctuations or volatility.

• Research and Due Diligence: Investors conduct research and due diligence to evaluate investment opportunities and make informed decisions. This may involve analyzing financial statements, studying market trends, assessing industry dynamics, evaluating management teams, and considering macroeconomic factors that may impact the performance of investments. By conducting thorough research, investors seek to identify attractive investment opportunities and mitigate potential risks.

• Portfolio Management: Investors manage their investment portfolios to optimize risk-adjusted returns and achieve their financial objectives. This may involve asset allocation, diversification, rebalancing, and periodic review of investment holdings. Portfolio management strategies may vary depending on factors such as investment goals, risk tolerance, time horizon, and market conditions.

• Emotional Discipline: Investing requires emotional discipline and the ability to remain calm and rational in the face of market fluctuations or unexpected events. Successful investors avoid making impulsive decisions based on fear, greed, or market sentiment and instead focus on their long-term investment strategy and objectives. They understand that volatility is a natural part of investing and maintain a disciplined approach to managing their portfolios.

Overall, being an investor involves making informed decisions, managing risk, and maintaining a long-term perspective to achieve financial success building wealth over time. It requires a combination of financial literacy, analytical skills, discipline, and patience to navigate the complexities of the investment landscape and capitalize on opportunities in the market.

What are private property rights?

Private property rights refer to the legal rights and protections that individuals or entities may have over tangible and intangible assets. Property rights (PRs) allow owners to possess, use, control, transfer, and profit from assets, subject to applicable laws and regulations. Private property rights are fundamental to the functioning of free market economies and play a central role therein promoting economic efficiency, individual liberty, and social stability.

• Ownership: Private property rights confer ownership of assets to individuals, businesses, or organizations. Owners have the legal right to claim exclusive control and use of their property, including land, buildings, vehicles, intellectual property, financial assets, and personal belongings.

• Possession, Use, and Control: Owners have the right to possess their property. This includes the right to use the property for personal enjoyment, business activities, or investment purposes, as long as it is consistent with applicable laws and regulations. Property owners have the right to use and control their property as they see fit, within the boundaries of the law. This includes the ability to make decisions regarding how the property is utilized, managed, improved, or disposed of, without interference from others, unless such actions infringe upon the rights of others or violate legal standards.

• Profitability and Transferability: Owners have the right to profit from any rent, dividend, or royalty that may be generated by their assets. Owners have the right to transfer ownership or convey property interests to others through sale, gift, inheritance, or other legal means. Owners can sell, lease, mortgage, or transfer for profit their property to third parties, subject to contractual agreements, regulatory requirements, and legal requirements.

• Legal Protections: Private property rights are protected by law, including constitutional provisions, statutes, regulations, and judicial decisions. Legal protections ensure that property owners can enforce their rights, seek remedies for violations, and defend against unauthorized encroachments or infringements by others.

In market economies, PRs are essential for promoting economic prosperity, individual autonomy, and social welfare by incentivizing investment, innovation, and responsible stewardship of resources. They provide a foundation for market transactions, economic exchange, and wealth creation, and serve as a cornerstone of free-market economies and democratic societies. 

Connect the dots like AI

AI mimics optimal human intelligence. Not all humans possess the optimal intelligence mimicked or simulated by AI. For AI, it is easy to conclude that if making money requires inheritance, marriage, or trade, if a human will not inherit money or marry into it, the human will need to trade profitably. Many humans, billions of them, don't get this. They dream of making money without taking reasonable steps to trade profitably. 

Trading for profit entails getting a well-paid employee, becoming a successful entrepreneur, and/or becoming a profitable investor / owner of property rights. 

What do you think? Are you interested in making money? What is your plan? Inheritance, marriage, or trade?

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