Is there a list of Scott Alexander's short stories somewhere?

Flow. Love is pretty good too.

I made a couple of bets on https://www.predictious.com/ using bitcoin. It was pretty straightforward and easy to use.

You imply that one should invest where economic growth is expected to be highest.

Note that it does not follow that shares in high growth companies (or countries) will lead to high returns. This is because the expected future growth may well be built into the current price.

That is, if everyone thinks something will be likely worth a lot in the future, the current price will be bid up to reflect this.

It is the uncertainty of the outcome that may arguably cause higher expected returns. If people have a distaste for uncertainty, then the price might be bid down leading to higher expected returns.

This is the idea that one must assume risk (uncertainty) to obtain excess expected returns. It is by no means ubiquitous: assuming risk may reduce expected returns. For example, people assume risk to gain exposure to negative expected returns in a casino (roulette, blackjack, &c). No doubt there are plenty of examples in financial markets where risk does not automatically yield excess expected returns.

TL:DR:

1. Make a will
2. Pay off your credit cards
3. Get term life insurance if you have a family to support
4. Fund your 401k to the maximum
5. Fund your IRA to the maximum
6. Buy a house if you want to live in a house and can afford it
7. Put six months worth of expenses in a money-market account
8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement

that requires no upkeep, no worry, and good returns.

It is plausibly the "worry" (or discomfort) that is required for good expected returns. For instance, CAPM, implies you are being paid to hold undiversifiable risk. You get paid for it because of people's distaste for it.

Your expected returns for a corporate bond, for example, might be because of the worry that it defaults (the extent to which this is undiversifiable, as there is a tendency for bond defaults to co-occur in bad times.), and an illiquidity premium --- in bad times when you'd like to be able to liquidate your position, you're likely to find no one who wants to buy it from you. This is why you can expect to get a return that more than compensates you for the expected loss.

This rules out real estate entirely, and the last criterion rules out letting money sit there.

You can invest in a real estate fund, which is probably a good idea for diversification purposes

get payed back and get taxed again.

typo: payed-> paid

So I should try to minimize these charges? Exactly!

Agreed: this is key.

Someone promises me higher returns for his fees! He's lying: academic research has shown no evidence of after-fee returns beating the market in general.

A lot of money managers are probably not lying in the sense that they probably do believe they have skill even if they don't. Also: some money managers probably do have skill: you just have no good way of determining which ones they are.

Do I need anything else? According to CAPM, no.

The CAPM is great in theory, but there is little evidence that it holds in practice. Within stocks, the longterm historical data shows that riskier stocks have a tendency to have lower returns. (CAPM on the other hand says undiversifiable risk will be priced; that is, you'll get paid to hold it.). There does seem to be an equity premium over bonds though (i.e., across the asset classes, but not within). Excess returns can be earned through liquidity premia, exposure to various 'factors' such as value, momentum, low vol within stocks.

Look on Google Scholar for the works of Ilmanen, Asness, Fama, Carhart, and others to find out what works in investing.

CAPM is considered to be a clever model of a world that is not the one we live in. This is probably because people have some irrational behavioral biases, do not have the utility functions assumed by CAPM, and are exposed to principal-agent problems because money managers incentives are not directly aligned with their clients.

Owning the market through an index fund is not a bad idea. But the reason why it tends to work well is because of low costs and exposure to the equity premium over bonds. When you the own a market cap weighted fund you are getting some undesirable exposures too, such as companies that are not low vol or value. Dimensional offers low cost funds with factor exposures. AQR Capital is another one to look at.

The generalized question is is it rational to invest in things with small chances of large payoffs. The answer is a qualified yes, given a few conditions.

1. You must have some expertise in the area you are investing in.
2. You must be young and thus have high risk tolerance.
3. You should not devote too large a fraction of your portfolio to this, despite above.

The pool of people who would devote a significant portion of a windfall to SENS or MIRI should be more risk tolerant in their investments than average.

Antti Ilmanen's "Expected Returns" is probably one of the best attempts to answer these questions. This book is however quite pricy.

From the intro: "Finance theories have changed dramatically over the past 30 years away from the restrictive theories of the single-factor CAPM, efficient markets, and constant expected returns. Current academic views are more diverse, less tidy, and more realistic. Expected returns are now commonly seen as driven by multiple factors. Some determinants are rational (risk and liquidity premia), others irrational (psychological biases such as extrapolation and overconfidence)."

It is worth mentioning that he has another book "Expected Returns on Major Asset Classes" that is a shorter version covering the central chapters of the pricy book. The kindle version is inexpensive.

There are also those that argue that even these expectations of return are based on an extremely atypical era of history in which rapid industrialization of much of the world lead to being able to expect a return due to rapid expansion of the real economy, and that the US was uniquely poised to take advantage of this era because (among other things) we were one of the few industrial nations that was not bombed extensively during WWII. That era could be ending, with a saturation of bankable projects with high returns to large populations and rapid slowing (and in some cases reversal) of expansion of resource extraction and population growth and the pulling of existing population into market systems. This is far more global than the previous disruptions talked about in this analysis.

If this is the case, we can expect long-term real returns to become far lower on average than even these estimates, far more unpredictable and volatile, and very difficult to weed out from the much higher short-term unstable returns of ponzi finance that creates high notional wealth without a corresponding investment in the real economy to stablize it.