Random thoughts – don’t quote

I read a dumb thing today: With the stock market, what does up must come down.

The stock market doesn’t obey the laws of physics. It’s not a bouncy ball. It’s not some bloke in a room typing numbers into a computer. It’s a haphazard aggregation of the thoughts, feelings and analyses of hundreds of millions of people. Crashes happen. Booms happen. We have no way of accurately and reliably predicting them.

The stock market isn’t a math puzzle you can solve. Nobody knows what future stock market returns will be. They are unknowable. Don’t waste your precious time and energy worrying about it.

I’m going to be candid. If you are the kind of person that worries about that kinda stuff – FIRE (Financial Independence Retire Early) isn’t for you. You’ll end up worrying yourself sick. You’ll never be able to relax. You’ll never know if you’ve ‘made the right decision‘.

Things that won’t help you towards FIRE

  • Bitching about how much money other people make
  • Complaining that your caviar-eating, champagne-snaffling, sports-car driving lifestyle is too expensive to be able to save
  • Worrying about whether “we’re due a stock market crash” or “if bonds are overvalued” or “the market is frothy”

Or as The Escape Artist pithily puts it: “You don’t get into FI club by talking about FI club.  Nor by arguing on the internet.

Things that will help you towards FIRE

Focus on the things you control. Or as many people would say, common sense:

  • Find ways to earn more money – the more money you have the more you can spend and save.
  • Spend less than you earn – if you spend money on things you will end up with the things and not the money.
  • Invest based on provable facts (evidence-based investing) – investing in long-term diversified index-tracker funds has been the easiest and most effective way of securing long-term returns above inflation.

Most important of all, know when enough is enough (lagom).

20 thoughts on “Random thoughts – don’t quote

  1. Hello
    Nice little post , based on the recent media interest in the whole FIRE movement. To me the problem is that most people are only interested in the destination but one has to buy the journey to this place called FIRE. The idea of living well with less stuff, valuing things that are really important and not being concerned about the opinions of others is the journey. So if your idea of happiness is being in an endless episode of the living with the Kardashians show, FIRE is not going to happen to you. The whole FIRE thing to me is like eternal life and salvation for a devout religious person: just the icing on the cake of a virtuous life, based in becoming the better possible version of oneself and learning to value what is really important.

    1. Well articulated, Roberto, I fully agree. This is why I see FI as self-limiting to the general populace, because to qualify in seeing what you say, a person has to have a certain amount of intelligence, emotional, intellectual and instinctive survival urge. (some call that last one street smart) In addition to that, they also have to have the mental strength to maintain discipline at the risk of ostracism by society as a whole, but more painfully from some of those they love. (who wont approve of how we want to live, or try to understand)

      So I don’t think even 50% of the public have this combination to even have a chance. Most people want their cake and to eat it too, even those who understand at some level of consciousness that it is not possible. When you see aggression and ignorance in the commentary, it is because they feel they have lost face, since it has been now proven that your destiny is due to your own choices to a greater extent than generally accepted.

      This is the same reaction that can be behind scapegoating immigrants for every problem in your life, because if someone can come here and in just a few years of hard work be better off than a local, that local feels robbed and admitting they could be the same by working harder and/or smarter is harder than excusing your performance by accusing immigrants of stealing the communal resources.

  2. “You don’t get into FI club by talking about FI club. Nor by arguing on the internet.”

    Granted, that is pithy, but you could reason that talking (and reading) is exactly the way you get into FI. I don’t think many magic it out of thin air by themselves?

    And arguing on the internet can be invaluable.

    Take the smart guys over at Monevator, for instance, constantly arguing things through. How much does that rigour add to the OP in terms of robustness of the ideas being discussed? Its invaluable.

    Contrast that with other sites of the ‘Woah dude, insightful article, you’re a legend’ comment variety. There’s no comparison.

    Arguing is not just desirable, its critical.

    1. Hi Rhino, good to hear from you! I hadn’t seen you comment in a while – I was concerned you had gone the way of your brethren.

      I wouldn’t say ‘arguing’ can be invaluable. What I would say is that debate is often invaluable. Perhaps we are talking about the same thing. I don’t see much value in things such as: “I’m right, you’re wrong.” I see a great deal of value in: “Have you considered this point of view…”

      The Monevator comments can be great, when people are debating and not arguing. The trouble is, there is a great deal more of the later than the former. Speaking from personal experience, a week or two ago I wrote about Inheritance Tax – the comments quickly spiralled into personal attacks on me until TI stepped in. Later on, we had a thoughtful discussion about what it means to be ‘FI’ in the weekend reads. Again, it dissolved into pseudo-personal attacks. Few of the comments were looking to understand different points of view, they mainly boiled down to: “I don’t like the way you do things – you are wrong.”

      Unfortunately, I’ve found that is very common on the internet. I’m hardly a controversial blogger, but I’ve still had all manner of insults and snide-remarks dished my way. What’s the point? If you’re rude to me, I’m not going to listen to you. Does it make them ‘feel better’? I don’t know. All I know is that kinda stuff doesn’t happen when I talk to people in person (and if you are rude to me, I walk away).

      Also taking The Escape Artist for example. I know you don’t see ‘eye-to-eye’ with him, many people don’t. I spent several hours talking and debating with him a few weeks ago. We agreed on lots of things, we disagreed on lots of things. He’s helped me to change my viewpoint on some things – I’d like to think I’ve helped him to change his viewpoint on some things. But speaking personally, I got far more out of that conversation than I could from reading 100s of comments on his blog (and arguably, from reading 100s of his blog posts – Sorry, The Escape Artist!) I could have sat there and thought: “Boy, that Barney says some right nonsense. What an idiot!” But that would have got me nowhere. Yet, that’s a lot of what happens on the internet, name-calling, ‘playing the man not the ball’ – whatever you may call it.

  3. haha – very wise words

    but its all relative – comments at MV are a million miles from any broadsheet/tabloid/bbc, even when it gets a bit feisty. Thats the skill of the MV team to keep it all functional. Its super-impressive. I don’t think anything on the interwebs is ever going to be as polite as your nan’s tea-party or even a group of real people in a real pub for that matter. What you gain in convenience you pay for in behaviour.

    Some bloggers, like TA and SHMD are phenomenally good at never getting riled and remaining humorous and that always defuses things rather than ramping them up. Others, like TI, are endlessly patient explaining their point of view, often in the face of seemingly willful ignorance. Its exceptional.

    You are actually a very controversial blogger, not because your rude or egotistical, but because you retired in your twenties. Thats massively controversial, but maybe doesn’t seem so from your perspective? You probably have to factor that in to how things go for you in the comments from time to time?

    On the subject of TEA, if you’re going to take money to provide financial advice outside the confines of any regulatory framework, then you really do have to be whiter than white (do you see what I did there?). You’d have to be like Mark Meldon on steroids. TEA isn’t that, and I think thats a bit dodgy and call him out accordingly. I’m sure he’d be a good laugh to have a beer with though..

    1. You are actually a very controversial blogger, not because your rude or egotistical, but because you retired in your twenties. Thats massively controversial, but maybe doesn’t seem so from your perspective? You probably have to factor that in to how things go for you in the comments from time to time?

      I’ve never really thought about it like that. That’s very interesting. I’ve always been one of those people who lets their words and actions do the talking. Which is probably one of the reasons ‘work’ would rub me up the wrong way – I’m not one for networking or any of that kinda stuff. If people are hung up on the ‘young’ aspect I don’t know what can I do about that? Genuinely interested in your thoughts!

      It’s not my place to defend or criticise TEA, but I don’t believe that he gives financial advice – rather he gives ‘coaching’ and I think he’s quite clear that was he does isn’t regulated. The regulations are a bit bizarre, as I recently wrote about (https://youngfiguy.com/the-advice-gap/). I personally think there is scope for non-regulated activities such as financial guidance and financial coaching – unfortunately, the FCA has been unhelpful in giving unambiguous market guidelines. That’s why this website and others, such as Monevator, say things like: “this website is for information purposes only, I don’t give advice etc.”

      To give a personal example, I could set up as a Financial Planner. That requires no regulations either as long as you don’t recommend products. FAOD I hold RDR level-4 compliant qualifications for regulated advice, but I’m not CF30 and don’t have an SPS. I’m also a Chartered Accountant, but don’t hold a public practising certificate as I don’t engage in public practice.

      1. With regard to TEA, I think The Rhino is referring to the “Portfolio service” that he used to sell: a monthly letter with his portfolio of funds and single stock selections. He seems to have removed this from his shop window at some point. It was a regulatory arbitrage that allowed TEA to call what he provided “education” when it was paid for investment advice. As someone who is a CF30 but would never consider ever doing a job involving retail clients (urgghh), I do see a real issue around the “advice gap” but I see stock tips as going too far. That needs some form of regulation.

        I don’t have issues with TEA providing life coaching but it’s hard to say he is RE anymore given how much he does. He rubs me up the wrong way more because of his attitude. He comes across increasingly Libertarian, right-wing etc. He feels that its all about personal responsibility and meritocracy. I suppose I think it’s mainly genetics and luck. I really wonder if he knows what it’s like to be born at the bottom of the pile. Plus there is the pseudo science he promotes. One side of my family has consistent issues around depression, anxiety (and weight). I suffer from an amalgam of all of them. The trite way he dismisses such issues makes me fairly angry. Of course, it’s his blog, his rules etc. But editing the posts of people who comment negatively on his blog? He can delete comments/trolls of course, but changing comments to improve the facade is out of order.

        1. Thanks ZXSpectrum48k for taking the time to comment. That’s interesting to hear, and not something I was aware of. It’s a shady area of the regulations. I’ve always found the stock or fund ‘tips’ columns in the papers a bit disconcerting. The downside of having something ‘stricter’ is you might end up ‘catching’ excellent resources like Monevator and that would be to the detriment of many. I’m no expert on these things, I just have to hope that people far smarter than me are thinking carefully on these issues.

          If you’re willing to share, I’d be really interested to know why you wouldn’t consider work involving retail clients? I ask as I thought long and hard about applying to be CF30 and working in the advice space but decided against it. I’m always looking to hear knowledgeable viewpoints. But do feel free to tell me to bugger off!

          1. I have to admit I’ve never given advice to retail clients. The “advice” period of my finance career was a long time ago (2000-05) and was focussed on institutional clients (SWFs, HFs, pension funds, corporate treasuries etc). I suppose my feeling is that retail clients can be a very poor risk-return proposition. On the return side even small fees in absolute terms would often be a massive NAV drag on a retail client’s portfolio. Against that you’d have significant costs, so the net margin would be poor. By comparison, I’d do asset allocation studies for a pension fund that would result in £1bn being deployed with a margin of 25-50bp for my bank. On the other side, the way regulation seems to be evolving, the compliance risk seems to be huge. Fifteen years after advising someone you could find yourself being sued by them. I’m not surprised IFAs are having to merge to survive since the combination of margin compression and needing enough scale to offset rising compliance costs really means the end for many smaller operations.

            Regulation also results, in my view, in an increasingly ‘bland’ set of products being offered. So the job would have little room for creativity or imagination. Go back 15 years and IFAs were far more interesting. Yes some peddled toxic waste but others generated really decent ideas. Idea generation seems to have been regulated out of existence. They simply add no value anymore with their vanilla products. As a result my use of IFAs have dropped to zero in recent years.

          2. Thanks for kindly sharing ZXSpectrum48k. Very interesting to read your views. The compliance risk was something that jumped out at me when I was looking into becoming a regulated adviser. The cost of insurance and compliance is very high and sticks with you for a very long time. The risk didn’t seem worth it for me.

            Regulation also results, in my view, in an increasingly ‘bland’ set of products being offered. So the job would have little room for creativity or imagination. Go back 15 years and IFAs were far more interesting. Yes some peddled toxic waste but others generated really decent ideas. Idea generation seems to have been regulated out of existence. They simply add no value anymore with their vanilla products.

            This struck a chord with me as it was something I observed in the accounting and valuation industries. A large regulatory push to ‘tick boxes’ and do things ‘the prescribed way’ even if that meant a worse service or not “thinking outside the box” so to speak. Finance, of course, is highly-numbers based, but I do sometimes wonder whether regulators and of course professionals ourselves, forget how strong a qualitative element there is. Perhaps it’s easier to regulate numbers rather than stories. But then, I think at least, that means regulations are going to fall short of the desired outcome!

        2. @ZX – I think you hit the nail on the head with those points. Its not just one thing with TEA, but an amalgam of the many you point out. As TA said, hopefully people are smart enough to see through it. It is critical to remember he is a guy trying to sell you stuff.

          I see that the portfolio service has now gone, but even the lifestyle coaching, given the provenance of his site, is inevitably going to have a strong personal finance bias, and whether he verbally recommends products or not, written recommendations for Vanguard are peppered all over his site.

          Its not difficult to see how a punter would put two and two together – so to my mind he is, to all intents and purposes, recommending products. Now that may well constitute good advice, but it is advice nonetheless – and provided with no regulatory framework for any subsequent recourse. The 100% equities he pushes really is extreme advice for almost all, which ironically, wouldn’t even have benefited a younger TEA, as he explained he folded during the dot-com bust.

          On the right wing libertarianism – I think TEA is intellectually very spongey – you can almost infer the (American) self-help book he is currently reading from the post he has written. It comes straight back out as his latest (profound) thinking on any given topic. I think his foray into women’s lib was most likely based on reading a bit of Jordan Peterson? I think Peterson’s writing is interesting and he gets pretty well mis-represented all over the media – but at the same time – his work certainly seems to embolden otherwise enfeebled misogynists the world over..

          1. OK guys, readers should have the gist of your point by now. So I think it for the best we leave it there. You always have the opportunity to speak to Barney in person about these things on the 19th October at the FI drinks.

  4. “You are actually a very controversial blogger, not because your rude or egotistical, but because you retired in your twenties.”

    This. As soon as certain types read that you had received an inheritance, that was the only thing they latched on to, not your low-spending lifestyle, your investments or that you hadn’t blown said-inheritance in the blink of an eye like many twenty-somethings would have done.

    Outside of the FI community, most with closed minds can’t comprehend people in their 30s or 40s retiring (or even 50s), never mind a whippersnapper in his 20s, so unfortunately, you will likely continue to court some controversy and inadvertantly invite the trolls, even on Monevator.

    Keep up the great work! ?

  5. Excellent post! I am a late FIRE-starter, but with enough years to bridge to beat full pension age by a pretty decent margin I hope. That’s the goal at least. But what really drives me is the journey. Simply taking one step at a time. Learn from others. Never envy them. And never panic. It’s not worth it.

    Pretty cool you reached FIRE status so early!

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