early retirement isn’t boring. Brexit and Covid are

There’s an interesting discussion over at Finimus, who characterises the tl;dr as

So that’s my verdict after four years of early retirement: boring.

and over at Monevator TA fears the dying of the FI/RE light.

Every time one of these FIRE-ees announces their return to work, I think of another soldier falling to cannon-fire amid the thinning ranks of a Napoleonic line.

I am one of the old guard, I have passed the FI/RE event horizon, and it seems the chimera of reappearance from RE of some folk caused a disturbance in the Force. It’s time to start rolling the cannons to the front line and fight for the noble cause. For the record:

I am not working a few hours a week because:

  • FI/RE didn’t work out and I am skint
2020 has been kind to me in net worth terms. Quicken extract, marked to market as of now, excl house and DB pension capital. Liabilities are borrowing wedge from a credit card on some deal, usually 0% on spending, Suckout is bridging a house purchase.

The step-changes at the end, while clear, aren’t important, they are one-off windfalls. You really shouldn’t charge around shorting stocks in a pandemic, Do Not Sell  but if you are going to sell, double down and short. Still, if Monevator can ‘fess up to a bit of non-passive jiggery-pokery, well, so can I. The first lift in 2019 is not investing win, it was a dialled down PCLS and not all of the lift in 2020 was shorting – a lot was simply the market roaring back. We should also remember that this is denominated in Great British Pounds, and Brexit has made them more British and less Great. You need more of ’em to represent a given value. But what is clear, in a more understated way, is the trend of decline has been arrested and reversed, since mid-2019.

of valuations and safe withdrawal rates

When I left work I did not have enough ISA+SIPP capital to match the safe withdrawal rate. That was okay strategically because I had a DB pension to come later/ From 2012 to 2014 the market crawling from the wreckage of the GFC beat out what was a too high spending rate, but the fall showed up in 2014, as the irresistible force of spending overwhelmed the immovable object of ROI. I had to fall back, fall back, fall back and hope the engines restart in the low-water mark by the time I started to draw the pension.

Valuation matters

It’s not supposed to, and perhaps it doesn’t if you accrue over many market cycles. I didn’t. Imagine the trajectory of 2015-2018 imposed upon the start. You’re never allowed to say that valuation matters to the passivista crew, but I would say that trajectory shows just that. I started out at low valuations into the GFC. I was able to make a SWR of 5% work – that’s what people said was OK back in the day. Don’t even think about that now. 3% is probably racy on current valuations. Continue reading “early retirement isn’t boring. Brexit and Covid are”