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.

The tilt upwards is because I have a pension now, ie a regular income, which means I am not drawing down capital. And: Covid. You can’t spend as much as you might otherwise(IFS). The ECB is even more emphatic than the IFS on that. Obviously, you must have the good fortune to be on the upper leg of the K shaped recovery. I have that good fortune. So will most reading this. Because:

It’s not pretty, and it will seed shit further down the line. Even the Torygraph, hardly a bastion of bleeding-heart liberalism fulminated thusly earlier on this year

‘Some people are sitting there with piles of cash in the bank and others will be wondering how they are going to buy food’

• nor because I am bored

This one’s more nuanced. I have less opportunity to do the things I want to do this year. That does reduce the opportunity cost of working a bit. But I have considered this conundrum earlier, in 2016. I am still true to my values, which I will pinch from that post:

1. I want to earn through doing something that is congenial √
2. and interesting√
3. has some originality or novelty√
4. creative in some way
5. with decent people who aren’t dickheads in general√
6. that helps people or causes that I know or care about personally √-ish
7. that is specifically something I bring to the party from skills, temperament or talent if any (tough – this is not a field of engineering I have prior experience of, though I have seen it over a 30-year career)
8. I want to spend less than a day a week on this, √ but I favour that being in all-or-nothing chunks with long gaps in between√. Part of this is that I am limited by the tax system, I don’t want to work for the government 20-40% of my time. I have done my share of that over the last 30 years.
9. I don’t what to sell my time for money. Obviously doing something creative takes time, but I don’t want it in the form of billable hours, more billable results ×
10. I don’t want to ever see performance management. An engineer’s work speaks for itself, should that be the field I use √
11. I don’t want regular or ongoing time commitments. Hit and run jobs are what I  want, get in, do, then get out ×
12. I don’t want to carry a smartphone all the time √
13. I am happy with no fix no fee and no guarantee of regular work – but if you aren’t there regularly for me there’s no guarantee I will be there for you 😉 and yes, that is sort of at odds with 9 ×
14. I prefer to sell Mind, not Stuff. Stuff gives warehousing and cashflow problems, and regulation is a bitch. It’s not hard and fast though. √
15. I do not want to be derivative or routine. I don’t want to be a replaceable work unit. No chuntering out ebooks or matched betting which seem common fave side hustles in the PF scene. I am rich enough not to have to do this, and old enough to know my time is limited. √
16. no franchising, if I am not original enough to make a decent return then I will just walk away √

A √ means I met that condition, a × means I didn’t. I met 11 out of 16 criteria, and failed 3 and 2 neutral/uncertain. 4 was tough. I defined creative in the artistic line, but I do originate. I start out with a blank computer screen and I end up with something that real people can make a real thing, which hopefully matches up with other real stuff and does what is required of it.

The initial engagement did satisfy 11, it was a specific quote for a specific job. I could see that there is a dynamic tension between fire and forget and some sort of dependability. The timescale matches the strategic Brexit Covid 19 hazard (I would say two years before the rubble stops bouncing at a guess), enough for them to get the product to market and then decide where to go.

So you know what? Reader, I jumped over myself. They are decent guys and I’m not going to stiff good people for the sake of principles decided against the backdrop of a toxic working environment. See Walt Whitman. Of course the project might all go titsup at any point in between, well, OK, time to put that networth lift to work, eh? It’s one of the tragedies of life – when you are young and keen, reliability of income is important, else you have to live in expensive hellholes like London¹ with lots of employers in the hope of being able to get another job if you get iced, because otherwise really Bad Shit happens in your life. When you are grizzled of fur, if it all goes wrong then well, there’s always the beach. You’re much more insulated from the jobs market because your human capital is all out. But there’s a price for that peace – you’re a working lifetime closer to death.

If I could take some of that spare wedge and go back in time to the early 1980s, when I graduated into Thatcher Recession#1 and my unemployed younger self didn’t borrow the money to go to the US and see my favourite lady singer in concert at the high-water mark of her career, and reach over a furred claw with a wad of fifty pound notes and go

I am the ghost of your distant future. Take this gift from your older self and fly to the US, enjoy and chase her tour across America, stay in decent hotels and not the cheap sticky motels you will do in a decade’s time. But my greatest gift to you, dear younger self, is for God’s sake don’t buy a house in the Lawson boom. Mark my words, because on the current track buying that overpriced house in less than a decade you will perpetrate the single greatest personal finance mistake of your life.

then the grizzled ermine will fade from sight, leaving a sprinkling of dust from 2020, a grey whisker and a pile of banknotes. It is not to be.

Not borrowing that money for the wasting asset of an experience was a first symbolic step of my younger self on the steps to fiscal probity, but it was an anti-YOLO moment. But if you haven’t got a job, you shouldn’t be borrowing money for entertainment. Now if I’d shown the same financial wisdom with overpriced housing a decade later…

The key to successful early retirement is above all to be curious, to pursue novelty, and learn. Still now, hardly a day goes by where I haven’t learned something new, and part of the trick there is to be insanely curious. They’ve pointed a multimedia firehose at your inquisitive snout, so you might as well use ’em:

an inquisitive snout is the early retiree’s essential adjunct

Pantalaimon is a CGI mustelid, in His Dark Materials but the movement and curiosity is true to form² 😉

Be protean. You change over time, and life changes. This rather dense study, pithily summarised by the British Psychology Association

Matthew Harris and his colleagues at the University of Edinburgh failed to find a significant correlation between their participants’ personality scores at age 14 and their scores on the same items at the age of 77. “Personality in older age may be quite different from personality in childhood,” they said.

I think the BPA over-egged it for the headline, when I read the paper I did not get this overwhelming impression that you are totally different at 77 than 14. My valedictory primary school report said ‘lone wolf. Doesn’t tolerate fools gladly.’ My mother got the headmaster to take out the lone wolf comment, because that looks bad, I’d be marked down for not being a team player. I never was a team player, it’s overrated – teams are for sheep IMO. I was an introvert then and I still am. As for fools, four decades of research has never shown me why they should be tolerated rather than run out of town at the earliest opportunity.

This year is different, because: Covid 19

I changed my policy on not having a TV with the start of the pandemic in March, because while the Web is OK for the news, we were spending more time at home, and lean-back viewing sucks on a computer.

It was good to see mustelids on the screen, and one of the things I learned today was how to break the encryption on my 10-year old Foxsat-HDR freesat box so I can copy HD recordings elsewhere. I am intrigued that eight years after I wrote that post they are still showing antique and auction programmes that grated on people then.

It’s quite scary installing a modern TV, I seem to have skipped three generations, jumping from analogue SD CRT to UHD whatever, and it’s really hard to stop it spying on you. I don’t want a flippin open microphone sending anything I say to Amazon to save me pressing a few buttons. Didn’t Orwell have something to say about that a while back? In 1984 at least the Ministry of Truth paid for and installed the technology. I will favour the Humax broadcast recorder for content, because broadcast TV is still anonymous, so it stops the bleeders³ spying and tracking you.

So I started work not for the same reasons as Finimus, though there is some overlap. Covid trashed a fair amount of what I was going to do this year too. I had plans of more hillwalking, more stones, messing about with amateur radio outside, plus taking some pictures and doing more sound recording – well, I did get the opportunity to do some recording  with the reduction in aircraft noise, but only in the local area.

Am I Finimus, without his honesty?

“Do I contradict myself? Very well, then I contradict myself. I am large. I contain multitudes.”

Walt Whitman

I’ve spent an inordinate amount of time on here snarling⁴ that work ≠ life. Was I wrong, guilty as charged 😉

Methinks the ermine doth protest too much…

Magnus

Finimus still has kids at home, and it hasn’t escaped my observation that there is a hell of a lot of drudgery associated with children – so I could see work being attractive in that situation. But he’s clearly more driven than I ever was. He was a much higher flier. Exceptional brilliance is some things is not always conducive to all-round balance in people, and it can make it tough to turn away from that exceptionalism.

Many in the FI movement have been taught that success is associated with projecting power in the world, and oddly enough Pantalaimon showed this to me. Apparently they used the dining hall in New Hall, Oxford for the TV series.

New Hall Oxford’s dining hall

Look at the design of the dining hall. Unless you’ve been to a public school, or Oxbridge, have you ever eaten in a place like that? It is designed to maximally expose people to each other, to build the networks of power and privilege, and to inculcate that this is an ancient institution, you are part of the way things have been and will be. Peter Turchin has a word about that later.

The FI movement has an awful lot of really driven people

It’s only after leaving work that this has become apparent, and I think the nature of the FI/RE movement has changed over the ten years I have been blogging. In the early days, through the global financial crash of 2007 to 2009, there were more civilians in the movement. Now there are more people who are really driven, they have always been taught to be successful, and they are often part of the elites of the country – people who have gone to Oxbridge. They are not my tribe, and in Finimus’ post this highlighted this for me:

I missed the buzz

Probably hardest to admit: I know quite a few seriously rich and powerful people (I went to the sort of university where that’s inevitable). Everyone else was doing more important things than me, which left me feeling pretty inadequate. I mean every time I hear one of them interviewed on the Today programme, I can’t help but think: FFS!

I don’t know any rich and powerful people. I can’t even think of anybody that I went to university with who I have seen on the telly, featured on the Web on a newspaper article. Before you quip that I clearly did sociology at a redbrick poly, I went to Imperial college and did Physics, and then a postgraduate degree in electronics at Southampton⁵.

The difference is cultural – the difference can be seen in the style of the Imperial alumni magazine and Cambridge’s CAM is clear, and Oxford’s⁶ alumnus magazine introduction lets you have it straight between the eyes:

Our alumni are amongst the most influential and well-known leaders and thinkers, teachers and researchers worldwide. You can maintain your links with the department, and other undergraduate and graduate alumni, through our programme of publications, events and networks.

Compared to that, Imperial’s mag lacks chest-beating about the thickness of the rind on their Big Cheeses. Oxford’s mag is about who you are, and the power you wield, not what you do… CAM is sort of in between, though more towards Oxford’s style.

According to rad reads H/T Monevator you’ve only got about two hours of decent knowledge work in you every day.

Indeed, looking back on my career, I did my best work in short, fast and furious bursts and coasted a lot of the rest of the time. Particularly after the WWW became a thing 😉

You can do other things instead of working all day, like being here

That would imply doing a few hours a week of knowledge work is a win-win. It’s a capacity I don’t particularly use, being an Ermine of mediocrity rather than an elite Big Cheese, so I may as well sell it. I can do better than when working full-time, because I can sell them just the good couple of hours, and the rest of the time I can deepen and broaden my mind.

or look at a Great White Egret tootling past

Or get out into the countryside when it’s allowed and do the modest physical exercise of walking, which curiously enough also helps thinking in some bizarre crosstalk. That sort of thing tends to be frowned on by The Man if it’s done on his time…

I am Hari Seldon Peter Turchin. Psychohistory Cliodynamics foretells ten years of darkness, ere the citadel falls into the sea.

It’s too late, we are almost guaranteed five hellish years, and likely a decade or more.

Peter Turchin

Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich

The bear case always sounds smarter – it’s interesting that of the things I was fearful 10 years ago only two came to pass.

Some part of me still sees an incoming crapstorm, as the West surrenders its economic and intellectual fire to the East

tick. See Donald Trump, Brexit, Huawei, South China Sea…. The straws in the wind have become a hurricane

The dynamics of Turchin’s argument about elite overproduction does ring true. And they ring true across the FI/RE scene. 10 years ago it was about cutting costs. Lean FIRE was a thing, and it was people I could relate to. Lean FIRE in the early days is the reason why as the Ermine piloted a damaged craft out of the GFC and switched off the power on leaving work in 2012 to avoid burning out, the networth graph did not pitch into the drink.

Whereas increasingly now, I would say now FI/RE is a bigger thing among the overproduced elites who are detecting that the bell tolls for them. How do you identify elites? Private schooling – they’re buying it, and usually attended it. Fat FIRE is a thing here – if you don’t have well over a million pounds you are nobody, you need enough to keep your entitled progeny in public schools⁷ and get them to Oxbridge, because you fear them going down the pecking order. Everybody’s all for upward mobility, right up until the point where its evil twin downward mobility rings their doorbell calling for their kids. It’s like Labour politicians’ tremendous dedication to non-selective comprehensive education, which disappears like summer rain when it comes to sending their kids to one of these bastions of meritocracy, because, well, their kids are special. Every parent thinks their kids are special. It’s the Dunning-Kruger effect writ large.

The hinterland problem

I grew up in a working class part of London. Children walked to school. Everything was more local, and the parents’ dead time to commuting was less, because people generally lived much closer to work, and work was more evenly spaced. When the factory whistle blew, they were off the clock. They could do something else with their time. Working from home just isn’t a thing for a machinist or an assembly line worker.

Specialization is for insects.

Heinlein, Time enough for love

People were more generalists, and they travelled less. They were poorer – the modern world is much richer in experiences and possibilities. We’ve achieved some of that by specialisation, but that comes at a cost. It seems higher for the driven people who aim high – the specialisation drains the hinterland, the stuff you do outside work. It’s not surprising that high-flyers have a hinterland⁸ problem – when something that consumes an awful lot of their energy and time goes away, what do they do then?

You need hinterland. I have interests and hobbies, as well as the usual occupations of retirees, travel to some extent and fine food. If you are hyper-driven, the transition to retirement can be tough. The thickness of your rind you cultivated over a working life doesn’t matter now you aren’t a Big Cheese any more. You feel the draught, and the loss of relevance. It is this that makes retirement hard for high-flyers – all their life they have worked for and achieved things, and this is reflected back to them from the outside world. They leave work and – well, they’re not used to investigating that which is unknown or unexplored about themselves. They didn’t have the time for unproductive frippery like that.

It’s well expressed in SHMD’s The Returned, as he retired from retirement. It didn’t work out for him.

I am not The Returned. Covid has shrunk the action space. One of the reasons I retired early because I failed to stick my snout out and scent the winds of change which were going to do for my career. I ain’t gonna be had the same way twice.

The networth chart trendline seems to imply those fears are overcooked, but I expect Brexit to be Very Bad for the UK economically. I’m not the only one, and with disaster capitalists in charge of Getting Brexit Done we are likely to go for the shit option out of a bad set of choices.

I’m not living proof that FI/RE doesn’t work or that RE is boring. Hopefully I got it all wrong, and unleashed from the dead hand of the EUSSR Britannia will soar, and all those mendacious promises written on the sides of buses will deliver. In that case, I will end up misallocating a few hours of my time a week for a little while. You can’t get everything right in life.

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1. How London has become a workhouse for the young, Telegraph, 2014 ↩
2. I am chuffed that mustelids are getting a better press in fiction these days, after the character assassination of Wind in the Willows set the cause of the weasel family back for decades, as well as the British ruling classes’ penchant for feeling manly by shooting grouse which has been bad for stoats and drove the beautiful pine marten to the brink of extinction. There’s some case to be made that Pantalaimon’s neck is a little bit long and the eyes a little bit larger than Nature’s Mustela erminea. ↩
3. This is how you can get a 43″ UHD TV for a few hundred quid. It’s a loss-leader, it’s your data exhaust that they want and will monetize. The aim is to choke that off at the knees. Broadcast, not catch-up, I don’t do subscriptions like Netflix and beware of anything using an app. The HDMI connection to the Humax stops the app ad serving, and Pi Hole is your friend otherwise – mine stops over half of data requests from my tablet, which I mainly use for checking the weather to avoid getting wet going for a walk. Presumably the mobile website is rammed with ads. ↩
4. to save you the trouble, for example CalvinistWatch – Happiness is having a job, according to Civitas, What’s up with this Calvinist Work Is Good For You Thing? ↩
5. I am surprised that Southampton is so weak now in its world university ranking in electronics, 35 years ago it was one of the premier places for that. But the world has got bigger in those three decades. Sic transit gloria mundi ↩
6. I do not understand Oxford’s collegiate structure. Mrs Ermine went to Cambridge, and I think CAM is Cambridge-wide, but I was not able to detect a corresponding Oxford-wide magazine ↩
7. in Britain we call schools you have to pay fees for public schools. I think the more logical Americans call them private schools, sometimes we also call them private schools, so you have to infer it from the context. We never call government-funded schools public schools, we sometimes call the State schools. Go figure. ↩
8. in the that which is unknown or unexplored about someone sense of the term, not the Welsh TV series. ↩

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