I was an early FIRE convert, as the philosophy is correct and it quickly teaches young people about money (growing wealth, and planning their future).
My argument is that the current FIRE movement is not considering the possibility of a total paradigm shift in financial markets. Massive paradigm shifts have happen…
I was an early FIRE convert, as the philosophy is correct and it quickly teaches young people about money (growing wealth, and planning their future).
My argument is that the current FIRE movement is not considering the possibility of a total paradigm shift in financial markets. Massive paradigm shifts have happened in both 1971 and 2008. To think that there cannot be another, is irresponsible.
I don't agree that there's nothing to suggest a problem with the passive dogma (which is entirely in growth-orientated equities and long-duration bonds).
We have had a disinflationary environment for the last 20 years, which is the same window for FIRE popularity. A 60/40 portfolio steadily climbs higher in this environment.
Now, there is a real possibility of moving into a decade (or longer) inflationary period. This is defined by higher resource costs/labor costs and structurally widening fiscal deficits that drive further broad money creation. You are going to see this soon in increasing oil prices and wage inflation taking hold, both are already underway going into end of the year.
The 60/40 portfolio does not work in this environment.
And on pension trusts, you already saw the UK LDI scare last October (see James Lavish break this down in The Informationist). Currently, UK gilts have already sold off to the exact same level at the time of that intervention. The only thing keeping UK Pensions alive is the BoE, and the cost is further money debasement.
The amount of self-reinforcing effects in financial markets is continue to stack up.
Enjoyed your perspective!
I was an early FIRE convert, as the philosophy is correct and it quickly teaches young people about money (growing wealth, and planning their future).
My argument is that the current FIRE movement is not considering the possibility of a total paradigm shift in financial markets. Massive paradigm shifts have happened in both 1971 and 2008. To think that there cannot be another, is irresponsible.
I don't agree that there's nothing to suggest a problem with the passive dogma (which is entirely in growth-orientated equities and long-duration bonds).
We have had a disinflationary environment for the last 20 years, which is the same window for FIRE popularity. A 60/40 portfolio steadily climbs higher in this environment.
Now, there is a real possibility of moving into a decade (or longer) inflationary period. This is defined by higher resource costs/labor costs and structurally widening fiscal deficits that drive further broad money creation. You are going to see this soon in increasing oil prices and wage inflation taking hold, both are already underway going into end of the year.
The 60/40 portfolio does not work in this environment.
And on pension trusts, you already saw the UK LDI scare last October (see James Lavish break this down in The Informationist). Currently, UK gilts have already sold off to the exact same level at the time of that intervention. The only thing keeping UK Pensions alive is the BoE, and the cost is further money debasement.
The amount of self-reinforcing effects in financial markets is continue to stack up.