Just a quick recap of some interesting things I heard and read today.
Leon Cooperman was on Bloomberg TV earlier in the day talking about transitioning his hedge fund business to a family office. He said "for my own capital as long as my capital is growing and I’m not losing money I don’t care if am up more than the S&P or less than the S&P." We all need some amount of money to maintain our reasonably desired lifestyle (it is not reasonable to think you'll live a $1 million/yr lifestyle after a career making $100,000/yr) for when we retire, if we retire. When the time comes you'll either be on target, short of your target our ahead of your target.
If you get there with 90% of your target or 110% of your target then retired life will probably be pretty close to how you envision it. If you fall far short then it won't be how you envision it. Save for some sort of catastrophic emergency, people actively engaged in this process for themselves will have a good idea of where they stand. If they are short then their best chances of catching up would mean spending less and saving more. It is extremely unlikely that relative outperformance in the stock market will bail out someone who is short of where they want to be. Note, I am saying relative outperformance. Over the last ten years the S&P 500 is up over 100% per Yahoo Finance. A ten year run like that during some time frame that is relevant for your financial plan could absolutely be the difference maker even for someone who is only up 85% in a 100% decade. Tying back in to Cooperman, stick to your strategy, don't be seduced by greed or ruined by panic and give yourself the chance to benefit from the market.
Advisor Rick Ferri had a tweet that offered his spin on the FIRE acronym. Instead of Financial Independence Retire Early, he thinks it is better to Remain Employed. If I am reading Rick correctly, remaining employed gives more optionality. Even if he didn't mean that, remaining employed does give more optionality. I replied that feeling independent in your work goes a long way to achieving the FIRE mindset which of course is about enjoying your work. I won't proclaim that everyone should be self employed but I think it helps. Ditto if you can work from home a good deal of the time. Things like performance reviews and commutes do create stress and granted that stress does not need to be overwhelming, but they are things I am grateful to not have to deal with.
Felix Salmon tweeted a poll question asking "does paying down a mortgage count as saving for retirement?" My answer as follows; " I voted yes. One relative with not a lot of money rented, is now late 80's and has no optionality from potential home equity. Another relative with not a lot of money is 61, just bought and when she is 75 or 85 will have optionality from home equity." I've never bought into James Altucher's frequent posts about not buying a house having observed the plight of these two relatives. Buying a house to live in may or may not be an investment but if it is not an investment I do believe it is a store or value that will at the very least keep up with inflation (my experience has been a little better than that but I realize that better than inflation is not everyone's experience). If someone will pay rent for some number of years, why not pay a mortgage (assumes the ability to come up with a down payment of course) instead? Who knows where my now 61 year old relative will be in ten or 20 years but it would be nice to have the home equity as a backstop. The relative in their late 80's could have used home equity back in 2000/2001 and didn't have it. I obviously am a big believer in optionality.