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We're All Asset Managers Now

A cut to the core assessment of what it is to be retired.

Saifedean Ammous, noted economist and Bitcoiner put out a Tweet that included the following comment: "Retirement just means becoming a full-time asset manager." There is at least a little truth it. His context was a pro-Bitcoin sentiment about the loss of purchasing power due to inflation of which the Bitcoin community says Bitcoin fixes because it is not a fiat currency.

Whether you agree or disagree about Bitcoin, if you understand that sentence you understand a bigger driver of the Bitcoin movement.

Coincidentally, I had a conversation this morning with a friend who is 66, still working but who decided to take Social Security too. Taking his Social Security is more like managing income streams than assets but for purposes of this post they are similar. He recently sold an investment property and is not sure what to do, investment wise, with the proceeds—that is he is trying to figure out what role this piece of money, this asset, will play with his other assets and his income streams.

He is uncomfortable with the stock market, I asked him where the S&P 500 will be in ten years and he said he didn’t know. Regardless of what he does, the S&P 500 is higher in something like 90% of every ten-year rolling period. Even if the next 30% is down, the odds are overwhelmingly favorable for higher equity prices ten years from now.

To overcome the emotional difficulty of buying high, I have often suggested buying a fixed percentage at a fixed interval like 25% of the lump sum every three months. There is zero statistical advantage doing this, but I do believe it is easier emotionally. After you figure out your emotions, just let the market do it’s thing for you which we’ve talked about before as ergodicity.

Letting the market do its thing or mostly letting it do its thing is one form of asset management. To Ammous’ comment you can swing to the other end of the spectrum and make it your full-time job, spending all day looking at stock screens and reading articles at Seeking Alpha. I know that some people do want to put that kind of work into managing their assets and that is legit but it is just as legit to have a reasonably diversified portfolio that you check in on just every so often to make sure things are reasonably in balance and with a nod to Ammous’ specialty, if you want to hold a small amount of Bitcoin, go for it.

There are other assets to manage too. First being your wellbeing. Here’s a quick post about some benchmarks for successful aging. I have my own benchmarks for physical aging including one related to grip strength with how I carry five-gallon water jugs and a couple of others with the biggest being the pack test requirement to fight a wildfire (hike three miles in 45 minutes wearing a 45-pound pack).

Mental acuity is of course another asset to manage. I think the easiest way to do this is to proactively seek out new things to learn. If you actively volunteer somewhere, like a fire department, then there should be a lot of opportunities for new things. New this year at the fire department, and really a big milestone for us, is that we are sending out one of our fire trucks to large off-district fires. Our crew just got back from their first assignment and is ready to go back out. For as long as I have been with the department and as long as I have been chief, this new dynamic has a lot of moving parts to it, a lot of new moving parts. It’s an awesome thing for the department on many levels. I am not going off-district to fight fires, it wouldn’t jibe with my day job, I don’t think it is appropriate for the chief to disappear for two weeks at a time during the fire season and I think I’d be taking money out of other peoples’ pockets, anyone whose place I might take on the truck. As chief though, I am very involved in many aspects of this, and it is a blast.

In many previous blog posts I’ve minimized the importance of having a retirement number, like $800,000 or $1.5 million or whatever because while assessing how much you need is important, it is true that whatever number you wind up with will be your reality. If you thought you needed $1 million but end up with $800,000, you’ll figure out how to make that lower number work because you have to figure it out. I’ve also written a ton of posts about optionality, doing whatever you can along the way to give your future self as many options as possible. An important component of maximizing your optionality is managing your assets, not just your financial assets but also your physical assets and your mental assets.