Do FIRE Updates Make Sense? (August 2019)

Hello, dear readers.

In the last monthly update I was talking about why a continuous reporting of an asset allocation doesn’t make much sense. In summary, once an allocation is defined there shouldn’t be any significant swings in the ratios. However, while holding volatile assets independently of your strategic asset allocation, there will be changes in the portfolio’s proportions. But does it qualify to be an asset allocation then?

I don’t like it when people get stuck on terminology and create confusion, so I won’t do the same.

Regardless of whether it’s strategic or tactical allocation or does reporting it at all makes sense, I have another finding.

Displaying my asset allocation on my blog doesn’t add any value to anyone’s life.

Right?

Take the FIRE veteran, who comes on MonkWealth to see a fellow enthusiast’s ideas or challenge his views. He might enjoy posts like How I Invest, Geographic Arbitrage, Rent vs Buy, or the more personal ones like Living the childhood dream, the Financial mistakes I made, or Why FIRE. But I’m not seeing him getting hooked on the percentages, especially when they’re reported without justifications, just in a form of a monthly update.

On the other hand, take the n00b who is new to this field and wants to learn more about long-term investing or kick-start his FIRE journey. He’d enjoy learning about saving money, overcoming investment fear, and eventually Becoming an Investor or read about more general concepts trough Inflation explained, Opportunity cost, or Cash vs stocks in 30 years. But again, I’m not seeing him getting hooked on pie charts.

And the same can be said for anyone in between. At least I believe so. I’m aware that there is quite some value to be extracted from MonkWealth – I just don’t think that my personal FIRE metrics contribute to that. In case you didn’t see where this is going, there is another metric I wondered if it’s worth sharing – the FIRE Progress. If you think about it, almost all the things I said are applicable to it as well.

Of course, an argument against this is that this is my blog and I have every right to use it as a journal.

I agree. However, even putting the readers aside, I’m struggling to see the value it adds to my life as well.

I do my accounting in a multi-sheet Excel file regardless of whether I’ll post it here or not. Its structure is one sheet per asset class and all accounts listed per month. Then, I have a separate sheet for aggregation, containing my total NW, allocation breakdown, the change from the previous month (in EUR and percentage values), the FIRE Progress, the mean and standard deviation of gains, and the 1Y mean and standard deviation of gains. I talked about them more in my June monthly update.

My point? Regardless of whether I’ll include a pie chart beneath this paragraph or not, this post will convey the idea.

What does this mean?

I’m not saying that I’ll isolate myself and only share non-personal ideas on this blog. Actually, I’ll continue sharing my findings, thoughts, and milestones going forward, but I’ll quit the scheduled reporting of personal metrics.

With all this said, maybe there is a place for sharing these numbers, but I guess a separate page would be a more adequate place then in each end-of-month post. But let’s examine one more thing.

I was careful enough to never talk in absolute numbers but only in deltas, the percentage changes, about both my asset allocation and FIRE Progress. The reason for doing this is because eventually I want to stop writing anonymously, so I wouldn’t be that comfortable being too open about my net-worth. I can’t say that I expect certain events if the public knows my net-worth, but any scenario I can think of is either neutral or negative. I can’t think of a single positive outcome one could get out of sharing how much money he has.

But of course, I never did it – I always talked in relative amounts (percentages) and I’ll keep it that way. I’ll just lower the frequency. I can’t say that I don’t think it’s a good idea to share some form of a FIRE progress every now and then, but having it in the sidebar or in monthly updates is an overkill from today’s perspective.

Btw, I’m aware of biases and I try not to fall for any. If I change my mind I won’t be consistent with what I wrote here and I’ll just continue sharing whatever I feel like. The commitment bias is a strong force when making decisions, so never be afraid to change your mind, even if someone tries to shame you publicly for it. Call it out (or don’t) and enjoy your life.

What will remain in the monthly updates?

The format will be quite similar – whatever I have to report from the month. I’ll just be less specific about my asset allocation and FIRE Progress.

Something that will remain in these monthly posts are some of the non-financial updates I might have.

For example, this month I took a break from checking my portfolios daily. The main reason I did it is because it became a form of a compulsion for me and resisting such temptations proves to be the right thing most of the time.

It was pretty easy for my stock portfolio, but it was a bit of a risky step for the cryptocurrencies. And indeed, they were nearing the “time to almost sell a portion” territory, but it didn’t happen. My girlfriend was of great help here because she would have told me if certain thresholds were breached for my biggest holdings.

Although I didn’t look at my stock portfolio, it was hard to miss the current events. Trade tension, 2-10 yield curve inverts, DOW 5% below ATH… The news were everywhere, so I had an idea that I was headed towards an unpleasant surprise at the end of the month.

One picture == 1000 words, so here is what happened with the stock market:

And here is what happened with BTC (as a representative of my crypto portfolio):

Crazy.

And I’m not talking about ending the month in the red for both. I’m talking about the swings – at one point you feel like it will be a bad month, the next day you wake up to beautiful greenery. You anticipate aggregating your accounts and seeing a big jump in the numbers, just to wake up to red graphs the next day.

Not much more to say… The hands are strong and the mind is ready.

FIRE Progress?

Okay… Let’s do it one last time.

Take a look at these metrics because they won’t stick around for much longer.

Who cares, right? 🙂