Wow – what a time to start my first Net Wealth post. It is 10:30 PM on 25 February 2020 and I am writing this as an almost stream of consciousness and won’t edit it (except for grammar) to try to truly capture how I feel right now having seen our wealth shed 5% in a matter of 2 days as the coronavirus fears grip share markets , and as we attempt to put the finishing touches on our house to sell it (listing soon – aim for sale by May). We are overleveraged and overweight on property (wait for the blog about THAT misstep later) so this is really a time of stress on stress!
NNT’s fantastic book, The Black Swan, shared some wonderful stories about how in hindsight we convince ourselves we felt and acted in a certain way at times of high stress or uncertainty, and it is only where people managed to record their actual thoughts and feelings at the time and these could be compared do we realise. So this is why I am doing this.
The classic is the 20% or so fall the sharemarket took in December 2018 – I look back and my self talk is that the only reason I did not leverage into shares at the low price was because it was not part of “the plan” at the time, and if I hadn’t been so rigid (following my plan as laid out in my spreadsheet) of course I knew it was a great opportunity and would have leveraged in heavily and collected the 30% plus bounce since. Probably at the time it was all I could do to not sell – thankfully we did remain fully invested.
It is also particularly salient as one of the criticisms levelled at the FIRE community, particularly those who have already done the “RE” is they were lucky in riding the wave of the last 10 years.
So, how do I feel?? Can’t deny it hurts – I mean 5% is not much off my assumption for a full year return in my planning (6.25% post tax, based on 2% inflation so ~4.5% real return) so OUCH. Plus, I have to wonder is this the beginning of that one in 20 year 50% crash, or the overreaction of investors, or just the 5% move that happens every 2 years or so and a good time to buy.
I am guessing it is too early to tell, and that in 5 years (retirement date if all goes well) it won’t matter, and since I can’t control the share market I need to stick with the plan – no surprise really, when you are a FIDERMan, sticking to something is always the default . So, that was not an exciting read after all (assuming you got this far) – but what will be really interesting is if in 5 years I can even recall this as being a tumultuous time. Heck, probably even in five months I might not even remember this ‘share market drama’ – so let’s revisit this in five months (in fact reminder just set in my calendar). So, I will keep my focus on what I can control, try to sleep easy and use whatever spare time I have in the next five months to find out how many times in the last 10 years did all those previous wannabe- FIDER heroes actually have to go through just this as I have a feeling they didn’t have smooth sailing the whole time.
So for any others out there who have been having some palpitations as they update their net wealth spreadsheets, what did you decide to do in the middle of this??