Cycling Stache, where did you get the idea that Mustachianism is "normal"? It's awesome that you seem to think so, but the belief in the possibility of successful early retirement is far, far from "normal" to most of the world's population.
We mustachians aim to do things differently. Learning before acting is all that's being suggested in this and related threads. Why is that so difficult? What does it cost anyone to learn before they act? Learning a different way to view the "norm" is the entire premise of mustachianism.
And unlike the person who wrote the words below, I'm happy to answer questions that help others learn. That's why I'm here.
This is all i wish to add on the topic, so no replies are expected.
So I thought about this for a while before responding.
Behavioral economics was founded on the fundamental insight that people act irrationally even when they believe that what they're doing is rational. That was a big break from the idea that people acted rationally (as best they could) unless overcome by emotion.
The problem with that is that what appears to be rational behavior to the individual is very hard to shake precisely because it appears rational to them.
You note that Mustachians are different, but I suspect that they're different in the opposite way from what you're thinking. Most people are loss averse, but who are the most natural Mustachians here? Likely people who saved money (more than their peers). Those are the more risk averse people--the people who have built up more of a buffer to protect themselves from future loss.
It's all fine and good to talk about the trail blazers like MMM who are jumping off into FIRE, but really, that's not the vast majority of people on these forums. Most are the savers and are excited about the idea that all this saving is for a purpose someday. Will the majority jump when they hit their FIRE number? I'm skeptical, at least until people build up significant buffers (and oversavings).
That's relevant because the question is what people will do when the market takes a sharp downturn? If they stick it out, then that's fine. But if they panic because they're thinking that they need to pay off the mortgage, or they don't want to see the loss, that's different. Again, the math is all fine, but it's a question in part of what people will actually do. And behavioral economics suggests that we are risk averse people who fear loss and might not make completely rational decisions, even though we believe we will.
We'll see. Consider this a placeholder for now. But if we wanted a short-term test, we should start a post on the Investor Alley forum that says "Market just hit an all-time high; should I take out a home equity loan so I can invest more?" If you and boarder don't respond, I think the responses are likely to be 90% negative. Even though it's the same question as whether people should invest while still paying down their mortgage, in which case most people would say of course. The fact that the answer would be completely different for what is effectively the same question shows the impact of behavioral economics.
It's great for us all to believe we'll act rationally at all times, but that is the flawed premise of economics. We often don't act rationally, even when we think we do. So I agree that it's good to learn, and these are important points, but with the caveat that behavioral economics means that it can't be as simple as "just math" so long as there's the possibility that people won't be able to stick to the "just math" analysis at all times.
