@ Interest Compound, Point taken.
Counter point(s):
It's not just the end result that matters. It's the ride along the way. For some, lower highs and higher lows have a payoff. For many others they are a requirement since they dont have it in them to handle 50% drawdowns and stay the course.
Sure, that analysis only looks at the numbers, and the numbers assume people aren't idiots. But if we're going to take emotions into account, we can't just look at the downside. Those same people are also at risk of jumping around due to their portfolio "underperforming" during
good times. Look at all the people jumping out of Betterment recently, because their portfolio is "underperforming" the market over the last
8 months or so. Be careful not to apply that thinking only to the rare bad times, it applies in good times as well.
Why do you believe you'd be more suseptible to one type of emotional mistake, and not the other? When you deviate from the market, people always find a way to act like idiots and let emotions ruin their portfolio.
Cfiresim is awesome, but it's a hacksaw, not a scalpel. There is more to life than VTI and BND. Subsets of these and different asset classes each have their own history, correlations, and potentials.
Now you're going into "if you can predict the future winners, put money in them now, and avoid the losers, you'll have more money!" territory. This has proven to be a loser's game.
If all one wants is fully FIRE and be successful, then by all means work until you have a 4%WR and go 90/10. Adjust for inflation and live life without ever looking at your portfolio balance, because risk is meaningless to you. Odds are highly stacked you'll be ridiculously wealthy when you die. 90/10 Fits great if you're a size 40 regular.
Some folks have a more complex web of goals. Example: Plan to FIRE, travel the world for the first few years not working, then return home and work part time or have capital to start a business. Is 90/10 appropriate for this person? Would her interests be better served with a different portfolio initially to reduce sequence risk when she has zero income potential & higher expenses? Why not adjust portfolio to meet needs of individual situations, using all available data, then adjust when situation changes?
Money is fungible. Money doesn't care about emotions. It doesn't matter why it's being spent. Here's what it looks like if you're spending an extra 10% ($4000 in this example) a year for the first 5 years traveling the world:
Here's what it looks like if you spend an extra 25% ($10,000 in this example) a year for the first 5 years traveling the world:
Here's what it looks like if you spend an extra 25% ($10,000 in this example) a year for the first 5 years traveling the world, then brought in $1000 a month from your part-time job, for 10 years:
Here's what it looks like if you spend an extra 25% ($10,000 in this example) a year for the first 5 years traveling the world, then spent $100,000 (inflation-adjusted) for start-up costs for your business, then brought in $1000 a month from your business for 10 years:
Here's what it looks like if you spend an extra 25% ($10,000 in this example) a year for the first 5 years traveling the world, then spent $100,000 (inflation-adjusted) for start-up costs for your business, then brought in $1000 a month from your business for 10 years, then spent $300,000 (inflation-adjusted) trying to fix the business, only to watch it fail anyway:
Here's what it looks like if you spend an extra 25% ($10,000 in this example) a year for the first 5 years traveling the world, then spent $300,000 (inflation-adjusted) for start-up costs for your business, then brought in $1000 a month from your business for 10 years:
Here's what it looks like if you spend an extra 25% ($10,000 in this example) a year for the first 5 years traveling the world, then spent $100,000 (inflation-adjusted) for start-up costs for your business, then
lost $1000 a month from your business for 10 years:
...etc
For those of us who need some tailoring and dont mind a bit of surgery, there are many tactical moves that could significantly reduce time worked and satisfy a guarded nature to more appropriately meet specific goals. I'd rather work less, decrease volatility (sleep better), and increase success rates for my personal web of goals. The sacrifice for this is more time spent managing the portfolio, a smaller chance of dying uber rich, and I'm down with that.
This is a dangerous game you're playing. On what are you basing your assertion that your "tactical moves" would result in a net-positive and not a net-negative?
