Just some very quick hits today. I lost most of my Saturday, after our monthly fire board meeting, we had to put snow chains on one of the trucks and we discovered a boulder, seriously a boulder, between the dually on the passenger side that turned into a lengthy project. We deflated the outer tire and then used a hammer chisel (may not be the precise name) to break up the rock. It was granite and just the chiseling took 40 minutes. I've got a bunch a tabs open so this is the best way to catch up.
Barron's wrote about dividend ETFs including SCHD for anyone wanting to be more defensive in 2026. SCHD is an excellent fund. Since inception its total return has compounded at 12.5% and its price only has compounded at 9% versus 15% for the S&P 500. Those are outstanding numbers and of course the drawdown in 2022 was much smaller than the S&P 500.
The last three full years though, would you be impatient and throw in the towel? Yesterday's post was titled whatever you believe in will not always be optimal. SCHD is no less valid than its ever been but anything you believe in will at times lag. This example is the epitome of the patience required to succeed in markets.
A quick snippet from a different Barron's article. "So, a 3% fed-funds rate could coexist with a 6.75% 30-year bond. Such a backup in yields would result in a 30% price plunge." Thirty percent?!? The compensation for the risk taken for intermediate and longer bonds at these levels is inadequate. I have no idea if the 30 year can ever get to 6.75% but at that level it starts to get into the lower end of equity returns which starts to become interesting/attractive.
Panoptica which is kind of like Grantland, wrote about the 4% rule. To be blunt, I don't actually understand what the main point of the article was. The 4% rule is out of date because of some undefined signal says it is? But in the part of the conversation about sequence of return risk something that I've seen more than a couple of times with newly retired clients is they have their first two or three years of retirement somehow covered so they don't have to start withdrawing right away. One client got a separation package after some sort of corporate transaction. Another actually consulted part time for a while. I say "actually" because I think that gets written about far more often than it works out.
One way to mitigate sequence of return risk is to set aside cash but another one is to figure out how to get by without pulling from an account if your retirement date turns out to be unlucky timing. Figuring out how to get by in this context obviously takes a lot of planning and a little bit of good luck.
The last one is again from Barron's about the withering away of the FIRE movement. The take here on FIRE has always been about pursuing independence as opposed to giving up work. The extreme of doing nothing at 35 seems wholly unfulfilling. Also not talked about enough elsewhere is undercutting your own Social Security if you really stop work at 35. Sixty years is an awfully long time to rely on a portfolio and nothing else, remember no Social Security. Or at least a tiny amount of Social Security.
An observation I mentioned about FIRE very early in its existence is younger people not understanding what it means to be 50. It's not unreasonable for someone who is 25 or 30 to believe that 50 is very old, too old to enjoy "what little time is left." 50 can be old of course but doesn't have to be. Being 50 (or 60), having a little money in the bank and still being able to get it done can be a great time in our lives. The combination of health and experience is fantastic but I appreciate can be difficult to understand in our twenties.
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