White Coat Investor: Enough is Enough!

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willthrill81
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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sat Dec 28, 2019 11:42 am

sf_tech_saver wrote:
Fri Dec 27, 2019 2:15 am
As I approach a ~$4M portfolio this year at 41 years old I've been somewhat struggling with how much to spend/save. It a strange feeling to know I could retire modestly to a LCOL area and I've been watching how it affects my career psychology.
With a $4 million portfolio and very conservative 3% withdrawals, you could already withdraw more (i.e. $120k) than the median household income for San Francisco. You might not be happy with the 'median household lifestyle', but you could certainly do it. Move just about anywhere else, not just LCOL areas, and you could live very well on $120k, especially if you have no debt. We spend quite a bit less than that in our MCOL area and live a very nice upper middle class lifestyle. Keep in mind that the median household income for the U.S. is only about $63k.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: White Coat Investor: Enough is Enough!

Post by abuss368 » Sat Dec 28, 2019 11:47 am

sf_tech_saver wrote:
Fri Dec 27, 2019 2:15 am
Sales managers have a saying that they want a salesperson on their team to spend everything they make and more so they show up hungry.

As I approach a ~$4M portfolio this year at 41 years old I've been somewhat struggling with how much to spend/save. It a strange feeling to know I could retire modestly to a LCOL area and I've been watching how it affects my career psychology. I've decided to set new goals like an absolute minimum of $7M portfolio to ever step back at work, perhaps a vacation home for the family etc.

I love having more of a nest egg now in a nice 70/30 2 fund portfolio -- but there is also real power in staying ambitious and hungry in your pursuits/career.

Its healthy to keep chasing the ring....even if you have a few already in your pocket. So I think a spending plan can be just as important as a savings plan at some point....
You have options and most valuable: financial flexibility. Now be smart with managing that portfolio! Hold index funds, keep your costs low, and stay the course. Try to eliminate most of your debt. I have family who have long retired with Jack Bogle's and Warren Buffett's Two Fund Portfolio with no debt and are loving and enjoying life. Please keep checking in with the forum.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: White Coat Investor: Enough is Enough!

Post by abuss368 » Sat Dec 28, 2019 11:47 am

sf_tech_saver wrote:
Fri Dec 27, 2019 2:15 am
Sales managers have a saying that they want a salesperson on their team to spend everything they make and more so they show up hungry.

As I approach a ~$4M portfolio this year at 41 years old I've been somewhat struggling with how much to spend/save. It a strange feeling to know I could retire modestly to a LCOL area and I've been watching how it affects my career psychology. I've decided to set new goals like an absolute minimum of $7M portfolio to ever step back at work, perhaps a vacation home for the family etc.

I love having more of a nest egg now in a nice 70/30 2 fund portfolio -- but there is also real power in staying ambitious and hungry in your pursuits/career.

Its healthy to keep chasing the ring....even if you have a few already in your pocket. So I think a spending plan can be just as important as a savings plan at some point....
I am curious what Two Fund Portfolio you may be investing in? Total Stock and Total Bond?
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

EnjoyIt
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Re: White Coat Investor: Enough is Enough!

Post by EnjoyIt » Sat Dec 28, 2019 11:51 am

Artsdoctor wrote:
Thu Dec 26, 2019 7:37 pm
dmcmahon wrote:
Thu Dec 26, 2019 6:08 pm
SCV_Lawyer wrote:
Thu Dec 26, 2019 12:09 pm

Marginal rate is 52.4%:

Federal: 37%
State: 12.3% (CA)
Medicare: 2.9% (self-employed)
Obamacare Medicare surtax: 0.9%
Subtract: 0.7% (half of Medicare is deductible against fed and state taxes)

37 + 12.3 + 2.9 + 0.9 - 0.7 = 52.4%
It’s a bit worse if you have investment income, because dollar for dollar above a certain level you start triggering a higher tax rate and then the Medicare surtax on your investment income. On a marginal basis you can get above 55%. I don’t know anyone who cares about the blended rate being lower - decisions about investments and work hours are made at the margin.
Marginal rate is definitely going to be the most useful for investment planning as well as income and even deductions. The total federal (and state) percentages can useful if you’re self-employed and trying to estimate your tax payments. But I also think it’s important for people to understand the difference: you may have a marginal tax rate of 50% but it would be incorrect to say that you’re paying 50% of your income in taxes. People DO say this if the subject of taxes comes up and your credibility takes a hit when you insist on it.
It could mean that any additional dollar you earn is taxed at “50%.” Then decide working for that addition dollar is not worth your time. I have done that.
A time to EVALUATE your jitters. | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418

EnjoyIt
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Re: White Coat Investor: Enough is Enough!

Post by EnjoyIt » Sat Dec 28, 2019 11:51 am

Artsdoctor wrote:
Thu Dec 26, 2019 7:37 pm
dmcmahon wrote:
Thu Dec 26, 2019 6:08 pm
SCV_Lawyer wrote:
Thu Dec 26, 2019 12:09 pm

Marginal rate is 52.4%:

Federal: 37%
State: 12.3% (CA)
Medicare: 2.9% (self-employed)
Obamacare Medicare surtax: 0.9%
Subtract: 0.7% (half of Medicare is deductible against fed and state taxes)

37 + 12.3 + 2.9 + 0.9 - 0.7 = 52.4%
It’s a bit worse if you have investment income, because dollar for dollar above a certain level you start triggering a higher tax rate and then the Medicare surtax on your investment income. On a marginal basis you can get above 55%. I don’t know anyone who cares about the blended rate being lower - decisions about investments and work hours are made at the margin.
Marginal rate is definitely going to be the most useful for investment planning as well as income and even deductions. The total federal (and state) percentages can useful if you’re self-employed and trying to estimate your tax payments. But I also think it’s important for people to understand the difference: you may have a marginal tax rate of 50% but it would be incorrect to say that you’re paying 50% of your income in taxes. People DO say this if the subject of taxes comes up and your credibility takes a hit when you insist on it.
It could mean that any additional dollar you earn is taxed at “50%.” Then decide working for that addition dollar is not worth your time. I have done that.
A time to EVALUATE your jitters. | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418

staustin
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Re: White Coat Investor: Enough is Enough!

Post by staustin » Sat Dec 28, 2019 12:28 pm

Dandy wrote:
Wed Dec 25, 2019 7:39 am
I was/am? a compulsive saver. Saw my parents having to move to a Florida mobile home community (it was pretty nice) when my father was forced into retirement just short of getting his full pension. My mom also started me off very young with opening a savings account.

Despite being forced into retirement twice :oops: I amassed sufficient assets/retirement income. I painted my house twice inside and out, changed my oil, rotated my tires etc. was on the cheap side of being fugal. When I finally retired at age 60 I used to walk every morning toward any place that served coffee and would fret just a bit when the price went up. I was facing 30 years or so of retirement. Of course retiring in 2008 - 9 was full of fear due to the market plunge.

It took awhile but I did baby steps as far as loosening the purse strings. More dining out, an extra vacation, season tickets to the theater, a new vs used car, etc. With each baby step I and my wife enjoyed life a bit better. Having a 10+ year bull market was also a major tail wind.

I'm still not a easy spender but realize that life is short, I have been very fortunate, and you can't take it with you. I even got to a point where we are gifting "early inheritance" to our children.

So my path to change was baby steps and realizing the rewards of loosening up.
a great post....

MarkRoulo
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Re: White Coat Investor: Enough is Enough!

Post by MarkRoulo » Sat Dec 28, 2019 12:37 pm

BanquetBeer wrote:
Sat Dec 28, 2019 11:04 am
sf_tech_saver wrote:
Fri Dec 27, 2019 1:56 am

Top top marginal bracket in California is closer to 51% -- 37% Federal, 13% State, Medicare, SSI....

Getting to 45% total taxes is just a question of how far into 7 figures your W2 stretches....but it is not that uncommon in CA in IPO outcome years etc.
In CA you would have to earn about $2.9 million/yr with no deductions to hit 45% and $10 million/yr to get close to 50%

While it is possible, even for this forum it would be pretty rare event.

The previous posts referenced typical annual income less than $1mill so don’t think this was originally about once in a company IPO events.
Don't forget property taxes.

I think one can purchase a ~$1.5M house on a (pre-tax) income of around $250,000. I think.

In California, that house would have a property tax of $15,000 (or 6% of one's pre-tax income).

Some people consider property tax when discussing their average level of taxation.

EnjoyIt
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Re: White Coat Investor: Enough is Enough!

Post by EnjoyIt » Sat Dec 28, 2019 12:43 pm

MarkRoulo wrote:
Sat Dec 28, 2019 12:37 pm
BanquetBeer wrote:
Sat Dec 28, 2019 11:04 am
sf_tech_saver wrote:
Fri Dec 27, 2019 1:56 am

Top top marginal bracket in California is closer to 51% -- 37% Federal, 13% State, Medicare, SSI....

Getting to 45% total taxes is just a question of how far into 7 figures your W2 stretches....but it is not that uncommon in CA in IPO outcome years etc.
In CA you would have to earn about $2.9 million/yr with no deductions to hit 45% and $10 million/yr to get close to 50%

While it is possible, even for this forum it would be pretty rare event.

The previous posts referenced typical annual income less than $1mill so don’t think this was originally about once in a company IPO events.
Don't forget property taxes.

I think one can purchase a ~$1.5M house on a (pre-tax) income of around $250,000. I think.

In California, that house would have a property tax of $15,000 (or 6% of one's pre-tax income).

Some people consider property tax when discussing their average level of taxation.
Tax is tax. I consider sales tax and property tax as tax because it is tax.
A time to EVALUATE your jitters. | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418

hicabob
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Re: White Coat Investor: Enough is Enough!

Post by hicabob » Sat Dec 28, 2019 12:52 pm

Here is a fun list of 100 taxes ....
https://www.balancedpolitics.org/editor ... ou_pay.htm

and yes it's easy to get to over 50% in California

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Re: White Coat Investor: Enough is Enough!

Post by Mel Lindauer » Sat Dec 28, 2019 1:22 pm

Here's an old Forbes 3-part series I wrote about the difficulty of switching gears from a lifetime of savings to spending after retiring.

https://www.forbes.com/sites/theboglehe ... e5b5e37adc

https://www.forbes.com/sites/theboglehe ... 2c6fe2f1f9

https://www.forbes.com/sites/theboglehe ... de-part-3/
Best Regards - Mel | | Semper Fi

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Re: White Coat Investor: Enough is Enough!

Post by SCV_Lawyer » Sat Dec 28, 2019 2:01 pm

MarkRoulo wrote:
Sat Dec 28, 2019 12:37 pm
BanquetBeer wrote:
Sat Dec 28, 2019 11:04 am
sf_tech_saver wrote:
Fri Dec 27, 2019 1:56 am

Top top marginal bracket in California is closer to 51% -- 37% Federal, 13% State, Medicare, SSI....

Getting to 45% total taxes is just a question of how far into 7 figures your W2 stretches....but it is not that uncommon in CA in IPO outcome years etc.
In CA you would have to earn about $2.9 million/yr with no deductions to hit 45% and $10 million/yr to get close to 50%

While it is possible, even for this forum it would be pretty rare event.

The previous posts referenced typical annual income less than $1mill so don’t think this was originally about once in a company IPO events.
Don't forget property taxes.

I think one can purchase a ~$1.5M house on a (pre-tax) income of around $250,000. I think.

In California, that house would have a property tax of $15,000 (or 6% of one's pre-tax income).

Some people consider property tax when discussing their average level of taxation.
Property taxes would actually be even more than that. The 1% figure is the baseline, but there are other add-on assessments that typically bring the tax rate up to 1.2% to 1.25%. So more like $18k to $19k in taxes. That percentage is not that high when compared nationally, but when applied to CA housing prices, the absolute dollar amounts get quite large.

smitcat
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Re: White Coat Investor: Enough is Enough!

Post by smitcat » Sat Dec 28, 2019 2:04 pm

EnjoyIt wrote:
Sat Dec 28, 2019 11:51 am
Artsdoctor wrote:
Thu Dec 26, 2019 7:37 pm
dmcmahon wrote:
Thu Dec 26, 2019 6:08 pm
SCV_Lawyer wrote:
Thu Dec 26, 2019 12:09 pm

Marginal rate is 52.4%:

Federal: 37%
State: 12.3% (CA)
Medicare: 2.9% (self-employed)
Obamacare Medicare surtax: 0.9%
Subtract: 0.7% (half of Medicare is deductible against fed and state taxes)

37 + 12.3 + 2.9 + 0.9 - 0.7 = 52.4%
It’s a bit worse if you have investment income, because dollar for dollar above a certain level you start triggering a higher tax rate and then the Medicare surtax on your investment income. On a marginal basis you can get above 55%. I don’t know anyone who cares about the blended rate being lower - decisions about investments and work hours are made at the margin.
Marginal rate is definitely going to be the most useful for investment planning as well as income and even deductions. The total federal (and state) percentages can useful if you’re self-employed and trying to estimate your tax payments. But I also think it’s important for people to understand the difference: you may have a marginal tax rate of 50% but it would be incorrect to say that you’re paying 50% of your income in taxes. People DO say this if the subject of taxes comes up and your credibility takes a hit when you insist on it.
It could mean that any additional dollar you earn is taxed at “50%.” Then decide working for that addition dollar is not worth your time. I have done that.
Not that it matters - but at a tax rate of 50% we have always found it worth our time to earn those funds.

Cash
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Re: White Coat Investor: Enough is Enough!

Post by Cash » Sat Dec 28, 2019 5:25 pm

getthatmarshmallow wrote:
Sat Dec 28, 2019 11:37 am
Cash wrote:
Wed Dec 25, 2019 10:56 pm
The problem I have with the plan of thirds is that it can lead to lifestyle inflation. What if there is a future salary/bonus decrease after you have become accustomed to spending a larger amount? That can be a tough pill to swallow.
The plan of thirds is more or less what I follow (a little more aggressive than that, but the principle is pay yourself first), and the key is to not let lifestyle inflation hit the big lifestyle upgrades (house, mostly), and have a healthy emergency fund. We can cut our income by more than half and meet all of our obligations (and we've done that, so it's not just speculation. More fun having more money tho.) Or one could set one's "third" excluding bonuses.

Beyond that, as long as we're not talking "losing the house" or "not eating", then one simply gets accustomed to spending less. All hoarding it does is ensure that one is swallowing the "tough pill" for no reason.
I know from experience that it is harder to adjust down than it is to adjust up. If you get used to buying business class seats for those international trips, it’s hard to go back to economy when times get tough. I’m all for responsible spending, but I think it is better to do so at a level that can be maintained indefinitely. Consumption smoothing, I suppose.

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Re: White Coat Investor: Enough is Enough!

Post by MathIsMyWayr » Sat Dec 28, 2019 5:47 pm

SCV_Lawyer wrote:
Sat Dec 28, 2019 2:01 pm
MarkRoulo wrote:
Sat Dec 28, 2019 12:37 pm
BanquetBeer wrote:
Sat Dec 28, 2019 11:04 am
sf_tech_saver wrote:
Fri Dec 27, 2019 1:56 am

Top top marginal bracket in California is closer to 51% -- 37% Federal, 13% State, Medicare, SSI....

Getting to 45% total taxes is just a question of how far into 7 figures your W2 stretches....but it is not that uncommon in CA in IPO outcome years etc.
In CA you would have to earn about $2.9 million/yr with no deductions to hit 45% and $10 million/yr to get close to 50%

While it is possible, even for this forum it would be pretty rare event.

The previous posts referenced typical annual income less than $1mill so don’t think this was originally about once in a company IPO events.
Don't forget property taxes.

I think one can purchase a ~$1.5M house on a (pre-tax) income of around $250,000. I think.

In California, that house would have a property tax of $15,000 (or 6% of one's pre-tax income).

Some people consider property tax when discussing their average level of taxation.
Property taxes would actually be even more than that. The 1% figure is the baseline, but there are other add-on assessments that typically bring the tax rate up to 1.2% to 1.25%. So more like $18k to $19k in taxes. That percentage is not that high when compared nationally, but when applied to CA housing prices, the absolute dollar amounts get quite large.
In my case, it is about 1.4%. There are a lot of add-ons on top of the stated 1%.

getthatmarshmallow
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Re: White Coat Investor: Enough is Enough!

Post by getthatmarshmallow » Sat Dec 28, 2019 5:56 pm

Cash wrote:
Sat Dec 28, 2019 5:25 pm
getthatmarshmallow wrote:
Sat Dec 28, 2019 11:37 am
Cash wrote:
Wed Dec 25, 2019 10:56 pm
The problem I have with the plan of thirds is that it can lead to lifestyle inflation. What if there is a future salary/bonus decrease after you have become accustomed to spending a larger amount? That can be a tough pill to swallow.
The plan of thirds is more or less what I follow (a little more aggressive than that, but the principle is pay yourself first), and the key is to not let lifestyle inflation hit the big lifestyle upgrades (house, mostly), and have a healthy emergency fund. We can cut our income by more than half and meet all of our obligations (and we've done that, so it's not just speculation. More fun having more money tho.) Or one could set one's "third" excluding bonuses.

Beyond that, as long as we're not talking "losing the house" or "not eating", then one simply gets accustomed to spending less. All hoarding it does is ensure that one is swallowing the "tough pill" for no reason.
I know from experience that it is harder to adjust down than it is to adjust up. If you get used to buying business class seats for those international trips, it’s hard to go back to economy when times get tough. I’m all for responsible spending, but I think it is better to do so at a level that can be maintained indefinitely. Consumption smoothing, I suppose.
I get where you're coming from, but I also think that while it's hard to go back, I'm not sure that's a decisive case for never enjoying some of the nicer things that money can buy. I'm sure it's not fun to have to book an economy seat after getting used to business class. But I'd bet "let's not take the trip because if we fall on hard times we won't be able to take trips" or "don't go skiing now because I can't guarantee that we'll always be able to afford it and we'd miss it if we stopped" isn't much fun, either. (And note, we're talking "economy on an international trip" not "no international trip" or "had to sell the cat for food," so this is just quibbling around the edges.) I suppose it's a matter of not letting the nicer experiences/things own you.

EnjoyIt
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Re: White Coat Investor: Enough is Enough!

Post by EnjoyIt » Sat Dec 28, 2019 5:57 pm

Our experience has been a slow and gradual increase in our expenses.

When I was broke I barely spent any money. As I made more and saved more I slowly increased spending. This pathway has allowed us to get to 25x expenses (excluding mortgage) very quickly. After hitting 25x we decided to go part time and also to increase spending some more. The theory is to hover around 23-27x as wealth grows. This practically guarantees us the flexibility we desire to retire at any point.

Cutting back is not that big of a deal. We have flown business class, extended legroom and just a few months ago we flew in the back of the plane. It was no big deal. Actually it taught us that the extra $90 united wanted per person each way was not worth it. I would rather spend those $360 on an extra day or two at our destination.
A time to EVALUATE your jitters. | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418

HEDGEFUNDIE
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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE » Sat Dec 28, 2019 6:09 pm

MathIsMyWayr wrote:
Sat Dec 28, 2019 5:47 pm
SCV_Lawyer wrote:
Sat Dec 28, 2019 2:01 pm
MarkRoulo wrote:
Sat Dec 28, 2019 12:37 pm
BanquetBeer wrote:
Sat Dec 28, 2019 11:04 am
sf_tech_saver wrote:
Fri Dec 27, 2019 1:56 am

Top top marginal bracket in California is closer to 51% -- 37% Federal, 13% State, Medicare, SSI....

Getting to 45% total taxes is just a question of how far into 7 figures your W2 stretches....but it is not that uncommon in CA in IPO outcome years etc.
In CA you would have to earn about $2.9 million/yr with no deductions to hit 45% and $10 million/yr to get close to 50%

While it is possible, even for this forum it would be pretty rare event.

The previous posts referenced typical annual income less than $1mill so don’t think this was originally about once in a company IPO events.
Don't forget property taxes.

I think one can purchase a ~$1.5M house on a (pre-tax) income of around $250,000. I think.

In California, that house would have a property tax of $15,000 (or 6% of one's pre-tax income).

Some people consider property tax when discussing their average level of taxation.
Property taxes would actually be even more than that. The 1% figure is the baseline, but there are other add-on assessments that typically bring the tax rate up to 1.2% to 1.25%. So more like $18k to $19k in taxes. That percentage is not that high when compared nationally, but when applied to CA housing prices, the absolute dollar amounts get quite large.
In my case, it is about 1.4%. There are a lot of add-ons on top of the stated 1%.
This whole conversation started around my suggestion of the rule of thirds. Granularity was never the point. (My CA property tax is 1.22% btw)

The point was you should be spending a decent amount of your income, and as your income goes up, your spending should go up commensurately.

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willthrill81
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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sat Dec 28, 2019 6:14 pm

getthatmarshmallow wrote:
Sat Dec 28, 2019 5:56 pm
Cash wrote:
Sat Dec 28, 2019 5:25 pm
getthatmarshmallow wrote:
Sat Dec 28, 2019 11:37 am
Cash wrote:
Wed Dec 25, 2019 10:56 pm
The problem I have with the plan of thirds is that it can lead to lifestyle inflation. What if there is a future salary/bonus decrease after you have become accustomed to spending a larger amount? That can be a tough pill to swallow.
The plan of thirds is more or less what I follow (a little more aggressive than that, but the principle is pay yourself first), and the key is to not let lifestyle inflation hit the big lifestyle upgrades (house, mostly), and have a healthy emergency fund. We can cut our income by more than half and meet all of our obligations (and we've done that, so it's not just speculation. More fun having more money tho.) Or one could set one's "third" excluding bonuses.

Beyond that, as long as we're not talking "losing the house" or "not eating", then one simply gets accustomed to spending less. All hoarding it does is ensure that one is swallowing the "tough pill" for no reason.
I know from experience that it is harder to adjust down than it is to adjust up. If you get used to buying business class seats for those international trips, it’s hard to go back to economy when times get tough. I’m all for responsible spending, but I think it is better to do so at a level that can be maintained indefinitely. Consumption smoothing, I suppose.
I get where you're coming from, but I also think that while it's hard to go back, I'm not sure that's a decisive case for never enjoying some of the nicer things that money can buy. I'm sure it's not fun to have to book an economy seat after getting used to business class. But I'd bet "let's not take the trip because if we fall on hard times we won't be able to take trips" or "don't go skiing now because I can't guarantee that we'll always be able to afford it and we'd miss it if we stopped" isn't much fun, either. (And note, we're talking "economy on an international trip" not "no international trip" or "had to sell the cat for food," so this is just quibbling around the edges.) I suppose it's a matter of not letting the nicer experiences/things own you.
That's part of the reason why I suspect that we'll remain living where we are in retirement. If/when we have to cut back on retirement spending due to our portfolio declining in value, we should be able to do so significantly and still maintain a very good quality of life. Our essential spending should only represent 2-2.5% of our portfolio, leaving at least another 1.5-2% for discretionary spending, mainly on travel. But if we need to limit ourselves to domestic or even just regional travel (i.e. roadtrips) and ski at local mountains, we will be perfectly happy to do so. We have worked hard to not let lifestyle inflation get too much of a hold on us.

When I see people like Sam Dogen, who recently said that he will likely come out of early retirement because his $250k of income isn't enough to live his desired lifestyle, I cannot help but think that lifestyle inflation is a very nefarious thing, and that the hedonic treadmill is moving quickly with many people.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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dmcmahon
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Re: White Coat Investor: Enough is Enough!

Post by dmcmahon » Sat Dec 28, 2019 6:20 pm

MathIsMyWayr wrote:
Thu Dec 26, 2019 11:31 pm
texasdiver wrote:
Thu Dec 26, 2019 11:19 pm
AlohaJoe wrote:
Wed Dec 25, 2019 7:06 am
AlphaLess wrote:
Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote:
Tue Dec 24, 2019 11:22 pm
1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Taxes of 45% require an income of $750,000 a year for a single person or $1,500,000 a year for a married couple (assuming California state taxes).

I would assume the standard answer is that you negotiate with your employer to get a salary of less than $1.5 million a year in exchange for more equity or deferred compensation.

Either that, or realize that rules of thumb on the internet are worth what you paid for them.
Perhaps if you are only counting income taxes. Add in payroll taxes, property taxes, and sales taxes and I expect many here are pushing 45%.
Unless you want to study how much is the government's total share of the economy, what is the point in counting property taxes or sales taxes? There are various taxes added even in the price before sales taxes.
Totally agree. Those have no bearing on work and investment decisions at the margin. They might have a bearing on spending decisions. I’ll give property taxes a Mulligan because a lot of people regard their home as an investment. But if someone wants to go there, then the $250-500k cap gains exclusion should be acknowledged.

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willthrill81
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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sat Dec 28, 2019 6:21 pm

HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:09 pm
The point was you should be spending a decent amount of your income, and as your income goes up, your spending should go up commensurately.
I agree that your spending can go commensurately with your income, but it certainly doesn't have to. Once you get to the point that you're really content with what you have, then, by definition, you don't want more. So if you acquire more, you then have the wonderful opportunity of being able to help out others.

I must say that personally, we're pretty much contented when it comes to spending. We care much more about experiences than possessions, and traveling is the primary experience we enjoy. But you can only take so many trips at a time, and we don't care to fly first-class and stay in $1k/night hotels. We would rather help out someone in need than spend needlessly.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE » Sat Dec 28, 2019 6:25 pm

willthrill81 wrote:
Sat Dec 28, 2019 6:21 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:09 pm
The point was you should be spending a decent amount of your income, and as your income goes up, your spending should go up commensurately.
I agree that your spending can go commensurately with your income, but it certainly doesn't have to. Once you get to the point that you're really content with what you have, then, by definition, you don't want more. So if you acquire more, you then have the wonderful opportunity of being able to help out others.

I must say that personally, we're pretty much contented when it comes to spending. We care much more about experiences than possessions, and traveling is the primary experience we enjoy. But you can only take so many trips at a time, and we don't care to fly first-class and stay in $1k/night hotels. We would rather help out someone in need than spend needlessly.
I am sure I will get flak for this. But every time I hear someone here say they are content with their current level of consumption and have no desire to spend more, all I can think is “what a sad lack of imagination”.

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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sat Dec 28, 2019 6:29 pm

HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:25 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:21 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:09 pm
The point was you should be spending a decent amount of your income, and as your income goes up, your spending should go up commensurately.
I agree that your spending can go commensurately with your income, but it certainly doesn't have to. Once you get to the point that you're really content with what you have, then, by definition, you don't want more. So if you acquire more, you then have the wonderful opportunity of being able to help out others.

I must say that personally, we're pretty much contented when it comes to spending. We care much more about experiences than possessions, and traveling is the primary experience we enjoy. But you can only take so many trips at a time, and we don't care to fly first-class and stay in $1k/night hotels. We would rather help out someone in need than spend needlessly.
I am sure I will get flak for this. But every time I hear someone here say they are content with their current level of consumption and have no desire to spend more, all I can think is “what a sad lack of imagination”.
And when I hear that, I think of how sad it is for someone to never be satisfied.

"Enough is as good as a feast."
- British proverb
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: White Coat Investor: Enough is Enough!

Post by bhsince87 » Sat Dec 28, 2019 6:35 pm

HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:25 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:21 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:09 pm
The point was you should be spending a decent amount of your income, and as your income goes up, your spending should go up commensurately.
I agree that your spending can go commensurately with your income, but it certainly doesn't have to. Once you get to the point that you're really content with what you have, then, by definition, you don't want more. So if you acquire more, you then have the wonderful opportunity of being able to help out others.

I must say that personally, we're pretty much contented when it comes to spending. We care much more about experiences than possessions, and traveling is the primary experience we enjoy. But you can only take so many trips at a time, and we don't care to fly first-class and stay in $1k/night hotels. We would rather help out someone in need than spend needlessly.
I am sure I will get flak for this. But every time I hear someone here say they are content with their current level of consumption and have no desire to spend more, all I can think is “what a sad lack of imagination”.
I'm not giving you flak, but it's entirely possible that way of thinking is what actually drives people to work longer, never retire, and save, save, save.

If you don't reach a point of consumption you're comfortable with, how can you ever decide when you have "enough"?
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE » Sat Dec 28, 2019 7:10 pm

willthrill81 wrote:
Sat Dec 28, 2019 6:29 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:25 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:21 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:09 pm
The point was you should be spending a decent amount of your income, and as your income goes up, your spending should go up commensurately.
I agree that your spending can go commensurately with your income, but it certainly doesn't have to. Once you get to the point that you're really content with what you have, then, by definition, you don't want more. So if you acquire more, you then have the wonderful opportunity of being able to help out others.

I must say that personally, we're pretty much contented when it comes to spending. We care much more about experiences than possessions, and traveling is the primary experience we enjoy. But you can only take so many trips at a time, and we don't care to fly first-class and stay in $1k/night hotels. We would rather help out someone in need than spend needlessly.
I am sure I will get flak for this. But every time I hear someone here say they are content with their current level of consumption and have no desire to spend more, all I can think is “what a sad lack of imagination”.
And when I hear that, I think of how sad it is for someone to never be satisfied.

"Enough is as good as a feast."
- British proverb
Where did I say I was never satisfied?

I am satisfied often. That does not preclude me from adding the cherry on top.

A concrete example: it is quite satisfying to enjoy a Bunnahabhain 25 Year in front of my fireplace. It is another thing entirely to enjoy it in the warehouse where it has matured, talking to the distiller who has dedicated his life to making it.

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willthrill81
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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sat Dec 28, 2019 7:20 pm

HEDGEFUNDIE wrote:
Sat Dec 28, 2019 7:10 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:29 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:25 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:21 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:09 pm
The point was you should be spending a decent amount of your income, and as your income goes up, your spending should go up commensurately.
I agree that your spending can go commensurately with your income, but it certainly doesn't have to. Once you get to the point that you're really content with what you have, then, by definition, you don't want more. So if you acquire more, you then have the wonderful opportunity of being able to help out others.

I must say that personally, we're pretty much contented when it comes to spending. We care much more about experiences than possessions, and traveling is the primary experience we enjoy. But you can only take so many trips at a time, and we don't care to fly first-class and stay in $1k/night hotels. We would rather help out someone in need than spend needlessly.
I am sure I will get flak for this. But every time I hear someone here say they are content with their current level of consumption and have no desire to spend more, all I can think is “what a sad lack of imagination”.
And when I hear that, I think of how sad it is for someone to never be satisfied.

"Enough is as good as a feast."
- British proverb
Where did I say I was never satisfied?

I am satisfied often. That does not preclude me from adding the cherry on top.
You cannot be truly satisfied if you still want more.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Xrayman69
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Re: White Coat Investor: Enough is Enough!

Post by Xrayman69 » Sat Dec 28, 2019 8:03 pm

willthrill81 wrote:
Sat Dec 28, 2019 7:20 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 7:10 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:29 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:25 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:21 pm


I agree that your spending can go commensurately with your income, but it certainly doesn't have to. Once you get to the point that you're really content with what you have, then, by definition, you don't want more. So if you acquire more, you then have the wonderful opportunity of being able to help out others.

I must say that personally, we're pretty much contented when it comes to spending. We care much more about experiences than possessions, and traveling is the primary experience we enjoy. But you can only take so many trips at a time, and we don't care to fly first-class and stay in $1k/night hotels. We would rather help out someone in need than spend needlessly.
I am sure I will get flak for this. But every time I hear someone here say they are content with their current level of consumption and have no desire to spend more, all I can think is “what a sad lack of imagination”.
And when I hear that, I think of how sad it is for someone to never be satisfied.

"Enough is as good as a feast."
- British proverb
Where did I say I was never satisfied?

I am satisfied often. That does not preclude me from adding the cherry on top.
You cannot be truly satisfied if you still want more.

Motivation and desire to advance/want more is not necessarily a negative trait. I’m thankful for those who “are never satisfied” and can continue in a positive manner be looking forward. Space travel, technological advances, advances in health care are a few examples in which I hope human kind strives to never be satisfied.

Onward and forward to those with the desire, will, and capabilities. Rewards to match can be a positive motivating and driving factor.mm

ThankYouJack
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Re: White Coat Investor: Enough is Enough!

Post by ThankYouJack » Sat Dec 28, 2019 8:33 pm

Xrayman69 wrote:
Sat Dec 28, 2019 8:03 pm
Space travel, technological advances, advances in health care are a few examples in which I hope human kind strives to never be satisfied.
I don't see it as black and white. For example, technology brought us the internet and smart phones but it also brought us guns and the atomic bomb. And do the internet and smart phones actually make human kind happier?

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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sat Dec 28, 2019 8:40 pm

ThankYouJack wrote:
Sat Dec 28, 2019 8:33 pm
Xrayman69 wrote:
Sat Dec 28, 2019 8:03 pm
Space travel, technological advances, advances in health care are a few examples in which I hope human kind strives to never be satisfied.
I don't see it as black and white. For example, technology brought us the internet and smart phones but it also brought us guns and the atomic bomb. And do the internet and smart phones actually make human kind happier?
Despite a strong economy, low violent crime rate, and unprecedented access to luxuries that Rockefeller himself didn't have just 100 years ago, Americans' happiness has been trending downward for years.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

hmw
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Re: White Coat Investor: Enough is Enough!

Post by hmw » Sat Dec 28, 2019 8:48 pm

smitcat wrote:
Sat Dec 28, 2019 2:04 pm
EnjoyIt wrote:
Sat Dec 28, 2019 11:51 am
Artsdoctor wrote:
Thu Dec 26, 2019 7:37 pm
dmcmahon wrote:
Thu Dec 26, 2019 6:08 pm
SCV_Lawyer wrote:
Thu Dec 26, 2019 12:09 pm

Marginal rate is 52.4%:

Federal: 37%
State: 12.3% (CA)
Medicare: 2.9% (self-employed)
Obamacare Medicare surtax: 0.9%
Subtract: 0.7% (half of Medicare is deductible against fed and state taxes)

37 + 12.3 + 2.9 + 0.9 - 0.7 = 52.4%
It’s a bit worse if you have investment income, because dollar for dollar above a certain level you start triggering a higher tax rate and then the Medicare surtax on your investment income. On a marginal basis you can get above 55%. I don’t know anyone who cares about the blended rate being lower - decisions about investments and work hours are made at the margin.
Marginal rate is definitely going to be the most useful for investment planning as well as income and even deductions. The total federal (and state) percentages can useful if you’re self-employed and trying to estimate your tax payments. But I also think it’s important for people to understand the difference: you may have a marginal tax rate of 50% but it would be incorrect to say that you’re paying 50% of your income in taxes. People DO say this if the subject of taxes comes up and your credibility takes a hit when you insist on it.
It could mean that any additional dollar you earn is taxed at “50%.” Then decide working for that addition dollar is not worth your time. I have done that.
Not that it matters - but at a tax rate of 50% we have always found it worth our time to earn those funds.
I think it depends on how many hours you are already working before hitting the 50% marginal tax bracket. I am a MD and I work anywhere from 35 to 55 hours per week. I am in the top marginal tax bracket. I can’t imagine that I will want to work 70 or 80 hours a week to earn extra money and keeping less than half of it. The extra hours going from 50 to 70-80 hours a week will have a severe negative impact on one’s health, and relationships with one’s loved ones. It is materially different than from going from working 30 hours to 40 hours a week.

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Re: White Coat Investor: Enough is Enough!

Post by Xrayman69 » Sat Dec 28, 2019 9:14 pm

ThankYouJack wrote:
Sat Dec 28, 2019 8:33 pm
Xrayman69 wrote:
Sat Dec 28, 2019 8:03 pm
Space travel, technological advances, advances in health care are a few examples in which I hope human kind strives to never be satisfied.
I don't see it as black and white. For example, technology brought us the internet and smart phones but it also brought us guns and the atomic bomb. And do the internet and smart phones actually make human kind happier?
I won’t speak for all of human kind, but yes without a doubt the internet and smart phones has made my life a lot better. People who don’t want to use these are free to not do so.

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Re: White Coat Investor: Enough is Enough!

Post by abuss368 » Sat Dec 28, 2019 9:58 pm

Xrayman69 wrote:
Sat Dec 28, 2019 9:14 pm
ThankYouJack wrote:
Sat Dec 28, 2019 8:33 pm
Xrayman69 wrote:
Sat Dec 28, 2019 8:03 pm
Space travel, technological advances, advances in health care are a few examples in which I hope human kind strives to never be satisfied.
I don't see it as black and white. For example, technology brought us the internet and smart phones but it also brought us guns and the atomic bomb. And do the internet and smart phones actually make human kind happier?
I won’t speak for all of human kind, but yes without a doubt the internet and smart phones has made my life a lot better. People who don’t want to use these are free to not do so.
Agreed. Technology can make life much easier.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: White Coat Investor: Enough is Enough!

Post by smitcat » Sun Dec 29, 2019 7:35 am

hmw wrote:
Sat Dec 28, 2019 8:48 pm
smitcat wrote:
Sat Dec 28, 2019 2:04 pm
EnjoyIt wrote:
Sat Dec 28, 2019 11:51 am
Artsdoctor wrote:
Thu Dec 26, 2019 7:37 pm
dmcmahon wrote:
Thu Dec 26, 2019 6:08 pm


It’s a bit worse if you have investment income, because dollar for dollar above a certain level you start triggering a higher tax rate and then the Medicare surtax on your investment income. On a marginal basis you can get above 55%. I don’t know anyone who cares about the blended rate being lower - decisions about investments and work hours are made at the margin.
Marginal rate is definitely going to be the most useful for investment planning as well as income and even deductions. The total federal (and state) percentages can useful if you’re self-employed and trying to estimate your tax payments. But I also think it’s important for people to understand the difference: you may have a marginal tax rate of 50% but it would be incorrect to say that you’re paying 50% of your income in taxes. People DO say this if the subject of taxes comes up and your credibility takes a hit when you insist on it.
It could mean that any additional dollar you earn is taxed at “50%.” Then decide working for that addition dollar is not worth your time. I have done that.
Not that it matters - but at a tax rate of 50% we have always found it worth our time to earn those funds.
I think it depends on how many hours you are already working before hitting the 50% marginal tax bracket. I am a MD and I work anywhere from 35 to 55 hours per week. I am in the top marginal tax bracket. I can’t imagine that I will want to work 70 or 80 hours a week to earn extra money and keeping less than half of it. The extra hours going from 50 to 70-80 hours a week will have a severe negative impact on one’s health, and relationships with one’s loved ones. It is materially different than from going from working 30 hours to 40 hours a week.
I Can see that If your work hours are lineally tied to income than it becomes a different problem to solve for.

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Re: White Coat Investor: Enough is Enough!

Post by smitcat » Sun Dec 29, 2019 7:36 am

willthrill81 wrote:
Sat Dec 28, 2019 7:20 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 7:10 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:29 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:25 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:21 pm


I agree that your spending can go commensurately with your income, but it certainly doesn't have to. Once you get to the point that you're really content with what you have, then, by definition, you don't want more. So if you acquire more, you then have the wonderful opportunity of being able to help out others.

I must say that personally, we're pretty much contented when it comes to spending. We care much more about experiences than possessions, and traveling is the primary experience we enjoy. But you can only take so many trips at a time, and we don't care to fly first-class and stay in $1k/night hotels. We would rather help out someone in need than spend needlessly.
I am sure I will get flak for this. But every time I hear someone here say they are content with their current level of consumption and have no desire to spend more, all I can think is “what a sad lack of imagination”.
And when I hear that, I think of how sad it is for someone to never be satisfied.

"Enough is as good as a feast."
- British proverb
Where did I say I was never satisfied?

I am satisfied often. That does not preclude me from adding the cherry on top.
You cannot be truly satisfied if you still want more.
Of course that is not true but if you can make it work then fantastic.

Cash
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Re: White Coat Investor: Enough is Enough!

Post by Cash » Sun Dec 29, 2019 7:39 am

willthrill81 wrote:
Sat Dec 28, 2019 6:14 pm
getthatmarshmallow wrote:
Sat Dec 28, 2019 5:56 pm
Cash wrote:
Sat Dec 28, 2019 5:25 pm
getthatmarshmallow wrote:
Sat Dec 28, 2019 11:37 am
Cash wrote:
Wed Dec 25, 2019 10:56 pm
The problem I have with the plan of thirds is that it can lead to lifestyle inflation. What if there is a future salary/bonus decrease after you have become accustomed to spending a larger amount? That can be a tough pill to swallow.
The plan of thirds is more or less what I follow (a little more aggressive than that, but the principle is pay yourself first), and the key is to not let lifestyle inflation hit the big lifestyle upgrades (house, mostly), and have a healthy emergency fund. We can cut our income by more than half and meet all of our obligations (and we've done that, so it's not just speculation. More fun having more money tho.) Or one could set one's "third" excluding bonuses.

Beyond that, as long as we're not talking "losing the house" or "not eating", then one simply gets accustomed to spending less. All hoarding it does is ensure that one is swallowing the "tough pill" for no reason.
I know from experience that it is harder to adjust down than it is to adjust up. If you get used to buying business class seats for those international trips, it’s hard to go back to economy when times get tough. I’m all for responsible spending, but I think it is better to do so at a level that can be maintained indefinitely. Consumption smoothing, I suppose.
I get where you're coming from, but I also think that while it's hard to go back, I'm not sure that's a decisive case for never enjoying some of the nicer things that money can buy. I'm sure it's not fun to have to book an economy seat after getting used to business class. But I'd bet "let's not take the trip because if we fall on hard times we won't be able to take trips" or "don't go skiing now because I can't guarantee that we'll always be able to afford it and we'd miss it if we stopped" isn't much fun, either. (And note, we're talking "economy on an international trip" not "no international trip" or "had to sell the cat for food," so this is just quibbling around the edges.) I suppose it's a matter of not letting the nicer experiences/things own you.
That's part of the reason why I suspect that we'll remain living where we are in retirement. If/when we have to cut back on retirement spending due to our portfolio declining in value, we should be able to do so significantly and still maintain a very good quality of life. Our essential spending should only represent 2-2.5% of our portfolio, leaving at least another 1.5-2% for discretionary spending, mainly on travel. But if we need to limit ourselves to domestic or even just regional travel (i.e. roadtrips) and ski at local mountains, we will be perfectly happy to do so. We have worked hard to not let lifestyle inflation get too much of a hold on us.

When I see people like Sam Dogen, who recently said that he will likely come out of early retirement because his $250k of income isn't enough to live his desired lifestyle, I cannot help but think that lifestyle inflation is a very nefarious thing, and that the hedonic treadmill is moving quickly with many people.
Exactly. I think one has to be very mindful about what to spend additional income on. Not things that will lead to recurring expenses (e.g., a larger house) or expectations (e.g., business class on every flight) unless you are confident your portfolio will be able to support that indefinitely. Much better to spend the money on discrete, “special” items and experiences. Continue to live the rest of your life in a way that is sustainable for the long term.

I think a lot of this discussion assumes a stable income that only rises over time or potentially unrealistic assumptions (people quoted above excluded) about being able to cut expenses if times get tough. What would your spouse/family think about that?...

SQRT
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Re: White Coat Investor: Enough is Enough!

Post by SQRT » Sun Dec 29, 2019 9:27 am

I think you can be satisfied with your current lifestyle yet still be flexible enough to find ways to spend more productively. Agree it can be a “fine line” between this and a never ending running on the hedonic treadmill.

In the end, once retired, one has to be satisfied with your status quo. To feel otherwise will just create regret and disappointment. But by the same token, if you find yourself in improved circumstances, it seems reasonable to be flexible enough to take advantage of this. Obviously you could spend more and/or give more away. Both require some flexibility and perhaps imagination.

While working, I had a lifestyle requiring $X per year. Once retired, I found I had an income of about $1.5X. Didn’t take too much effort or imagination to deal with this. Now 13 years into retirement, I find my income is about $2X. Again, I’ve gradually adapted. I figure, I can only spend it or give it away, now or later.

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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sun Dec 29, 2019 10:52 am

smitcat wrote:
Sun Dec 29, 2019 7:36 am
willthrill81 wrote:
Sat Dec 28, 2019 7:20 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 7:10 pm
willthrill81 wrote:
Sat Dec 28, 2019 6:29 pm
HEDGEFUNDIE wrote:
Sat Dec 28, 2019 6:25 pm


I am sure I will get flak for this. But every time I hear someone here say they are content with their current level of consumption and have no desire to spend more, all I can think is “what a sad lack of imagination”.
And when I hear that, I think of how sad it is for someone to never be satisfied.

"Enough is as good as a feast."
- British proverb
Where did I say I was never satisfied?

I am satisfied often. That does not preclude me from adding the cherry on top.
You cannot be truly satisfied if you still want more.
Of course that is not true
You're not likely a social scientist, so I'll cut you some slack here, but a simple dictionary shows that you are wrong. You cannot redefine commonly accepted terms in order to fit your own desires.
Satisfaction is the act of fulfilling a need, desire, or appetite, or the feeling gained from such fulfillment.
https://www.vocabulary.com/dictionary/satisfaction

A psychology 101 textbook will obviously provide a more in-depth explanation, but I'll briefly summarize the satisfaction process here. Needs arise in humans when they perceive a difference between their desired state and their current state such that it activates the need recognition process. If there is no perceived meaningful difference between one's desired and current states, then the individual is said to be satisfied. As such, if you still want something that you do not have, then, by definition, you are not satisfied.

Now if you mean that a person can be satisfied in one area of his/her life and unsatisfied in others, that is obviously true since satisfaction is domain specific. But if a person is truly satisfied in their life, then there is, again by definition, no difference between where they want to be and where they are, and they do not desire more.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sun Dec 29, 2019 11:03 am

SQRT wrote:
Sun Dec 29, 2019 9:27 am
I think you can be satisfied with your current lifestyle yet still be flexible enough to find ways to spend more productively. Agree it can be a “fine line” between this and a never ending running on the hedonic treadmill.

In the end, once retired, one has to be satisfied with your status quo. To feel otherwise will just create regret and disappointment. But by the same token, if you find yourself in improved circumstances, it seems reasonable to be flexible enough to take advantage of this. Obviously you could spend more and/or give more away. Both require some flexibility and perhaps imagination.

While working, I had a lifestyle requiring $X per year. Once retired, I found I had an income of about $1.5X. Didn’t take too much effort or imagination to deal with this. Now 13 years into retirement, I find my income is about $2X. Again, I’ve gradually adapted. I figure, I can only spend it or give it away, now or later.
As I noted above, if a complete state of satisfaction exists, a person does not desire more. So you are correct to say that there is a link between a person's current status and their level of satisfaction. If people who were completely satisfied later on have greater resources, then that may result in a discrepancy cropping up between a person's desired and current states and thereby activate the need recognition process. This idea is actually an ancient one as the Apostle Paul said "...I have learned to be content in whatever circumstances I am."
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: White Coat Investor: Enough is Enough!

Post by MotoTrojan » Sun Dec 29, 2019 11:04 am

transient_academic wrote:
Thu Dec 26, 2019 12:57 pm
Godot wrote:
Wed Dec 25, 2019 2:26 pm
flyingaway wrote:
Wed Dec 25, 2019 11:01 am
Dandy wrote:
Wed Dec 25, 2019 7:39 am

Despite being forced into retirement twice :oops: I amassed sufficient assets/retirement income. I painted my house twice inside and out, changed my oil, rotated my tires etc. was on the cheap side of being fugal. When I finally retired at age 60 I used to walk every morning toward any place that served coffee and would fret just a bit when the price went up. I was facing 30 years or so of retirement. Of course retiring in 2008 - 9 was full of fear due to the market plunge.
You cannot be a model of frugality, I don't even drink coffee in a store, I drink tea at home in the morning.
Water for me, and I get it from my neighbor's hose when he's still sleeping. Utilities are going up!
Look at this fat cat here, that hose will eventually fall apart and then you'll have to replace it! I go through people's recycling bins for old milk jugs and leave them out to collect rain. Then I sell the water at the farmer's market.
Reminds me of the founder of Juicero (interesting story of a collapsing bubble) who then moved on to sell “raw water”.

SQRT
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Re: White Coat Investor: Enough is Enough!

Post by SQRT » Sun Dec 29, 2019 11:10 am

willthrill81 wrote:
Sun Dec 29, 2019 11:03 am
SQRT wrote:
Sun Dec 29, 2019 9:27 am
I think you can be satisfied with your current lifestyle yet still be flexible enough to find ways to spend more productively. Agree it can be a “fine line” between this and a never ending running on the hedonic treadmill.

In the end, once retired, one has to be satisfied with your status quo. To feel otherwise will just create regret and disappointment. But by the same token, if you find yourself in improved circumstances, it seems reasonable to be flexible enough to take advantage of this. Obviously you could spend more and/or give more away. Both require some flexibility and perhaps imagination.

While working, I had a lifestyle requiring $X per year. Once retired, I found I had an income of about $1.5X. Didn’t take too much effort or imagination to deal with this. Now 13 years into retirement, I find my income is about $2X. Again, I’ve gradually adapted. I figure, I can only spend it or give it away, now or later.
As I noted above, if a complete state of satisfaction exists, a person does not desire more. So you are correct to say that there is a link between a person's current status and their level of satisfaction. If people who were completely satisfied later on have greater resources, then that may result in a discrepancy cropping up between a person's desired and current states and thereby activate the need recognition process. This idea is actually an ancient one as the Apostle Paul said "...I have learned to be content in whatever circumstances I am."
Agree. My point, I guess, is that satisfaction (whether total or partial) need not preclude future flexibility if circumstances improve. Maybe this is predicated on not anticipating future improvements? Interesting philosophical questions.

Turbo29
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Re: White Coat Investor: Enough is Enough!

Post by Turbo29 » Sun Dec 29, 2019 11:16 am

Xrayman69 wrote:
Sat Dec 28, 2019 8:03 pm

Motivation and desire to advance/want more is not necessarily a negative trait. I’m thankful for those who “are never satisfied” and can continue in a positive manner be looking forward. Space travel, technological advances, advances in health care are a few examples in which I hope human kind strives to never be satisfied.

Onward and forward to those with the desire, will, and capabilities. Rewards to match can be a positive motivating and driving factor.mm
What's good for society as a whole and what is good for an individual are not necessarily the same. I am thankful for those never satisfied persons also. I would not want to be one of them however.

I liked this anecdote:

The writers Kurt Vonnegut (Slaughterhouse Five) and Joseph Heller (Catch-22) were at a glamorous party outside New York City. Standing in the palatial second home of the billionaire host, Vonnegut began to needle his friend. He described the exchange in a poem published in the New Yorker in 2005:

I said, “Joe, how does it make you feel
to know that our host only yesterday
may have made more money than your novel Catch-22
has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”

https://forge.medium.com/the-life-chang ... d78a5f6963
It is by the goodness of God that in our country we have those three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence never to practice either of them. --M. Twain

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willthrill81
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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sun Dec 29, 2019 11:20 am

Turbo29 wrote:
Sun Dec 29, 2019 11:16 am
Xrayman69 wrote:
Sat Dec 28, 2019 8:03 pm

Motivation and desire to advance/want more is not necessarily a negative trait. I’m thankful for those who “are never satisfied” and can continue in a positive manner be looking forward. Space travel, technological advances, advances in health care are a few examples in which I hope human kind strives to never be satisfied.

Onward and forward to those with the desire, will, and capabilities. Rewards to match can be a positive motivating and driving factor.mm
What's good for society as a whole and what is good for an individual are not necessarily the same. I am thankful for those never satisfied persons also. I would not want to be one of them however.

I liked this anecdote:

The writers Kurt Vonnegut (Slaughterhouse Five) and Joseph Heller (Catch-22) were at a glamorous party outside New York City. Standing in the palatial second home of the billionaire host, Vonnegut began to needle his friend. He described the exchange in a poem published in the New Yorker in 2005:

I said, “Joe, how does it make you feel
to know that our host only yesterday
may have made more money than your novel Catch-22
has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”

https://forge.medium.com/the-life-chang ... d78a5f6963
Well said. :thumbsup
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

EnjoyIt
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Re: White Coat Investor: Enough is Enough!

Post by EnjoyIt » Sun Dec 29, 2019 11:44 am

willthrill81 wrote:
Sun Dec 29, 2019 11:03 am
SQRT wrote:
Sun Dec 29, 2019 9:27 am
I think you can be satisfied with your current lifestyle yet still be flexible enough to find ways to spend more productively. Agree it can be a “fine line” between this and a never ending running on the hedonic treadmill.

In the end, once retired, one has to be satisfied with your status quo. To feel otherwise will just create regret and disappointment. But by the same token, if you find yourself in improved circumstances, it seems reasonable to be flexible enough to take advantage of this. Obviously you could spend more and/or give more away. Both require some flexibility and perhaps imagination.

While working, I had a lifestyle requiring $X per year. Once retired, I found I had an income of about $1.5X. Didn’t take too much effort or imagination to deal with this. Now 13 years into retirement, I find my income is about $2X. Again, I’ve gradually adapted. I figure, I can only spend it or give it away, now or later.
As I noted above, if a complete state of satisfaction exists, a person does not desire more. So you are correct to say that there is a link between a person's current status and their level of satisfaction. If people who were completely satisfied later on have greater resources, then that may result in a discrepancy cropping up between a person's desired and current states and thereby activate the need recognition process. This idea is actually an ancient one as the Apostle Paul said "...I have learned to be content in whatever circumstances I am."
Satisfaction is relative. One can feel that they are unsatisfied with something, try to improve on it and fail over and over again. We see this very often in mindless materialistic consumerism. Understanding one's desires becomes a very valuable exercise in minimizing wasteful spending.

Advertising is great in making one feel dissatisfied. For example if I never watched commercials or participated in social media I may never know there is a new TV technology or a new cell phone technology and therefor I won't feel my current tech is inadequate and therefor I do not feel the need or desire to improve what I already have. This becomes increasingly true when one is currently satisfied with what they have.

Someone above said technology has made their lives better. I would agree, but at the same time technology has added some harm. For example facebook and other social media has been linked with a higher incidence of depression. Smart phones have made us more connected so that now people expect replies to their queries almost immediately which has increased stress at work. There was a time when a family happily lived in a smaller house, with one car and a stay at home parent but with advances in technology and the power of advertising people want more which often times requires a dual income and the children go to day care. New tech has benefits, but there is harm as well
A time to EVALUATE your jitters. | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418

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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sun Dec 29, 2019 11:48 am

EnjoyIt wrote:
Sun Dec 29, 2019 11:44 am
willthrill81 wrote:
Sun Dec 29, 2019 11:03 am
SQRT wrote:
Sun Dec 29, 2019 9:27 am
I think you can be satisfied with your current lifestyle yet still be flexible enough to find ways to spend more productively. Agree it can be a “fine line” between this and a never ending running on the hedonic treadmill.

In the end, once retired, one has to be satisfied with your status quo. To feel otherwise will just create regret and disappointment. But by the same token, if you find yourself in improved circumstances, it seems reasonable to be flexible enough to take advantage of this. Obviously you could spend more and/or give more away. Both require some flexibility and perhaps imagination.

While working, I had a lifestyle requiring $X per year. Once retired, I found I had an income of about $1.5X. Didn’t take too much effort or imagination to deal with this. Now 13 years into retirement, I find my income is about $2X. Again, I’ve gradually adapted. I figure, I can only spend it or give it away, now or later.
As I noted above, if a complete state of satisfaction exists, a person does not desire more. So you are correct to say that there is a link between a person's current status and their level of satisfaction. If people who were completely satisfied later on have greater resources, then that may result in a discrepancy cropping up between a person's desired and current states and thereby activate the need recognition process. This idea is actually an ancient one as the Apostle Paul said "...I have learned to be content in whatever circumstances I am."
Satisfaction is relative. One can feel that they are unsatisfied with something, try to improve on it and fail over and over again. We see this very often in mindless materialistic consumerism. Understanding one's desires becomes a very valuable exercise in minimizing wasteful spending.

Advertising is great in making one feel dissatisfied. For example if I never watched commercials or participated in social media I may never know there is a new TV technology or a new cell phone technology and therefor I won't feel my current tech is inadequate and therefor I do not feel the need or desire to improve what I already have. This becomes increasingly true when one is currently satisfied with what they have.

Someone above said technology has made their lives better. I would agree, but at the same time technology has added some harm. For example facebook and other social media has been linked with a higher incidence of depression. Smart phones have made us more connected so that now people expect replies to their queries almost immediately which has increased stress at work. There was a time when a family happily lived in a smaller house, with one car and a stay at home parent but with advances in technology and the power of advertising people want more which often times requires a dual income and the children go to day care. New tech has benefits, but there is harm as well
100% agree.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

harrychan
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Re: White Coat Investor: Enough is Enough!

Post by harrychan » Sun Dec 29, 2019 12:04 pm

Helo80 wrote:
Wed Dec 25, 2019 9:16 am
To be blunt --- the issue this article addresses in honestly why I resent certain members and schools of thought on this thread.

On the BH.org top page, a quick overlook shows the "Flaunt your high mileage car",
Hear hear! I also cringe at that thread. A lot of people who drive those cars can probably go out and buy a brand new car with cash. Yes, the car may appear operational but at some point will become a hazard to the public as brakes, belts get worn down. There is nothing to flaunt about super high mileage cars.
This is not legal or certified financial advice but you know that already.

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Re: White Coat Investor: Enough is Enough!

Post by SQRT » Sun Dec 29, 2019 12:15 pm

Surely, there is a lot of room between the two extreme positions of:

-never satisfied, always wanting more, total slave to American consumerism, and

-totally satisfied, couldn’t imagine spending more than my current lifestyle which is perfect.

I get it’s sometimes fun to argue but really it’s the balanced middle ground which is often under represented on this site. Maybe internet chat rooms simply encourage the expression of extreme points of view? I try to resist that.
Last edited by SQRT on Sun Dec 29, 2019 12:18 pm, edited 3 times in total.

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Re: White Coat Investor: Enough is Enough!

Post by CyclingDuo » Sun Dec 29, 2019 12:15 pm

harrychan wrote:
Sun Dec 29, 2019 12:04 pm
Helo80 wrote:
Wed Dec 25, 2019 9:16 am
To be blunt --- the issue this article addresses in honestly why I resent certain members and schools of thought on this thread.

On the BH.org top page, a quick overlook shows the "Flaunt your high mileage car",
Hear hear! I also cringe at that thread. A lot of people who drive those cars can probably go out and buy a brand new car with cash. Yes, the car may appear operational but at some point will become a hazard to the public as brakes, belts get worn down. There is nothing to flaunt about super high mileage cars.
That all depends... :mrgreen:

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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 » Sun Dec 29, 2019 12:16 pm

harrychan wrote:
Sun Dec 29, 2019 12:04 pm
Yes, the car may appear operational but at some point will become a hazard to the public as brakes, belts get worn down.
Only about 13% of auto accidents are caused by mechanical failure, and proper maintenance will largely sidestep that issue. It's certainly true that a two year old vehicle is less likely to have a mechanical failure that directly causes an accident than a ten year old vehicle, but a properly maintained ten year old vehicle is very unlikely to have such a failure. Brake and steering systems, for instance, are easily maintained if the owner chooses to do so. It's a classic case of 'correlation does not equal causation'.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: White Coat Investor: Enough is Enough!

Post by CyclingDuo » Sun Dec 29, 2019 12:20 pm

Mel Lindauer wrote:
Sat Dec 28, 2019 1:22 pm
Here's an old Forbes 3-part series I wrote about the difficulty of switching gears from a lifetime of savings to spending after retiring.

https://www.forbes.com/sites/theboglehe ... e5b5e37adc

https://www.forbes.com/sites/theboglehe ... 2c6fe2f1f9

https://www.forbes.com/sites/theboglehe ... de-part-3/
Excellent, Mel. Thanks for sharing the links to that series!
"Everywhere is within walking distance if you have the time." ~ Steven Wright

afan
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Re: White Coat Investor: Enough is Enough!

Post by afan » Sun Dec 29, 2019 12:39 pm

HEDGEFUNDIE wrote:
Wed Dec 25, 2019 11:05 pm
Cash wrote:
Wed Dec 25, 2019 10:56 pm
The problem I have with the plan of thirds is that it can lead to lifestyle inflation. What if there is a future salary/bonus decrease after you have become accustomed to spending a larger amount? That can be a tough pill to swallow.
You downsize, just like how in retirement when you have no new savings and the market crashes, you decrease your withdrawal rate.

The rule of thirds is intended to avoid the much more common affliction seen around here, and that is dying with a boatload of cash in your coffin. Lifestyle inflation is the point.
Hardly the case for us. Our lifestyle has not inflated in decades even as our income and networth have increased. We live a perfectly comfortable life, as we did decades ago. Having more more does not obligate one to spend more.

I use the example of going to a restaurant, something we do rarely. We choose the place with cost in mind and order food we want to eat. We do not compare the cost of the meal to our credit limit and buy as much food as our limit will permit. Some of these comments imply one should buy 5 steaks, 5 lobsters, and 2 each of every special. If one were to protest that "I don't want to eat any of that", then we are told we are failing to enjoy life. Where "enjoying life" = "spending as much money as possible". I suppose we should also buy a $500 bottle of wine although we don't drink alcohol. We have the money and there is a moral mandate to spend it???

Were does our money go? We have little control over taxes so most of our decisions revolve around saving.
We save more than we pay in taxes and pay considerably more in taxes than we spend. I classify real estate taxes as part of spending since we could reduce the taxes by moving to a different house. The real estate taxes are part of housing expenses.

I suppose we are on our way to the horrible end of dying without wasting all our money.
The gates of heaven will be closed on that account.

I wonder whether we can save ourselves by instructing our executor to convert whatever is left to cash and set it on fire? It would not have happened during our lives but it would still be money wasted. Would that redeem us?
Last edited by afan on Sun Dec 29, 2019 12:57 pm, edited 1 time in total.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

afan
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Re: White Coat Investor: Enough is Enough!

Post by afan » Sun Dec 29, 2019 12:42 pm

SQRT wrote:
Sun Dec 29, 2019 12:15 pm
Surely, there is a lot of room between the two extreme positions of:

-never satisfied, always wanting more, total slave to American consumerism, and

-totally satisfied, couldn’t imagine spending more than my current lifestyle which is perfect.

I get it’s sometimes fun to argue but really it’s the balanced middle ground which is often under represented on this site. Maybe internet chat rooms simply encourage the expression of extreme points of view? I try to resist that.
Not that my lifestyle is perfect but that it cannot be improved by spending more money.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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