SpaceX Falcon-9 Rocket (photo from

SpaceX Falcon-9 Rocket (photo from

2008 was a great year.  A lot of incredible things happened, paving the way for a better and brighter future for all.  SpaceX launched the first commercial spacecraft into orbit, leading the way to the future of space exploration.  The Large Hadron Collider at CERN powered up, leading to the discovery of the Higgs boson.  Doctors grew an organ from a patient’s own stem cells and sequenced the entire genome of a cancer patient, both early steps in the revolution of medicine.  We lost nearly $400,000 in the stock market.

Indeed, 2008 was a great year, a year of breakthroughs and triumphs.  The future looks bright

“Hey, wait!  You lost $400k!  How is that a great year?!  You think that looks promising?”

Well, yeah. Just as twice as much money won’t make us twice as happy, having less money didn’t make us any less so.  Maslow was a pretty smart guy.  We still had our health and our friends and family.  We still had a roof over our heads, food to eat, and clothes to wear.  We still owned the exact same number of shares of stock in the best companies around, with smart and capable leaders and staff, building great products and services.   We still had jobs, and best of all, stocks were ON SALE!

People line up overnight in the dark and cold on Thanksgiving to be first to buy some crappy consumer gadget for 50% off, and do so with excitement, but suddenly the best companies in the world are on sale and people freak out.

God help the man standing between a crazed shopper and a 50% off shoe sale or in the doorway to the brokers office when there is a market crash.  A lot of people sold stock in 2008…  We went shopping.  This was our Black Friday.

2013 has been another great year.  It was our first full year of retirement, our first full year living off the fruits of our portfolio, and our first full year of extended world travel.  It was also a great year for stocks, with the S&P500 and Dow Jones Industrial Average both closing at record highs…  Unfortunately

We started the year with a portfolio of 70% stock / 15% bonds / 15% REITs.  I had imagined converting this to 100% stock early in the year, but elected to wait, to see how we adjusted mentally to living without a working income

We adjusted well.  We realized that we could live incredibly rich and rewarding lives for less money than our portfolio could support, and that we could do so without paying a single penny in tax.

Retirees have bonds in their portfolio to provide short term income and to reduce volatility.  We realized that we didn’t need the former and weren’t affected by the latter.

A quick simulation on cFIREsim shows that a 100% stock portfolio is practically guaranteed to leave a substantially greater endowment to posterity than a 70% stock portfolio, at least 60% more but in some cases more than 500% more.

Since those medical and scientific breakthroughs are going to help us live to be hundreds of years old, with the ability to explore the galaxy in our own private spaceship, we are going to need some extra spending money

Screen Shot 2014-01-02 at 10.26.11 AM

Example cFIREsim Output

Now we just need to convert our bond and REIT positions to stock…  All I wanted for Christmas was a major stock market correction, a good year-end sale…. but No

Now, 2008.  That was a good year