Are you aware of the price?

Thoughts on tools, goals, and FIRE

"The Village Politicians" by John L. Krimmel (via Wikipedia)

This article was inspired by a discussion with

Tom

, the author of VanDiemen Vagabond Subststack. I strongly recommend subscribing.

In his recent article, Tom shared his life experience and thoughts about frugality, investing, and living. It was a thought-provoking piece, I have to say.

And here we are.

---

The decisions we do not make define us more than those we make. Action and inaction have its price. More often than not, the latter comes at a dearer price than the former.

Our unprecedented access to information, combined with our innate demand for certainty, has resulted in delusions.

We admire winning but hate efforts. We love success but loathe uncertainly. We seek wealth but despise risk.

That’s why one-size-fits-all products are in high demand. They bring consumers to the promised land of certainty, or at least the sensation of arriving there.

Desperation for certainty is disguised as sweetened promises of wealth and success. Practical ideas like DCA and FIRE are advertised as the ultimate tools—profitable ads only for their promoters.

FIRE acolytes advocate that the road to a wealthy life is a decades-long frugality. DCA gurus suggest that the only way to achieve investing success is to use DCA.

Extrapolating the past into the future and deducting that the wealth is guaranteed if we live as hermits for XYZ years and follow DCA investing works on theory. But theory fails in practice.

Neither DCA nor FIRE are zero-fail rate spells for success. There are just tools. And most importantly, they are not the only tools.

As Thomas Sowell says, there are no solutions, only trade-offs. This is true for every aspect of life.

That said, let’s talk about tools, goals, and prices.

Goal, skill, and risk tolerance

What works for me may not work for you. On top of that, what worked for me yesterday may not work for me today.

Remember, we have tools at our disposal. Every tool has a limited purpose. The hammer punches nails, and the screwdriver tightens bolts, not vice versa. Treat every investing strategy and asset class as such.

Pick your tools according to your goal, skills, and risk tolerance. Here is an example. I aim to generate a double-digit Alpha, so should I use a LEAPS calls?

Let’s look at three scenarios. Every bullet presents a goal/skills/risk tolerance:

• I seek double-digit Alpha; I am well versed with options; I cannot stomach volatility.

• I seek double-digit Alpha; I have zero clue about options; I can stomach volatility.

• I seek income generation; I am well versed with options; I can stomach volatility.

In all three scenarios, using LEAPS calls is a big NO. Our goal, skillset, and risk tolerance must be aligned to apply LEAPS or any other tool. In that case:

I seek double-digit Alpha; I am well versed with options; I can stomach volatility.

Replace LEAPS calls with whatever you are interested in. The principle is the same: seek synergy between goals, skills, and tolerance.

This is just an instance of how universal and omnipotent tools do not exist. If someone claims otherwise, he or she is a scammer or ignorant. Or, on some occasions, both combined.

Beware the price

Even if we pick the right tool, we still have to pay the price to achieve our goal.

This is one of the most powerful quotes:

First, you decide what you want specifically. Second, you decide if you're willing to pay the price to make it happen, and then you pay that price.

Bunker Hunt

Everything has a price. Even inaction and indecision have a price. Doing nothing is doing but from a higher order.

Living an austere life now to live comfortably after XYZ years sounds easy at first glance. Then you convince yourself that whatever years of dull existence is a fair price to pay.

Thinking like that means that you ignore the time, the ultimate equalizer. Time, like all resources, is limited and has alternative applications. However, unlike all assets, we can not manufacture more time.

The arrow of time has only one direction: the future becomes the present, and the present becomes the past.

So, by choosing a frugal and dull life, you close all doors for an exciting and fulfilling life. Fulfillment is not hidden in the predictability of repetitive existence but in the uncertainty of the unknown.

To clarify, I am not a YOLO backer. YOLO-ing is as stupid as over-frugality. Again, you ignore time, assuming you can buy prosperity from the future. If you YOLO, you borrow money from your future; if you FIRE, you borrow time from your future.

Money equals time, too. So, both sides of the scale result in a poor life. However, there is a subtle difference. If you YOLO, you are time-poor measured in quantity. If you FIRE, you are time-poor when measured in quality.

Choose wisely.

Consciously enjoy life with travel, hobbies, etc., because living a monastic life does not create memories, experiences, or wisdom. The variable that turns a poison into medicine and vice versa is dose. The same is true for investing, spending, and saving.

That said, saving is a must for any intelligent individual. The point is to find a balance between saving and spending and quality and quantity.

Final thoughts

Life is messy. The only sure thing is uncertainty. We do not know how much we do not know, yet we desperately seek an undemanding yet prosperous life.

Pick your goal, figure out the price, and decide whether to pay.

Easier said than done. The way to find it is through experimenting. This means time, effort, and pain. In other words, there is no all-around recipe for success in life and markets.