Wednesday, April 15, 2020

Hermeneutical Analysis of the FIRE Wars.

9 facts about hermeneutics | OUPblog

I doubt I can come up with such an article if not for the creeping cabin fever during this CB season. This article requires some explanation for the usual layman audience.

Most readers of this blog know what FIRE is. Financial Independence Retire Early - it is basically what many financial bloggers preach. As COVID-19 started creeping in, there is a schism in the ranks of FIRE aspirants.

  • Non-FIRE folks took the opportunity to at FIRE aspirants who are likely to see dividends getting cut. I'm sure some readers have to deal with a lot of "well-wishers" as I have in the past few months.
  • The FATFIRE guys also took a chance to challenge FIRErs. They assert that FIRE is too soft a target and cannot withstand a full-blown recession. Only FATFIRE is the one true way of achieving bliss. FIRErs are losers who should really be aiming to FATFIRE.
As COVID-19 rages on the Financial Wu Lin has fallen into chaos. With YOLOs and FATFIRERs both attacking the FIRE community and challenging their beliefs. In short, a war to determine the Soul of FIRE in the Finance Wulin has begun.

So why use the term Hermeneutics? This term is guaranteed to turn some readers off.

Hermeneutics is a branch of knowledge that deals with interpretation normally reserved for Biblical texts. I think the FIRE Wars arise because of differences in interpretation. 

These differences arise from the way the various factions interpret the meaning of Freedom. 

Let's review the players in this game :

a) YOLO faction ( Non-FIRErs )

The YOLO faction could be that trader who is not invested in the markets but wants to find out how you are doing, that insurance agent who gets a mental orgasm from seeing your investments fail because you did not buy ILPs for them. YOLOs have this one chance to push a wooden stake into a FIRE Vampire's heart. It is supremely rare for REIT dividends to be savagely cut this way. 

YOLOs define freedom differently from the other factions. YOLOs see freedom as being able to do whatever they want so long as money is in their hands. To spend such a large fraction of their lives earning then being forced to save more than 50% of their income is not freedom. It is self-imposed imprisonment. 

Freedom is using sales commissions to buy a flashy car and then showing it off, something a FIRE adept will be unwilling to do. 

A lot of my critics do not understand is this - I belong to the YOLO faction. I have a job I really enjoy training people on basic tenets of FIRE. My jobs pay throughout COVID season. I also show off my hobbies like painting miniatures, my disdain for expensive goods is because I walked the FIRE path for 15 years before I attained this YOLO state.  

b) FIRE faction

The middle ground FIRE faction is suffering now because of the horrible effects of the virus on our investments. I think this downturn is short-lived and personally, have re-imposed leverage on my investments. 

FIRE seems to be attacked on all sides. One side finally has it's day and is mindlessly attacking the investment methodology. Another side accuses them of lacking ambition and they should be accumulating more before quitting their jobs.

I am very sympathetic to FIRE aspirants. In fact, I teach their interpretation of freedom. Not every Singaporean has a job that they enjoy looking forward to given how obsessed we are about paper qualifications. Some corporate cultures are just so dysfunctional that freedom means being able to get out of them. This could be endlessly toiling for an SME if you are a private degree holder or being promoted to a point where you can only work for assholes (like me). 

It takes a lot to make a person want to stop earning a salary. A lot of wealthy individuals don't understand that for a large part of our populations, work is a form of cruel imprisonment with Singaporeans working 44 hours a week which is 33% more than their global counterparts. 

Work was fun for me for a decade in IT, after I joined the public sector, it stopped being fun. Now as a trainer it is fun again, but I have three degrees and a multi-million portfolio to design my lifestyle - most of my students don't so they need to get their investment income right to wean off the bitter-tasting milk coming from their corporate teats. 

c) FATFIRE Faction

In psychology, the FATFIRE faction suffers from two things. They believe in systems justification theory - they believe that our Singapore system is good, fair, and legitimate. This leads them to develop advantage blindness. They fail to see how the system that gives them such a huge advantage can be altered in any way, especially with regards to the systems that allowed them to FATFIRE in the first place.

It is not easy to FATFIRE. 

I am trying to get there right now and I am somewhere between FIRE and FATFIRE. I think it is a major achievement for any individual to attain this. But this creates a sense of entitlement and invincibility that makes them totally unable to understand what the middle class is feeling.

Freedom for FATFIRE is a combination of both forms of freedom for FIRE and YOLO. FATFIRE want to answer to no one, but they also want as many toys as they desire. You need a net worth in the mid-7 digits to even begin to do this. 

FATFIRE's problem is that they have this belief that everyone can bootstrap their way to success and that the only prison is a person's limitations. I can admire that but as I work with many individuals who are trying to attain FIRE, I know that most will not attain the basic FIRE that can pay all their compulsory bills at home. 

I have a lot of personal advantages, upper-middle-class upbringing and above-average academic ability. But I am still a failed mid-career changer and public servant. 

FATFIRE need to know that, unless you are really exceptional, you need to first attain FIRE, then you need to volunteer yourself to work harder to attain FATFIRE which can be a decade later. 

This is delaying gratification beyond that is normally possible. Personally, I think you need a vocation that you really enjoy to even contemplate that. Very lifely, this will not involve having a reporting line to anyone. 

While I seem the harshest to FATFIRE, do note that I am trying to attain that status myself. 

So there we have it. The most ridiculous and necessary warfare in the financial blogosphere that arose from a different interpretation of what Freedom means to each faction.

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