- How Has Covid-19 Affected Your FIRE Journey? Part 2 - May 29, 2020
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- How Has Covid-19 Affected Your FIRE Journey? Part 1 - May 11, 2020
On June 23, 2016, the UK decided their economy was WAY too good. Jobs were everywhere. Housing prices were astronomical. And the pound was rockin’.
Clearly, something had to be done.
So they idiotically voted to break up their decades-long union with the rest of Europe, a move that is increasingly starting to look like it will break up the UK itself as Scotland and Northern Ireland panic and threaten to jump ship. I thought the U in UK was supposed to stand for United?
In just one day, the FTSE fell 8%, the Dow plummeted 600 points, and the pound sterling took a nosedive falling to a 31 year low.
Nervous Brits quickly cancelled their home purchases, terrified they’d lose their jobs.
And they should be terrified. By breaking ties with the EU, the British workforce loses the ability to work in 27 countries, and big international companies (like HSBC and Morgan Stanley) are making plans to leave the UK, taking thousands of jobs along with them.
So if that’s the outcome, why would the Brits do this? Why would they shoot themselves in the foot?
Because they’re Boomers.
No, I’m not kidding.
More than 75% of Millennials voted to stay, but the Boomers wanted out. And for what? To keep out the refugees? Those poor, exhausted, hungry Syrians who are somehow simultaneously stealing British jobs while also mooching off welfare?
The Millennials voted for unity, economic prosperity, and empathy. But the Boomers voted for bigotry, ignorance, and distrust.
So after waking up to find that their country had suddenly been plunged into recession by the Boomers (once again), our generation had this to say:
“The younger generation has lost the right to live and work in 27 other countries. We will never know the full extent of lost opportunities, friendships, marriages and experiences we will be denied. Freedom of movement was taken away by our parents, uncles and grandparents in a parting blow to a generation that was already drowning in the debts of its predecessors.”
“A generation given everything: free education, golden pensions, social mobility, have voted to strip my generation’s future.”
“This morning we have woken up to discover that the Baby-boomer generation – as they start to retire on their final salary pensions after lives spent benefiting from comparatively tiny state pension costs, from EU membership, from record trade, from skyrocketing house prices – have given us one final parting kick in the teeth.”
Thanks, Boomers! Once again, you’ve managed to kick us while we are down. But of course, you couldn’t give two shits about that. Not while you’re in your multi-million-pound house, tossing back a 15 year-old Scotch, paid for by your EU-funded pension. You’ve already won.
And don’t think this is just a United Kingdom thing. This is happening on this side of the pond too. The same Boomer bullshit is happening with the Trump supporters, who are feeding off the same anti-immigrant rhetoric, ready to destroy our economy with one pen stroke.
And once again, Millennials will be left holding the bag, and the Boomers won’t lift a finger to help.
After all, Millennials don’t need your help, do they? We just need to stop our incessant whining, roll up our sleeves, and solve our own problems (THAT YOU CREATED). It’s a dog eat dog world after all.
Well, you know what?
You’re right. We don’t need your help.
We aren’t going to take your bullshit anymore.
We’re going to start our own revolution and take back our lives, just like you’re trying to “taking back Britain”.
And how are we going to do that?
With our own F.U. money.
Because when we have F.U. money, we’re not relying on you to sell us your houses, or on companies to chain us to a job.
Our portfolio continues paying us, even as your houses are plummeting. And they will continue paying us even as companies are fleeing the UK.
And that’s why a diversified portfolio works. Instead of putting everything into 1 risky asset, like a house, we have bonds to dampen volatility, a cash cushion for rebalancing, and dividends that pay us.
While the FTSE lost 3.15%, the S&P lost 3.59%, and the DAX lost 6.8% all in 1 day, our 60/40 portfolio is only down 1.5%.
While the whole world is panicking, and Britain lost 125 billion pounds in 1 day (that’s 15 years of EU contributions!) our portfolio remained steady, continuously paying us dividends.
We don’t have to worry about losing our jobs or our house. We can rebalance as we see fit, and buy into the storm. All the while continuing to live off the yield.
Property owners in London, on the other hand, could expected to see their values plummet 18%, through NO FAULT of their own.
In the midst of what investor’s would call “Black Friday”, our 60/40 portfolio is doing just fine.
But what about the other allocations? What about 75/25 and 90/10 (with equities diversified across CAD, US, and EAFE)?
Well, let’s see…
- down 1.5%
- down 2.5%
- down 3.3%
Even with the riskiest 90/10 portfolio, the losses are nowhere near as catastrophic as an 18% crash in housing. That’s the power of diversification.
Our portfolio has survived all of these volatile events:
- Great Financial Crisis in 2008
- Grexit in 2012
- Oil Crash in 2015
And it will survive this too.
As will the Millennials, and we’re going to come back stronger and more resilient than before.
Because we’re going to STOP letting the Boomers win.
From now on, we’re going to:
Stop buying their overpriced houses.
Stop tying ourselves to jobs that feed their fat pensions.
Stop following their dreams, only to have it crush us, and then get kicked in the teeth while we’re down.
We’re going to fight back. We’re going to build an arsenal of FU money. And we’re never going to let the Boomers screw us over again.
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