Debate Club Round 2: Risk, Rationality, and Efficiency

Posted on 09-May-18 by Grumpus

Welcome Back Debate Fans!

Are you ready for Grumpus to grumble about the concept of investing the Emergency Fund (EF) in equities?

Or should I say “GGGGGRRRRUUUUMMMMBBBLLLLEEE” in my best sport’s announcer’s voice?

A Quick Recap

I’m back with another round of Debate Club. I hope everyone enjoyed round one. Just to re-cap, ChooseFI episode 66 prompted this series of articles in response to the idea of investing an EF. In episode 66, and the follow-up episode 66R, Brad and Jonathan (the hosts) enthusiastically endorsed Big Ern’s (the guest’s) idea that the traditional EF, invested in some sort of cash or cash-equivalent account, was a bad move. Instead, all three agreed it made more sense that a person invest their EF in equities.

In response, I argued in my first article of this series that Episode 66 lacked nuance and suffered from a mistaken definition of the EF. In other words, Ern, Jonathan, and Brad set up a strawman argument and easily knocked it down. By the end of the first article, I created what I felt was a level playing field on which to engage in a debate about the merits and drawbacks of their argument. Thus, I moved on to the second article. Continue reading →

The Golden Albatross Vs. Risk (Part 2): Emergency Fund Debate Club, Round 1

Posted on 10-April-18 by Grumpus

Debate Club

Pop quiz. What’s the first rule of Debate Club?

Surprisingly, it’s not “do not TALK about DEBATE CLUB!”.

It turns out the first rule of Debate Club is “read all your preparatory material”. Or at least that’s what I presume it is. I based that presumption on memories of my high-school Debate Club friends who spent their free-study hours furiously highlighting reams of printed journal articles they’d found on microfiche in the school library. Yes, I realize I’m dating myself with the microfiche reference.

I know what you’re thinking, and I agree — the Fight Club reference sounds way cooler. Then again, what do I know? I spent the majority of my time in high school cutting weight for the real fight club (the wrestling team). Which, by the way, no one ever talked about … probably because no one ever attended high school wrestling matches (other than parents). While my choice of extracurricular activities may have prepared me well for the lonely life of a blogger with three devoted readers, it probably didn’t prepare me well for a debate on investing the Emergency Fund (EF) against some of the heavy hitters in the Financial Independence (FI) community. Continue reading →

The Golden Albatross vs. Risk (Part 1)

Posted on 28-March-18 by Grumpus

Doubting Grumpus

I spent a recent weekend and a good part of the following week “engaging” in the main ChooseFI Facebook group on the topic of whether or not it’s a good idea to invest your Emergency Fund (EF). This debate was prompted by ChooseFI Episodes 66 and 66R in which the “Invest Your Emergency Fund” thesis was broached, examined, and positively endorsed by the hosts and their guest. Just to be clear, I argued (congenially, of course) that in general terms, it was a doubtful thesis. More importantly, though, I pointed out (along with several other people) that the framework for the debate was poorly constructed. This was primarily due to a lack of defined terms.

Fund?

For the record, I’m a big fan of the ChooseFI Podcast, and not only because they interviewed me. The hosts, Brad and Jonathan, typically dole out challenging but sound Financial Independence (FI) advice. Although they stooped low to interview me, their guests are also typically top notch. In fact, their guest for the “Invest Your Emergency Fund” episode was Big Ern McCracken. Ern runs the Early Retirement Now blog — of which I’m also a big fan. Ern’s not only a valued member of my Golden Albatross FB group, but we even collaborated on an article for my website. Continue reading →