Being In The "Zone"

"The optimal strategy might be executing a suboptimal plan at a fast pace. Strategy evolves as lessons are learned—and the person who moves faster, learns faster. Learning is a marathon and perfection is a weighted vest. - James Clear

“It is better to be roughly right than precisely wrong.“ — Carveth Read*

10 years ago I believed, more than I do now, in the grace of specific numbers and precision. Today, not so much. That's because even if I were to have a perfect, optimal retirement model, and if I had successfully tuned it to the infinity of possibilities of whatever reality we know, as of yesterday let's say, then: 1) you and I would still have results different enough today that it would be hard to explain, and 2) for both of us, the output today could be entirely stale as early as tomorrow morning. Agony, right? I used to think so. Instead, I have been thinking how it matters only generally what we spend and how we invest but not necessarily specifically or precisely. Getting into a "close enough zone" and being willing to adapt are stronger and less burdensome concepts than getting it exactly right. At least I am telling myself that so I don't pull out what's left of my hair.

The Cost of Retirement Certainty

This post is a little bit of a reprise of a post I did a couple years ago. That one, as is this one, is dependent on past conversations and correspondence with others. First, this post here is a riff on an article by Gordon Irlam on the "cost of safety,"  of which this is derivative...although he was working in utility terms and I am working in Life Probability of Ruin terms (LPR). Second, this post is the result of thinking about some conversations with David Cantor on the topic of hedging tail risk (retirement portfolios, not necessarily accumulation portfolios) by way of either technique (options hedging, trend following, risk parity, etc.) or redundancy (surplus capital, more on which later in another post). Fwiw, David has been almost my only interlocutor over the last 5 years and has been a very productive influence. The vast majority of the papers I read now come from his enthusiastic referrals.