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Welcome back to your Money Trailguide.  It’s hard to believe but Thanksgiving is only 47 days away, so we are quickly moving in to the end of the year.  Speaking of which, if you have had any adjustments to your income or investments this year that we have not yet discussed, please reach out to us before November arrives so that we can be sure to review your year end planning needs. This month I have included a couple more articles for you.  The first is an interesting look at a growing trend…Unretirement.  Or is it a trend…what do you think?  In addition, there is a second article discussing when it makes sense to join the wisdom of the crowd, and when you need to run away as fast as you can.  It’s a timely thought experiment considering the world we live in today.

I have also included a few items I have read recently in addition to the most recent conversations on my podcast.  I hope you enjoy and see you soon…

Included in this months newsletter is:

  • Quick hits…What I’m Reading
  • Recent conversations at the On Adventure podcast
  • Is UnRetirement Right for You?
  • The Wisdom of Crowds vs Popular Delusions

Happy Trails,

Joshua E. Self, CLU, ChFC, CFP®
Managing Partner

Quick Hits…What I’m Reading

  • Things Don’t Make Sense – Michael Batnick, CFA, The Irrelevant Investor Blog – Yep, the title pretty much says it all.  Not much is moving in the same direction when it comes to stock markets these days.

Recent Conversations at the On Adventure Podcast

Is Unretirement Right for You?

According to a recent report by T. Rowe Price, the COVID-19 pandemic created 2.4 million “excess” retirements in 2020. Some folks retired due to family health issues. Others retired from high-stress positions in health care or education. And many were forced into retirement due to cutbacks by their employers.

Fast-forward to 2022 and more than half of those COVID retirees were back in the workforce. 20% of retirees in another T. Rowe Price study are either working full time or part time. An additional 7% are actively looking for some level of employment.

If you think unretirement could improve your Return on Life, work through these three questions and share your answers with us.

1. Why do I want to unretire?

A successful unretirement should have a bigger “Why” than “I retired before I wanted to.”

After a couple years living as a retiree, it’s possible that your perspective on retirement has changed. You’ve had a taste of what your weeks are like without your old job. Maybe you’ve enjoyed some of that freedom. Or maybe the lack of structure drove you crazy.

Early retirement also may have triggered some parts of your financial plan ahead of schedule. Perhaps your nest egg needs some topping off. Or, maybe you’d like to earn extra income so that you can delay taking Social Security until your full retirement age and maximize your benefits. Maybe you were forced into retirement before age 65 and you want to work to bridge the gap until you’re eligible for Medicare.

Or, maybe you’re just feeling bored and lacking in purpose since you stopped working.

2. What are some alternatives to unretirement?

The above are all valid concerns and considerations. But many of these issues could have alternate solutions that don’t require going back to work full time.

If needing something to do is more important than earning some extra money, start by considering part-time positions or volunteer work. You might be able to take regular shifts at smaller companies or non-profits that are doing interesting things or working to improve your community.

Many retirees repurpose their lifetime of professional skills by mentoring the next generation of young professionals, teaching, or working as a part-time consultant. I cannot think of a better use of the human capital accumulated throughout a career than repurposing it as an investment in the next generation!

If there’s a niche in your old profession that you always wanted to explore more thoroughly, you could take online classes and start working towards a degree that will help you start a second act with a new company, or even start your own company.

As you consider these options, it might occur to you that work and money aren’t why you’re feeling unsatisfied with retirement. Rather than taking a new job, maybe you need to think about how to be more intentional with your time and give yourself permission to enjoy life without work. Fill up your days with more of the things you could only squeeze in on weekends: sports, arts, vacations, restaurants, home remodeling projects. Make time to try new things and go on new adventures. And, perhaps most importantly, prioritize spending more time with your family and friends.

3. What will be the financial impact of unretirement?

On the other hand, if none of your options in retirement sounds as invigorating as the hustle and bustle of your old work week, you need to start planning for how unretirement is going to affect the rest of your financial plan. Health care, Social Security, and your investment and withdrawal strategy are just a few of the issues that you will need to discuss with us. Schedule an appointment or call, and we can also work through our Life-Centered Planning to help you develop both your unretirement and, eventually, re-retirement goals.

The Wisdom of Crowds vs Popular Delusions

In a bit of a paradox, you’ll find the following two titles high on many investors reading lists:

So, which is it? Are crowds wise or delusional? It helps to understand why the answer is yes, to both, and why both have shaped our investment recommendations through the years.

When Crowds Are Wise

Surowiecki describes group intelligence, or the wisdom of crowds, as follows: “If you ask a large enough group of diverse, independent people to estimate a probability, and then average those estimates, the errors each of them makes will cancel themselves out.”

To illustrate, he shares a classic jelly bean experiment, where a group of 56 students guessed how many jelly beans were in a jar of 850 beans. The group average was strikingly close at 871. Only one individual guess came closer. Similar experiments have been repeated across time and distance, and have found group consensus is consistently among the most reliable counts.

But what about those “mad” crowds? Surowiecki does not suggest every group consensus produces remarkably accurate answers. The group must be diverse, possess “a particular kind of decentralization,” and, importantly, be free to think independently.

Fortunately, these characteristics usually exist in free markets. Each individual trade may be spot on or wildly off, but their average, representing all known information and lucky guesses alike, typically generates our closest estimate to a perfect price in an imperfect world.

When Crowds Are Delusional

Of course, history is also jam-packed with times when crowds have gone bonkers, stampeding toward outcomes no rational individual would choose.

Usually, a crowd’s rash behavior is a result of “groupthink,” or herd thinking. Surowiecki warned against this when he wrote: “Deliberation in a groupthink setting has the disturbing effect not of opening people’s minds but of closing them.”

Investors are exposed to the madness of crowds whenever a stock, bond, or any other tradeable asset goes on an overwrought run or perilous plummet. When fear of missing out (FOMO), or just plain fear overcomes a market’s usual efficiencies, a few lucky souls may profit wildly. But billionaire businessman Warren Buffett describes the most likely eventual outcome: “[T]he stock market serves as a relocation center at which money is moved from the active to the patient.”

Manic pricing is nothing new. When Mackay published Extraordinary Popular Delusions in 1852, he dissected several centuries-old speculative runs, including a 17th century “tulipomania,” when some tulip bulb trades were fetching values normally reserved for entire estates.

Until, abruptly, they weren’t. As Mackay wrote: “Enterprise, like Icarus, had soared too high, and melted the wax of her wings; like Icarus, she had fallen into a sea, and learned, while floundering in its waves, that her proper element was the solid ground.”

Crazy or Crafty?

Thanks to Mackay, Surowiecki, and many others, we know that group dynamics can yield magnificently wise as well as woefully foolish results. We also know that investor “crowds”— capital markets—can exhibit both conditions, depending on the factors at play.

Adding to the challenge, we usually only know in hindsight which type of pricing we are participating in. Predominantly, global markets provide the volume and diverse independence needed to generate highly efficient trades. But from tulipomania to the latest hot holdings, groupthink can blur the view by sending securities off their proverbial rails, for years at a stretch.

Is it a bubble or substantial growth? Only time will tell.

What’s a Rational Investor To Do?

For your own investments, how do you apply the wisdom of crowds and avoid its madness? Whether you try to outpace a wise market or a delusional one, you’re far more likely to be beaten by the crowd than to outsmart it. Under these circumstances, your best bet is to:

Join the wise crowds: Invest as cost-effectively as possible in the market’s broad expected returns, according to your personal goals and risk tolerances.

Rise above the mania: In case market mania is the principal driver of a run, avoid trying to chase or flee individual securities, or time your entry into and out of hot and cold markets.

Would you like to know more?  Let’s chat…





Ridgeline Wealth Advisors, LLC (“RWA”) is a state registered investment adviser located in Raleigh, NC. RWA is registered in the state of North Carolina and in compliance with the current registration requirements of the states in which RWA maintains clients. RWA may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. 

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