The $1,000,000 question

[Skylark]

Catching an economic boom and riding it to ER.

It seems like the easiest way to ER is to identify an upcoming boom, position yourself to earn a lot from it, and milk it for as long as you need to before jumping out and early retiring.

I'm thinking of the internet boom, when programmers and techies were able to start up dot coms from vapor and get out with a nice sum after only a few years.

There were other economic booms, perhaps the oil boom or gold mining or the early auto industry, where you could get in and pretty much make the market if you are early, in the right place with the right concept with the right credentials, and a lot of luck.

For younger early retirement candidates, perhaps a good strategy is to try to identify how to profit from emerging economic areas.

There seem to be fewer and fewer good paying jobs available (this may or may not be true) and it seems that more people have to make it on low paying jobs that hardly cover expenses, much less being able to save for ER. The common knowledge is that good jobs are exported (debatable point).

This process of buying products from impoverished countries will probably continue until wages start rising in poor countries, maybe 40 years yet(?), so we may see low cost of living due to cheap consumer goods, but dropping real wages at home (USA) due to lack of demand for domestic products.

But even with falling wages in some sectors, there are other sectors that might allow for an economic boom for those positioned correctly.

We are told that the new economy is information based and service based. Demographics tell us that the medical system will grow to take care of the aging boomers.

So looking over the horizon, what economic areas will have high wage opportunities, or chances to start a business that allows you to cash out with enough to ER?

 

[BigMoneyJim]

So looking over the horizon, what economic areas will have high wage opportunities, or chances to start a business that allows you to cash out with enough to ER?

Pornography, gambling (as the house, not the gambler), prostitution and crime. But those aren't new, and they have their downsides.

I'm afraid chasing the "next big thing" would lead to financial disaster more often than boon. Besides, if we could predict it with any accuracy we could just invest and retire immediately rather than go through the trouble of working or owning a business.

On the other hand, it's worth looking at the likely cost/benefit of any given career or enterprise. My cousin is working on a doctorate in political science likely leading to an academic career. She is a year younger than I, but I've been working in a decent-paying career for 10 years while she continues school.

(Actually, I have no idea how much she makes now or will make, and money and ER aren't the only worthwhile things in life, so I'm not passing judgement.)

 

[cute fuzzy bunny]

It almost seems like you can wait until one emerges, then act on it.

The problem is they arent always long lived, and the plug gets pulled rather quickly.

Trying to pick one in advance leads to problems with timing and with other unpredictable events interceding.

I like the idea of health services in general becoming profitable when the deep pocketed baby boomers start aging and want everything from special pills to plastic surgury. But what if the govt starts regulating prescription prices and people go to thailand for their cheap plastic surgery at boutiques already being established?

I could have "gotten in" on the internet boom. I lived in silicon valley, had the right friends, had the right brains, etc. But it all seemed so surrealistic...no "there" there, that I expected it to fold at any time.

What that surge did create as well as instant millionaires that had the luck to cash out (like I did) was some very unfortunate cases. I know some guys that hocked themselves to the teeth and then hit the wall. Bankruptcy in your 20's doesnt look pretty. Although one can say "aww, how awful for them : " I also know a lot of folks who were paper millionaires and then lost that and their jobs. I wonder what its like to spend six months to a year thinking you're going to be rich and set for life and then be back to working for 50k a year paycheck to paycheck. THAT must suck.

I know one guy that went and bought a multi million dollar home, filled the garage with expensive cars and his closet with expensive suits, and then lost it all. A real bummer.

But the future waves of opportunity are perhaps apparent.

Sometime between 25 and 75 years, depending on how much you believe people like the Saudi's, we'll run out of oil. There should be some great opportunities on both ends of this...high profits on existing energy and big opps on replacements. A side business in "defense" contractors is also likely to be a boomer...after all once its clear the oil is running out I would imagine there will the mother of all conflicts over who gets to take control of whats left of the oil supply.

Polution isnt getting any better and once you factor in the burning of all that oil, and the scramble to use coal, nuclear and other less clean environmental impacts, technologies and processes to clean air, soil and water may become increasingly valuable, along with people who can handle the cleanups of the strip mining and the recycling of the radioactive stuff.

Food will become more of an area of potential profit with a combination of more people and less fertilizer and pesticides. Since much fertilizer and bug sprays are made from oil based components, using dwindling energy sources for those purposes may be hard to justify. Tools, products and processes to wring out field production in the absence of cheap petroleum should be at a premium.

The health field, again in the absence of government intervention to reduce costs or to nationalize the process should be a good one.

Much of this depends on things that cant be ascertained because of unknown factors or intentional deceptions. Clearly the major oil producing countries arent going to give the slightest indication that the tap is about to run dry until the moment it does, because its their only leverage. We dont know where new sources might be, or if in fact there are any. Clearly there was only so much biological matter that could have been converted to oil, coal and gas.

Anyhow, for our purposes, a diversifying investment into oil and gas pumpers (say vanguards energy fund), health care (vanguards health care), someone once mentioned a couple of funds that spread across several of these, I think one was called "new age"...I cant find any references to it though.

A 3-5% investment in these funds...each of which performs very well historically and currently, might produce some passive benefits in some likely growth areas.

 

[Nords]

Re:  A high-paying career is great...

... if you're there when it hits you across the face like a wet mackerel. But picking the right trend, finding the right industry, hiring with the right company-- that could be a career all by itself. And what do we suggest to your kids for THEIR career advice? Even worse, what if they listen to us?

The millionaires next door didn't do it that way. They either followed their interests or fell (*splat*) into them, and then they pursued their own employment. (My favorite story from that book is the guy who sells parts from junked trucks.) But such serendipity was only validated by lots of hard work fun.

Or look at the highly-paid surgeon, seemingly on top of the world. Years of training and apprenticeship, dozens of overtime hours every week (& weekend), piles of reading & proficiency to stay abreast of the field, a couple pagers AND a cell phone, and a huge malpractice risk from disgruntled patients (or bereaved families). It's a good thing that most surgeons are highly competitive creatures. Now look down to the end of the operating table to the OTHER doctor-- the anesthesiologist. Same years of training & apprenticeship, same reading/skills required, but almost union hours. Probably no pagers or cell phones, and no involuntary weekends, either. Some malpractice risk, sure, but orders of magnitude less. The job is almost as fiscally rewarding but much less stressful.

Another way is a career that supports your lifestyle. I know many low-paid civil servants who give quality effort on the job but whose real dreams are finishing night school, or running their startup business, or buying rental real estate. The "day job" has regular hours, good likelihood of continued employment, cash flow, and few surprises. No one's surprised when you head for the door at quitting time instead of hanging around to schmooze the boss. Same thing for military Reservists, although admittedly the risks of being surprised are a lot higher.

My personal favorite isn't finding a high-paying career-- it's living a low-expenses life. "Five Acres & Independence" was my grandfather's bible for decades and he gave us wonderful farm memories. (Hey, milking the cows was my dad's problem.) Recent years have given frugality a bad name but for many of us it was the path to ER. I don't use dryer sheets and I'll never own five acres, but we've grown our own citrus for over a year. We've already talked about confusing frugality with deprivation & hardship, but frugality is mainly the skill of acquainting yourself with a hundred different ways to avoid expenses-- and then choosing the ones that work for you.

And sometimes frugality even gets easier. Our used Altima just turned seven-- we bought it 14 months ago @ $7000-- but at only 75K miles it needs approx $2500 of transmission work. When you look the price pressure imposed by eBayMotors & CarFax, and all of the cars finishing their incentive leases, it's not too hard to say sayonara. We'll sell it for $3000 to a transmission motorhead and move on to another quality used vehicle!

 

[Cut-Throat]

Nords,

But picking the right trend, finding the right industry, hiring with the right company-- that could be a career all by itself. And what do we suggest to your kids for THEIR career advice? Even worse, what if they listen to us?

All of this stuff gives me a headache! - I had no idea what I wanted to do when I left School and even less of an idea today!

As far as giving anyone advice - All I can say is Marry Rich

 

[wabmester]

It seems like the easiest way to ER is to identify an upcoming boom, position yourself to earn a lot from it, and milk it for as long as you need to before jumping out and early retiring.

Timing is everything, and it's probably easier to time the stock market.

For example, the internet boom started in 1996, but the internet started in 1973.  I started mucking with it in 1981 -- an overnight success  

 

[ats5g]

There seem to be fewer and fewer good paying jobs available (this may or may not be true) and it seems that more people have to make it on low paying jobs that hardly cover expenses, much less being able to save for ER. The common knowledge is that good jobs are exported (debatable point).

I don't think it's that more people have to make it on low paying jobs. I think it's that you're just noticing it now. I the late 1990's, how many times on the news programs, or in newspapers/journals, did you here about people getting rich and how many times did you here about families (most likely single parent) that were hovering just around or below the poverty level? Did the poor become poorer in the last two years? Not likely. They're likely still doing as bad as ever.

It's just that news programs had more viewers and newspapers/journals sold more papers in the late 1990's by focusing mainly on the "new economy" (which btw had been around for years previously) and the techies. And now I'd bet they'd get a lot more viewers and sell a lot more papers by focusing on stuff like people searching for jobs, etc.

Also, are people struggling because their salaries are "too low", or b/c their expense are "too high"? I think there are plenty of "good jobs" still in the U.S. They may not be in the area some people used to work in, but they're still there. I'm currently unemployed, and I can't tell you how many jobs I see every day for government contracting (especially in IT). We haven't declared bankruptcy yet, or had anything repossesed (sp). We did, however, trim our expenses wherever possible, even with a child.

I think that looking for the next boom or whatever, and trying to exploit it, could be a way to get rich quick, but it's also a way to get poor quick.

- Alec

 

[prbob]

Your question is what every 20-30 year old should be asking themselves. What industry has the greatest prospects for the next 20-30 years. You can make that guess then hope you picked the right one. If you did not guess right, you still have time to try it again.

Working is a lot easier if the industry is growing. I told my kids they should look at the funeral industry. Of course, each one told me to drop dead.

 

[Whakamole]

I'm struggling with this issue myself, since I'm in tech and there is a lot of concern about outsourcing/downsizing/etc., plus it is a relatively high burnout field.

I know people who have decided to tackle it pre-emptively by going back to school (the medical field is popular), or getting advanced degrees, or moving into product management or somesuch.

I'm one of the lucky ones who has managed to stay one step ahead of the game - I've been unemployed a little since 2000 but not terribly much. And I've also realized that it's probably impossible for me to know where our economy will be five or ten years from now. Perhaps the US cost of living will have dropped to become competitive, or we'll see some sort of protectionist measures. Maybe we'll see 70s-style inflation or 30s-style deflation.

I don't know. Not saying it's not useful to think about such things - one reason I went into tech was because it is a well-paying area with solid job prospects, but also I was good at it and liked it. That is just as important, especially if you are going to be doing it every day for 20 or 30 years.

Frankly, if the axe came and my future career as a techie didn't look good, I'd be depressed because my planned earnings would go out the window and there'd be a big question mark about any chance of ER. Then I'd get over it And then look for a more stable position, rather than a get-rich-quick one.

 

[wabmester]

Plastics. Oh wait, that was in 1967.

Maybe you're just asking the wrong question. I don't think the industry matters as much as how you position yourself. For example, make it your goal to become CEO of a public company. The few I've known weren't especially smart, but they had "leadership qualities." Which apparently is some combination of good grooming, greed, and utter lack of humanity. This rare combination of traits allows you to not only inflict capricious decisions upon countless others, but also to redirect large quantities of both revenue and equity into your own pockets without worrying about quaint notions of merit, profitability, or anything like that.

Now it may sound like I'm bitter, but I am really in awe. I think CEO compensation is a huge anomaly that deserves to be exploited. There are others, like certain lawyers and investment bankers, who also make much more than they could possibly be worth. It just seems to me that pursuing these known paths to wealth makes more sense than trying to find an unknown path.

 

[Skylark]

The question is intended to be posed by a 20 year old who has to make a decision about a future career. Anyone who has ever been 20 years old knows that at the age of 20 years, most younguns are barely capable of planning beyond the next weekend of beer and babes. But assuming that a 20 year old thinks about these things...

I guess there are really two sides to the question.

1. Set yourself up for a high income, stable career which will continue to be stable until you reach ER. What type of education and knowledge does one need to be successful?

2. Set yourself up for a high income career which gives you the chance to smash and grab large amounts of loot, in fields like piracy, sales, smuggling, financial management, gold prospecting, marketing vaporware, bank robbery, corporation management, pimping and other fine careers. What type of education and street fighting instincts does one need to be successful?

As someone who has chosen #1, and still has a decade or more to go of plodding along in a stable career (yawn) before ER, I sometimes wonder dream about success using strategy #2.

 

[cute fuzzy bunny]

Ok Wab and Skylark, I cant laugh anymore...cut it out!

 

[zbwmy]

Markets for aging baby boomers. In 10 years there is going to be a pantload of over 55 people looking to be taken care of in every sense of the word.
Do you think all of these male enhancement drugs coming out in such a short span of time is a coincidence?

 

[BunsGettingFirm]

Markets for aging baby boomers. In 10 years there is going to be a pantload of over 55 people looking to be taken care of in every sense of the word.
Do you think all of these male enhancement drugs coming out in such a short span of time is a coincidence?

Let's see...lots of 50 year olds running around dosed up on Viagra looking for hotties. That makes BigMoneyJim and Skylark's pimping recommendation sound like viable careers.

 

[BunsGettingFirm]

I too am at a loss as too why some people enjoy meteoric rise up the ladder. Some I could tell got there by dint of hard work and competence, but some I just can't figure out. Must be the hair, the good looks, and the sheer willingness to shove others out of the way.

Plastics.  Oh wait, that was in 1967.

Maybe you're just asking the wrong question.  I don't think the industry matters as much as how you position yourself.  For example, make it your goal to become CEO of a public company.  The few I've known weren't especially smart, but they had "leadership qualities."  Which apparently is some combination of good grooming, greed, and utter lack of humanity.  This rare combination of traits allows you to not only inflict capricious decisions upon countless others, but also to redirect large quantities of both revenue and equity into your own pockets without worrying about quaint notions of merit, profitability, or anything like that.

Now it may sound like I'm bitter, but I am really in awe.  I think CEO compensation is a huge anomaly that deserves to be exploited.  There are others, like certain lawyers and investment bankers, who also make much more than they could possibly be worth.  It just seems to me that pursuing these known paths to wealth makes more sense than trying to find an unknown path.

 

[Bob_Smith]

I too am at a lost as too why some people enjoy meteoric rise up the ladder.

In my organization I've observed this - most who rise do nothing more than make it known they want to rise, and then apply for management positions. Most of the rest of us wouldn't touch it due to many factors: unwillingness to move due to kids in school and spouse's job, preference for doing something productive during our working years, horror at the thought of working closely with some of the weasels who have already risen, and a thousand other reasons. The top-dog in my organization asked me this: "Bob, what can we do to attract good people to leadership positions?". My response: "Nothing". (I didn't tell him all the reasons why. That's something for after ER.)

 

[cute fuzzy bunny]

Whats that old saying? There are three kinds of people in the workplace...the show horses, the work horses, and the horses asses?

And management is drawn exclusively from the first and third categories. Senior management usually from the first.

I'm also willing to bet that most ER's are work horses. I dont think the show horses could cut the extravagant spending one needs to engage in to continue to be perceived as a show horse.

I dont want to predict the likely long term end state of a horses ass...