ER and The Joys Of Being Wrong

[arcyallen]

One of my favorite benefits of being retired is being able to deep-dive into topics that I thought I had a firm understanding and opinion on. More often than not, once I do more research and more contemplation about it, I find out I was at least partially wrong.

How great is that!

Because here's the deal. I don't know everything. You don't know everything. But together...well, together we know almost everything there is to know. But it takes me listening to you and you listening to me to get to that point. We still may not change our minds or agree on things, but at least we can learn new facts. And, most helpful to me, we can try to understand other people's viewpoints and ideas. If you ask a Conservative to describe what a Liberal thinks (and vice versa) they'll often be wrong. It goes with almost any two seemingly conflicting viewpoints. We often misunderstand and then mischaracterize others. But just in the last few years, I've adjusted my viewpoints on:
-Racial justice
-Index fund investing
-Liberals
-Working during retirement
-Policing
-Buying apparently low value items
-Taxes
-Conservatives
-Full service brokerage firms
-Fox News and MSNBC

I know a lot of these are political, and I have no interest talking politics here or online (although I'm happy to Zoom with people and actually do). My point is in all of these topics I was quite confident of my knowledge and opinion a few years ago. But, after intentionally setting aside my preconceived notions and trying hard to understand I often realized I was "a bit" wrong. I don't always agree, but I strive to reach understanding. And honestly, I find it very exciting to find out I was wrong about something. Because, I WAS WRONG. And now, I get to actually be right and not just feel right. Or, at least closer to right. It's one of the reasons I'm love this site. Most people I've read and interacted with have appeared reasonable and open to ideas that they don't currently hold. That's exciting. That's a group of people willing to grow. And I'm part of that group.

So let's keep listening, and thinking and talking. All the knowledge is out there, we just have get it from each other!

“I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do.” - Charlie Munger

 

[Car-Guy]

Overall, my viewpoints haven't changed much on most things in the past few decades. Actually, most have been reinforced as I've gained a deeper understanding of why things are the way they are. I'm sure there are probably a few notable exceptions, but none that I can think of at the moment.

I am often find I was wrong (well maybe sometimes) on specific things because I didn't understand the details, but nothing so significant that it has changed my fundamental viewpoints on much of anything. Examples: (1) I'd never hire a FA but I would/did take SS early. (2) I don't think I'll buy an EV in the next decade (or my driving lifetime) but I acknowledge that there is no stopping them or that they will be needed in the future) (3) Doctors are human and are often off target but they are still better at diagnosing a problem than I am. (4) Medical insurance companies are only interested in making really big money. End of story/full stop.) (5) I'm still trying to understand the main difference between bitcoin vs fiat currency vs monopoly money (6) You can't fix stupid no matter how hard you try.

 

[Rianne]

One of my favorite benefits of being retired is being able to deep-dive into topics that I thought I had a firm understanding and opinion on. More often than not, once I do more research and more contemplation about it, I find out I was at least partially wrong.


So let's keep listening, and thinking and talking. All the knowledge is out there, we just have get it from each other!

“I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do.” - Charlie Munger

I'll bite! Yes, my opinions have changed on many issues including financial, political, and sadly some judgy daily opinions of other people's behavior

I'm more open-minded in ER. I guess I have time to consider and research rather than make a simple judgment based on one statement or issue.

It is harder to get someone I know to be honest and direct about their opinion. Seems hurt feelings or fear of ruining a relationship haunts the thought process.

Reading, listening to the other side, and learning on this forum has changed financial desicions for sure!

 

[ERD50]

And some posters claim that no one ever changes their mind from any forum (or other discussions).

Two areas that come to mind for me, where I have changed my mind:

1) "Price Gouging" - sure, it sounds awful for a store to raise the price of bottled water in an emergency, and some politicians have made this illegal. Who wouldn't be against "gouging"?

But then I read some analysis that made it clear that letting prices float with supply/demand is actually the best way (not 'perfect' - but the best) to manage scarce resources. There are many reasons for this, one can do a search for the answers.

2) "Walking away from a house that is 'under water' (worth less than the mortgage). That just sounds wrong - you can't just dump the house on the bank, just because things didn't work out for you, right? You have an obligation!

Wrong. This is in the contract. If you don't pay the mortgage, they can keep the house. There is no moral issue here. The bank accounts for foreclosures in their fees and rates, it's a business decision for them (and you).

To be clear - you do have a contractual obligation to maintain the home. Letting it rot, or stripping out the copper before you leave is wrong and illegal.

-ERD50

 

[pacergal]

So let's keep listening, and thinking and talking. All the knowledge is out there, we just have get it from each other!

Excellent post, totally agree.
Majority of folks here post with consideration and intention of sharing/learning/care for others.

And many Thanks to the Moderators, who do a wonderful job of keeping us in line!

 

[REWahoo]

(6) You can't fix stupid no matter how hard you try.

From a judge: "I may not be able to fix stupid, but I can set a court date!"

 

[skibum]

Sounds like the OP read the book Think Again, by Adam Grant, and is taking it to heart in ER.

The book explores understanding the other side of an issue, and the joy of being wrong.

 

[arcyallen]

Sounds like the OP read the book Think Again, by Adam Grant, and is taking it to heart in ER.

The book explores understanding the other side of an issue, and the joy of being wrong.

Think Again and The Righteous Mind are two of my favorites reads from the last few years, yes.

 

[Car-Guy]

From a judge: "I may not be able to fix stupid, but I can set a court date!"

 

[Taco]

And many Thanks to the Moderators, who do a wonderful job of keeping us in line!

Amen!

.... But just in the last few years, I've adjusted my viewpoints on:
-Index fund investing
-Buying apparently low value items
-Full service brokerage firms

If you are willing, I would love to hear a high level summary of your before / after viewpoints on these, to understand what about your thinking on them changed. Maybe I will learn something new too!

 

[Letj]

I too find that I’ve definitely changed my view points/took a more nuanced view of things I was once so sure about. I think life is our greatest lesson. I am less judgmental and much more open to ideas as I’ve aged. I’ve also had new experiences that humbled me and made
me more empathetic and less judgmental about what I perceived to be the short comings of others (we all have a story). I also recognized that luck more than merit or hard work played a much greater role in my life (the color of my skin, family background, etc) so I have more empathy for those who still struggle. My biggest ah ha moment is when I saw quite clearly that there is no failed life. People live the life they know how to and the path they took when they came to a fork in the road. It’s is what it is. I also realized that there shouldn’t be any regrets. It’s all part of the journey you had.

 

[arcyallen]

Amen!


Originally Posted by arcyallen
".... But just in the last few years, I've adjusted my viewpoints on:
-Index fund investing
-Buying apparently low value items
-Full service brokerage firms"

If you are willing, I would love to hear a high level summary of your before / after viewpoints on these, to understand what about your thinking on them changed. Maybe I will learn something new too!

Sure.
-Index funds. I for a long time did not see a benefit to them. I was aware of too many actively managed funds that had beaten the S&P500 for too long to consider an S&P index. But as time keeps ticking, about 80% of THOSE index-beating funds have eventually failed in my eyes. So I think for people that a) have the risk tolerance, and b) don't know how to or care to track active funds, they're a great choice. But also a) It's been my experience that most people don't have the enough risk tolerance despite them thinking they do, and b) there are still excellent actively managed funds that, if you have faith in how they manage money, I'm convinced will continue to beat their benchmarks over meaningful periods of time.

-Buying apparently low value items. It hit me one day that it's not just the purchase price and the value I get out of it, but also how much I can sell it for. I love pinball machines, and new they can sell for over $11k. That was a pretty low value proposition to me...until I realized that I could still sell them, likely for close to what I paid for them. Jacob from Early Retirement Extreme talks about buying quality used furniture on Craigslist, knowing he can sell it down the road for literally what he paid for it. I never would have thought that was a good plan. But if you can buy something, with a reasonable chance of selling it down the road for near purchase price, I think that's a pretty good value. So yeah, I own an $11k pin

-Full service brokerage firms. I worked for Edward Jones for over six years. I loved the firm, loved the clients, and loved the investments I worked with. And I was convinced most firms and advisors must be awesome. They are...not. I watched many advisors at many other firms do bad/silly/greedy/destructive things. And after I left ten years ago, I've only been able to see it even clearer. Having said that, I agreed with 99.9% of what Jones did. They worked tirelessly to do what was right for our clients. And the vast majority of advisors there were good, caring people doing what they thought was best for their clients. My accounts are still with them today, despite being able to easily manage the accounts in a self service account at Vanguard or whatever (although I'm generally directing it anyways). And, I think most people don't understand the value an advisor brings to the table. And yes, most people could benefit from one. But many think they wouldn't, and I'm tired of trying to convince people who "already know better". And that's ok!

I often think about the large paradigm shifts for me, because there will be more. Which is a little nerve racking, but also exciting.

 

[Montecfo]

And some posters claim that no one ever changes their mind from any forum (or other discussions).

Two areas that come to mind for me, where I have changed my mind:

1) "Price Gouging" - sure, it sounds awful for a store to raise the price of bottled water in an emergency, and some politicians have made this illegal. Who wouldn't be against "gouging"?

But then I read some analysis that made it clear that letting prices float with supply/demand is actually the best way (not 'perfect' - but the best) to manage scarce resources. There are many reasons for this, one can do a search for the answers.

2) "Walking away from a house that is 'under water' (worth less than the mortgage). That just sounds wrong - you can't just dump the house on the bank, just because things didn't work out for you, right? You have an obligation!

Wrong. This is in the contract. If you don't pay the mortgage, they can keep the house. There is no moral issue here. The bank accounts for foreclosures in their fees and rates, it's a business decision for them (and you).

To be clear - you do have a contractual obligation to maintain the home. Letting it rot, or stripping out the copper before you leave is wrong and illegal.

-ERD50

I have to disagree about walking away from a mortgage. That a contract provides *remedies* for one party's failure to keep its obligation is a characteristic of most contracts. But that is not the expected outcome which is why walking a mortgage damages your credit ALSO, for example, and your reputation.

The moral piece is perhaps more subjective, but I do not see that as favoring the opportunistic debtor.

You can see why this is wrong. The borrower only owes the debt if that home value increases? I suspect we can agree that that is not reflected in interest rates as most people keep their obligations. And mortgage money would be a lot less available were that not true.

 

[rk911]

just the opposite for me. as i age my political and societal beliefs become stronger.

 

[FlaGator]

Great topic.

My views on political and social topics have probably hardened in the last few years. Raising teens as a single parent and having more time to explore issues are the major factors (I think).

While I found myself more tolerant of odd behavior, the biggest change for me was/and is my unwillingness to put up with "unsocial" behavior that intentionally inconveniences me, or anyone else. That became a bright line for me. I realized I was done with inconsiderate people when a family emptied their shopping cart and left it at the front of the belt, blocking me. I gave it a shove asking if they forgot it. I don't put up with that anymore.

 

[MC Rider]

Live and learn.

One thing I like about living here is there is a huge diversity of people, opinions, viewpoints, ways of doing things and on and on. I'm pretty sure there are people from every country in the world in LA.

From a judge: "I may not be able to fix stupid, but I can set a court date!"

I am so stealing that line. LOL.

 

[Stormy Kromer]

A great epiphany for me was when I realized that people I disagree with aren't always wrong.

 

[Taco]

Sure.
-Index funds. I for a long time did not see a benefit to them. ...

I often think about the large paradigm shifts for me, because there will be more. Which is a little nerve racking, but also exciting.

Thanks! Very interesting.
It sounds like you are very open minded and not set in your ways.

On the index funds topic, I have long been a fan. My thinking was that while there might be good managed funds that can outperform over the long term, I was unlikely to be able to actually pick those somewhat rare winners - so the index was my best bet.

I still am a fan, but am more concerned about the weighting / concentration. The top 10 companies of the S&P500 make up about 30% of the index's capitalization. And, those top 10 companies are mostly tech. It just seems a bit riskier with that concentration.

 

[ERD50]

I have to disagree about walking away from a mortgage. That a contract provides *remedies* for one party's failure to keep its obligation is a characteristic of most contracts. But that is not the expected outcome which is why walking a mortgage damages your credit ALSO, for example, and your reputation.

The moral piece is perhaps more subjective, but I do not see that as favoring the opportunistic debtor.

You can see why this is wrong. The borrower only owes the debt if that home value increases? ...

No, to be motivated to walk away, the home value would need to drop below the mortgage pay-off balance, not just 'not increase'. And the person would probably need to be in a position where they were planning to move and rent, otherwise they'd just hang on.

And the hit on credit rating, etc, also are de-motivators from walking away. The bank knows this too. So probably a considerable drop to even consider it.

... I suspect we can agree that that is not reflected in interest rates as most people keep their obligations. And mortgage money would be a lot less available were that not true.

No, I don't agree. The mortgage companies certainly bake the expected default rates into mortgage interest rates. It's a for-profit business, they need to do this.

Why do you think they charge higher interest rates on 10% or 0% down mortgages, and require PMI? Because they know the default rate will be higher, it's easier to walk away with less put down.

-ERD50

 

[Silver]

I have always had a tendency to believe that whatever is most familiar is innately correct.

Wrong. And in some cases....really wrong.

 

[38Chevy454]

I haven't really changed any of my thoughts since retirement, if anything I am more sure of my standing. I do have more time to read and understand alternate or opposing views. But it hasn't changed my view. Having a deeper understanding of a subject allows me to be more confident in support of my view. I do however have a better idea where alternate views come from, even if they are not agreeing with me. As I have said for many years, if all the world thought just like me it would be a pretty boring place.

 

[Koolau]

I appreciate when those I disagree with don't assign a value judgment to me - so I am trying diligently to do the same (golden rule and all that sort of thing.)

 

[Montecfo]

No, to be motivated to walk away, the home value would need to drop below the mortgage pay-off balance, not just 'not increase'. And the person would probably need to be in a position where they were planning to move and rent, otherwise they'd just hang on.

And the hit on credit rating, etc, also are de-motivators from walking away. The bank knows this too. So probably a considerable drop to even consider it.




No, I don't agree. The mortgage companies certainly bake the expected default rates into mortgage interest rates. It's a for-profit business, they need to do this.

Why do you think they charge higher interest rates on 10% or 0% down mortgages, and require PMI? Because they know the default rate will be higher, it's easier to walk away with less put down.

-ERD50

Well for some reason you wish to make this case. We bailed out a lot of financial institutions post the financial crisis. I guess expected defaults were not sufficiently "baked in".

All these caveats about when people would walk away weaken your original point, which was that it is not wrong to do so because the mortgage, by providing a lender's remedies for default, is somehow legitimizing that tactic.

That's just not the case.

And it is not the only remedy. Suits for deficiency are not unheard of.

 

[ERD50]

Well for some reason you wish to make this case. We bailed out a lot of financial institutions post the financial crisis. I guess expected defaults were not sufficiently "baked in".

All these caveats about when people would walk away weaken your original point, which was that it is not wrong to do so because the mortgage, by providing a lender's remedies for default, is somehow legitimizing that tactic.

That's just not the case.

And it is not the only remedy. Suits for deficiency are not unheard of.

Sorry, I'm just not following your counter-points.

"I guess expected defaults were not sufficiently "baked in"." Could be, but that's not contrary to anything I said. The lenders sign a contract that has the stipulations for foreclosure spelled out, I'm sure they try to account for that as a cost of doing business. Foreclosures do happen, it's part of the business. Just because the lenders may have underestimated the costs, doesn't mean they don't include their estimate in the interest rates they charge.

"All these caveats about when people would walk away weaken your original point," Again, sorry, just not following this. What I'm saying is there is no "right" or "wrong". It's spelled out in the contract, if the borrower defaults, the lender gets the house. That's the contract. If it was "wrong" why would either party sign?

And to be clear if someone reads this and not my earlier posts - I'm talking about a legitimate foreclosure, per the contract - not where someone damages/neglects the property and walks away. That is against the terms of the contract, and that would be breaking the law, and be "wrong".

-ERD50

 

[street]

There are always two sides to every story, and everybody has a story to tell. I have always been an advocate of hearing both sides and not trying too just take the story I like to hear.

That is the big problem in today's news that most just tell you the story they like or want you to hear. It is a bit and piece news world and not the whole story or do we get the hear both sides of the story.

It doesn't matter what topic or event that happens but seems never on an equal level.