It Feels A Lot Like 2007 Again: Reflecting On The Previous Peak

It feels a lot like 2007 again

It feels a lot like 2007 again. Almost every major asset class is on fire. People are leveraging up to buy things they don't fully quit understand. Investing FOMO is all over the place! Let's review why it feels like 2007 all over again so we can better protect ourselves.

Reflection helps us appreciate how far we've come. Reflection also helps us learn from our mistakes. I'd like everybody to reflect on several key items: Career, Finances, Health, Family, and Happiness. See if you can tie the five together and weave a story about who you are today.

It's an exhilarating time, but it's also a perilous time for those who don't have perspective. Please don't go into major to debt to buy risky assets. It feels like another recession is coming.

What Life Was Like In 2007

2007 was a most bubblicious time. Investors were feeling great! Let me go over what my situation was like back in 2007. Because just one year later, we had the 2008 – 2009 financial crisis.

Career in 2007

I was finishing up my third year as a VP at a large investment bank in San Francisco. 2007 was also the year I turned 30. Given my boss recently departed to become a client, I was left to take over the west coast business. Knowing my worth, I asked for a raise and a promotion and got them. If they lost me to a competitor, they would have been screwed for at least six months as they scrambled to find and train my replacement.

30 years old was a significant age because I finally felt like I could be taken seriously. Getting my MBA in 2006 also gave me a confidence boost. I was loving my career because I was finally my own boss in San Francisco. Sure, I had to work with the head of the office and a more senior colleague in a different department, but for the most part, I was free to control my own schedule. So long as the business was coming in, nobody could complain.

In 2007, I thought I could easily work for 10 more years and then call it quits for good. Little did I know the financial crisis would crush my industry and cause me to pursue a different path just four years later.

Thoughts for today: If you don't love your career, you better get paid. Otherwise, you're wasting your time. There are so few careers that truly provide meaning. Find something worth doing.

Finances in 2007

I received the biggest bonus of my life in 2007 due to a negotiation I had with my big boss in Hong Kong. It was a handshake agreement, so you never know until the end of the year when bonuses are paid. But he delivered as promised. From that day on, I decided to be loyal until the very end.

Although the stock market was booming, I was still hesitant to go all-in due to the dotcom bubble that began to collapse in 2000. Instead of investing everything I had in the stock market, I decided to invest most of my savings in real estate. At least with real estate, if all went to hell, I'd still have something to sleep in.

I bought my first SF property in 2003, lived in it for two years, and was renting it out to a couple in 2007. In 2005, I decided to take out a $1,200,000 mortgage and buy a single family house in the Marina district for $1,523,000. It was the cheapest house for its size in the neighborhood because it was on a busy block next to the busiest street.

Because my real estate investing experience was positive, and I had just received a big bonus, I decided to buy a $718,000, 2/2 vacation condo at The Resort At Squaw Creek, Lake Tahoe in 2007. I loved the place because that's where I took my girlfriend on our first getaway date back in 2001.

I was delirious about my financial luck and felt I just couldn't lose. I was imagining that my compensation would continue to grow by 10-20% a year for the next five years. There were some warning signs about the stock market and real estate market getting ahead of themselves, but I didn't listen carefully. Instead, I myopically focused on my fortunate career situation. I wish someone with decades of experience sat down with me to run through the pros and cons of buying more property then.

Notice the frequency. Nobody knows when the next downturn will begin.

Thoughts for today: As soon as you reach your financial target, the target will move. The desire for money is a never ending process until you decide how much is enough. Don’t just make money for money’s sake. Have a clear purpose.

Health In 2007

Work was stressful given the 60-70 hour work weeks. But at least my chronic back pain from 2000-2003 was gone. But what replaced my chronic back pain was teeth grinding and TMJ. It hurt to speak for more than an hour. I remember paying $700 to a specialist dentist who ground down parts of my molars so I could get some relief when I closed my jaw.

I was in OK shape because I started aggressively playing tennis again. But of course, I suffered from occassional tennis elbow pain that kept me from swinging freely. I weighed between 162-165 lbs, which was a normal weight for someone 5'10” tall.

Now when I look back on my diet, I realize I ate extremely unhealthy due to frequent client entertainment. I'd often take clients to fancy steak restaurants and nice lounges. The wagyu beef and Moscow Mules tasted especially good thanks to a corporate card with a $200/head budget.

I remember telling myself that no matter what, living in San Francisco was healthier than living in Manhattan.

Thoughts for today: The Health Benefits Of Early Retirement Are Priceless. It's easy to forget how much of our health we sacrifice for money and prestige. But living a pain-free and healthy life is worth it. I’m about 168 lbs now, but still fit into the same clothes from 10 years ago.

Family Situation In 2007

My girlfriend graduated college in 3.5 years and came out to live with me in December 2001. She was 27 in 2007, and I was unsure whether starting a family was a good idea yet. Work was extremely busy and I had all this pressure to keep the ship afloat given my boss left.

But I knew she was the one, so I proposed during the heart of the financial crisis in 2008. We got married in Hawaii in December 2008.

If the financial crisis didn't hit, I would have been more confident to start a family by 2010. It would have been nice to get parental leave and company benefits. Further, since our son is the best thing that has ever happened to us, he would have been in our lives for seven years longer.

It's so difficult to figure out when is the best time to have children. Even if you decide now is the time, it might take several years to conceive.

What I do know is that having a life partner through my entire post college journey has been priceless.

Related: When Is the Best Time To Have Children? A Physical And Financial Decision

Thoughts for today: Nothing comes close to having a family and spending time with loved ones. There is no way I'd ever take a full-time job over time with my family. Even the most meaningful job doesn't come close, yet most jobs are pretty meaningless. You can never get the time you missed away from your family back.

We currently have two young children and I'll be damned if another financial meltdown makes us have to go back to work. We want to spend as much time with our kids as possible until they go to school full time.

Happiness In 2007

I was ecstatic about getting a raise and a promotion. Part of my happiness stemmed from having gone to public high school and public university. Never in my wildest dreams had I thought I'd have a job at a respectable investment bank and earn a healthy income. If I had gone to an elite private school, I'm not sure I'd be as happy because I would have expected all these things and more.

It's funny, but the memories that stands out most from this time period were figuring out what ring to buy and the cozy little wedding on our favorite beach in Hawaii the next year.

My happiness level has never really fluctuated much since graduating from college in 1999. It's always been about a 7-8 out of 10. The happiness of getting recognized at work only lasted for maybe three months. The pressure to deliver took over.

San Francisco property prices

Thoughts for today: If you're relatively happy no matter how much you have, then it's not worth sacrificing once you've reached your financial goals. The same thing goes for thinking you’ll be happier once you have more money. Happiness does not come from money. Please, know this to be true. Focus on improving your health and relationships.

Our ultimate goal is to live a purposeful and happy life. There is certainty a happiness conundrum many of us face, where we have so much yet are still unhappy. Therefore, I think maintaining happiness and raising happiness takes consistent work.

Life in 2021 And Beyond

The most important thing I learned from 2007 is thinking that I couldn't lose, and then losing big when the financial crisis hit in 2008. I remember swearing to myself in 2010 that if my investments ever came back to pre-crisis levels I would take some money off the table. I tried to do so in 2012 by selling my primary residence in order to pay off a ~$1,000,000 mortgage and live in a small two bedroom, one bathroom apartment. But nobody wanted to buy my four bedroom house.

The difference with 30 year olds in 2019 versus my 30 year old self in 2007 is that I went through the dotcom collapse in 2000. I saw paper millionaires end up with nothing within a couple years. They had to start all over, like the guy who made my breakfast croissant each morning. 70% did my analyst class was fired too. As a result, I tried to diversify as much as possible.

It's hard to really know how scary recessions can be if you've never been in one with significant money at stake. Everybody likes to say they'll hold on to their investments and buy more during a downturn. But when your investments are down 30%+ and many of your colleagues are getting fired, the first thing you do is think about survival, not dumping every last cent you have in the stock market.

I'm praying that I'll finally be satisfied with what I have today and no longer grind as hard. My health depends on it. Staying in San Francisco and being surrounded by so many success stories has finally taken its toll. My recent bout of chronic back pain reminded me not to forget the point of financial independence and owning a lifestyle business: a better life.

Some Final Thoughts On The Previous Peak

* It's easy to extrapolate explosive growth in your career and net worth in a bull market. The problem is, nobody wants to work forever and things always change. Be more conservative with your expectations. Don't confuse brains with a bull market.

* No matter how much money you make or have, your steady state of happiness won't really change. Stop thinking that if you get to X amount you will be happy. Retire by a certain age, not a financial figure. There will always be something that will make you feel bad. The good thing is, you'll likely revert back to your steady state.

* If you're relatively young (under 40), it's worth swinging for the fences during the good times with growth stocks. It's worth allocating some funny money to chase unicorns. Money is abundant and cheap. Once the spigot shuts off, dumb ideas no longer get funded and silly job offers are no longer given.

* Learn when to cash in your chips by setting goals. You made these goals because you decided how much was enough. If you've somehow found yourself way beyond your goals, then absolutely focus on using your profits for a better life. The saddest thing is losing a massive lead or having to start over. Always try and turn funny money into real assets like real estate.

* Even if you buy at an inopportune time, if you wait long enough, you'll likely get back to even. Just look at us now.

* The next 10 years will go by faster than the previous 10 years. Make the most of it.

Recommendation To Build Wealth

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Diversify Into Real Estate

Real estate is a core asset class that has proven to build long-term wealth for Americans. With stock market valuations at nose bleed levels, I would diversify your investments into real estate for less volatility and more steady income. Real estate is a tangible asset that provides utility and a steady stream of income if you own rental properties.

With mortgage rates high, there are more opportunities to buy real estate at lower valuations. Take a look at my two favorite real estate crowdfunding platforms:

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.

Both platforms are free to sign up and explore. 

I've personally invested $954,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$300,000. 

102 thoughts on “It Feels A Lot Like 2007 Again: Reflecting On The Previous Peak”

  1. FB, Twitter have very poor leadership at each place. I am surprised they do as well as they do. The lack of leadership at these entities is bad. We have 2 year olds that got super lucky with a unicorn. Does not mean they know what they are doing. The 2 CEO’s are not worthy of their positions. They are squandering the trust and good will they once had. Look at what happened to the iconic, unsinkable Sears. When they took the trust of their customer base for granted- the once almighty Sears is shuttering stores across the USA.

    Listen to Stephen Mnuchin predicts 3% GDP for next couple years. Love this guy…steady and pushes through in spite of the garbage thrown at him every day by the naysayers. I will listen to him all day long before the losers going after him in the press like NYT Krugman who site in Ivory Towers and have never run an actual business. Never listen to anyone who has not run a business successfully.

    Mnuchin (who walks his talk) says we are on track for a wonderful, sustainable recovery once we get fair balanced reciprocal (key word) trade agreements in place.

    Please Sam consider going to other booming prosperous cities and get out of the super depressing mess in the Bay area. The prosperity and optimism in other places will lift you.
    As an entrepreneur….I would suggest more tax friendly locales for your business.

    California lawmakers punish success in business at every level. Again, Sam thank you for your columns and food for thought. I look forward to your columns all the time. All the best.

  2. Sam very much appreciate all you do and all your advice. Do not agree at all that this is like 2007. Think the doomsday thinking is not warranted at this point.

    People always take profits at new highs….totally normal to see a dip at the “top” with good news

    FB, TW and other FANG tech stocks are setting themselves up to be regulated due to scandals. Not surprised they are down.

    Trump whether you like him or not- is re-regulating the trade contracts with multiple countries. EU just “gave in” to the tariff issue. We will see what happens with other countries. This had to happen. Things were too out of balance and there was no reciprocity for USA companies.

    I do not want my personal info published or out there. I just think you have good things to say. I deeply admire what you are trying to do on your own as an entrepreneur but very much disagree with you on these things.

    We will always have ups and downs but calling for doomsday scenario akin to 2007 – when things are so different is not good. San Francisco may feel like it is collapsing because it is- with the crazy out of control democrats there. Go other places that are absolutely booming and prospering and you may see things differently. I know you do not like Texas (sadly) for some reason….but if you go to Dallas- you have never seen such prosperity and optimism. Go to Plano north of Dallas – corporate headquarters from all over USA are moving there. Things feel fantastic.

    I lived in CA for 15 years and completely understand why people there must feel it is 2007. Your state is being over-run with an out of control government (democratic). I am so sad to see this. I always wanted to have 2 places…one in Tx and one in CA. Now- not so much. After living in Tx- looking back- I could not see the abusive ways of the govt until I saw how good Governor Abbott and Texas politicians are (in general- also Republicans)

    In CA, too much crime, state taxes are way out- of- control, profligate waste in govt., encouragement of illegal migration when we have so many USA citizens that need help now. We do not have enough resources now for our own citizens…and they encourage more burdens on the overwhelmed systems. “The rich” are tapped out and are doing their own personal “tax inversions” by moving out of CA. That is going to make it worse for the middle class. Who else is going to fund the ballooning out-of -control spending on pensions and entitlement programs….no one by you and others like me with decent jobs… pay the high taxes. I could never go back to CA except to visit. After you see good thing and prosperity….it is very hard to look at the mess that is sadly my beloved CA.
    I think a lot of your “2007” thinking is because you are there in CA. CA is going to go over a cliff financially and I agree with your 2007 in terms of CA. I do not agree that other states are in the same mess. I travel all over the lower 48 states for my job. CA, NY, IL, CT are an absolute mess. So sad. Go to Dallas and go to Plano. It will blow you away – night and day- in terms of optimism and prosperity everywhere. There are issues…but nothing like CA and nothing like the beloved Bay area.

    This message is mostly for Sam- because I deeply appreciate what he is trying to do. I want him to be super successful. I have told my nephew to watch what Sam does closely and try to emulate this….but not on this point. Thank you for all your wonderful posts and all you do!

    1. Please STOP talking about Texas as if it’s some kind of Utopian dreamland. Once people get slapped with a $43,000 property tax bill and experience their first endless 100+ degree summer (along with 95% humidity and $800 monthly a/c bills), reality hits that it isn’t that great.

      Plano is flat and ugly, Richardson is urban sprawl with endless acres of track homes that all look the same with no trees or relief from the heat. Meanwhile in Dallas, crime is rampant due to an understaffed police force, drugs are a huge problem, and the homeless population is beginning to rival California’s. And all of this while sitting in the most horrifying traffic that you’ve ever seen, among the most angry drivers you’ve ever dealt with. Going to the DMV takes hours, completing simple local administrative government activities turns into an entire day of wasted time…there’s soooo much more.

      It is NOT an easy place to live and it is NOT for everyone. Stop trying to sell “Texas” to people. Ugh.

  3. Sam,
    Your love of family over money is what I love most about your ideas. In 2007 I had just inherited about 3 mil. I am down to about 600k in assets. age 62 with MS. 1 son. 3 grand kids 2 with special needs. I just emptied my stocks at a good time to invest in a house to be close to kids. my son is single dad. Am I scared? Sure, I am. But thru these down turns I haven’t been able to get a lot of income. I always had to keep a high reserve of cash so wouldn’t have to sell on down turns. I loaned out money to individuals using their homes as security. that was the best passive incomes. I only have one left maturing in 2021. I could have been less giving to my family. My son has struggled because of his bad decisions in his early 20’s. Now he’s on the right path. I am hoping for the sale of one of my properties at the end of this month as I took cash to buy the house down the street from his. Its looking good for a closing. I just don’t know what to do with that cash of about 250k when I get it. I have gifted him 100k for his home, so he could afford to get a mortgage and we can live in a nice middle class area on the same street. No, we could not live together. I need some private time for my life. I would like to see the 250k bring in a 4% return . I don’t worry about the tax consequences at this time. And yes, I would do most of it all again, with just a few wrinkles ironed out…hindsight is 20/20

    1. Thanks for sharing. What were some of your mistakes that you made is $3 million is a nice sum of money.

      I wouldn’t be in a hurry to reinvest your windfall of $250k. I would sit on it for three months and carefully choose your investments and think about your liquidity needs.

      1. Mistake 1 is it was inherited and I had very little preparation to know how to manage it or the people around me. Mistake 2 was in trusting a smart guy, that had been a long time friend to manage it. I had to fight a very large bank to get it away from their mismanagement. that took a lot of the funds. fighting yourself only pays attorneys. but I won. Or rather the attorneys and accounting firm won. Then the nice guy used it due to the wording of the original trust that allowed the trustee to invest as they wanted. it was mostly a GST and POD accounts. Mistake 3 not knowing about what you call stealth wealth. Other than that, I would still have helped out everyone I did. Even the small 500.00 loans that friends never paid back. And I wouldn’t have given my Ex a dime. I did, but wasn’t legally necessary as it had been inherited and I had managed to save him a good size retirement fund over the years. In my state inheritance if kept separate isn’t included as marital assets to be divided. I shouldn’t felt sorry for the him. He left as soon as his 20 years was up and my parents were dead. looking back, I think he was just waiting. Now i practice stealth wealth, and read your blog. I think I’m inclined to go with your suggestion and not be in a hurry to reinvest. my interest is piqued by Realty shares you talk about. That seems like a replacement passive income without the tenants. and I like the money I made in YY and tencent before I had to put cash on this place. I was lucky enough to have a great friend that is a CPA so she has guided me well on the tax end of it. I wish I had the business acumen that was taught to my older brother. I didn’t have any training because I didn’t know my parents were worth that much. He did as he was involved in their businesses. I was a happy mushroom. I do love your blog and sorry your over worked. I understand your wife not knowing about the finances. I always handled it for my husband and I. he only earned 48k a year, but I managed to save 25%. I think he’s blown thru it by now. I knew how to save, I never needed much.

  4. I remember 2007 very well – I had most of my wealth – 90% of it in the stock market. I remember thinking then, can it get any higher? Still FOMO made pull back from selling, I figured I had enough cash to ride out any downturn. Still watching my investments go down 50% was a huge lesson. I had read “The intelligent Investor” but not followed its advice to maintain ratios of cash, bonds and stock – I was basically all in stocks. I didn’t like selling then and I didn’t want to pay the taxes. I had a lot of money saved, but was not making a lot of money from my work.

    I learned my lessons – the stock market is doing great, so I’ve been selling. I still may have too much in perhaps at 75% in index funds, but I’ve been disciplined about selling when my ratios get out whack. I’m just a little sad that I have to pay taxes on money I may never use unless there’s an emergency.

  5. Ten Factorial Rocks

    Great post, Sam. I remember 2007 and 1999 both very well, and the euphoria that prevailed then. With a dividend stock-heavy portfolio, I have more than a 20% gain this year, and this was on top of a 13% gain in 2016. Even the tax reform has baked into the market valuation now, and with many valuation ratios in the 99th percentile or higher, I am wary now. I think it is prudent to take some (or most) of the chips off the table and re-enter sometime next year. Yes, there is opportunity cost and risk of missing the mad run-up that may still happen prior to the crash, but for those who have “won the game” with a sizable portfolio and have seen the previous crashes first hand, this may be a sensible move. For a young 20’s or early 30’s guy/gal with a long runway to retirement, staying invested is still the right move as they can recover easily. For a late 40’s or 50’s guy with the best earning years behind him, it will take painfully long to recover even from a 20-30% loss on a 7-figure stock portfolio.

  6. I remember the early winter of 2009 very well. Talk about scary ! Here I was ,33 years old running my newly founded timber brokering business. It was the first time in my entire career ( up until that point and ever since) that you couldn’t sell raw logs to any mill…anywhere. No one would take them. Everything came to a screeching halt. With a fledgling business my assets and free cash were non-existent. It was beyond terrible. The only thing that saved me and my wife from homelessness was the fact that we exchanged rent for care-taking on a palatial estate. We ate a lot of pasta that winter.

  7. patrick murphy

    To say that the recession changed my life for the better, is an understatement. My income dropped by 2/3rds as I was in sales and my divorce left me with ZERO retirement. So I said screw it, quit my job in 2009 and started my own company. Now, my house in San Jose is paid off, I make several six-figures, and I figure I have two years left to retire at 55.

    When you have not much left to lose, you can jump in with both feet

    1. Amazing Patrick. Nice job battling back! I do enjoy that feeling of having not much left to lose, which is why I like to start new endeavors. The thrill of the upside is exhilarating. Enjoy the next two years! And try to be more conservative with your finances now that you’re so close to the finish line.

  8. 2007:

    I had just started working at a major consulting firm in NYC. It was my first real job post-school. I had almost no professional experience going in and I was excited and nervous. Excited to learn a lot of new skills, nervous about keeping up given that I had no business experience. Late at night, after long office hours in front of Excel and Powerpoint, I studied for the CFA exams to increase my business/finance knowledge and, hopefully, build career optionality for later. When the financial crisis hit, it was a stressful time at my firm but I survived it. After a couple years, I’d had enough of NYC and moved out to the Bay Area, where I’ve been ever since.

    In 2007, I think I had $40k saved in a Roth IRA and that’s it. My net worth was negative because of student loans though. I didn’t know anything about investing and had bought several oil mutual funds, which got completely hosed during the financial crisis. I lost more than half those meager savings in the fall of 2008. That stung bad and made me internalize it’s better to invest in passive index-tracking funds if you’re not a very serious public equities investing professional.

    I had no notion of how to live/eat healthy. I was working really hard, didn’t exercise much (which I regret now), and often ate expensive but not very healthy takeout dinners on the firm’s dime after long working hours. (I never want to do that again.)

    Family & Happiness:
    I didn’t have my own family or even a significant other. It was all work and I didn’t invest nearly enough time back then meeting new friends or dating. I regret this now because I don’t have that many warm friendship memories from that time. And even though I had an abstract understanding that it takes real effort to build new friendships and relationships, and they don’t just happen on their own, and ignoring this aspect of personal life would mean that, later on, the pool of potential compatible mates/friends would shrink, I didn’t appreciate concretely enough how this might impact my happiness either back then or 10 years later. To be sure, I don’t know what life would look like now if I had prioritized work less back then and personal relationships more (for all I know, I might not have been happy 10 years later for other reasons), but what I do know is that 10 years ago was a fairly lonely time and I wish I had somehow found a better balance and spent more time just enjoying my late 20s and early 30s, building more connections and friendships and memories and stressing less about always trying to prepare for the “next thing.”


    Half a dozen jobs later, having worked across several industries (consulting, PE, tech), I’ve learned it doesn’t necessarily get easier as you get older: you just become better equipped to handle new challenges. I’ve also internalized more than ever that companies and roles are never stable, you shouldn’t ever rest on your laurels (until you financially never need to work again), and the best way to maximize optionality over the long run is to keep investing in your skills, relationships, and general/industry knowledge. I now work in the tech industry, where there’s a lot of “creative destruction” and companies individually are not stable (but well-paying jobs as a whole in the industry ARE pretty stable and plentiful). I’m not sure I’ll stay in this line of work forever, but it’s a good skillset to have and is transferrable to many other things.

    These days my finances are more stable because I’ve had a decade of earnings runway and I’ve lived frugally during this time. Importantly, I also found a spouse who is aligned in terms of financial values. While I still do not feel totally financially secure, I believe we’re on the right path, we’re building passive income streams to diversify away from our jobs, and we have a real pathway to achieving our dream of early-retiring in Hawaii. Maybe we’ll see you there someday!

    I have to give most of the credit on health matters to my wife. Before I met her, I ate poorly and didn’t take good care of myself. I still don’t do a great job, but she creates more balance because she ensures better nutrition in our diet. Since she is a healthcare professional, she’s also more OCD about health matters, which I appreciate, since I’m not as on top of this as she is. Now I just wish we both had more discipline about getting regular physical exercise…

    Family & Happiness:
    I’m definitely more content now than I was 10 years ago. Less ambitious, but more content. I feel lucky about the major things in my life. Thankful I met a wonderful spouse and we are a great team together and support each other lovingly. Thankful we both got good lifelong educations, are both healthy, have good work/saving habits, strong/resilient professional skills, and got our fair share of lucky breaks in life. Even though we weren’t born into families of means and probably won’t ever be among the super-rich in our lifetimes, we’ve learned to build wealth, financial and otherwise, with our own hands. We are content with what we have and we’re happy.

  9. Dood, el Farbe

    Several commenters have mentioned the feeling of standing on the edge of a cliff, waiting for the impending market drop.

    I feel the same way. I find myself now daily checking the ups/downs of all the Vanguard and other funds my various accounts (three 401(k)s and one deferred compensation account) are currently placed in.

    I’ve been worrying about this since late last year. Each time an account dips 6K or 10K, I think I should have already shifted everything into a bond index fund or a “2020 retirement” fund or something else relatively safe from an equities crash.

    Then a few days or a couple of weeks later they creep back up and hit another all time high, and I’m glad I haven’t yet pulled the trigger.

    But it is worrysome. 3 of 4 are flying at +23% YTD (my wife’s 401(k) has crappy options and is only around +15% YTD). Every week I think about pulling out into something safer, but haven’t, yet.

  10. Thanks for the thought-provoking post, Sam.

    In 2007 I was in high school and was aware of the stock market but didn’t know much about it. I always thought it sounded interesting and since I grew up in a rural area I found NYC intriguing.

    10 years later I’m working as an equity analyst in NYC. I have kept a large chunk of my savings out of the stock market to diversify my investment risk away from my career risk.

    My theory on the market is that everything is becoming so complex that people just want to invest in stories and themes. It’s too difficult to follow every small piece of news (because there are thousands of sources these days) so people focus on high level themes. And as long as these growth stories continue to deliver, people will keep buying them up. Valuations will continue to be irrelevant, until a given theme starts to change.

    The one caution I would call out is emerging markets growth. A lot of US companies are putting up strong growth numbers that are bolstered my huge growth in Asia. If that changes for some reason, valuations will start to matter again. This could be the catalyst, in my opinion.

    I like your points on happiness stemming from your expectations. I also went to public schools and I never thought I would work in investment banking or stock picking in NYC. And It’s noticeable to me that I appreciate it a lot more than others who were groomed for this from the start. I think it also makes me more willing to give it all up once I’ve hit my goals. Since I was raised outside of this world, I know what it’s like on the outside. To private schooled kids the uncertainty can be a lot more intimidating.

  11. Great wrap up of all the life lessons you learned in the past decade. It’s so true that when times are good, it’s easy to forget that you have to hedge for bears as well as bulls. As humans we tend to think good times will last forever when things are going up, and that recessions will also last forever whenever everything is plummeting. But in reality, nothing goes up forever and nothing is bad forever. It’ll be okay in the end. If it’s not okay, it’s not the end.

    Congrats on discovering the real meaning of life–friends, family, and having enough.

  12. I found Financial Samurai relatively recently and want you to know how much I’ve appreciated your articles and information. You stay on top of relevant recent financial topics, while also touching back on fundamentals. In addition, your posts have personal relevancy for me (and others in similar situations). Thank you!

  13. Super interesting article. In 2007, I got my first salaried job and was very excited to start investing in my 401k. I was training for a marathon so my health was great. I was dating a really great guy. I was happy – I had everything I could want.

    In 2017, well I have 50x the money I had in 2007. I’m in a different career. My health is probably the same. I’m single. I really try to be happy.

    Hmm I thought this would be a more triumphant comment. I will have to think about how to put a better spin on this. Maybe it’s just less impressive because I was doing ok in 2007?

    1. Not sure. The only hint I have from your comment is “I’m single. I really try to be happy.” 50X more money is HUGE! Congrats on that front.

      Perhaps your comment is another example explaining how money doesn’t buy happiness?

      One of my main points in this article is that family is BY FAR so much more valuable than all the money in the world.

      1. Sam,
        Your love of family over money is what I love most about your ideas. In 2007 I had just inherited about 3 mil. I am down to about 600k in assets. age 62 with MS. 1 son. 3 grand kids 2 with special needs. I just emptied my stocks at a good time to invest in a house to be close to kids. my son is single dad. Am I scared? Sure, I am. But thru these down turns I haven’t been able to get a lot of income. I always had to keep a high reserve of cash so wouldn’t have to sell on down turns. I loaned out money to individuals using their homes as security. that was the best passive incomes. I only have one left maturing in 2021. I could have been less giving to my family. My son has struggled because of his bad decisions in his early 20’s. Now he’s on the right path. I am hoping for the sale of one of my properties at the end of this month as I took cash to buy the house down the street from his. Its looking good for a closing. I just don’t know what to do with that cash of about 250k when I get it. I have gifted him 100k for his home, so he could afford to get a mortgage and we can live in a nice middle class area on the same street. No, we could not live together. I need some private time for my life. I would like to see the 250k bring in a 4% return . I don’t worry about the tax consequences at this time. And yes, I would do most of it all again, with just a few wrinkles ironed out…hindsight is 20/20

  14. Paper Tiger

    In 2007, I was 50 and now in 2017, just turned 60 in October. Lot’s of changes during this 10 year period. In 2007, our daughter was 9. Now she is 19 and in her Freshmen year in college. In 2007, I was deep into the corporate world as a senior level sales executive. Now, I’m retired and on to a second career as a budding Entrepreneur. In 2007, out Net Worth was about 3.5M and we were aggressively saving and investing. Now, it is just over 9M and I’m focused on how to “preserve and protect” and what to do about the pending tax implications of our tax-deferred investments. In 2007, I was very focused on myself and our success. In 2017, I’m much more focused on how I can give back and help others. I’m also working on a better balance in my life around faith, family, fitness, volunteering, mental/emotional changes, and overall outlook on life, etc.

    We/ve been very blessed over the last 10 years and I hope the next decade is just as good or even better. It certainly will be different!

  15. Loved this article! I quit my job a couple of weeks ago and will be going to another one soon. This time off helped me think about my next target and sure thing, early retirement it is. The reason for deciding to retire early is spending more time with my daughter and wife, living a healthier life. Now it is more or less clear to me what financial steps I need to take to secure my early retirement.

    This article resonated a lot with my thoughts. Thank you, Sam!


  16. Great read! Many takeaways for me. But I think the best is the adage “Don’t confuse brains with a bull market”

  17. 10 years ago I was closeted and had just taken a second job to pay for the cost of applying for grad school. I was living in a crappy apartment with my best friend at the time in a small town I liked. I had less than $500 in the bank. No investments. Now, I have my second degree and a business doing work I value highly for the good it brings the world. Now I have an IRA and am working on getting out of educational debt. I am living my life in a city I love and openly as a lesbian. All of these things make now so much better for me than then. I’ve learned a ton about PF and am actively pursuing more knowledge so that I can continue positioning my life into what I’d prefer. My goal is to stop working for others in the next five years and only work for my own business.

  18. Hi Sam,
    Hope everything is going well for you. I have been reading your blog for the last three years and will like to meet you this summer and pick your brains before enrolling to an MBA

    Currently, I am applying to few MBA programs ato enroll for the fall of 2018. Specifically, I am applying to Columbia, Cornell, NYU, Ohio State & Penn State. My focus will be in finance.
    Two years ago, I graduated from Penn State with a bachelor degree in accounting. Throughout my time at Penn State, I have been involved in many leadership roles. I was an orientation leader for two years, a peer mentor for an English class and the student government Financial Manager. Currently, I am the President for the Chi Alpha Epsilon National Honor society and a member of the accounting association club on campus. Finally, I was involved with the learning center at Penn State to tutor students in accounting.

    I love learning about finance and enjoy meeting people like minded as yourself. This summer I will head to San franscisco, California, and it will be a dream come true to meet you over lunch or coffee, while I am there.

    Please feel free to reach me via email to set up something this summer.


  19. Time definitely does go by faster as you age. In 2007 I got married and time has flown since then. So much has happened good and bad. My goal for the next 10 years is to drive as many things to goodness as possible :-)

  20. Great post Sam. I love the lessons embedded within it. For being so young, you’re a wise ‘ol Man!
    I worry a great deal that what we have directly in front of us is similar to the boom & bust. Recently, I’ve had several financial consultants ridicule me for having so much held in cash & ultra-short term bond funds (40% cash allocation) and having so little equity exposure (20% allocated to equities) for such a young age (51 years old).
    At the end of the day, I sleep better, I have peace of mind knowing that I may be giving up the last 5% of upside in order to save myself the 25% downside risk. When the next Bear Market hits (right around the corner is very plausible), I’ll be laughing my way to the bank while others will be crying in their soup.

    1. Hi Kirk,

      I have similar thoughts and worries about what lies ahead, but that’s perfectly normal in a bull market like this. This is one of the most hated and feared bull markets ever and big names like Howard Marks and Einhorn are turning bearish. I’m not sure I agree with the comparison to the dot com boom, where you had IPOs every day for companies that were valued based on eyeball views, and having .com in the company name, not profits or even sales. You had taxi drivers and hairdressers handing out stock tips and family members bragging about trading profits. That boom was absolutely euphoric and hysterical compared to this one.

      Right now individual investor stock ownership is at generational lows – understandable given the two busts in the past 20 years. Aside from possible mania in cryptocurrency, not seeing the usual warnings signs are flashing red. The yield curve is not inverted (although it is flattening). Junk bond spreads are very tight to investment grade bonds. Low stock ownership as mentioned. Manufacturing, services, employment, and retail sales are all growing and we’re starting to see wage inflation. Valuations look high on the surface, but corporate earnings are growing at 10+% year over year and this is accelerating, adding upside pressure to stock prices (especially overseas which are cheaper and unloved to begin with). FANG stocks are valued rich, but plenty of other stocks are unloved and could be bargains. What specifically causes you to think there’s only 5% upside left?

      The opportunity cost you are facing is that by sitting on the sidelines, if we get another 30-50% gain, even if we then get a “typical” bear market of 30%, you won’t see equities cheaper than they are right now. And how will you know when to time your entry anyway? You’ll have to time it perfectly to laugh your way to the bank.

      Anyway, just challenging you a bit here. I feel the urge to raise cash as well but not 40% haha. If allocating more to equities would cause you to stress out and lose sleep, then that is reason enough not to. But I urge you to reflect on what exactly would cause you to lose sleep.

      Best of Luck!

  21. In 07, I just became a Sales Executive for a very large financial services company. It was a newly created position full of challenges. It was rewarding and I had several good years. In the end, I wound up with 2 lunatic bosses. I left in April of 16 relatively secure at age 50. Stomach problems gradually (very gradually) getting better.

    As for the markets, I took my daughters 529, education savings account and extra money set aside for college and went to straight cash. That was over a year ago and I don’t regret it for a second. My younger daughter still have some allocation to stocks but in the 529, the glide path is decreasing that %. I am not far away from making her very conservative either.

    As for my own accounts, we are somewhat protective but still invested. I have enough cash set aside to ride through hard times. My wife’s funds about 75% of our spending needs and the passive income covers most of the rest. On net, we are still savers since she maxes her SEP.

    I would guide people towards being a bit more protective but not out of the market. If you are young starting out, the 401(k) is a great option. $ cost averaging with a match. Hard to beat that. After taking advantage of the match, open a Roth IRA. So many benefits down the line. Always take advantage of the 401(K)’s match first. Don’t worry about the markets. If you have a lump sum of, say, $20,000, perhaps $ cost average in an equal amount over 5 or 6 quarters. That decreases your risk should a market correction occur.

  22. In 2007 I was in my junior year of college for mechanical engineering. All of the engineers in the classes ahead of me where getting multiple offers with big signing bonuses. I was an above average student so I felt that I was going to have it made when I graduated.

    Oh how wrong I was. Once I started to my last semester, January 2009, I started looking for jobs. I could not find anything close to what I was hoping for. Almost no one was hiring people with zero experience. If they were it was low wages and not for an engineering role.

    With no acceptable jobs to be had I took the GRE and went to grad school. Turned out to be a blessing.

    Hopefully this next down turn will work out as well.

  23. * Learn when to cash in your chips by setting goals. You made these goals because you decided how much was enough. If you’ve somehow found yourself way beyond your goals, then absolutely focus on using your profits for a better life. The saddest thing is losing a massive lead or having to start over.

    This one is the most difficult one for me. I don’t like having money on the sideline so it’s tough. The goal keeps moving and more money is always better… I’m going more conservative now than in 2007, but we still have a lot of money in the stock market and real estate. It’s unnerving. I’ll try to be more conservative next year.

  24. I used to be on the 100% index fund bandwagon common in the fire community until earlier this year when I took some money off the table. Of course the market has kept going up, but I have felt pretty comfortable with it.

    Maybe getting older and taking a mortgage/having a child has something to do with it, but the wisdom from a certain older samurai may have also been involved.

  25. Great post, and I like the ties you make back to the role money plays in life.

    Would you agree the idea of hustling hard up front allowed you to make some of the changes later in life? I’m a huge believer of while you’re young, keep pushing so you can enjoy it later… Obviously you need an anchor point on when to slow down though or you never stop :)

  26. Current age: 27

    Hadn’t started yet but was thinking about what majors would be in demand and what to apply for in Univeristy. I decided on Agricultural Science because the Agriculture industry had just gone through a 10+ year down cycle and there was a shortage of educated and qualified people with lots of Baby Boomers gear for retirement.

    Now: Have been employed and on a great career track since i graduated. Added an MBA ( work payed for it) and have had several promotions in the 5 years in the workforce. Averaged 12%+ raises so far and have a breakfast meeting tomorrow to discuss another raise/promotion. No regrets in this section.

    Was aggressively saving from part time and summer work for university. I lucked out in that i didn’t know anything about investing and all my school funds were in cash, i didn’t lose anything in the financial crisis and has lots of liquidity for school.

    Now: Have been actively in investing since my first paycheck. Have stuck to a 75 stock:25 bonds globaly diversified index portfolio. Can’t claim to be an investment genius but i have done pretty well discipline wise as i have invested 15-40% of my income every year (now i aim for 40%). Also managed to add extra funds in the first correction i have experienced (-15% in Jan 2016), despite the unpleasant feeling.

    I was 17 in 2017 and in incredible shape. I also had not broken as many bones.

    Now: Maybe 5 pounds overweight put i did just run my first full marathon in just over 4 hrs. Not too bad but need to eat healthier, like Sam mentioned client facing stuff with a corporate card is so unhealthy All those broken bones have caught up to me. Do what you love but try not to get injured, if you do, participate in proper rehab. Stay active!

    Family, and Happiness.

    I will address these together. I was living at home at 17. I was generally reasonable happy 7/10 but way to focused on the future. Worried about what school and if i had enough money to pay for it and all the stuff a 17 year old might get stressed about. I didn’t enjoy the moment and the freedom of being 17 as much as i should. I had a great relationship with my family.

    Now: After years of putting my career first, i have certainly made my relationships suffer. I haven’t kept up with good friends like i should have. I still have a good relationship with my family. I have worst of all ruined a relationship (engagement) with someone i loved and cared about for over 6 years. You can’t put all your effort and time and energy into work and school and expect to have deep and meaningful relationships. I have also sacrificed quality of life moving from Calgary (outdoor life) to Toronto (urban rat-race).

    In summary what Sam said about family and happiness would really sum up how i feel right now. The past year has been one of the most difficult years i have had and it comes down to not focusing on family/relationships that matter. My career and finances have never been better but my happiness has suffered because of the ruined relationship. I am glad i am learning more about what really matters in life at 27 but wish i had know it in 2007.

    Live life going forward and focus the “free” but important things in life health, happiness and family.

  27. Ms. Conviviality

    Looking back on 2007, the most significant event that occurred and still has a major impact on my happiness today was the friendship I formed with my co-worker, Marilyn, who is now my best friend. Up until that time I heard it was best to keep my professional and personal life separate which I could understand for several reasons but I sure am glad I didn’t heed that advice. Marilyn was the one that recommended me for her position (a promotion for me) when she left the organization to move to Switzerland seven years ago. She and her husband had a goal to live oversees and they achieved that with a move to Switzerland. This is just one of their many goals that they’ve accomplished and provide me with constant inspiration. In 2010, Marilyn had urged me to give my now husband a chance in dating me eventhough I was resistant to dating anyone at that time. I’m so happy I listened to that advice because he is the love of my life. When our house flooded during Hurricane Irma she was the first one to reach out and offer financial assistance. The lesson I’ve learned is that maintaining good friendships are priceless because those are the people who lift me up when I need support and are motivators to achieve my best.

    How coincidental that the pic in this post could be any of the mountains I’ve been seeing the last few days in Switzerland while visiting my best friend :)

  28. 2007 – Age 35, Was almost 2 years moving back from the Bay Area to India, getting well settled into my new job, having put a 20% down on a 2/2 apartment, driving a sub-compact purchased with all-cash payment. 1 son, 3 years old, me trying to find a little more time to play ball with him.

    2017 – Age 45, still in the same job, discovered Financial Samurai 4 years back, clear goals for FIRE, apartment paid off, bought a larger used car to do long driving trips every year (all-cash), 2nd son that I can say is more attached to me purely because I always gave him the time he wanted.

  29. Career:
    2007 right out of school and joined bear stearns…. made 60k plus bonus. I felt rich.
    2017 still in ib technology. About two years away from executive director (according to my big boss). I definitely wasted the first five years of my job just drifting along. Definitely working more than ever.

    2007: graduated school with around $25k to my name
    2017: doing well, investing every month a set amount so I don’t care about a downturn. I’ll keep investing. Maxing 401k. Own a home, etc.

    Health: I’ve gained about 5 lbs and lost a decent amount of muscle. Still can fit in a size small and slim jeans.. so I’m doing alright!

  30. Hello Sam,

    You have actually touched on something that I thought about touching on in a future post and that is that when we are successful in something, what can be attributed to a bull market/luck and what can be attributed to grit/hard work/business sense? While luck can be a factor and is a factor, I truly believe that there are people who have seen the trends and can see where things are possibly headed, and can capitalize on it.

    Also, you are absolutely correct on cashing in chips when you get a bit older. I used to feel that I could outwork anyone but now I find myself wishing for less hassle aside than just more cash hordes (although that would be nice).

    Love the content, keep it up.


  31. “Most people overestimate what they can do in one year and underestimate what they can do in ten years.” -Bill Gates

    Great post and a good time for reflection. In 2007, I had just moved to Asia the previous year and got married that year. Our net worth had just crossed $1M. I kept most of our money in cash and CD’s and didn’t invest in the market heavily until much later, in 2014. I was in so-so shape, about 186 lbs on a 6’2″ frame, and running a business with 600 people.

    2017- we’ve been happily married 10 years and have a 4 year old daughter. Net worth is over $4M. Health is fine but age is taking it’s toll with more cases of injuries happening. Weight is 160 – 170 lbs. Still in a high level job but focusing on technology development. Able to pull the rip cord when necessary but will see how the coming months and years play out. Diet is much better than 2017 (gave up drinking, caffeine, junk foods for the most part) so happiness is higher. Your mind reflects what you put in your body.


  32. I got this in my inbox this morning and I though it was a newsletter and couldn’t comment. I was 18 during the Great Recession so I’m as experienced as a toddler but I’ve been feeling the same way too! We’re gearing to take some money off the table too (sell rental). And we’re starting to load up on government backed bonds.

    I don’t want to announce it to the world though. Everyone looks at me weird especially when things seem to be going well.

    Thank you so much for writing this Sam!!

  33. I like downturns, I feel quezy when the market hits a new high, or real estate prices March north. It feels like the opportunity has passed and I am being impoverished. I feel restless. It’s at these times I pay down debt.

    When things go south, recessions happen, the economy contracts and markets correct that I feel energised and empowered. Opportunity.

    1. I used to feel that way in my 20s when I didn’t have much . But not anymore. It actually hasn’t for a long time. How old are you? And how far Away are you from your net worth target?

  34. Great post Sam. RE: the bull market. One thing to watch for is endless TV ads by stock brokerages and mutual funds asking for your business. That’s a key top indicator for stocks, so far I don’t see it. Having said that, there was a recent WSJ article that indicated investors have been taking money off the table due to 2008-2009 experience and much fewer rank and file investors are 100% stocks. My other bit of wisdom to share here is bull markets end in parabolic looking charts, or they end in double tops- none of that is happening yet, and since no one can accurately predict the future all the time – knowing what is happening now is the next best option.

  35. Hi Sam,
    Great post. I love these thoughtful posts that make me reflect on my own life.

    2007 : Had just started a new job after taking a sabbatical, partly due to burn out from a previous job, but also to take care of my parents who were going through some health issues at the time down in LA. Taking this new job was a 40% decrease compared to my previous job, but I didn’t care. I wanted a work life balance.

    2017: Have slowly built my career to previous salary levels, but have declined opportunities and promotions in order to maintain a work life balance. Although it slowed my net worth growth, it’s one of the best decisions I made. It allowed sounder sleeps, healthier habits and focusing on what really matters, family and friends.

    2007: Having gone through the dot com crash(remember gems like CMGI, Vitesse, Sun Microsystems, Netscape?), I was just slowly rebuilding my portfolio and had decided to buy a house in Seattle. Little did we know what lurked just a few years ahead with the real estate/financial crash. At this time my net worth was about $300k with little equity in the house(most likely under water at the time) and having to sell stock to put a down payment on the house.

    2017: I will start by saying I’m smart enough to know I’m no investing expert and the reason for my increase in net worth is due to a raging bull stock market and the real estate market in Seattle. The saying, “A rising tide lifts all boats” is appropriate here. Net worth today $1.4 million. Maxing 401k, maxing Roth, maxing HSA, maxing ESPP. Not an index guy, but am slowly coming around to this more conservative approach.

    2007- 5’9″, 183 lbs. I remember going to a friend’s house for a party and seeing a scale in the bathroom. I was shocked when I stepped on it. This relates to my previous career. Long stressful hours = no time to exercise, take out meals instead of cooking, lots of beer to drown my sorrows.

    2017- 157 lbs. Now have time to exercise/run. Now have time to go grocery shopping and prepare healthy meals. I still drink beer, but for enjoyment, not to dull my reality.

    2007-Doing a long distance relationship with future ex-wife.

    2017-Remarried and like you, Sam, I have a little one who is just under a year old. This changes my perspective on life and with my increased net worth has me thinking of being a stay at home parent. I’m about 10 years older than you, Sam, which makes me want to spend even more of my limited time on this earth with my daughter.

    2007- I was happy.
    2017- Didn’t think it was possible to be happier, but I surely am.

    My finances, family, health, happiness could not be any better, so this post will definitely help me reflect on why not pull the plug on my career a 2nd time. Maybe this time for good since I have something important to stay home for. It’s also a great exercise in how far I’ve come in many areas of my life. I’m not the type of person who really measures myself, so I’m glad i saw this post.

  36. I also have the eerie feeling that we are standing on the edge of a cliff. Every indicator suggests how every asset class is more expensive than (almost) ever before. I also agree it is time to play more “defense”. But my question is very concrete and simple: HOW?

    I have asked myself the following questions, and given myself the following answers

    Q. Should we keep more of our holdings in cash?
    A. I had the same eerie feeling at the end of 2016. What if we had exited the market then? we would have lost one of the best investing years. Studies show that trying to time-the-market (good or bad) never works. So stay put and invest in diversified index funds?

    Q. Should we pay off our mortgage?
    A. Our rate-of-interest is 2.75%. For a almost $1m mortgage, it is silly to down pay all your money and not invest and let it grow otherwise. Loans are cheap and the opportunity cost of money is too high right now.

    Q. Should we buy more real estate/ and invest less in stocks & bonds?
    A. Real estate is also more expensive than ever before. And it too will come crashing down when everything else does. So there is nowhere to run and nowhere to hide when in fact the markets crash.

    So, how does one play “defense”? Thoughts?

    1. Build a defensible business or product where revenue rises in a downturn or upturn eg a book on negotiating a severance. I’m pretty sure sales will sky rocket like applications to business schools in a downturn.

      Build more income streams in general.

  37. I like the article – good perspective and it’s easy to forget about 2008 since it feels like so long ago and we’ve had such good results since then. I’m worried that people especially those that started investing heavily after 2008 don’t have a good guess of their own risk tolerance. I see plenty of people sitting at 100% stocks without a significant emergency fund saying that they’ll just buy more on sale if the stock market crashes.

    I think that’s great if they can stomach the potential 50% loss and also are lucky enough to keep their job during a recession but I’m not sure that’ll be the case for a ton of people. It’s very easy to be 100% stocks when the market is rising like this but it’s a lot harder to do so when the market is red for months at a time.

  38. This is a very good post. Great perspective. I especially love the don’t mistake brains for a bull market line. I’ll bookmark this and read it periodically.


    Thank you for the words of wisdom. Engineering a lay off from a good job is not easy. But worth it.

    Also, bull market make us do stupid things…

  40. Handy Millennial

    Hi Sam. Great post! I usually like your perspectives and this one didn’t disappoint. I especially like the nice 10 year view of how far you’ve come. Your views and thinking have changed quite a bit. From corporate cog to independent in just 10 years! That’s pretty amazing! Considering most people never get to be independent at all.

    I think its safe to say all boats get knocked during a recession – real estate and stocks. It’s all just money, when it’s scarce all assets lose value. I think that the next time a recession hits I will plaster a huge 20 year chart of the S&P on my living room wall so I don’t forget what happened last time.

    But whatever happens you have to have that life partner. It makes everything so much better. Love the family focus on here lately. I’m looking forward to reading more!

    1. Yes, plaster than 20 year chart in your room and on your computer for sure. Panicking is the worst, and the more cash and diversified income streams you have, the less you will panic.

      Good luck! Things still feel like they’ll go on for a while.

  41. Moved from DC to Denver with my boyfriend (now husband) in 2006 because real estate prices were cheap and we could buy a 2/2 downtown (that’s funny now, given the current Denver market). Quit my job with a luxury hotel company at the end of 2007 and took a job with a brokerage firm starting in March of 2008. My first day Bear Sterns was bought by JP Morgan for $2. You know the rest of the story.

    Today: Still working at the brokerage firm, just changed job from broker to client services. Husband has had multiple promotions and heads up an accounting dept. Recently sold the condo we bought in 2006 for a healthy profit. Sitting on the cash from the condo to buy a mountain place, but waiting until we roll a kid or two out of daycare. Same dog plus two kids, now living in the suburbs.

    What I learned from it all: Buy your house/condo not for the profit, because it’s where you want to live. If you want to live there, others will too, and the profit will come. Sometimes vision requires a strong stomach for twists and turns but don’t over extend yourself, because you never know what’s around the corner. Don’t live so that it’s expensive to wake up in the morning because of debt.

  42. The most important thing I learned from 10 years ago is not realizing I had it all until I lost it all. I don’t take anything for granted anymore and try to make the most of life with what I have.

  43. Another sign that a correction is on the way: the number of unreliable people out there who don’t do their jobs but are apparently still getting paid. In my experience lately contractors, suppliers, co workers, and clients are all getting lazy. Deadlines come and go. Things that should take a day or two take a week. People aren’t where they said they would be when they said they would be there. Surely this can’t continue.

  44. 2007, lets see:

    Career: I had not yet immigrated to the U.S., but I had put the wheels in motion. I knew it was going to happen, just not exactly when. I was doing well at my company (which is why I was eligible to apply for a transfer to our headquarters in the Valley).

    Finances: Hahahahah. I neither knew nor cared about my finances in those years. I had (coerced by a friend) invested a small amount of money (under duress!) in India. I never checked on my investments. My best guess is that by the end of 2008 they were worth about $50k.

    Health: I had LASIK surgery done. I had worn glasses since I was 5 years old. The change was dramatic and fantastic. I was rarely sick, had no chronic pain, had a kick ass metabolism, occasionally did some yoga and other than that ignored my health as roundly as I did my finances.

    Family: I had just ended a long term relationship and was not dating. I was enjoying being single for the first time in more than a decade.

    Happiness: I was ripe for a change. My father had moved to Botswana the year before, my mother was going to join him there soon. My sister was studying in Amsterdam. I had just got out of a not good relationship. I was happy with my job and my circle of friends but I felt that there needed to be more to life and I needed to explore more of the world.

    Cut to 10 years later. I am married, I have a kid, I live in the Bay Area, we have saved and invested $260k this year and I plan to retire next year when I turn 40 years old. My life is nearly unrecognizable from just a decade ago.

    1. Sounds like a great 10 years! I’ve always wanted to do Lasik, but I’m too chicken shit. Maybe if my eyes get really bad.

      I wonder whether I will beat you to Amsterdam. It’s on top of my relocation list! But if you actually cut the chord next year, then you win :)

  45. Career:
    2007 Still working like a dog at what is today one of the most admired companies in the world, but on the cusp of leaving it. No work/life balance (all work).

    2017 Early retired for 10 years and living off of passive income. No work/life balance (all life).

    2007 Retired with an almost 8 figure net worth and promptly lost 40+% of it during the financial crisis.

    2017 Net worth slowly crawled its way back to 70+% above its peak in 2007, now well into 8 figures. It wasn’t easy relying on only passive income to build it back up. If I had kept working, I’d be well into 9 figure territory now.


    2007 Worked out every day since there was no shortage of basketball players looking for full court 5-on-5’s.

    2017 Work out every other day at the gym. BMI still ideal, but no one escapes Father Time.


    2007 Single with not a care in the world other than work.

    2017 Lots of dating after early retirement 2007 – 2011. Now married and raising a kid.


    2007 Happy designing high sales, high recognition products, and enjoying prestige being employee #20 at a 6,000 person company.

    2017 Happy to play with my kid every day.

  46. This is such a great honest recap of your development over the past 10 years. I can see a lot of meaningful lessons drawn from this post. I think it’s amazing that you were the VP of a successful investment bank at the age of 30. I’m 30 now, and I’m nowhere near where you were 10 years ago.

    I got married when I was 26 and wasn’t even sure it was the right move. I never even planned to get married in the first place. But Mr. FAF turns out to be just the right person for me to be with, so I guess that’s one of my biggest accomplishments so far.

    1. It was a lot of luck, b/c a recruiter called my VP in NYC at a different bank, and she passed and handed the phone over to me. It is much easier to get promoted if you job hop. I’m glad I did b/c 70% of my GS classmates in NYC lost their jobs within two years after I left.

  47. Damn Millennial

    I agree that I see a lot of investing FOMO going on and have it myself as well! I didn’t really hear many people talking about investing as regularly when I really got started in 2013. Now it seems to be a more normal topic that people discuss. The other big one being from Denver is that people talk about real estate a ton here.

    I am optimistic about the future but never truly experiencing a bear market for many millennial’s makes me think that when a down turn does come more people will panic then they think.

    What would you do with Denver real estate right now? I am considering selling my primary to take the tax free gain this spring and then sitting on some cash in hopes of finding a duplex to house hack.

    1. I’d always hold onto a primary residence and ride the downs and ups, especially if you see yourself there for the long term. You want to be neutral real estate. It’s the 2nd, 3rd, Xth property you own as an investor you should be thinking about.

      1. Damn Millennial

        Agreed, but would you sell the property and then look for an opportunity to invest in a duplex (living in one side/renting other). Or do you think I would be better positioned to just stay put with the low cost of living I have locked in and look to invest in other ways if there is a pull back? Starts to feel like wasted cash when it is tied up in your home.

  48. Great post. I am sitting on a lot of insurance money currently (personal property pay out, not the dwelling money to build the house) and am being cautious. I will pay off my student debt and place some cash in my son’s 529. After that I am not sure what I will do with the rest of the money.

    Stock market? 1 years CD at 1.65%? Savings account at 1.25%?

    That is my next big question. That and if I should build or just sell the land and walk away.

    1. Man, I just saw your tweet about paying off $175K in student loan debt! That is HUGE! What was the interest rate? And also, can you share how big the personal property payout is and whether you have money left to buy personal property replacements?

      You will make the best decision once you test the market. I can’t believe lightning will strike twice at your home.

      1. Thanks man…so the loan was at 3.25%. Low interest but just needed to get rid of it to feel like I was making progress. Considering my investments have made 14% year to date, I know there will be people out there saying it was stupid to pay off.

        As for insurance- the personal property is typically 70% of the dwelling limits. We had a 1.2 million dollar home insured for over a lot in dwelling coverage (though not the full amount of my mortgage as land is considered part of that mortgage) and thus about a large chunk for possessions. They don’t pay out immediately. My friend with a different insurance is getting 100% after categorizing, another friend is getting 25% with not doing anything, we got 75% with categorizing and have to itemize to get a 100%. We are itemizing currently. It is a brutal job but per hour is worth the effort.

        1. It’s totally worth paying off your student loans. Feels like a monkey off your back, and it’s an immediate win out of a difficult situation.

          Does the value of your home part of the personal property insurance? For example, you say $1.2M. Are you saying 70% X $1.2M = $840K in personal property insurance? I don’t think that’s what you mean right? You can have different values of personal property values in a house. I want to check what mine is this week.

          1. The dwelling portion of your home is based on a estimate to rebuild. For instance if it is a 3200 square foot custom home (like ours was), then they estimate it will cost somewhere in the $800 to 900k range. A smaller home will have a lower coverage.

            This sets your coverage A/dwelling limit and sets many of the other coverages. For instance the personal property, external structures, landscaping, etc.

  49. Cool, thought-provoking, insight. I was in prison during 2007-2012 (drug charges), so I only saw how the TV media covered the downturn. It was a very powerful and scary time for me, because I didn’t know what reality I was going to be released into when I got out. Would I be able to survive the difficult financial times when I got out? I think that time still haunts me, because I am always apprehensive about it happening again. The fear of difficult times on the horizon inspired me to save, diversify, and be prepared for the worst, because the worst can happen to us. The only way to protect yourself from the worst, is to be prepared for it. Plan for it. Take the long view of success, and accept that the only way to experience some of the greatest high points in life, are to survive some of the low points. The highs, and the lows, are all part of the experience of life. I try not to be afraid of them anymore. I just try to prepare for them the best I can. Peace out, friend.

    1. Bill – It is fascinating to hear you say the fear of difficult times on the outside was stronger than the fear you had in prison. Some would say the opposite. While some may also say if there was any time to go to prison, it would be during the worst downturn in history. Thanks for sharing.

      1. Thanks Sam for the cool reply! I have been reading your work since we talked on my budgets are sexy guest post. I still plan to hit you up about an article. After I wrote that budgets are sexy post, I was just exhausted and creatively run down from too much writing and real-estate projects this summer and needed time to recharge before I committed to the next one. I then went on an 8-day road trip to Fincon 2 weeks ago, and caught a nasty cold this week when I came home, so I’m just starting to get caught back up with life.

        Watching the economic downturn from my prison cell allowed me an interesting perspective. I was virtually 100% protected from it, as the food trays never stopped coming, and my free time running in the exercise yard never stopped either. But it did give me a very anxious feeling when I tried to imagine my life in the free world. If the free people I saw on the nightly TV news were having that much trouble out there, how much trouble would I have with no skills or financial cushion????? At least in my prison cell, I knew what to expect every day. I had learned how to survive and succeed mentally in that world — a world where money didn’t exist or mean anything. But would I still be able to succeed in a world where money meant something? In a time where money was very scarce to go around? The fear of the unknown is often the scariest of fears.

        Now that I have done it, and made the transition successfully, I realize I had nothing to be afraid of as talent, faith, and hard-work are some of the greatest forces that equalize any setback and help you overcome any challenge. But before I knew that, and had proven that I could do it, sitting alone in my cell, there was alot of apprehension of the unknown, as I wasn’t sure if I could do it or not.

        1. “If the free people I saw on the nightly TV news were having that much trouble out there, how much trouble would I have with no skills or financial cushion????? At least in my prison cell, I knew what to expect every day. I had learned how to survive and succeed mentally in that world — a world where money didn’t exist or mean anything. But would I still be able to succeed in a world where money meant something? In a time where money was very scarce to go around? The fear of the unknown is often the scariest of fears.”

          Great stuff man. Yes, the fear of the unknown can be debilitating. But once you take the risk once and don’t drown, it’s easier to take more and more risks.

          I’d love to delve more into this topic with you and your perspective from prison in a future post. Hope you enjoyed Fincon.

  50. This is a good reminder to everyone. Lots of folks talk about a recession (including myself) coming soon, and while nobody can truly time it, the writing’s on the wall; better to be prepared than not.

    Being DINKs we have some added flexibility in that we’d only really be SOL if BOTH of us lost our jobs at the same time. The odds of that happening aren’t fantastically high, but even if it were to happen, we’re prepared with our emergency fund to last us a while.

    It’ll be interesting with all the younger millennials having only really experienced a strong bull market, for the most part, to see how we’ll react during a bear market…Like you said, folks talk a strong game, but survival instincts will kick in.

  51. Sam, great perspective, I couldn’t help but stare at the CAPE ratio and % declines in your table. I often wonder how the many 30-somethings in the FIRE community will react when the next downturn comes (and come, it will). It’s one thing to talk about it, it’s an entirely different thing to live it. I’ve been through ’87, the lost decade, the .com bust, and ’08. I’m only 202 days from retirement, and keeping plenty of dry powder. The busts are a lot more emotionally draining than many folks realize. If you’ve achieved your goal, play a little defense. Great post.

    1. I often wonder the exact same thing. I read these articles where late 20 or early 30 somethings have hit their goal and are retiring, and anyone else can do it if they just invest all their money and write on their blog in their spare time. At that age a large portion of their working years has been in the second longest bull market in history. Doesn’t make sense to me. All those gains can unwind so fast.

      Downturns can shred apart and light fire to the best plans one has for a downturn.

      1. Paper Tiger

        I’ve wondered the same thing. Live frugally, no kids, save/invest 1-1.5M in the market, retire at 35, travel, workout, enjoy life. If it doesn’t work out in 5 years, go back to work.

        Good luck trying to get back into the workforce at the same place you left it, if at all. It all sounds good but it is never as easy as it sounds. There is a small percentage of people that make it work and have enough discipline to manage that fine line of expenses and passive income from investments. And MAYBE they create a successful side hustle that supplements the nest egg and keeps the good times rolling. However, for the majority, it rarely works out like this and can be a disaster if not properly managed and a little bit of luck going your way.

    2. Man, 202 days sounds so close, yet sounds like an eternity! Hope you get an exit package or something to sweeten your departure.

      One piece of advice: don’t take any vacation days for the next 202 days! Use SICK DAYS! Vacation days must be paid out like real day job wages.

  52. Looking back and reflecting on how you’ve arrived here is always a good idea.

    Personally, getting married and having kids had been my biggest changes in the last 10 years. I’m extremely fortunate that I was run over on my motorcycle 25 years ago. Recovering from that financial disaster put me on the path to financial freedom. While I’m not a multi millionaire, the lessons learned then has meant my layoff earlier this year has given me the freedom to spend stress-free time with my boys white looking for my next thing.

    I wouldn’t trade it for the world.

  53. Although I don’t follow the market as closely as you do, I have that same eerie feeling that we’re standing at the edge of a cliff.

    It might be construed as trying to time the market, but we’ve slowed down as of late. We’re still maxing out our retirement accounts, but we’re sitting on a good amount of cash that I’m not willing to throw into the stock market or real estate market right now.

    I’m hoping to quit my job in about 2 years, so I’ll definitely be paying a little more attention to the way everything’s moving as those first handful of years will be pretty important.

    — Jim

      1. Well, I had hints that I was going to be downsized but due to insecurity and naivity, instead of quitting I waited for to be offered a buy-out, which happened in 2005. I had great reviews so I knew that they had to offer me a good package. I did not negotiate it or initiate it, but the effect was the same financially. If I had taken control of the situation I probably would have been better off initiating and negotiating a new job and the buy-out package. But it turns out that I didn’t really need a new salaried job, and did well with rental property and free-lancing for a few years and built up my net worth and nest egg quickly. The 2008 recession knocked my investments down about 30% but I rode the market down and then back up which was quick because I was not yet drawing down I was could stay invested. In 2010 I started managing my own investments and did well. Now I am drawing down but less than than the annual return. Not all good luck, but up and down the mountains as one of your readers talked out.

  54. Career:
    I just started working in financial services in July 2007 after graduating in May. I moved to New York on Saturday, July 7, and started work on Monday, July 9. 10 years exactly would have almost been Thanksgiving, so I was only a few months on the job. I was extremely motivated and naive.

    Impact on Today: drink the kool-aid but don’t get drunk on it.

    Received a $10,000 signing bonus as part of the job offer during senior year which got paid about 2 months before starting work (so right around graduation). *POOF* immediately down to $6,000 after taxes, and another ~$4500 went to the first month’s rent and one month’s worth of rent for a security deposit with my roommate. The remaining $1500 probably sat in my checking account until I decided to buy a bed to sleep in and grown-up clothes for work.

    Impact on Today: large purchases can obviously have a significant impact on our finances, but small adjustments can make a large difference. We didn’t need to be living in both the nicest apartment AND the nicest location.

    In Nov 2007, I was a few months in exercising to lose my college (aka beer) fat. I was never extremely overweight, but the constant late night drinking and eating crappy food definitely impacted me. I probably exercised 2-3 times as much while in college senior year than I did in New York, but cutting out much of the crappy food and drinking had a larger impact than exercising alone.

    Impact on Today: I’m in the best shape I’ve been in 10 years thanks to Orangetheory Fitness. I know it’s important to take care of myself.

    Mrs. BD just accepted a job in New York after working in the Mid West for several months after graduation; she was going to move to New York with me in January 2008. My grandmother – my last living grandparent – passed away.

    Impact on Today: don’t waste a single day.

    I remember being excited and overall happy. But then NYC – the greatest city on earth – got real lonely at times despite having lots of friends and family nearby.

    Impact on Today: It’s easier to now know what does NOT make me happy.

  55. Baptiste Wicht


    Very interesting post

    I’m currently thinking of starting investing in stocks and bonds (late, 30 years old), and I have to admit that I’m scared the market is too high. On the other hand, I know I should not time the market.

    Do you recommend still going all in now with what I want to invest or maybe try to split my investments over a few years from now ? Or maybe another strategy ?



    1. Damn Millennial

      Hey Baptiste,

      I know this wasn’t directed towards me but I will give you my 2 cents. I think you should not wait if you are not invested at all to get started. You are young and have time on your side, to many people hold off and then never build a comfort level around their investing.

      My recommendation would be ensure your debts are all paid (no credit cards, student loans, car loans), then build an emergency fund, and then get started investing and make it a regular habit. Even if the market dips big right after you go in new contributions will be more meaningful.

      Now if you inherited a million or there are other factors then it maybe is a bit of a different story.

      1. Baptiste Wicht

        Hi Damn Millenial,

        I never had any debts and I have a 3-month emergency fund (with very stable job). I’ll try to be a bit more conservative than I thought at first, but I’ll invest in early January. I’m not talking about a lot to start with, around 20K $USD (in CHF currently).

        Thanks a lot for your answer

        1. Damn Millennial

          No problem! Sounds like you are well positioned, I would go for it and make sure you have a long term time horizon in mind in case the market bounces the wrong way shortly after you invest. You would be harming your future though if you don’t get started, sounds like you have a bright future ahead!

        2. Why not invest a certain portion to get started (like 50%/$10k in VTSAX or your choice mutual fund) to get started. Then add a little at the time inwbuch you get paid each week or month (known as dollar cost averaging) until you run out of the $20k. Then, continue to make it a habit to invest from your paycheck earnings on the same schedule as you were indefinitely.

        3. You should be dollar cost averaging into the market now. Set up a weekly investment of $250/week = $1,000 / month and put it in ETF’s for the lowest fees. Increase your weekly amount as you get comfortable. NOBODY can time the market. You might regret entering the market with a lump sum in January and see it disappear overnight. Your long term commitment and mentality is key when you start investing. Dollar cost averaging will support the right mindset. Good luck!

    2. I am/was in the same boat as you. I am 31 years old and just started investing in the stock market this year. I did quite a bit of research and reading before I felt comfortable investing in such an “expensive” market.

      The bottom line:

      Today’s valuations…. and even a big crash tomorrow or next year will mean little in 10, 20, or 30 years. Time in the market is much more important than trying to time the market.

      Determine what level of risk you are comfortable with, select an asset allocation that’s right for you, and invest in tax advantaged accounts first.

      Best of luck

      1. Baptiste Wicht

        Thanks a lot :)

        As for tax-advantaged accounts, we don’t have as much as you have in the US, here in Switzerland. At least less flexibility on the allocation and only around 7000 USD / year that can be tax advantaged.

        I will follow your advice.

        The best of luck to you!


    3. Financial Muse

      If you are strong enough to ride out a market correction, there is no reason to not invest now. Yes, the market appears to be inflated and warning bells are starting to ring. But if you won’t panic when a crash does happen, go for it and start investing.

      1. Baptiste Wicht

        Hi Financial Samurai,

        Thank very much for this link, very interesting and well-written, I did not there was so many models for asset allocation.

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