Discuss Latest WCI Blog Post: Early Retirement Now with Dr. Karsten – Podcast #246

[Turf Doc]

Goes to show how when you’re rich worrying about the 4% rule is kind of comical. I wonder if he ever thought he’d be able to cover all his expenses just with his current gigs.

also would’ve been interested to hear what his strategy would have been assuming he fully living off his portfolio. Since I assume he could have done that if he wanted, I think he counts as FIREd

[Tim]

Very entertaining and informative post.

• Would be interested in an update on his “insurance approach” using the short term options. When events occur, losses can capsize the ship. He is obviously aware of risk management. Just curious.
• The health insurance, was curious.
• I greatly enjoyed his personal assessment of SWR. I didn’t use it. I spend what I need and see where I am at the end of the year. Brilliant.

What wasn’t said was ,Then I decide if I need to make more money or cut expenses.
Good for him, He made a lifestyle choice.
“If you can’t dazzle them with brilliance, baffle them with bullshit.” WC Fields
He can do both.. Very entertaining but few have his skills.

[dayman]

Ah, the early retirement police finally showed up. I had the same thoughts. He has changed careers from a Wall Street financier to an options trader, consultant, and teacher. It sounds like the options strategy keeps him pretty busy, too, checking throughout the day on Monday, Wednesday, and Friday. Not that there is anything wrong with it, as he spends his time doing what he wants to do and no longer answers to The Man.

I agree with the Health Sharing Ministry comment. He is one MVA or breast cancer diagnosis from getting his clock cleaned. I guess he could always go back to work. I think that this is being penny wise and pound foolish.

I don't think the goal of the FIRE movement is to live a life of pure leisure, never lifting a finger. The goal is just to gain control of your time. It sounds like he has done that, and whether or not we call it "retirement" is irrelevant.

I tend to agree with you guys on the health sharing ministry stuff, though I don't know enough about them to have a strong opinion. Massive potential downside for being wrong there.

[Kamban]

I thought he was interesting but not sure he’s truly “walking the talk”
He’s making his current income based on an option strategy, blogging, and teaching a course. He’s still working, he’s just found an area where he can mostly control how and when he’s working

That is pretty much what happens for all those not quite FI or wanting a fatter FI but want to call themselves RE. It is just a different type of work. If they don't constantly update their blog and be in the news, their value and income goes down dramatically. Even the so called social influencers have to put in hard days and sometimes night work to justify their not holding down a regular job.

[VagabondMD]

I thought he was interesting but not sure he’s truly “walking the talk”
He’s making his current income based on an option strategy, blogging, and teaching a course. He’s still working, he’s just found an area where he can mostly control how and when he’s working.
His option strategy has worked great in a prolonged bull market, doubtful it will work in a prolonged bear.
He’s relying on a health share ministry for his health insurance. I think they’re kind of like Medicare advantage plans, good until you’re really sick and want something more than bread and butter care.

Ah, the early retirement police finally showed up. I had the same thoughts. He has changed careers from a Wall Street financier to an options trader, consultant, and teacher. It sounds like the options strategy keeps him pretty busy, too, checking throughout the day on Monday, Wednesday, and Friday. Not that there is anything wrong with it, as he spends his time doing what he wants to do and no longer answers to The Man.

I agree with the Health Sharing Ministry comment. He is one MVA or breast cancer diagnosis from getting his clock cleaned. I guess he could always go back to work. I think that this is being penny wise and pound foolish.

[lemonlime]

This was a great podcast episode. Much of it was over my head, but I learned a lot and have a direction to go for further reading.

Would love to see more like this in the future.

[LazerBeams]

Right. It was a great interview and I learned a lot.

Relying on a health share ministry does seems like an unnecessary way to risk your life savings for someone who’s doing well enough financially to buy real health insurance.

I’d be interested in hearing more about his options trading strategy though.

He has a series of posts explaining it on his blog. Here's a link to the latest post, it has backlinks to the beginning

[Dusn]

Right. It was a great interview and I learned a lot.

Relying on a health share ministry does seems like an unnecessary way to risk your life savings for someone who’s doing well enough financially to buy real health insurance.

I’d be interested in hearing more about his options trading strategy though.

[pit.alumni]

I thought he was interesting but not sure he’s truly “walking the talk”
He’s making his current income based on an option strategy, blogging, and teaching a course. He’s still working, he’s just found an area where he can mostly control how and when he’s working.
His option strategy has worked great in a prolonged bull market, doubtful it will work in a prolonged bear.
He’s relying on a health share ministry for his health insurance. I think they’re kind of like Medicare advantage plans, good until you’re really sick and want something more than bread and butter care.

[The White Coat Investor]

On thing they talked about was robo advisors and tax loss harvesting. Let's say I'm using VTSAX and VFIAX to tax loss harvest. What if I own one of those in my 401k and the other in my Roth IRA? I though wash sale issues are only an issue for individuals across all their taxable accounts. Retirement accounts don't fit in this world. Is there a consensus on this?

IRAs definitely count. 401(k)s are a gray area. Nobody is actually watching them though.

[Nysoz]

Interesting guy and topics.

What's interesting is that he sells like 2 dte index puts which exposes him to a lot of gamma risk. Most people recommend selling 30-45 dte to decrease that risk. He also talks about just taking the loss and losing money occasionally, but what you can do is roll the option to 'never lose money'. He's also leaving money on the table by not selling the call side. But that's my approach and one size doesn't fit all.

He does make a point where a busy physician can't check trades frequently, especially with his frequent expirations. For the DIY person, setting up monthly trades shouldn't be too hard.

[Tangler]

This. Hearing him talk about options made me want to run the other way.

Yes. You are playing with dudes like that. Brilliant dudes with lots of time to study and trade and experience.

Fun to learn about but No thanks.

[Tangler]

On thing they talked about was robo advisors and tax loss harvesting. Let's say I'm using VTSAX and VFIAX to tax loss harvest. What if I own one of those in my 401k and the other in my Roth IRA? I though wash sale issues are only an issue for individuals across all their taxable accounts. Retirement accounts don't fit in this world. Is there a consensus on this?

I think big ERN is correct.
I think if you sell in a taxable and immediately buy in an IRA that is a wash sale. Otherwise people would do that. I think you have to sell in taxable and immediately buy something that is similar but not "substantially identical". You cannot sell VTSAX in taxable and immediately buy VTSAX in IRA.
But, I am no CPA, just a dumb doc.

[Larry Ragman]

On thing they talked about was robo advisors and tax loss harvesting. Let's say I'm using VTSAX and VFIAX to tax loss harvest. What if I own one of those in my 401k and the other in my Roth IRA? I though wash sale issues are only an issue for individuals across all their taxable accounts. Retirement accounts don't fit in this world. Is there a consensus on this?

My best understanding is that the IRS issued a revenue (2008-5) ruling that wash sales apply across TIRA and Roth IRA. Conservative practice is to assume that rule would hold for 401k/403b. However, the ruling does not actually address the latter two cases and aggressive practice is to ignore 401k/403b holdings.

[Senator]

I consider myself a pretty smart guy…..listening to ERN brings me back down to earth.

This. Hearing him talk about options made me want to run the other way.