The First Real Test of the FIRE and FI Communities

There is an adage on Wall Street many have repeated over the years and more so in the last month:


What so many forget is another Wall Street adage similar to the first:


I have warned this is not over yet so don’t get too excited about buying the first decline.

My opinion is unchanged. Unless something drastic changes, the events put in motion will play out until their logical end (the end all panics end in).

Most readers of my blog have never experienced a prolonged decline in many markets at once. It has been 12 long years since things were really ugly. This will be the first REAL test of the FI and FIRE communities. Unfortunately, most leaders in these communities have also never experienced a real market panic when they had meaningful money invested.

By now I hope I convinced all of you to never invest with borrowed money. If you followed this advice it will only be a time thing before normalcy returns. Before the clouds clear, however, the news feeds will be littered with end of the world predictions. Unemployment will rise, markets will fall, the economy will slow or even decline. This has all happened many times before.

My advice to you, kind readers, is turn off the news feeds. The coronavirus will be fine without you watching its every move. Oil prices are going to decline heavily. Enjoy even cheaper gasoline prices in the interim.

If you didn’t sell at the high (you didn’t) don’t try to out guess the market now. Stand pat. Let the world around you panic as it always does. You, my good friends, are smarter than that. You will not be moved by a decline in your investment account balance. That is only a temporary thing unless you lock in the loss.

I was beginning to believe the coronavirus was the black swan event that would finally trip up this long bull run. It seemed strange because the coronavirus is bad, but not that bad. The economic damage could be sharp, but short lived.

The oil price war between OPEC (mostly Saudi Arabia) and Russia is the real black swan event I was waiting for. This has a real risk of causing serious damage.

If oil prices stay where they have fallen to (I’m writing this Sunday night, March 8th, 2020 when oil prices dropped into the upper 20s and gasoline futures dropped over 20 cents a gallon), U.S. shale companies are in deep trouble with massive debt and no way to work out of the problem. 700,000 jobs are on the line and several million more in halo industries serving the U.S shale oil industry.

Not all these jobs will be lost. But if even a reasonable percentage are lost the decade long economic expansion will come to an end.

Remember, the end of one economic expansion only paves the way for the next leg up.

I don’t know where the next economic advance comes from, but there are some strong indications. In 2008-09 shale oil was the one bright spot in the economy as oil prices were high. Oil will be an economic drag this time around.

Where will the next massive spike in economic growth come from? I have several guesses. Elon Musk made EVs cool and reliable. I expect the next economic surge will include a massive transition from ICE vehicles to EVs.

Solar, wind and other alternative sources of energy have the promise of huge economic growth. Even larger economically is storage technology. Batteries and other storage technologies for solar and wind will be nice areas to watch in the decade ahead.

After all this time the final frontier might be the biggest source of economic growth going forward. Virgin Galactic, SpaceX and Blue Origin will compete for space travel dollars. Space holds the promise of opening an economic boom never witnessed before.

So when the news feeds tell you the world is coming to an end, don’t believe it. None of this is new. Old guys like me have seen this before. The history books go even further back with stories of boom and collapse. It is the nature of a capitalist system. You have to take risk to build a better tomorrow and sometimes that leads to some short-term pain.

Stay well, my friends. And vigilant. Fear will rule in the weeks and months ahead. Do not allow your emotions to rule your common sense.


Note: I originally wrote this for a Facebook post for my followers. I removed that post shortly thereafter and pasted it into this post. I felt it was too important to leave this as a social media post that will gallop into the distance rapidly. 

You can read more about past market panic in this book. 



More Wealth Building Resources

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Side Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant. Call 888-844-8910, email or read my review.

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here. 

Keith Taxguy, EA

Keith started his tax practice in 1982 and went full-time in 1989. An enrolled agent (licensed tax professional) since 1992, Keith has focuses on helping businesses and individuals pay the least amount of tax allowed by law.


  1. Shana on March 8, 2020 at 8:14 pm

    Hi Keith, Great perspective and great message. I needed to hear it! I’m a 30+year investor and spouse and I are staying the course with our financial plan – which means holding tight and riding the roller coaster.

    • Phil on March 8, 2020 at 8:48 pm

      Rule #1 of financial blogging so you can appear smart – predict lower stocks and oil prices on a Sunday post when stock and oil futures are limit down…

      • Keith Taxguy on March 8, 2020 at 8:56 pm

        Phil, no prediction. I am commenting on the market declines Sunday night, hence my reference to the date and time in the post. Not looking to appear smart. Instead, looking to calm fears and panic of readers who see the headlines in the morning. I’d rather be considered dumb as long long as I take steps to protect my people, which means helping readers control emotions.

      • Jane on March 9, 2020 at 12:54 am

        Possible for Keith to share his investment positions?

        • Keith Taxguy on March 9, 2020 at 7:06 am


          Retirement accounts:
          30% VFIAX
          5% VTIAX
          65% VMMXX


          Some of these holdings are small so don’t read too much into it. I also keep cash in my business for working capital and in my personal accounts. Cash has been running high recently as I started to lighten up on the market when the S&P was at 2871. My last sale was earlier this year. Odds are pretty good I slowly add to positions as the market declines. I will not lower cash to normal levels until we see the bottom. I’d rather pick up bargains once this turns around. Still, my constant nibbling at several stocks and returning VMMXX funds to VFIAX are a near certainty as this unfolds. I guess I just like picking up things on sale.

          • Bob on March 11, 2020 at 2:56 am

            Sp at 1871. Then its still got a long way to fall before we’re below that?

          • Keith Taxguy on March 11, 2020 at 7:24 am

            Sorry about that, Bob. I meant 2871.68. That was September 7, 2018 (I better watch my typing and not say 1018 :-). That was a small sale and the rest I sold later at higher prices. I did buy back a small portion Monday for less than I sold for and will slowly reinvest as time goes on. In my position I don’t mind a higher cash level. I still have a lot invested and if the market races higher I still have plenty invested. However, it seems likely to me I will have plenty of opportunity this year to be as fully invested as I care to be.

    • Keith Taxguy on March 8, 2020 at 8:59 pm

      Shana, don’t let people like Phil distract you. The news feeds will be even worse Monday. This post is a comment on the Sunday night news. Markets are likely to get scary if you watch too much. You sound like you have a good head, Shana. Don’t let anyone psyche you out. Turn away until the dust settles if you must.

      • Phil on March 8, 2020 at 10:32 pm

        Lol. Be strong Shana… like a Keith.

  2. Daniel on March 8, 2020 at 8:30 pm

    I’ve done what I strongly suspect may be market timing, but under a different name — both despite knowing you shouldn’t attempt to time the market and understanding why that advice is given. As soon as I realized Chinese supply chains were likely going to be disrupted a few weeks ago, I sold all my VTSAX (I’ve never sold a single share, ever) and put it into VMMXX (Vanguard Money Market Fund). I have a 30-40 year time horizon, so I’m not concerned with the value of my portfolio in nominal terms right now, but saw this as an opportunity to trade my shares in for even more shares — what I really care about is having the most shares of VTSAX I can. I’m not getting obsessed with “finding the bottom”, and figure that as long as I buy back in at any valuation lower than what I sold at, I’m increasing my shares, and I’m happy with that.

    Buffett’s hamburger analogy changed the way I think about money, and this looked to me for all the world like a hamburger fire sale was inevitable, and that someone was knocking at my door offering to buy my high priced hamburgers with dollars that would buy me significantly more hamburgers for my trouble.

    What say ye? Am I lying to myself and just playing the market timing game by another name?

    • Keith Taxguy on March 8, 2020 at 8:41 pm

      Selling an over-priced asset isn’t always a bad thing, Daniel. I have plenty in my MM account at Vanguard as well and was accused of market timing as well. You did market time and it seems to have worked out this time. I’m a bit concerned over the all or none policy, however. Selling “all” your VTSAX is bothersome because if your timing was wrong you would have watched the market walk away from you and you might have been tempted to chase it. Personally, I take chips off the table when things reach nose bleed territory. Not all my chips, just the ones that no longer fit my portfolio. Even Buffett does that.

      You did market time and that can be an issue. You won this time so you are encouraged to take another swing because you might feel you “know” the market. That is a bad thing I see in my tax office all too often.

  3. Dave on March 8, 2020 at 8:53 pm

    Best advise ever. I plan on slowly , slowly and intentionaly adding as we fall and ride this out. My kids will thank me someday .lol best of luck

    • Keith Taxguy on March 8, 2020 at 9:01 pm

      Good mindset, Dave.

  4. Andy on March 9, 2020 at 7:35 am

    Thank for writing this article Keith. Watching this unfold and watching our networth plummet is a humbling experience for sure. I’m taking your and Jack Bogle’s advice of “staying the course.”. I’m no good at market timing so time in the market is better than timing the market for me.

    I wrote an investment policy plan at the advice of bogleheads and will stick with it. If for some reason I get scared I’ll go back to that policy and re-read it. My wife maxes her 401k and the rest goes to Roth and taxable. The Roth’s and taxable get filled once a month. I won’t deviate from this. Attempting to time the dip and “catch the falling knife” is a losing game for me.

    We have VFIAX(SP500) in taxable and 401k and VTIAX(International) in our IRA’s. 60% US and 40% International recommended by Vanguard. We have 6 months of expenses in cash. I tax loss harvested into VFIAX from VTSAX. We’ll see if I get another opportunity to TLH again.

    I’ll keep coming back here for reminders.

    It will be interesting to see how the FIRE community reacts. Especially the young ones who just experienced the 11 year bull market and thought they were smart. Now could be the real test for them.

    A nice reminder from Vanguard’s CEO.

    • Keith Taxguy on March 9, 2020 at 8:14 am

      Excellent attitude, Andy. And a solid plan, too!

      This post preempted a much longer post I’m working on. Long posts take research and time. Then I wanted to talk with my followers on Facebook and decided it would be a good, if short, blog post. If I can get and the readers of this blog to not panic I have earned my keep. 2020 is going to be a stressful year for some. But this to will pass. Jack Bogle was right. Stay the course.

  5. Benny on March 9, 2020 at 11:30 am

    Honestly feel that 6 months worth of expenses in emergency fund is too low for the common advice given by FI blogs/podcasts. When times like these come, and will come for sure, everything falls apart. Investment accounts drop, people lose jobs, renters start falling behind payment, etc. I feel 2 years worth of cash is a more better cash balance.

    • Keith Taxguy on March 9, 2020 at 11:47 am

      Once you have enough money accumulated, Benny, I usually recommend 2-3 years in a liquid fund (money market or liquid bank product). If the market climbs you can always sell something to raise cash. If the market tanks you can divert dividends to the money market account until the market reclaims new highs. This should provide at least a 4 year buffer. The 6 month rule is more for people in the accumulation phase and need to keep a greater percentage of their cash working.

  6. michael on March 9, 2020 at 2:39 pm

    Hey Keith, would you recommend doing a lumpsum buy during this sale on index funds or do a dollar cost average to buy at each drop of say 5% or more? i’ve been doing DCA as it makes me feel like i am in control which i am not really 🙂 #sale

    • Keith Taxguy on March 9, 2020 at 7:47 pm

      The sooner money is invested the better. When you look at long range charts the massive 1987 drop is barely a blip 30 years out. Whether you bought at the high or the low made only a modest difference; the only thing that mattered was that you were in the market the whole time. Investing nearly 20% off the highs isn’t the worst thing in the world as long as you have a 10+ year time horizon.

  7. Scott on March 9, 2020 at 8:31 pm

    “You can read more about past market panic in this book. ” Which book? I don’t see a link.

    • Keith Taxguy on March 10, 2020 at 8:33 am

      Scott, Amazon changed their API recently and they are having problems with some of my older posts with Amazon books listed (66 need to be updated to be exact). For some reason Amazon did okay when I first published and then broke the link. I will try it as an in-text link because it is a good book. I’ll drop the link here too:

      • Peerless Money on March 11, 2020 at 12:42 pm

        Thanks for the book recommendation, Keith! I see that my library has a digital copy of it.

  8. Kim on March 9, 2020 at 9:18 pm

    Great article, Keith. The FIRE community grew from a 12 year bull market. Now is the test to see if it will survive for the masses. It’s a very interesting thing to see the panic already setting in in people who logically know this is normal, but can’t tolerate it actually happening to them. This will be a real learning experience for many people who were far too overconfident.

    • Keith Taxguy on March 10, 2020 at 8:37 am

      That is the issue, Kim. Most in the FIRE community will be fine. Unfortunately a large enough percentage will be harmed. That is why I published yet again on the subject. I want to provide as much encouragement as possible for sound financial activities for those who struggle when the world around them panics. It is the stressful times where years of financial discipline can be destroyed. Some mock me for saying what I do, but that is okay. I do it for them.

    • Katy on March 10, 2020 at 9:58 am

      I think part of it was that plenty of people hit major milestones with the latest surge. Finally crossing into 7 figures or double commas. That (probably inappropriate) exhilaration of course rebounded in a greater than average amount of angst. If they would have sold a few weeks ago they would still be millionaires after all, loosing that label isn’t the easiest thing. Some people had readjusted (again inappropriately) their FI timeline based on current value, and were thus disappointed. Of course people with greater positive emotions on the way up are going to have greater negative emotions on the way down.

      • Keith Taxguy on March 10, 2020 at 10:48 am

        You hit the nail square, Katy. Your sentiment are my thoughts exactly. People freshly hit their goals and think doing so on a market sugar high doesn’t mean they could fall below their magic number. Hopefully people stay the course and don’t do something stupid.

Leave a Comment