The Buy/Sell Equation

As you have already read, I have been spending a lot of time thinking about scaling back on my clinical practice. Such thoughts naturally lead me to question how we in the financial independence community make complex decisions. Sometimes I wonder if we could take a lesson from our oft ballyhooed stock picking friends. For most immersed in picking stocks, they formulate some sort of buy/sell equation in their head. When apple stock reaches X, I will buy. When it reaches y, I will sell. The trick is to take emotion out of the process and deal with stone cold facts. The art of the process is to pick the right buy/sell points or limits. These are prespecified points which hold hard and fast to the principles involved in making the decision in the first place.

This idea got me thinking. Should I use the buy/sell equation in all aspects of my financial life?

Early Retirement

My thoughts about whether financially independent doctors should all retire are definitely an extension of such thinking. The buy proposition is obvious. We start a career to build our lives and hopefully also find meaning and purpose. But the buy/sell equation is not just one-sided. When to get out of a successful career is much more complicated. Could it be a trigger event? Or are the cold economic facts of financial independence enough to walk away from a lucrative W2 wage.

Risk management also plays a role. Is there a point when being a physician is just too darn risky?

It turns out that leaving a career is fraught with just as much angst as starting one.

Real Estate

I am a big proponent of buy and hold real estate. Instead of speculation, I enjoy being a landlord and collecting the monthly dividends that come with the business. Yet, it would be foolish to say that there is not some speculative nature to our holdings.

We spend a lot of time on the buy side side of the buy/sell equation looking for severely underpriced properties or units in foreclosure.

There are, however, times when we also think long and hard about selling. We owned a lakefront property in Wisconsin that we bought in foreclosure and sold four years later. Unlike many of our properties, we were aware from the beginning that the property would appreciate quickly and had a rough sell number in our heads from the beginning.

Blogging

Although in less obvious ways, the buy/sell equation continues to play a role in the writing of this blog. The buy proposition is clear. My intentions are to create unique content to engage the community, form connections, and clarify my thoughts.

Certainly, from the onset, there were a number of self-imposed limits. Similar to trigger events for the career, I had thought of a number of reasons the blog would need to be placed by the wayside.

Unable to create unique content
Stress of writing is greater than the joy
Negative feedback in excess
Keeping me from other important parts of life

Luckily, I haven’t reached any of these sell points yet. We will see what the future brings.

Final Thoughts

When it comes to complex decision making, I think we all use the buy/sell equation. Although we may not rationalize it out loud, we usually create a series of criteria when it comes to both business and personal decisions.

With this blog post I have attempted to codify how the thought process works.

A more interesting question is whether we stick to our prespecified limits.

But that will have to be a discussion for another day.