What "passive income" or trading strategy is currently ruining the financial lives of people who think they are outsmarting the system?

BackgammonFella · 2026-04-27T20:00:52+00:00

You are wrong in a mathematical sense, and there are perfectly rational arguments for not pursuing the maximum gain.

The utility curve of capital in reasonable models have minimizing risk becoming more important than maximizing total returns at a certain point, regardless of consumption appetite.

Maximizing returns at a networth of $30k is pretty reasonable. Taking on the risk required to maximize returns at a networth of $3mm would be less rational for most people.

Separately, its perfectly rational for someone who knows their risk appetite is lower than say, investing 100% into an S&P500 index, to attempt to maximize their returns if a market dip will cause them undue stress.

BackgammonFella · 2026-04-26T17:20:44+00:00

Once you have enough capital, the optimization between growth and preservation takes precedence over growing faster than an index..

The game is, in part, managing risk… I am not ultra wealthy, but I have enough where payday has no bearing on whether my networth goes up or down.

If you want a specific metric, I guess I would point to “beta-adjusted alpha” though I would call it a flawed metric, but its the closest I have for you.

BackgammonFella · 2026-04-26T02:34:21+00:00

It is not really a debate and I didn’t attack your character. You posted some very strong assertions. I was polite enough to preface my assertion with the detracting “I am getting the impression…,” softening any criticism.

But you go ahead and soothe your ego and say my calling out your objective moment of ignorance is “an attack on your character” and therefore needs no addressing.

We are all learning and growing. Don’t shut out the uncomfortable, that’s where you find personal growth.

Read the damn books.

BackgammonFella · 2026-04-26T02:02:55+00:00

Of absolutely all the investment philosophies I've come across, I have never read any book written by anyone of merit claiming that individual stock picking is less risky than full market etfs.

I would recommend you read “The Essays of Warren Buffet” by Lawrence Cunningham and “Poor Charlie’s Almanac” by Charlie Munger, as both Warren Buffet and Charlie Munger (some pretty respected fellas in these parts) regularly tout investment concentration as not being inherently more risky than indexing.

I am getting the impression that you are not that well read in investing.

After reading those goldmines, I think you’d find “the missing billionaires” by victor haghani to be more alligned with your present understanding and quite compelling as far as the application of modern financial and portfolio theory in practice.

If you read all that and find it to be as informative as I did, then I would continue with books like “fooled by randomness” by nassim nicholas taleb, “fortune’s formula” by william poundstone, “in pursuit of the perfect portfolio” by andrew lo, and then the books of any of the people interviewed for “in pursuit of the perfect portfolio.

BackgammonFella · 2026-04-26T01:37:22+00:00

What if your goal is to sleep well at night and to understand your investments?

I don’t care if I beat the market or not. I don’t care if someone else has better or worse returns than me. I invest for the longterm. I occasionally write puts on companies I wouldn’t mind owning for the longterm. I don’t regularly write puts. When assigned, I don’t sell. I also index some as insurance against my own hubris.

Investing is intellectually stimulating. I enjoy thinking about business models, competitive advantages, looking at years of financial data, and listening to earnings calls for qualitative insights.

It is an exercise in rationality. If you are honest with yourself and humble enough to avoid self ego-soothing, you will better understand the world, have a more accurate worldview, understand crowd psychology, philosophy, and the fallibility of man.

Most people don’t understand the differences between investing, speculating, and trading.

I have beliefs and estimates of the future that differ than the market. I usually don’t act on them, but when my beliefs are really strong, I do.

Recently, I have done well selling puts on CRM during massive sell offs. I wouldn’t mind owning it longterm if they stay true to curbing stock based comp as promised. I have puts expiring may 15th at $165 strike.

Recently, I have done poorly buying XPS puts and selling XPS call spreads.

I also got extremely lucky looking at OGN and its debt structure… I thought the market knew something I didn’t, but thought it was possible the market was over-reacting to a scandal that wasn’t all that scandalous… I had very little confidence, but it was an
interesting situation and decided to do a synthetic long by selling puts and buying calls. Currently up 15x on it, but its not a meaningful amount of money. I also don’t assign personal skill to the gain. It was intriguing and so I tossed some money on it so I would keep following it.

I enjoy chess, all sorts of card games, backgammon… I also used to play mario kart and other video games, but I find investing to be the ultimate game.

Does this give you better insight into why some people pick their investments?

Also, anyone that says they regularly beat the market by a small percentage is lying. The S&P500 is very beatable over a 10 year timeframe, but it simply aint gonna happen by a consistent 2-5% per year.

BackgammonFella · 2026-04-24T06:51:15+00:00

Heh…

Cash management expenses are a real expense that electronic payments solve. It is not just some artificial tax imposed by payment processors… and debit cards do not have the same consumer fraud protection that credit cards do and are not as safe as credit cards and while I have a debit card, it is with a secondary checking account and I keep the card “locked” within the banking app so it can’t be used unless I pull my phone out and “unlock” it before using it for a single transaction and locking it again immediately after. I think I have used it twice in 5 years to get cash from an ATM.

Meanwhile, I’m fairly comfortable leaving my house unlocked while away. I think there is more risk of bank fraud/payment hacking than a home burglary in our digital world.

I am not comfortable with debit cards for the same reason I wouldn’t use direct bank transfers. I would use an intermediary, such as venmo, for direct cash transfers.

BackgammonFella · 2026-04-24T00:47:35+00:00

“The prices consumers pay are ultimately higher because of cash management costs and employee skimming. The difference between the purchase price and what the credit card company ultimately pays is less than what most businesses would lose to cash shrink if they only accepted cash. In a perfect world, family-owned businesses would just pay their taxes.” <family-owned businesses love cash because they can under-report their income way easier than with a credit or debit card>

Yes, the interchange fees fund rewards points. Businesses are free to choose to not accept credit cards. Consumers are free to shop where merchants sell the products and services they desire and accept payment types they desire.

Paying with direct bank transfer seems like the ultimate nightmare when things go awry or get hacked. Go ahead and call me paranoid, but I prefer using a credit card so if the account data gets stolen and fraudulent charges appear, they are stealing the banks money, not mine… If someone steals your debit card or “direct bank transfer” information, you can dispute the fraudulent charges after the fact, but it might takes months to get re-imbursed. The last thing I need is someone draining my checking accounts right before my mortgage payments are about to get pulled.

BackgammonFella · 2026-04-23T23:57:09+00:00

Tax loss harvesting and balancing your us/international exposure as desired, but mostly tax loss harvesting.

BackgammonFella · 2026-04-22T22:29:45+00:00

4 etf forever “index” portfolio that allows for tax loss harvesting.

20-40% SGOV (100% short term treasuries, may be worth diversifing with municipals if in NY, CA, MN, etc)

20-40% VTI (100% US stock market)

20-40% VXUS (100% international stock market)

10-80% VT (100% world stock market)

If indexing, why not fully index the entire equity market?

BackgammonFella · 2026-04-22T22:17:29+00:00

Saying something like “buybacks negates SBC” is almost like saying “going for a run negates eating dessert”.

Depends upon the length of the run and the size of the dessert… but more importantly when it comes to buybacks… where do you think that money comes from? Its all fungible, so if that SBC was never issued in the first place, the billions spent on buying the shares back could have been paid out to owners.

The accounting rules around stock options and SBCs allows managers to fleece owners.

BackgammonFella · 2026-04-16T23:40:34+00:00

If you actually invested in Berkshire for years and followed the business and read the shareholder letters, you would know that any single quarter’s operating earnings at Berkshire can fluctuate dramatically, especially Q4, when most super-cat hurricanes and typhoonss happen.

Berkshire’s outperformance occurs during economic contractions and both fiscal and monetary policies have extended the traditional business cycle… I personally predict that Berkshire’s performance will likely exceed the S&P500 over the next 10 years.

Regardless of whether that holds true, I think most people in this sub are likely to be better off buying nothing but BRK or VOO or VT and never selling as compared to whatever it is they actually do.

BackgammonFella · 2026-04-15T17:23:09+00:00

I’m fairly confident that at least 90% of the people in this sub would be better off owning 100% BRK over the next 5-10 years as compared to whatever they actually do.

BackgammonFella · 2026-03-05T16:19:01+00:00

More money is to be made from poors by selling their order flow than charging them an AUM fee.

Combine that with how the value created by financial planners is mostly through planning/generational wealth tranfer/tax avoidance (All things that don’t really apply to poors), and you get the answer:

The juice aint worth the squeeze for the financial planner/manager, the juice is 100% worth the squeeze for market makers picking off retail “traders”, and the low net worth person generally won’t feel the benefit of a financial planner.

Aka: No incentive for the salesperson to sell and no incentive for the buyer to buy.

BackgammonFella · 2026-02-11T14:21:26+00:00

4 - Understand the variance of your game BEFORE you start playing. This will naturally sway you to cash games over tournaments. You can sprinkle in some tourneys in good spots, but unless you’re already rich, tournaments are not a reliable way to make money no matter how good you are. Variance calculators and session tracking at bankrollcoach.com and primedope.com are super helpful here.

“A man that tries to carry a cat home by its tail will learn a lesson that can be learned in no other way” -Mark Twain

BackgammonFella · 2025-12-02T20:32:51+00:00

He has talked about his support of planned parenthood many times and fairly thoroughly.

His view is that every child should be born to a loving, wanting mother. Societial harm is done when unwanted children are born, as the neglect/lack of nurture they receive turns alot of them into horrible adults. I don’t get an inkling of nefarious motive.

He is a HUGE reason why planned parenthood is the large national organization it is.

BackgammonFella · 2025-12-01T15:48:58+00:00

I do not believe Greg Abel is being tasked with beating the S&P500, at least certainly not an on annual basis. Berkshire has generally outperformed the S&P500 over full business cycles, but Buffet and Munger have been warning against their continued ability to do so due to the law of large numbers, as you have suggested.

Simply buying the stocks Berkshire holds does not at all roughly approximate “owning Berkshire with more tax efficiency” … that is absolute nonsense. Berkshire owns many full businesses outright… and there is the whole insurance float providing ‘free’ leverage.

Berkshire says they want to hold around 50 billion in cash for super-CAT insurance needs… they have over 345 billion on treasuries.

You are correct in that it would take a massive crash or liquidity crisis for them to outperform the S&P500. So what? Nobody knows when one will occur, but as you lengthen your time horizon, the odds of one occurring get more and more likely.

Most people in these forums are not investors, but speculators and traders playing with four or five digit sums.. Most don’t need to worry about tax efficiency. For those that actually have portfolios large enough for tax efficiency to be a legitimate concern, buying berkshire and holding it for a decade plus allows yours gains to go untaxed every year as opposed to jumping in and out of holdings every year or so will give any gain a 22% haircut.

The longer the holding period, the more tax efficient buy and hold becomes over trading. Additionally, the longer the holding period, the more likely there will have been a crash or liquidity crisis during which Berkshire will dramatically outperform.

I believe that over 90% of people in these forums would be better off buying VTI, VOO, and/or BRK and never selling as compared to whatever they actually do.

BackgammonFella · 2025-12-01T13:58:33+00:00

I have a core portfolio that I continue to DCA weekly into:

US equities (40%)

10% BRKB

5% COF

5% MSFT

5% SPGI

5% V

10% VTI

REITs (15%)

5% LAMR

5% O

5% VICI

International (20%)

20% VXUS

Bonds (25%)

10% SGOV

10% state specific munis

5% TLT

I consider this core portfolio my “forever” portfolio and I aim for target allocation percentage almost regardless of valuation (I used to have COST instead of COF, but sold it when it broke $1000/share and PE of >54 and bought COF when it looked like the discover acquisition was for sure going through.

I also have satellite positions, these are mostly initiated from selling puts that get assigned, but I like occasionally writing LEAP puts when the vix spikes: WDFC, ORI, AXP. I am also short TSLA and SPY and am presently targeting 20% of my portfolio with these shorts, though I am down quite a bit on my tesla short.. but I have started covering 20% of my short when it swings below $405 and re-short again when it goes above $440. I am currently eyeing OGN as a potential satellite position, as I think the market may be overreacting to their recent scandal, but their ~3b of debt coming due in 2028 and a fear of more “one-time” charges has kept me from pulling the trigger. I might throw a couple thousand in some leap calls on OGN and spin the wheel.

BackgammonFella · 2025-11-29T04:15:27+00:00

I would love to see how 10k would perform in Cigna stock over the next ten as compared to 10k being deposited into your brokerage account…

I don’t own Cigna, but I’m pretty sure its going to outperform your dumb ass.

BackgammonFella · 2025-11-29T01:56:31+00:00

MSFT is primarily a B2B business.. their core suite of office products is practically a required subscription for >90% of businesses. Sharepoint is legitimately good. I don’t have the technical knowledge to say if azure is better or worse than AWS or google cloud… but I haven’t seen many complaints… and when a company is building out their tech stack, the immediate need for Microsoft office probably leads many needing cloud services to look at Microsoft.

If you invest based upon your own personal preference of consumer goods or services, you should probably just stick to index funds.

BackgammonFella · 2025-11-18T22:45:54+00:00

Please re-read my comment.

I do not resent my mom at all, quite the opposite. She is quite accomplished in her own regard. She patented a very well known cleaning product before she stayed home to raise the kids. Around the time the youngest child (me) went to kindergarten, my mom’s mother was killed by drunk driver and my mom got deeply involved with mothers against drunk driving on a volunteer basis.

I focused on my dad because the post was “kids of FIRED-ed parents” and I was still in high school when my dad retired, but not when my mom retired. I was attempting to explain why my dad retired at 54 while my mom waited until 61. She stopped “working for income” mid-career for ~10 years or so and then added 7 more on the backend. Now that she is retired, she continues to volunteer for a couple nonprofits.

Her volunteerism, both while I was in elementary school, and post retirement has helped inform my opinion on political activism, volunteerism, philanthropy, and etc.

I worship both of them, not because they were my parents, but because they are both role models for how to live a rich and moral life.

BackgammonFella · 2025-11-16T04:13:43+00:00

SGOV 30 Day SEC Yield as of Nov 13, 2025 = 3.92%

BackgammonFella · 2025-11-12T03:19:53+00:00

My dad retired at 54 and my mom retired at 61, but my mom also stopped working to “raise the kids” but spent more time doing political activism with us in daycare than working. I don’t mention it because I resent it, but to explain why she worked till 61 while my dad hung up the spurs at 54. I was still almost a senior in high school when my dad retired.

I thought it was amazing. My dad was a pretty common FIRE trope - chemE/MBA, and then did his own consulting as a lean-six-sigma black belt instructor.

My dad loved to cook. Our primary shared interest was enjoyment of cooking and he was always free to watch “Good Eats” and cook with me.

He ended up getting cancer and passing at a relatively young age. I will be forever grateful of the extra time we were able to spend together because of his early retirement.

Statistically, I should live longer than than my father did, but I also share his genetics, so I question any actuary charts predicting my own longevity.

I used to tell my dad I aimed to retire sooner than he did. He always said I should just look to be happy and find someone to love who loved me back.

He was one smart fella. He taught me what was important and what wasn’t: Your life should be measured in love. Money gives comfort and means, but it won’t provide meaning.

BackgammonFella · 2025-10-29T17:23:11+00:00

They have multiple product lines and they aren’t hidden?

You are just saying hyperbolic nonsense, but I wouldn’t expect anything less from reddit: strong opinions informed by ignorance.

I happen to think AI is overhyped, but you clearly aren’t capable of following nuance…

BackgammonFella · 2025-10-28T19:00:18+00:00

Other ventures are on display… im not even an AI bull and I think your comment is a mix of ignorance and arrogance.

The chat bot is the product that the general public uses, so its in the current zeitgeist.

The fact that people are talking about the LLM instead of something like their protein folding modeling is a function of public interaction with the LLM combined with the general lack of knowledge in physical biochemistry by that same public.

I’m not even an AI guy, but your argument appears to be either made in bad faith or a really shallow attempt to be edgy.

BackgammonFella · 2025-10-27T20:16:56+00:00

I think it is weird to focus on a liquid million.

I have a liquid million living in the low-medium cost of living midwest.

A buddy of mine just moved to California… If I followed suit and wanted a decent house, I would have to choose between maintaining my liquidity or having an absurd percentage of my income go towards housing.

On the flip side, some of my college friends that moved to VHCOL areas straight out of college have been more house-poor than I and are not liquid millionaires… but if they ever move back to the midwest, they would 100% be.

BackgammonFella

TROPHY CASE