Sound like the Pope don’t I?
Yesterday, Rachel Bachman began her WSJ article “The Rise of the Five-Figure Bicycle” with a bang. “Last year,” she wrote, “Ted Perry dipped into his 401(k) to buy a $20,000 bicycle.”
The mind whirls. My first thought. As a public service, let’s plaster TP’s mug on a series of financial illiteracy posters titled “How Not to Manage Your Money for the Long Haul”. Obvious question one, why so damn much? Obvious question two, why, when Perry is 51 years old, use money designated for retirement? Not as obvious question three, why tap money that incurs a 10% federal tax penalty? Even less obvious question four, why advertise such a mind-boggling purchase to the world?
I would be too embarrassed, but maybe, like everything in life, a Perry-like purchase would make more sense in the larger context of one’s private life. With that in mind, let’s play “What if?” Imagine, if you will, the following possibilities:
• The Fed is artificially stimulating the market. Stocks are overpriced. Bonds = serious inflation risk. Cash = semi-serious inflation risk.
• A bicycle lover (BL) repeatedly finishes second to one of his* archenemies on mountain top finishes.
• Our BL receives a MacArthur Genius Grant of $625,000 for creating a comprehensive health care delivery model that addresses the medical and social service needs of high-risk patients in impoverished communities.
• While simultaneously receiving a life-threatening cancer diagnosis from his own doctor.
• Our BL never married or had children and his/her siblings and nephews and nieces are all well-to-do.
• Our BL is leaving all of his/her other assets to a long list of cash-strapped health care non-profits.
It’s conceivable, if all those stars aligned, a Perry-like purchase could make sense. The take-away? Pre-judge at your own risk.
* Had to use the male pronoun because women have way more financial sense.