[pedrosorio]

> a total market collapse so horrific it reduces your semi-liquid net worth to less than your emergency

I don’t follow the logic here. It doesn’t need to reduce your funds anywhere near the emergency amount.

If it reduces your investments to 3x your emergency you were just forced to sell 1/3 of your portfolio at what is potentially the lowest point.

[Moodles]

Because there are actually two goals, not one:

1. To have enough money to survive an emergency no matter what.

2. To maximize long-term net worth on average.

I was only talking about 1. You are talking about 2. But, to address your point: yes, stocks can indeed go down, but on average they go up. Sometimes your emergency will coincide with a good stock market. You're literally choosing the worst possible situation and then saying "see, this strategy doesn't work!". But I'm actually being very careful with my words here. I am saying: mathematically, backtesting with real data and with monte carlo simulations, you will maximize your long-term net worth on average if you forgo the EF after a certain net worth level.

Consider also the original comment I replied to talked about investing on margin while simultaneously having an EF. Which, if you're against me forgoing an EF, you must really be against investing on margin while having an EF: That's kind of the same to what I'm currently doing, only paying interest for it!

[pedrosorio]

People don’t keep EFs to maximize their expected net worth. They do it to keep worst case scenarios within reasonable bounds.

You argue keeping stocks is ideal for 2 (sure) and it doesn’t hurt 1 (assuming your net worth is significantly higher than what you’d keep as EF). Agreed.

An EF is for 3. Maximize long-term net worth in x th percentile of outcomes (where x < 10)

EDIT: “ you must really be against investing on margin while having an EF”. Yep.

[Moodles]

Ok but now we're just personally disagreeing on what x is, which as I said in my first post, is fine. But just be aware of the bias.