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money [2019/12/20 15:37]
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money [2020/08/05 14:12] (current)
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 //"The whole investing **industry** exists only by making commissions on trades and charging you fees for assets under management. Hence they encourage active trading/management funds and rarely let you see how you perform relative to an index fund (usually worse)" --Marion Boersma (grandpa)// //"The whole investing **industry** exists only by making commissions on trades and charging you fees for assets under management. Hence they encourage active trading/management funds and rarely let you see how you perform relative to an index fund (usually worse)" --Marion Boersma (grandpa)//
  
-//Your fees are based on the amount of assets managed, which aligns our incentives with yours -- when you do well, we do well. -- Fisher Investments// Uhh...what about when I do poorly? +//Your fees are based on the amount of assets managed, which aligns our incentives with yours -- when you do well, we do well. -- Fisher Investments// Uhh...what about when I do poorly? **You still do well!**
  
 //"You hear stories of secretaries at Microsoft being millionaires, their groundskeepers driving a Ferrari...I didn't want to be an innovator, I just wanted to make a quick, easy buck. I just wanted in" -- Boiler Room// //"You hear stories of secretaries at Microsoft being millionaires, their groundskeepers driving a Ferrari...I didn't want to be an innovator, I just wanted to make a quick, easy buck. I just wanted in" -- Boiler Room//
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   * Plus the world improves more measurably as compared to "yeah I made a bunch of money! (off of other investors, which is a zero-sum game)". //Arguably though, investors help to some extent by somewhat efficiently allocating capital to profitable ventures//   * Plus the world improves more measurably as compared to "yeah I made a bunch of money! (off of other investors, which is a zero-sum game)". //Arguably though, investors help to some extent by somewhat efficiently allocating capital to profitable ventures//
   * //I need some more justification of this, but it feels right//   * //I need some more justification of this, but it feels right//
 +<blockquote>Do something where you’re performing a real service for people. It’ll be a success. I like investment counseling. And I like helping others. It gives you pleasure you can’t get spending thousands of dollars. Sir John Templeton, May 1951</blockquote>
  
 +===== Domes Todos =====
 +
 +=== Class ===
 +3 fund portfolio strategy
 +Recommends a Revocable trust. Hyatt legal is $200/year compared to the $3K for the real cost.
 +  * Forces you to create a living will and power of attorney.
 +
 +=== Domes ===
 +
 +  * Get a will and beneficiaries on all accounts.
 +  * Life insurance, if I left Intel, could I take it with me. You can only buy it when you don't need it. If you need it, then you can't get it anymore!
 +    * Recommend a 20-year-term policy that is renewable.
 +    * It's for when you get cancer and have bills racked up and then die. You
 +    * When you have kids, then he recommends a 1.0 mil or a 1.5 mil.
 +  * Accident insurance. $25 / year.
 +  * Probably want a $5-7K car. Lots are good price and good car and good condition. Well worth the investment.
 +  * Want a backup method for people to log into without needing my phone (in case it gets lots). Hmmm...Yubikey? Or a different phone?
 +    * List descriptions of the accounts and why you opened them.
 +  * Download Social Security statement, see what they say are your earnings and whether you have 40 quarters.
 +    * Send statement to Domes.
 +    * Social security pays for you in disability situations, also pays spouse and dependents.
 + 
 + 
 +  * Double check RSU and ESPP tax basis. Same for brokerages.
 + 
 +  * Keep track of running and total contributions/basis to all accounts. HSA, Roth IRA, rollover, 401k,
 + 
 + 
 +  * Send Domes reimbursement for last year and maybe this year.
 +  * Can gift $15K to each mom and dad. Love and benevolence. No rental agreement.
 +
 +
 +Tax rates over time.
 +
 +
 +IRS Pubs are not considered a reliable source.
 +  * Revproc, a notice, the law itself, those are the quotable things.
 +  * Bureau of National Affairs publish condensed booklets on various tax topics. They reference revprocs, etc.
 + 
 + 
 +Want to make sure that the gross proceeds from the various 1099 documents is the correct amount or higher. Don't dare underreport proceeds on schedule d.
 +
 +
 +===== Breaking the Market =====
 +Fascinating series of posts.
 +
 +=== Investing Games ===
 +https://breakingthemarket.com/math-games/
 +
 +By rolling ahead your bet, the odds start going against you! By making your bet size static or a static portion of your pot, you can keep the odds in your favor.
 +
 +Assumes that buy and hold in one stock is a coin flip every day, which obviously it isn't. However maybe it's similar?!
 +
 +^ Real Life ^ Coin Flip Game ^ Outcome ^
 +| Buy and Hold | Reinvest winnings each time | Losing game |
 +| Index Fund | Reinvest 1/N winnings across N stocks, is it rebalancing? | Maybe winning? |
 +| Traditional Portfolio | Rebalance winners and buy losers | Winning, barely |
 +| Trend Following | | |
 +| Best strategy | Fixed bet size, arithmetic! | But then your money would never grow... |
 +
 +
 +===== Fidelity Pages =====
 +For whatever reason they're all different and have misunderstandings of the term "automatic investment".
 +^ Loc ^ URL ^
 +| Auto-Invest (for all accounts, has links to individual pages) | https://digital.fidelity.com/ftgw/digital/auto-invest |
 +| EFT Transfer Request | https://digital.fidelity.com/ftgw/digital/universal-tracker/ |
 ===== Remaining Questions / Misunderstandings ===== ===== Remaining Questions / Misunderstandings =====
 Mostly points for Jeff Eischen. Mostly points for Jeff Eischen.
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 Also: https://www.marklines.com/en/statistics/flash_sales/salesfig_usa_2018 Also: https://www.marklines.com/en/statistics/flash_sales/salesfig_usa_2018
  
-===== Household Debt Composition =====+ 
 +===== Debt Composition ===== 
 +{{:pasted:20200409-125827.png}} 
 + 
 +==== Household ====
 {{:pasted:20190316-091342.png}} {{:pasted:20190316-091342.png}}
  
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 ===== Options Trading ===== ===== Options Trading =====
 +==== Fritz ====
 +https://www.theretirementmanifesto.com/option-trading-strategy/
 +
 +Covered call strategy. Relies on you understanding a good price for the stock, like it says below.
 +
 +Intel guy had similar opinions.
 +
 ==== Wealthy Accountant ==== ==== Wealthy Accountant ====
 <blockquote>The naked puts are fun (and profitable). If the stock doesn’t decline to my buying point I keep the premium and if it does I get to own a piece of a business I wanted to own.</blockquote> <blockquote>The naked puts are fun (and profitable). If the stock doesn’t decline to my buying point I keep the premium and if it does I get to own a piece of a business I wanted to own.</blockquote>
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 ===== Fidelity 401k ===== ===== Fidelity 401k =====
 +==== Detailed Transactions ====
 +{{:pasted:20200617-131616.png}}
  
 So, apparently you can invest your money into other funds, it's called BrokerageLink.  So, apparently you can invest your money into other funds, it's called BrokerageLink. 
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 {{:everyday:pasted:20180319-221302.png}} {{:everyday:pasted:20180319-221302.png}}
  
-===== Market Timing ===== 
-{{:pasted:20190623-204955.png?500}} 
- 
-  * Yields are starting to tank for treasuries. Stock market is at an all time high. 10-2 yield curve hasn't inverted yet, but treasuries are tanking earlier than normal. But no Fed interest rate cuts yet or new unemployment. Kinda want to wait until dividend is paid out and then convert ... 80% to long term treasuries. 
-    * FRED chart of treasury .. yields?  
-    * [[https://fred.stlouisfed.org/graph/?g=ofyT|{{:pasted:20190623-223601.png?500}}]] 
-  * Greater Fool has a good [[https://www.greaterfool.ca/2019/06/22/whos-right/|article]]. Bond direction is disagreeing with stock direction. Feels that it's overblown, stocks will not crash. But not sure what will happen either.  
-  * Karsten has a good article in April, but he's talking about recession. Which, while it's the ultimate drawdown, isn't trying to capture the top either. https://earlyretirementnow.com/2019/04/03/yield-curve-inversion-why-i-am-not-worried-yet/ 
-  * The "pop" for treasuries doesn't occur until deep in recession, so not much penalty kinda for waiting. 
-  *  
- 
-==== What to go into ==== 
-^ Recession ^ Treasury maturities returns ^ 
-| 74-76 | No difference | 
-| 80-83 | No difference | 
-| 90-92 | No difference | 
-| 00-02 | No difference | 
-| 08-10 | Some difference. Longer terms had nice price appreciation "pop". \\ [[https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=2&startYear=2007&firstMonth=5&endYear=2010&lastMonth=12&calendarAligned=true&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&benchmark=-1&benchmarkSymbol=FRORX&sameFees=true&asset1=InterTaxExempt&allocation1_1=100&asset2=IntermediateTreasury&asset3=TreasuryNotes&allocation3_2=100&asset4=LongTreasury&allocation4_3=100&total1=100&total2=100&total3=100|{{:pasted:20190623-210203.png?400}}]]| 
-  * Only in 2008 did long term treasuries pop. So...maybe go with tax-exempt municipal? But hard to sell. Treasury interest is state tax **exempt**. 
- 
- 
-TOp 10 leading indicators: https://en.wikipedia.org/wiki/Economic_indicator 
- 
-Pretty good writeup by Bridgewater too: {{ :personal:bwam021218.pdf |}} 
-  * He thought December 2017 was the top?!?! weird. Not according to indicators below... 
- 
-https://earlyretirementnow.com/2018/02/21/market-timing-and-risk-management-part-1-macroeconomics/ 
-  * Repeating more or less the same stuff, in forbes: http://fortune.com/longform/economic-expansion-end-is-near/ 
-  * Need to time entry and exit! No peeking! 
- 
-Accounts to manage: 
-  * 401k, Vanguard, HSA, 529 (Oregon College Savings Plan), M1 Finance, Robinhood 
- 
- 
-==== Bond Interest Rates / Yield Curve ==== 
- 
- 
- 
-When interest rates for short-term bonds increase (which the fed generally does after a long boom time to corral inflation), then the price for existing bonds will need to be discounted to be equivalent to the new bonds with higher interest rates, so overall returns for bonds go down. At some point near the top of the business cycle, bond investors feel the need to lock in long term rates because a recession is coming and the Fed always? lowers interest rates to cushion the drop. So the demand for long-term bonds increases, necessitating a higher price for them and decreasing their effective yield, while short-term bonds are undesired and their price lowers and increases their effective yield. This is called an [[wp>Yield_curve#Inverted_yield_curve]] and has happened consistently for the past 40-50 years, somehow 6-12 months before the stock market declines. 
- 
-  * Also, banks can no longer arbitrage the spread between short and long term yields (which they use to fund home loans, apparently) so credit availability decreases, even though the long term rate stays the same. One of several causes to a depression. 
- 
-Ramit Sethi: https://www.iwillteachyoutoberich.com/blog/inverted-yield-curve/ 
- 
-<blockquote>This occurs when the curve inverts or goes the other way. It shows that younger bonds (i.e. bonds that are two years or less) yield more in interest than older ones. This shows the lack of investor confidence in older bonds and is a good indicator that a recession is incoming (more on that soon).</blockquote> 
-  * Uhhh, you got it backwards Ramit. 
-<blockquote>As more and more people begin to buy long-term bonds, however, the Federal Reserve responds by lowering the yield rates for those securities. And since people aren’t buying a lot of short-term U.S. Treasury bonds, the Fed will make those yields higher to attract investors.</blockquote> 
-  * Uhh, what? I don't think the fed controls yields, only interest rates.  
- 
-==== Long term risk ==== 
-Not sure what bond maturities I should get. Well, maybe I shouldn't as I'm timing the market too. 
- 
- 
-Nice chart! http://schrts.co/aapFLd 
- 
-{{:everyday:pasted:20180317-163922.png?600}} 
- 
- 
-=== Inverted yield curve === 
-It was inverted a full two years before 2008 hit. So maybe everyone knew it was going down, but no one knew when so they couldn't bet on it? 
  
 ===== Relative performance of assets ===== ===== Relative performance of assets =====
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     * A pro-total-stock market [[https://www.bogleheads.org/forum/viewtopic.php?f=10&t=88005#p1263681|bogleheads guy]]. What does **automatically re-balances within sectors** mean? One of references is this paper, which sorta rambly says no: http://www.norstad.org/finance/total.html     * A pro-total-stock market [[https://www.bogleheads.org/forum/viewtopic.php?f=10&t=88005#p1263681|bogleheads guy]]. What does **automatically re-balances within sectors** mean? One of references is this paper, which sorta rambly says no: http://www.norstad.org/finance/total.html
  
-===== Market Timing ===== 
-While you might be able to time the highs, you still have to time the lows. When do you get back in? It takes a while to go down, and has many false starts along the way.   
- 
-Really nicely explained video: {{youtube>ATCqq2Mh2GQ?medium}} 
-  *  
 ===== Index Fund ===== ===== Index Fund =====
 === Which Company? === === Which Company? ===
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 === Philosophical Economics === === Philosophical Economics ===
 +Written by Jesse Livermore: https://twitter.com/Jesse_Livermore
 +
 Great introduction into why index funds match the average actively invested dollar. TODO write summary for review and understanding. Great introduction into why index funds match the average actively invested dollar. TODO write summary for review and understanding.
  
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   * Make sure the beneficiaries know who they are and print out all logins and important documents in an easily findable folder in the safe.   * Make sure the beneficiaries know who they are and print out all logins and important documents in an easily findable folder in the safe.
   * Vanguard advice for [[https://investor.vanguard.com/beneficiaries/nonretirement|non-IRA]]  and IRA accounts.   * Vanguard advice for [[https://investor.vanguard.com/beneficiaries/nonretirement|non-IRA]]  and IRA accounts.
 +
 +Writing a will
 +  * Easy to copy a basic one online and have it notarized. Once you sign it, you're done!
 +  * Simplifies a lot of things especially if you forgot to put a beneficiary on your 401k.
 +  * Intel will pay for legal services for this too.
  
 ===== The Richest Man in Babylon ===== ===== The Richest Man in Babylon =====
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 ==== Tax loss harvesting ==== ==== Tax loss harvesting ====
 +Could do it during Coronavirus, but for some reason emotionally don't want to deal with it. 
 +
 +== Implementation in M1 ==
 +  * Adjust asset allocation from VOO/VO/VB to VTI so that losses equal 3K.
 +  * Force rebalance for that amount
 +  * Increase allocation of VTI so that future contributions (30 days worth) will go into VTI and not the ones sold (wash sale)
 +
 +
 Still don't quite feel comfortable. Lots of rules here: https://www.bogleheads.org/wiki/Tax_loss_harvesting#Fine_points_about_tax_loss_harvesting Still don't quite feel comfortable. Lots of rules here: https://www.bogleheads.org/wiki/Tax_loss_harvesting#Fine_points_about_tax_loss_harvesting
   * Don't want automatic reinvesting   * Don't want automatic reinvesting
money.1576885075.txt.gz · Last modified: 2019/12/20 15:37 by admin