Merge pull request #170 from 8fold/investing

Investing

content/public/coaching/content.md

@@ -21,7 +21,7 @@ The response was: I've never had a developer ask me that. Let me check.
 
 The three of us got on the phone.
 
-I came into the project 18 months in and it was slated for 36 months. It was converting a static site with roughly 1,500 pages. We were converting it to a [dynamic, database-driven site](https://joshbruce.com/web-development/static-dynamic-and-interactive/). For the first 18 months the client had done everything by committee and it took them that long to agree on a design for the home page.
+I came into the project 18 months in and it was slated for 36 months. It was converting a static site with roughly 1,500 pages. We were converting it to a [dynamic, database-driven site](/web-development/static-dynamic-and-interactive/). For the first 18 months the client had done everything by committee and it took them that long to agree on a design for the home page.
 
 The client finally realized design and management by committee wasn't really conducive to getting things done, so, that's where the person who was sending me all these emails came from.
 
@@ -75,4 +75,4 @@ Went back out the third week and took time off from the day job. By the end of t
 
 With the promise to not be a developer for corporate ever again and a history of being a punk with a fuck-off attitude, I decided being a Scrum Master and Agile Coach was probably more suitable for me; my lifestyle is conducive to this end.
 
-So, here we are; doing [Scrum Master shit](https://joshbruce.com/coaching/being-a-scrum-master/).
+So, here we are; doing [Scrum Master shit](/coaching/being-a-scrum-master/).

content/public/finances/building-wealth-paycheck-to-paycheck/20220115/content.md

@@ -37,7 +37,7 @@ Brokerage accounts, retirement accounts, personal and business accounts, and so
 2. [FidSafe](https://www.fidsafe.com): An as of now free place to store documents and grant access to those documents via encrypted cloud storage.
 3. [Living Together by NOLO](https://www.nolo.com/legal-encyclopedia/living-together): Becca and I have no plans to get married, however, this can be problematic in the United States (not sure about elsewhere) when it comes to hospital stays and decision making on behalf of each other.
 
-During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](https://joshbruce.com/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 will be different.
+During 2021, I didn't get much traction on putting legacy documents together because that wasn't [the focus for that year](/finances/building-wealth-paycheck-to-paycheck/20220101/). Hoping 2022 will be different.
 
 ## Retirement accounts
 

content/public/finances/content.md

@@ -71,6 +71,7 @@ In times of stress, I can come back to these and center myself from a time when
 6. Promote dividends earned in securities returning less than 7% per year to securities that historically return higher.
 7. Higher rates of return should be lowest priority consideration when making decisions (see previous).
 8. [Building Wealth Paycheck to Paycheck](/finances/building-wealth-paycheck-to-paycheck/).
+9. Don't take out a loan to buy an investment; investing on margin.
 
 ## Tools
 

content/public/finances/investing/content.md

@@ -0,0 +1,120 @@
+---
+title: Investing
+created: 20220123
+---
+
+# Investing
+
+For me, I’m fond of the principles espoused by Bogle and Dalio, which I give credit to the [Risk Parity Radio podcast](https://www.riskparityradio.com/podcast) for introducing me to, specifically episodes 1, 3, 5, 7, and 9. Further, I’m appreciating the 10 question approach proposed by the book *Money for the Rest of Us* by J David Stein. Finally, I’m seeing the benefit of a risk parity approach to investing in [drawdown mode](/finances/concepts/#accumulation-drawdown-and-rebalancing) or if I had a lower risk tolerance, capacity, or both.
+
+## The principles
+
+We’re looking at 3 principles:
+
+1. the macro-allocation principle,
+2. The Holy Grail of Investing (principle), and
+3. the simplicity principle.
+
+The macro-allocation principle says that portfolios made of similar asset classes in similar proportions will act over 90 percent the same. All 100 percent stock portfolios will act over 90 percent the same, for example. This means changes to the proportions within the asset classes are somewhat moot when it comes to returns, gains, losses, and so on.
+
+The Holy Grail of Investing says that asset classes have an environment in which they perform best. Consider a quad chart. The first column is an inflationary environment where the purchasing power of a currency reduces. The second column is a deflationary environment. The top row is a growth environment. The bottom row is a compressing environment. What we want to do, according to this principle, is choose different asset classes that perform well in each environment and then set proportions to our comfort. In general, this means equities, bonds, gold, and something like commodities (or literally commodities). The key is that each asset class should have low- or negative-correlation with the others.
+
+The simplicity principle says we want to abide by the previous 2 principles with a minimal number of individual vehicles and fees.
+
+During [accumulation mode](/finances/concepts/#accumulation-drawdown-and-rebalancing) where you’re not planning to shift to drawdown within 10 or more years, chances are a 100 percent equities portfolio will be okay; this ensures maximum return for the money you’re putting in, however, opens you up to risk regarding drops in value that last multiple years.
+
+When it comes to shifting toward drawdown we want to add bonds that are negatively correlated with equities. For example, long-term treasuries (in the United States), which have a negative 0.31 correlation to equities on a scale of negative 1 to positive 1, so, when equities drop, treasuries tend to go up in value. Gold has roughly a 0 correlation with equities and treasuries. Commodities are about 0.5 correlated and tend to do better during inflationary environments.
+
+With the above, you could get that result with 4 different securities; simple.
+
+## 10 questions
+
+1. What is it?
+2. Is it investing, speculating, or gambling?
+3. What’s the upside?
+4. What’s the downside?
+5. Who’s on the other side of the trade?
+6. What’s the investment vehicle?
+7. What does it take to be successful?
+8. Who’s getting a cut?
+9. How does it impact your portfolio?
+10. Should you invest?
+
+What I appreciate about this approach is it helps cover the age-old advice (another principle) of don’t buy into things you don’t understand.
+
+Let’s take VTSAX in 100 percent equities portfolio.
+
+1. Broad-based United States equities.
+2. Investing: it pays dividends and each share may increase or decrease in value over time.
+3. It invests in all stocks available in the New York Stock Exchange, therefore, the likelihood of going to 0 is minimal and, if it does, there are probably bigger concerns than the value of the portfolio. It pays dividends on a regular basis. Vanguard is owned by its investors. VTSAX is a long-running, well-known, and relatively liquid security. And so on.
+4. It could lose value compared to what I’ve put in and could take a long time to recover. And so on.
+5. It’s passively managed by Vanguard.
+6. Index mutual fund; I’m investing in Vanguard as much as the companies underlying the fund.
+7. Does better in growth environments and favors large-cap companies.
+8. Vanguard takes a percentage for passive management of the fund. The expense ratio as of this writing is 0.04 percent per year. This percent is converted to a daily percent and the gains and losses are adjusted by that percent daily.
+9. Because it’s 100 percent of the portfolio, it is the portfolio.
+10. I’m in accumulation mode with more than 10 years before needing to withdraw, have a high risk tolerance, and capacity, so, pretty easy to say yes here.
+
+It’s important to note that the majority of responses are not based on emotion. With that said, adding in more emotional considerations aren't inherently a problem.
+
+For example, I tend to favor even distribution across small-, mid-, and large-cap companies when it comes to investing in the United States stock market. VTSAX favors large-cap companies. So, I added other funds that afford me the opportunity to distribute my contributions more evenly; despite the downside of slightly increasing expense ratios and complexity as well as knowing the portfolios will perform pretty similarly. In other words, the change isn’t because I think my mix will outperform anything; it makes me feel better.
+
+## Risk parity portfolios
+
+A risk parity portfolio could be viewed as the natural result of The Holy Grail of Investing.
+
+Let’s consider the Mark 1 portfolio I’m planning to head toward over the years as I steadily move toward drawdown [paycheck-by-paycheck](/finances/building-wealth-paycheck-to-paycheck/).
+
+50 percent total [.United States](US) equities, 25 percent long-term US treasuries, 13 percent gold, 6 percent commodities, 3 percent US [.real estate investment trust](REIT), and 3 percent non-US REIT.
+
+A simple path to get there would be:
+
+1. VTSAX,
+2. VLGSX,
+3. GLDM,
+4. PDBC,
+5. VGSLX, and
+6. VGRLX.
+
+Vanguard doesn’t offer a gold or commodities fund with similar performance to GLDM and PDBC and that’s okay.
+
+I don’t want the mix provided by VTSAX alone, so, I’ve add a sixth fund: VEXAX.
+
+In some cases, I don’t have the ability to purchase into the index fund at Vanguard or I want to purchase using a different tool, which brings in [.Exchange Traded Fund](ETF) equivalents; GLDM and PDBC are both ETFs. Mutual funds typically have minimum initial deposit requirements and must be done directly with the company offering the fund. ETFs are mutual funds that trade like stocks. When an ETF has a mutual fund equivalent, performance characteristics are often similar and there are details we won’t go into related to the concept of purchasing fractional shares.
+
+This gives me a list of mix-and-match securities:
+
+1. VTSAX, VTI;
+2. VEXAX, VXF;
+3. VLGSX, VGLT;
+4. GLDM;
+5. PDBC;
+6. VGSLX, VNQ; and
+7. VGRLX, VNQI.
+
+When it comes to certain things, I can’t stick to Vanguard, so, I’ll look for the equivalent index at the provider in question. For example, my employer uses Fidelity. Fidelity offers [.Health Savings Accounts](HSA) (Vanguard doesn’t) and I had a fallout with HealthSavings Administrators who offer Vanguard funds, so, my HSA is with Fidelity, bringing in another fund:
+
+1. VTSAX, VTI;
+2. VEXAX, VXF, FSMAX;
+3. VLGSX, VGLT;
+4. GLDM;
+5. PDBC;
+6. VGSLX, VNQ; and
+7. VGRLX, VNQI.
+
+Unfortunately, these aren’t available for my 401k as of this writing, so, 3 more funds:
+
+1. VTSAX, VTI;
+2. VEXAX, VXF, FSMAX;
+3. FXAIX;
+4. FSMDX;
+5. FSSNX;
+6. VLGSX, VGLT;
+7. GLDM;
+8. PDBC;
+9. VGSLX, VNQ; and
+10. VGRLX, VNQI.
+
+This seems like it’s breaking the simplicity principle, but the simplicity (for me) is in the macro-allocation; 50 percent equities, 25 percent long-term treasuries, 13 percent gold, 6 percent commodities, and 6 percent real estate. The complexity of multiple funds is due to other constraints and opportunities to achieve the macro-allocation. I use tools that simplify the actual purchasing; automated decision making.
+
+The 401k contributions happen automatically and I adjust on occasion to maintain the balance of the portfolio. The HSA and Individual Retirement Accounts have one fund, so, when I make contributions it only has one place to go. The pies in M1 Finance have the percentages set already and automatically distributes the purchase based on the allocations set. That leaves one account with two equities funds at the moment and I buy based on whether my allocation to small-caps is lower or higher than I want; if lower, VEXAX and, if higher, buy VTSAX.

content/public/web-development/refactoring-re-engineering-and-rebuilding/content.md

@@ -57,7 +57,7 @@ If you work in an organization with a lot of rules and governance, chances are y
 
 ## Rebuilding
 
-I [rebuilt this site](https://joshbruce.com/web-development/2021-site-in-depth) with these things in mind, in fact; the only things I kept were the [.CSS](Cascading Style Sheet) and the libraries I use for building HTML ([HTML Builder](https://github.com/8fold/php-html-builder) and the [CommonMark extension](https://github.com/8fold/commonmark-fluent-markdown)). I maintain the code for both of those packages (dependent on myself).
+I [rebuilt this site](/web-development/2021-site-in-depth) with these things in mind, in fact; the only things I kept were the [.CSS](Cascading Style Sheet) and the libraries I use for building HTML ([HTML Builder](https://github.com/8fold/php-html-builder) and the [CommonMark extension](https://github.com/8fold/commonmark-fluent-markdown)). I maintain the code for both of those packages (dependent on myself).
 
 And, in under 48 hours, I redesigned the site, removed my dependency on a framework, and improved my workflows.
 

site-dynamic-php/tests/FileSystem/FinderTest.php

@@ -12,7 +12,7 @@
 
 final class FinderTest extends LiveContentTestCase
 {
-    private const PUBLISHED_COUNT = 50;
+    private const PUBLISHED_COUNT = 51;
 
     private const DRAFT_COUNT = 10;