Indexing simplified

Since I moved from active trading to indexing and dividend investing, I tried to simplify the indexing first. 

This is what I came up with so far. 

Indexing should run an autopilot. I researched in the beginning. After that I just follow the chosen strategy. It should be minimal time investment in the long run.  

Research in the beginning included ETF performance and costs comparison. 

1. I decided to mirror the most popular ETFs which mostly reflect the most popular ETFs: SPY, QQQ and RUT. 

2. I picked equivalent ETFs with lesser expense ratios. The equivalents I use are: SCHB for SPY, VGT for QQQ and VTWO for RUT. 

In the image below the red line is VGT, the yellow line is VTWO and the pink line is SCHB which follows the large CAP ETF SCHX (candlestick line) very close with almost no difference.  

 

The yearly dividends as of 6/22/2021 for those are:

SCHB: 1.43%
VGT: 0.70%
VTWO: 1.66% 

3. I decided to go equally with those three: SCHB, VGT and VTWO.

Below is the comparison table for the expense ratios: 

I am putting a certain sum every week equally into those three ETFs. This is not the same for the dividend stocks and I will describe it in another post.  

The weekly investing will have two functions:
1. It will follow the market closer than monthly. 
2. By checking in with the markets weekly I can see the time for the dividend stock investment time points weekly which is better than monthly. 

How to fix low self esteem?

M. asks: I like getting free stuff - how does self esteem play into it?

Who doesn't like getting free stuff? If you don't, there is something wrong with you. 

M. crafted her question very carefully. She is asking "how does self esteem play into it". Generally high self esteem is considered better than low self esteem. No one would worry about high self esteem. 

She probably just didn't want to ask directly if liking free stuff is connected to low self esteem. 

So the question actually asks: Is enjoying the "free stuff" has anything to do with low self esteem: Do I have low self esteem if I like free stuff?

I am not done yet taking apart this question. Actually mentioning of "enjoying free stuff" is a misdirection. The question itself points to a self esteem problem. The person asking this question is afraid being judged by others. People how are afraid of judgment usually have low self esteem.

Self esteem can be 

1. Low (adequate or inadequate) 

2. High (adequate or inadequate) 

The optimal is high and adequate. 

Self esteem is the price tag the person puts on him/herself. 

Just like with things, people can overprice, underprice or appropriately price themselves. 

The price tag on a person is connected to the resourcefulness. 

Someone with low self esteem can price himself either adequately (is not resourceful and has a realistic picture of it) or inadequately (has recourses but they are not considered or are discounted).

The same can happen with high self esteem. The person either prices himself correctly or is overpricing himself (has no resources but thinks of himself a lot). 

People who priced themselves incorrectly too low or too high, have a life full of emotional roller coaster. They feel that the price is not right and they constantly try to gage and adjust it by the reaction of others. If they are liked by others, the price mentally goes up until someone brings it painfully down. 

The people who are aware of their recourses and price them correctly have relatively stable mood. They are not moved much by opinions of others. 

The reasons for inadequate self-pricing can be different, from the inborn psychotype to the parental damage done wile upbringing. 

But independent from the reasons something can be done to fix it. 

One of the ways to fix low self esteem is to become a professional / an expert in some field. That will take time, but it is a sure way to get there. 

For example my geography knowledge is not good. But as my sister said once "She can afford not to know geography, she is a doctor". In that situation it was funny but the truth was there. You can hyper-compensate in one area and then you can slack in others.  

You can see many examples when people try to become experts in different areas, from law to Taro card reading. The more useful and respectful the area is the most certain is the way to the adequate increase in self esteem. 

Another way to fix the self esteem is to change the group. 

For example in schools or work places there is a certain group dynamic at play. 

Every group has a leader, several followers, the class clown. Most groups also have an opposition leader and a negotiator (who tries to keep peace between them). Most groups will have an outsider who is bullied. Sometimes there are also experts and wizards. 

The person with the lowest self esteem is the outsider. Working his way up, he can change groups and get in to the position of an expert or a wizard, dependent on his  interests and abilities. 

The expert knows something very well and is usually not bothered by the leader, especially if his knowledge is useful to the lieder.

The wizard is a variation of an expert. The wizard is an expert in weird stuff and sometimes scary stuff. He will also be left alone because weird is scary. 

When changing groups outsiders can never jump to the leader position. It is not natural for them. The easiest way to "advance" is to take a special spot of an expert or a wizard. 

For example, in school I was very shy. My grades were great, I almost never got any Bs. But my shyness made me a target of the group lieder. My self esteem was low and I was incorrectly pricing myself. To scare away the lieder and the followers who tried to bully me, I used foreign language (German) to put spells on those who bothered me. I made sure they know that I can put spells on them. I also learned card reading and palm reading and took the spot of the wizard. I was weird but useful and I was left alone and was not bullied. 

Later I thought that if I was born long time ago I would be a shaman. It later grew into the wish to become a doctor. Shamans, witches or wizards give you potions, doctors give you "potions" too - what is the difference? I am still a wizard. 

Getting back to the question: If liking free stuff and low self esteem are connected?

They are only connected on the level of fear of being judged by others. If you are afraid that others may perceive you as cheap, if their opinion bothers you, then yes, you have low self esteem. You price the opinion of others higher then your own. You are underpricing yourself and overpricing them.

 

Challenge "Cash flow" update for 2020

 

Corona has changed some things for me. 

After it hit and the markets tanked, I stopped any active trading. I didn't know what is going to happen and for how long the markets will be down. It reminded me on the market dip when we had Ebola scare. But it was magnified at least 10 times. 

After the Ebola scare the markets recovered quickly. The same with the Corona but it took longer and the dip was larger. The similarities are: people are scared about an infectious agent but the infrastructures are not damaged. 

After I stopped the trading activities, I became busy at work.

Sometimes I watch the Russian billionaire's Igor Rybakov YouTube channel. He mentioned that when he was scared during the 2008 crisis an older guy told him, that this will pass too. But during those down times it is good to prepare for the time when everything will pick up again. Because it will. 

That is what I did.  Starting February-March our workload went down at least 50% and in some weeks it was down 75%. 

During those weeks I used the free time to validate a bunch of new immunostains and also designed and implemented a new training system for new residents, a kind of a "boot camp" for the first two weeks when they start. I also started a new audit program for billing. When the work picked up, we had the quality improvement in resident training, a new billing audit and we had a bunch of new stains to use.  

While I was busy doing all this work related stuff I watched the market less and less. Whenever I did, it felt stressful. Somehow I didn't want to have the same fast paced stress every day like when I was trading every day. And when the marked turned, I didn't participate much anymore. 

An additional factor in this loss of interest was the fact that I was getting closer to the "magic number", the amount I calculated I need to stop worrying. I am getting closer to that number and the closer I get to it, the less I worry. 

It feels like that I don't need to stress that much anymore for a little bit that is left, especially that I have still at least 10 years of working before retirement. I can see that I will reach it. 

So my investing shifted to using mainly index funds and dividend stocks.

In 2020 there is almost no active trading anymore. I only did it in January. After that it was mainly dividends. You can see it on the graph, the January is at above $15,000, the rest is not going much over $5,000 a month, depending on when the dividends are paid. 

The total cash flow from investments (mostly dividends) in 2020 was $52,895 (compared to the last year at $143,241, mostly active). 

That brings me down to the level 1 of my "Cash flow challenge" - "Floating".

But somehow I like floating right now. It is less work. Considering that the difference between $143,241 and $52,895 is $90,346. Those  $90,346 is taxed at the highest tax rate available and leaves me with about half of that. I am OK with having less daily stress and forgo on additional about $45,000 a year when I am getting closer to may goal anyway. 

Below is my cash flow per month and the S&P 500 performance for 2020. 

my cash flow

                                                                      S&P500 returns in %

At the time of this update it is June 2021 and Corona fears are subsiding. 

I decided to stay with index funds and dividend stocks. 

The investing turned into passive income for me now. 

google.com, pub-2401395848907192, DIRECT, f08c47fec0942fa0

Happy birthday 47

 

This year the number is 47. 

Getting closer and closer to 50. 

When do people start to write memoires? Probably best to do it before you start to forget all the funny things that happened in your life.  

I almost didn't post anything from my Happy birthday 46 post. 

It was not because I lost interest. There was a computer related change at work and the blogger function was suddenly blocked. I usually don't post anything from home, I have a lot of home related thigs to do at home. It is much nicer to do it from my office where I am alone and it is quiet. Especially proof-reading is easier with my slight dyslexia. This week I checked and found that the blogger function is not blocked anymore. And now I am back.

It was very surprising that the total blog views are now at about 20,000. A year ago when I posted last time they were at 3,000. 

It took 4 years to get to 3,000 and only one year to get from 3,000 to 20,000. 

The strange thing is that there are not many new comments... Maybe my writing style is not inviting to comment, I don't know... But is was actually a comment that prompted me to check if the blogger was still blogged. The commenter asked to continue to write and it was nice.

I need to update the Cash flow challenge for 2020, there were some changes. The last year was less stressful because I didn't do active trading anymore. Only after stopping I realized how tired it was making me. Now I am less tired  and it feels that I only have one job instead of two. 

My daughter is 11 and she wants to have a YouTube channel. I am reluctant because of my paranoia. I thought about that myself  and have looked up some ways to have an anonymous channel or one where you al least don't show your face, but I think I am not ready yet.  

Today I will add a photo of my cat, also no face. The cat is wearing my daughter's baby clothes and is eating his daily portion of ice cream. 

google.com, pub-2401395848907192, DIRECT, f08c47fec0942fa0

   

Is Corona finally finished?

 It is June 2021. 

Just in the last few weeks I saw the masks disappearing form people's faces on the street, in stores and is schools. My 11 year old is very happy that everything is returning back to normal. She wants to go to a swimming pool again. 

At work (in the hospital) we still have to wear the masks. Doctor's offices still let us wait outside in the car and not in the waiting room. 

How do the statistics look like right now? 

Here are the images from the www.worldometers.com  website:

 

It is obvious that the case numbers and the deaths are both very low now. The peak in deaths was in January 2021. The deaths now are lower then the areas between the peaks. 

Will this virus stay or will it disappear? 

I think it will stay on a low level, just like it's "brothers" from the same Corona virus family. The virus is not lethal enough to wipe itself out. It is contagious enough to just continue travelling trough the population.

If the immunity to this one is similar to the others in it's family, it is not complete and after it wears off you can get another infection, maybe milder and it will continue and go on in circles.  It will become another reason for a common cold, with a few severe cases. 

I just hope that there will not be a mandatory immunization requirement for the hospital personnel. I had a quite large hematoma after the first shot (Pfizer) and a very large hematoma after the second dose. And after the second dose I had to take a sick day. It was my first sick day ever. I might have had some platelet reaction to that shot. There were some cases described where the shots produced a drop in platelet counts. 

What all this pandemic experience showed me?

- Most people play by the government rules and obey.

- Governments are easy to scare. 

- The economy is robust to hits like that where there is no structural damage.

- This RNA vaccine is different, I never had such a severe reaction to a vaccine. 

 

Happy 46, belated

With all this COVID-19 if forgot to make my birthday post for my 46th birthday. It should have been in April.

Short summary: 

I definitely look older than 40. 

I have 6 gray hairs, in the temple areas, quite symmetrical. 

I feel great. 

I really don't like wearing a mask when  I have to talk a lot. 

I am too lazy to customize my mask. Maybe I am not lazy. When I was in the 4th grade I had to learn how to saw a mask (cold war times). And the mask I made had to pass a test. Of course my hand-made masks were great then but because it is connected to the obligatory school stuff, I don't want to do it again. I will have to express my individuality some other way. 

I still wear very high heels. 

My weight is stable for the last 2 years (after I figured out the secret).

My rosacea is gone (after I figured out another secret). 

I definitely don't have the "Superman syndrome" (when you try to help others even if they didn't ask). But I probably have the "Hercules syndrome" (when you try to solve unsolvable puzzles). Since I solved the weight and the rosacea puzzles, I am looking for a new one.  

Based on the Kurpatov's classification I am constructor-reflector which is a great combination. I am likely constructor predominant. It feels like constructor is taking over with age. 

Majority of the information we have around us is lies. Digging very deep is necessary to get to the truth. Only few of us dig. Probably mostly those who have "Hercules syndrome".  

     

Second wave - Corona diary 6

Most states have lifted the restrictions for about one month now. 

The news are flashing with "Record numbers of new COVID-19 cases". 

But what does the data say? How bad is this second wave? 

New cases in USA (from www.worldometers.com): 

 

Yes, the cases are rising. But what about deaths? 

They are not rising. 

Why are they not rising? 

The first peak of the positive case numbers was about the April 4. In that time the deaths were about half way to the first peak which was on April 18. That seems to give a lag time of 14 days. 

Now we have more testing capacities and that contributes to the positive case numbers. I don't know how to explain the low death numbers. So far the rising case numbers are not translating into rising deaths.

I hope it is obvious to the people in power that the economy cannot be shut down again. 

Traveling is difficult. Business bankruptcies are rising. 

The meat has almost doubled in price and it feels as a serious inflation.

The economic effects of the recent shut down are not fully there yet. There are talks about the "eviction moratorium" which should extend until March 2021. Good for people who can't pay rent but what about the landlords? 

Yes, the second wave of the economic stress is coming.  

  

    

Why are we so secretive about our finances?

M. asked me: Why do we have to be so secretive with our friends or family members about our finances?

When we are secretive, it means we feel like we have to hide something. But why would we hide? 

Generally, consciously or subconsciously, we sort all our personal contacts based on 2 criteria: usefulness and potential danger.

 
Here are the examples: 

How useful or dangerous someone is, is defined by the resources the target person possesses. 

Money is  one of the main resources. 
Let's take an interaction between two people. If the level of wealth is about the same, sharing the information about it doesn't appear very dangerous. 
If there is a dis-balance and one site has significantly less resources, the sharing may have consequences. 

It might be that the person with less resources decides to aggressively take some of yours. Or the person might put you into a situation that you will feel that you have to share those resources even if you natural inclination is not to share. It can be done trough manipulations like making you feel guilty. "Just because you have more you have to share, it doesn't matter that you worked harder to get there".    
A normal good friendship is based on balance. 

I am not talking about abnormal friendships which are based on secondary psychological gains. For example someone keeps a poor looser friend and constantly helps him financially. The secondary gain in this case is to feel as a "better person" and to pay off the moral guilt. The moral guilt is usually brought on by abusive family members, or religious businesses.

The normal friendship without secondary gains is balanced. The balance makes the relationship harmless because there is no danger of appearing significantly weaker or stronger. The possibility of being manipulated out of some of your resources is very small. 

We choose our friends. 
We don't choose our family. The resources in the family will be unevenly distributed. If you feel the strong social pressure to keep in contact with your relatives, you will constantly feel some of the dis-balance. 

For example you have an abusive mother whose finances are not in a good shape. In the square above she falls into category of useless and dangerous but you can't stop the socially obligated contact. By hiding the information about your financial recourse you protect yourself. 

If you have a brother ho is not abusive but is not in a good financial situation and he is not asking you for money, his category might be useless and not dangerous. Here some people can feel guilty for their own success and feel that they have to even out the situation, even though a situation like that can never be evened out. 
Some would offer money, some would hide the information about the finances. Some may even pretend that they also have financial troubles, to make the financial situation less clear.  Lying about your finances is another way of protection. What protection works best is situational. Sometimes it is better just not to talk, sometimes it is better to lie. In a contact with an abusive/manipulative person lying is completely justified. As soon as the other site starts using unfair methods, you are released from the rule of playing fair.  

I summary, it will always be difficult to have a relaxed connection if there is a dis-balance of resources. 

If you accept that it is normal to protect yourself and accept the fact that you don't have to play fair with manipulative people, it will make your life easier. 

Who wants to go back to school? Corona virus diary 5

My daughter said that she wants to go back to school. She cried when I told her yesterday that the schools will be closed till end of May. After that there is summer break. No school until August. She cried with bitter tears. 

How the graphs of daily deaths look like now? 

https://www.worldometers.info/coronavirus/country/italy

https://www.worldometers.info/coronavirus/country/us/

In the beginning the incline was about 45 degrees. It definitely stopped for Italy. For the USA it might be coming now. 

Are the graphs of daily deaths saying anything? Corona diary 4

I am watching the statistics for the Corona cases. 
Mainly I am watching the reports of the daily deaths. The daily new infections are interesting too, but the testing is not the same from country to country. 

I trust the death reports more and think that they will be more useful in comparisons. 

The graphs below are from https://www.worldometers.info/coronavirus/. 


The general feeling is that Italy and Spain are the front runners and that the USA and Germany are behind. I am looking at Germany because my sister lives there. 

On the two graphs below we can see that both countries started to slow down in the rates of daily new deaths. 

 Italy link: https://www.worldometers.info/coronavirus/country/italy/

Spain link: https://www.worldometers.info/coronavirus/country/spain/

The plateau was approximately from March 28 till April 4.

If I shift the Italy versus USA, it looks like we are there where Italy was about March 31-April 1. 

USA link: https://www.worldometers.info/coronavirus/country/us/

This way it looks like the shift is about 1 week. If this is correct, we should see the slow down in daily new deaths soon. 

"Cash flow challenge" summary 2019

The total cash flow from investments in 2019 was $143,241. 

That is still Level 2 of my "Cash flow challenge" - "Sailing".

It was about the same as last year (for 2018 the total was approximately $146,000). I didn't have significant incerases in the capital involved and kept more in cash.

Below is my cash flow per month and the S&P 500 performance for 2019. 

my cash flow

                                                                      S&P500 returns in %

My minimum per month was above $2,000 and the maximum this year was about $22,000 (compared to the last year minimum of above $2,000 and maximum of about $19,000). 

It is April 2020 and the Coronavirus flying around in full speed. The numbers for 2020 will not be good. 

Overreaction? Corona virus diary 3

This morning I noticed that the Funeral march music has dissapeard from my head. I tried to sing it on purpouse but it didn't stick. It was there from the middle of January till last week of March - for about 2.5 months. 
Now it seems to be gone. I hope it is good sign.


I will take it with caution and watch what will happen. Usually there is a lag time of 2-4 weeks. Maybe most of us will be back to work in 2-4 weeks.  Even if it doesn't look like it right now. 

I feel the similarity between this Corona virus pandemic and that one time few years ago when the biggest snow storm of the century was predicetd for Atlanta region. The airport was closed based on predictions. But no snow came. 
Definitely there are people dying due to the new virus but to put the entire planet into an economic coma may be a very big overreaction. 

The more we will be getting out of this pandemic, the more voices will be sounding calling is overreaction. 

Sometime later another virus will come. I hope that people in change will not forget the economic results of the current overreaction and will concider the measures more carefully. 


   

Why Corona virus makes people poor? Corona virus diary 2

After I returned form work yersterday my girl asked me: "Why does virus make people poor?"

I don't know if my constant background fear of being poor  tranfered to her. Two weeks ago when the China's deaths were rapidly increaseing, I said that we will not buy any toys untill the virus has passed. For the time being we will only buy food and the most nesessary things. I was surprized how easy she aggreed to that. 

I am watching how gradually the news are changing from "No we wan't have a ressesion" to "This will be a very deep ressession" to "This will be a depression". 

Some are still hoping for a V-shaped marked recovery. But it probably wil be mor of an L-shape.

The closings of restaurants started the snow ball. Almost everything is closing. Even the health care businesses are not safe. With the canceling of the elective surgeries, the medical practices lost a lot of business. They are also laying off people. 
This can't just suddenly all come back. There will not be a sudden pick up of all consumer spending to the previous levels. Most people will be shocked and scared for a long time and the spending will decrease for a while. 

After I explained those reasons to my girl, she thought a bit and said: "There is a boy in school, Vinnie, he winks at me. What does it mean?" I can only hope that we will swich back as fast as she can. 
I said: "The boy likes you but doesn't not know what to say". Then she said: "Akul never winks at me, does it mean he does not like me? But we play together a lot." I said: "Akul likes you but he knows what so say".  
Soon there will be more questions of this sort coming. I feel like starting a new Q&A section, something like "What girls want to know".  

Why do we live? Corona virus diary 1

Yesterday my 9 years old girl asked me: "Why do we live?" I said that I don't know and that if she finds it out, she should let me know.

She is worried about the Coronavirus even though I told her that children are not at risk. She is worried that her mom and dad can die. And because the stores don't have eggs.

Her worry is real because she sees things happening which never happened before. The schools are closed. The store shelves are empty. The numbers of dead people are increasing rapidly on worldometer.

We went  to Walmart  to get eggs and there were no eggs. With surprise and fear in her eyes she asked what is she going to eat? How can we survive without eggs?
She likes eggs a lot and eats them every day.  Recently she learned to make scrambled eggs all by herself and she is very proud.

This is the first crisis she is witnessing.

For me this crisis is not the first.
Growing up in Russia, first half of my life was a non-stop crisis.  Empty shelves, long ques and rationing - I saw it before. I spent many hours in those ques.

My parents were about 40 years old themselves during that time.
First there were empty shelves. Then there was the hyperinflation. I remember that I wanted to buy a pair of shoes and the price went from 5 to 25 rubles in about 2 weeks.

And there was always the background of never having enough of anything. 

This background feeling of crisis has never left. The memory of empty shelves makes me to have a backup of household items at all times. I didn't have to go and buy the toilet paper when everybody was freaking out about it. We already had enough in storage for several months.

I had a feeling that if I relax too much, something bad will happen. For years I didn't let myself to relax. Just recently I started to try to relax. Did I relax too much?

I started to think that maybe I don't need to have so much toilet paper at home. That if we want to buy more expensive brats with cheese instead of those without cheese, we can. Only two months after we started buying brats with cheese, the Coronavirus hit.

Last time I relaxed too much was when we went shopping on one Saturday in January.
It was a nice sunny Saturday and we were returning form shopping. I got come earrings, some blouses and pants for work.
My girl got boots with chunky 3 inch heels. She practiced walking in those shoes in the store. It was a funny show for the cashier and other shoppers. It took her a few minutes to finally not walk with flexed knees like some kind of a bird. I told her that is she can walk in those shoes, I will buy them. She was very motivated. Finally she waked like a model, quite tolerable. 

While watching this show I had a feeling that I am relaxing too much by buying her $35 shoes which she is not really going to wear much. She can't go to her clases in the elementary school in heels. 

I classified those shoes as a fun toy and thought it will be OK.  
Returning form shopping, while driving home in the car, I suddenly started to sing the funeral march.

I explained to my girl that it was a funeral procession music and it was always used in Russian funerals. I sung it loud to her. She said it sound like someone is crying really bad. Here is the link to this music on YouTube: Funeral march.

The funeral march stuck to me since then. I had it in my head every day. 

I told about it to one colleague at work. He jokingly said that maybe he will die. I said: "Probably not. If this music stuck to me for two weeks, that must be something more important. It is either my close relative or lots and lots of people."

Now I think that maybe our way of life is dying. My comfortable life with little economic worries is being killed by Coronavirus. The funeral march is accompanying it.

I survived those horrible times in Russia and the things have gotten better after. It probably will happen again.
Maybe when the funeral march in my head disappears, the things will start getting better.  

My girl called me at work today. I was not busy because all elective surgeries were cancelled due to the virus. 
She said that she figured out why we live. " We need to see the world. We should go to the ocean, we should go to Ireland and other places and see the world."

I agreed with her and said that as soon as we can, we will go and see the world.   

We planned a 2 weeks trip to Ireland in July.
It is not cancelled yet but it probably will be. 

If it took China from the beginning of January till end of March to slow down and they still have restrictions for all incoming air travelers, it will take us at least as much time. Probably longer since we are trying to flatten the curve. 
In USA it will probably extend to at least June. And if  we succeed in slowing it down then July and August will be included. 

Challenge "Cash flow" update October 2019

          

Today I hit $100,000 in cash flow from the investments for this year so far. Last year that was in September. The markets must be slower this year.

Below is my cash flow per month and the S&P 500 performance. 

my cash flow

                     

                     S&P500 returns in % to date (October non included yet)