October 1st, 2022 paycheck
- Debt (hold)
- current: 0.4
- min: 0
- max: 1
- Cash (decrease)
- current: 15.9
- min: 3
- max: 9
- Low correlation (hold)
- current: 0.5
- min: 0
- max: 1
- Negative correlation (hold)
- current: 0.6
- min: 0
- max: 1
- US equities - small (hold)
- current: 32.1
- min: 28.2
- max: 42.4
- US equities - mid (hold)
- current: 24.9
- min: 21.8
- max: 32.8
- US equities - large (hold)
- current: 25.9
- min: 24.8
- max: 37.2
My operating expense account was below the minimum I established because something came up, so, a bit extra went toward bringing that back up.
Still buying the dip via the multi-factor fund.
Experimenting with different purchasing strategies; see 401k rollover.
I received dividends and they were reinvested.
401k rolloverSection titled 401k rollover
I received the check from the 401k at my former employer. I called Vanguard and was surprised to learn I could deposit the check using the mobile app instead of overnighting the check; per the Vanguard instructions.
The agent was awesome and curbed my expectations by telling me it could take two weeks to hit my settlement fund. With that said, Vanguard has a policy based on account value when it comes to check deposits and transfers. Long story short, some money was available, however, all of it wouldn’t be available until after 7 days. (I asked Vanguard to update the user interface to be more explicit about what’s available and what’s not; similar to check holds with my primary credit union.)
It took two business days to hit my settlement fund. I spent those two business days (and the weekend) figuring out how I would disperse the cash.
I didn’t want to repeat my experience with my HSA this year. If you don’t know, when the market started down its correction and bear market path, I maxed out my HSA for the year. Unfortunately, that was the tip of the dip and I could have spread that out more evenly; lesson learned. That mistake, for lack of a better term, was the impetus behind creating the spending savings protocols.
The 401k rollover falls under the “Too much cash” protocol because now the portfolio as a whole went from its target 6 percent cash, to 10 percent cash when I took the three funds at my former employer to 0, and is still around 16 percent cash.
The too much cash protocol, as of this writing, allows me to put in as much as I want toward one or more securities. When I created the protocol, I wasn’t expecting a windfall scenario, so, I’ve updated the protocol to loosen the guardrails; initially all the money had to go to a single security and now it can go toward multiple securities as long as it doesn’t throw the portfolio out of balance.
With that said, I don’t want to do it all in a single move; avoiding the HSA debacle from earlier in 2022. What I’m going to do instead is combine the buying a dip and 90 day cool down protocols. I’ll be buying daily and using a percent of the cash in the account.
Here are the guardrails around this experiment:
- favor limit orders (and purchasing whole shares) instead of dollar-based (fractional shares).
- only commit 50 percent or less of the cash available until the balance is too low to bother.
- create as many orders as needed to disperse the amount for the day using the target equity mix for the Mark 0 allocation.
- base each limit order primarily on the initial price of the share.
Who’s ready for some numbers and an example?
The target percentage for each fund is:
- 15 percent total stock market.
- 47 percent extended market.
- 25 percent multi-factor.
- 13 percent S&P 500.
Let’s say the available cash was 30,000 USD. On day 1, I’d be able to commit up to 15,000 USD to purchasing shares.
If I was doing it straight, that would be:
- 2,250 USD to the total stock market,
- 7,050 USD to the extended market,
- 3,750 USD to the multi-factor, and
- 1,950 USD to the S&P 500.
Given the way limit orders work and the experience I had with the HSA though, I’d like to subdivide even more. So, instead of doing the straight method, I’m doing 2 or more limit orders for each fund.
For this example, let’s say I have 3 limit orders to make for each fund:
- The normal tier is what’s quickly becoming the normal way I put in limit orders, which is the initial price plus 2 cents; using 13 percent of the available money for the fund.
- The single-dip tier is 1 percent less than the initial price; using 33 percent of the available money for the fund.
- The double-dip tier is 2 percent less than the initial price; using 53 percent of the available money for the fund.
Each tier is a different percent of the total amount committed; thank the maker for spreadsheet software.
Back to the 15,000 USD example. We’ll run through the total stock market fund to give you a sense of it; let’s say the initial price of the total stock market was 100 USD per share and I have the 2,250 USD available to put toward it:
- Normal tier at 100.02 USD per share with a maximum available of 292.50 USD I can put toward purchasing shares; 2 full shares in this case.
- Single-dip tier at 90 USD per share with a maximum available of 742.50 USD; 8 full shares.
- Double-dip tier at 80 USD per share with a maximum available of 1,125 USD; 14 full shares.
If the price rises (and stays) above the 2 cents (0.0002 percent of the initial price in this case), none of the orders will execute. If the price stays at or below the 0.0002 percent threshold, the first order should execute. If the price drops by 1 percent, the first and second orders should execute. If the price drops by 2 percent, all three orders should execute.
I say “should” because one or more people need to be on the other side of the trade selling shares at or below the price, and in the quantity, set by my limit order. Luckily, the funds I’m using are fairly liquid.
The following details each day until the cash from the check was no longer in the account.
Day one resultsSection titled Day one results
Day one was the first time I placed multiple limit orders for a single fund, so, I didn’t have the double-dip orders in place. I see the thrill in day-trading based on this first day, however, I’m going to actively avoid going there.
I put in 8 limit orders. 4 for the the 2 cents above the initial price and 4 for the 1 percent dip.
None of them executed when the market opened.
Excitement or anxiety (or both) filled me as I was considering what I should do.
My answer to myself was, “Nothing” but it took convincing. The mantra became: No worries, if none of them execute today, you’ll do the same thing tomorrow.
The prices kept going up. I’d look at the Vanguard app about once an hour in-between doing day-job things; I wanted to meditate on why I was compelled to look, so, I just kept looking whenever I was compelled to do so.
Around noon, I stopped looking.
I ran to an appointment related to the whole gout thing and came back. Toward late afternoon, I looked.
All but one of the limit orders executed. The multi-factor fund was hovering above the 1 percent dip mark. That was a good feeling. Finished up the day and looked again; the last limit order executed.
All 8 limit orders executed. Further, if I had put in the double-dip tier limit orders, they would not have executed; there might be something to only having the single-dip.
Day two resultsSection titled Day two results
This was a “buy the dip” day, and I did; I went with the multi-factor fund. From a portfolio allocation-perspective, the multi-factor fund is the lowest next to the S&P 500. However, I have the S&P 500 and an extended market fund in the 401k at my current employer, so, I want to avoid both of those for now. Further, the total stock market is getting filled through the redistribution of cash in the Traditional IRA. (Besides, and worth noting, the extended market fund is down over 30 percent compared to its 52 week high; so, only regular contributions for now.)
I used the three limit order protocol and all three executed, then I did a market order for the remaining, which was even cheaper.
I quickly threw together some spreadsheet tables and updated them with the cash available in the settlement fund for the Traditional IRA. I was able to put in 4 more limit orders. 3 of the 4 executed.
In the future, if I do another rollover, and if Vanguard hasn’t updated their user interface to be more explicit with how much is available, I’ll probably:
- go with 25 percent instead of 50 and
- call to ask how much is available when the funds appear in the Settlement Fund.
With that said, I need to wait the remaining 7 days before I can do more purchases.
Days 3–6Section titled Days 3–6
Waited for the funds to be available for real.
I updated the investment policy and will try to use a similar limit order approach with my future contributions; updated the spreadsheet to make this easier.
As of September 23, 2022 the price of the extended market fund is back to where it was around the same day in 2020; now I have that Cher song stuck in my head. With that said, each fund is up from its 52 week low (by about 1 percent). Further, each fund is above any of their high or low period from 5 to 10 years ago.
The CNN Fear and Greed index hit extreme fear again; not surprising.
Day 7 resultsSection titled Day 7 results
I skipped buying the total stock market since it was the only one I could order with the money made available from the deposit. I put in the 6 limit orders for the multi-factor and extended market funds. I could only put in 2 orders for the S&P 500 fund though; the price per share is too high for how much I was throwing in at the time; I decided to go down to 25 percent instead of 50 percent of the cash available.
5 of the 8 limit orders executed.
The greater portfolio is almost within the bounds of being in balance except for the cash portion.
Day 8 resultsSection titled Day 8 results
I did 12 limit orders this day and changed the percentages to simplify.
Starting with the percents; they are now 15 percent for 2 cents over current price, 35 percent for the 1 percent below current price, and 50 percent for the 2 percent below current price. At these new percents the S&P 500 for 2 cents over didn’t equate to a single share, however, this would have made the allocation of the Traditional IRA even more out of balance when it came to the S&P 500 fund; so, I went ahead and did 1 share at 2 cents over the current price.
4 of the 12 orders executed.
I decided to look back in time and realized that the current prices for all the funds are around where they were when I started this whole thing in 2021; the extended market fund is back to where it was when the COVID dip happened. This has caused me to narrow the steps for the limit orders. I’ll have the 2 cent over tier, however, I’ll be setting the next tier to a 0.5 percent drop and the third tier to a 1 percent drop; instead of 1 and 2 percent, respectively.
Day 9 resultsSection titled Day 9 results
Equities had a good day in the sense they went up in price; only 2 of the 12 limit orders executed.
I’m going to switch to a market order, a 2 cent over order, and a 0.5 percent down order the next day; just to see what happens.
There was actually a moment on this day where the value of the Traditional IRA exceeded the original amount of the check received. Unfortunately, the check and value on this day wasn’t more than the value of the 401k on the day I asked for the check, but a good sign, I think.
Day 10 resultsSection titled Day 10 results
I used the spreadsheet table to determine how many shares to buy. I increased the total amount to try and contribute 50 percent of available money. I set my orders to continue allocating 15 percent to the market price, 25 percent to two cents over, and 50 percent to 0.5 percent below. This means less shares were purchased at the initial price and more would be purchased if there was a 0.5 percent drop.
What I appreciate about this approach is I’m limiting myself in the sense I only want to buy X number of shares at the initial price (plus or minus). Further, I appreciate the idea that I’m always buying at least 1 share, even if it’s at, below, or above the initial price. For example, I didn’t have enough, based on the allocation, to purchase 1 or more shares of the S&P 500 and total stock market funds; however, I asked Vanguard to buy 1 share no matter what.
The prices of the funds went down 2 percent within a couple hours of opening, so, I could have received a better deal had I done the 2 cents over, the 1 percent down, and the 2 percent down method and I reflected on that a bit. All 12 orders executed immediately.
I’m looking for the setup that scratches the most itches for me, including achieving my overall investment goals. Further, and on that score, I don’t know when I’ll have this much liquid cash during a volatile time to experiment without feeling like I’m missing out on an upswing or throwing in too much all at once.
This method with the market orders seems to be helping keep the values for each fund near their targets more consistently, which I’m thinking is a good thing.
I’m considering two more experiments.
The first setup would be something like:
- 15 percent (or 1 share) at market price.
- 35 percent (or 1 share) at 2 cents above initial price (or current price, if lower than initial price).
- 50 percent (or 1 share) at 1 percent below initial price.
The second setup would add a tier and look like:
- 10 percent (or 1 share) at market price.
- 20 percent (or 1 share) at 2 cents above initial price (or current price, if lower than initial price).
- 30 percent (or 1 share) at 1 percent below initial price.
- 40 percent (or 1 share) at 2 percent below initial price.
The goal of both setups is to always be buying and get as much as I can at or below current and initial prices.
Both of these scenarios should resolve some psychological baggage I’ve been experiencing, which is that I’m in accumulation mode and don’t want cash sitting on the side for an extended period and I don’t want to go in all at once. This approach should help resolve that because I’m always buying at least 1 share at the current market price. Further, both of these setups take more advantage of dips in the price of a share in the fund, which helps satisfy the desire to feel like I’m going in at opportune moments; despite not being able to predict they’re coming. Also, I think it’s a balance between scratching the tinkerer’s itch and automated decision making. Finally, using the lower price between initial and current makes me feel more comfortable about the “wait until after the market has been open 30 minutes or more” rule of thumb.
One drawback here is both setups increase bookkeeping overhead due to the number of potential transactions.
Another drawback is that both setups make me feel like I should have two rounds of placing orders, or, I should adhere more strictly to the rule of thumb of not placing orders before 10 in the morning Eastern Time.
I decided to look at the current value compared to the initial amount of the check and discovered the current value of the account was less than 2 percent down compared to the initial value. If I had done the lump-sum approach, it would be down roughly 6 or more percent; that’s what happened with the HSA this year, so, it feels like further affirmation on this approach.
Day 11 resultsSection titled Day 11 results
I’m thinking the two setups would actually perform better in different circumstances.
If the price of the funds are up, I think the 15 (at market), 35 (at 2 cents over), and 50 (at 1 percent down) would be better. If the price of the funds are down, I think the 10 (at market), 20 (at 2 cents over), 30 (at 1 percent down), and 40 (at 2 percent down) would be better.
On day 9, the market closed up, which made me want to throw more money in on day 10, just in case it went up even more—get in early. Unfortunately, the price of the funds dropped on day 10 and in some cases to the 2 percent threshold; had some regret there.
Most of these feelings are a matter of reconciling them for myself and getting comfortable with them. While the advice is to “just not look,” given my history and baggage, that’s not gonna work for me. Instead, I want to watch and see to determine what’s normal. From a pure cashflow perspective, I could live without this value and money I’m putting in, however, not knowing and not building up the immunity to freaking out would cause more stress than I think it’s worth.
With that said, the rollover exercise is starting to feel like market timing, however, this is experimentation mode, so, I’m not beating myself about it. Knowing me, I’ll do this for a while before stopping after I feel I’ve learned what I can from the exercise.
The funds were down on day 10, so, I went with the 10, 20, 30, 40 setup.
14 orders, 8 executed.
This day was interesting because the S&P 500 fund went down while the extended market fund was going up.
Day 12 resultsSection titled Day 12 results
The funds were down on day 11, which went well, so, going with the 10, 20, 30, 40 again. But that will be for the next paycheck.
Closing M1 FinanceSection titled Closing M1 Finance
Main M1 Finance Pie is still down over 30 percent and I’m working through the 401k rollover, so, no money went this way.
I earned dividends and reinvested them in the main Pie.
Update on the dipSection titled Update on the dip
As I continue with the four funds I’m appreciating their similarities and differences. On the day-to-day none of them moves dramatically different than the others; macro-allocation principle—they’re all United States equities. With that said they are all down different amounts from their 52 week high and their share price is different enough to keep it interesting; facilitating purchasing whole shares.
The S&P 500 fund is at around 300 USD per share and is down around 26 percent. The total stock market fund is around 200 USD per share and down 26 percent. The extended market fund is about 140 USD and down about 37 percent. And, the multi-factor fund is at 95 USD and down 20 percent. (All compared to their 52 week high.)
So, for the same price as one share of the S&P 500 fund, I could get just over 3 shares of the multi-factor fund. Further, the multi-factor fund, is playing a bit of a ballast role at the moment.
There was also a few times when the extended market dropped more than 30 percent, so, I couldn’t buy the dip with more of it, but I could still buy the other funds.
We’re also hitting the point where 52 weeks ago the New York Stock Exchange, and subsequently the mutual funds I own, started dramatically increasing in price. So, I would expect buying the dip to begin cooling down for me; it will not alter my regular contributions.
Purchasing ETFs at VanguardSection titled Purchasing ETFs at Vanguard
This was interesting to me.
I was doing the buy the dip thing with the multi-factor fund. I used the method described in the previous paycheck and it was fascinating.
I’m making up numbers, but the gist is correct.
I went to put in a limit order. The price of a share was 100 USD and I set my purchase amount at 100.02 USD per share. The most recent bid price, however, was 100.50 USD; so, the order didn’t execute immediately and wouldn’t unless the price dropped far enough.
As the day progressed, the price dropped to the point that my order executed. As soon as I saw the limit order executed I made another market order to buy 90 USD worth of shares. The market order executed immediately for the price of 99 USD.
So, my initial order didn’t execute immediately, and the price dropped enough for it to execute. Then I was able to buy in for an even cheaper price right after that.
I’m calling that a win.
I don’t have enough experiences to make this part of my investment policy statement, but we’re getting there.
So, that happenedSection titled So, that happened
The first time I went back to the store I grabbed a cart and asked someone up front if they wouldn’t mind watching my bag for me; they didn’t mind and they did so.
As I was waiting to checkout someone asked the employee about the bag on the ground. The other employee said, “A customer just gave it to me to watch.”
It seemed the employee who asked about it felt some sort of way about it, but walked away.
The second time I went in I did the same thing and the employee said, “We can’t hold bags up front anymore. You can carry it with you.”
“All right,” I responded, “I’m just trying to avoid being accused of shoplifting again.”
“I understand,” the employee responded with a smile.
The bag is a sizable 35 liter duffel and could take up the basket of a large cart by itself. Luckily I went with one of the larger carts with the rack under the basket; not the double-stacked, smaller carts.
It’s an interesting departure from what I’ve been doing for the last 4 or 5 years; on a weekly basis. With that said, I appreciate the education.
Changes to diet and spendingSection titled Changes to diet and spending
The last 30 days we’ve been treating my foot pain as gout via medication. Had uric acid blood levels checked after 30 days and they’re down 1.3 from where they were.
The plan was to come off the anti-inflammatory and replace the breakfast sausage with a combination of cashews and pumpkin seeds.
I came off the anti-inflammatory on a Tuesday.
I didn’t do a very good job of trimming my toenail on the gout-prone foot. The big toenail was starting to stab into my skin a bit. I took care of it and in the process nipped the skin a bit. It became inflamed. That was Sunday.
On Monday I switched to the nuts instead of the breakfast sausage.
By Tuesday I could feel another gout flare coming on and the toe was pretty angry on two fronts.
By Wednesday I was done. Called the doc and we modified the plan. Back on the anti-inflammatory and doubled the dosage for the drug to reduce uric acid levels in my blood. I also went to a podiatrist. Had some X-rays taken, the ingrown toenail removed, and a second opinion on the whole gout situation; they gave me a different anti-inflammatory to take before the follow-up a week later. They said outside of that, foot seems fine.
For the anti-inflammatory from my doc we went with 60 days worth, however, I’m going to try to only do 30 days and go off it again. This way, if I experience another flare coming on, I have the pills on hand to deal with it.
My foot feels much better, even after just a couple days, and I’ve been learning how to do pedicures. Even purchased a whole kit.
So, we’ll see what 30 days brings us.