Investing Axioms

Everything you need to know about the investment business is...

Nobody knows nothing. John C. Bogle

Financial markets go up and down as a result of transactions made by billions of people worldwide. The financial media attempts to correlate the news of the day with daily price fluctuations in the market. While the financial media spends more time analyzing the financial markets than the average investor, at the end of the day they are merely guessing what moved the market. In response to the news stories they create, investors may react to the news and make a trade in the stock market and the process begins anew the next business day.

To keep emotions in check, you need to write down your investment plan. Over the years I have written statements that help me stay the course with my personal investment plan. I review my list periodically to see if I need to make any updates based on what I continue to learn.

My Investment Plan

These are my most important investment objectives to help me organize my thoughts and keep me on track. I review them periodically and make changes as I learn more.

• Time in the market is more important than timing the market
• Always maintain asset allocation (buy & hold), never be out of the market
• Defer taxes when in high tax bracket, max out 401k and Roth IRA contributions (including catch up contributions)
• Target asset classes are Total Stock Market, Extended Duration Treasuries and International Dividend Appreciation
• Core holdings are VTI, EDV and VIGI
• Volatility is where money is made, hence long-term bonds
• Long-term Treasuries usually reduce drawdown of equities
• If ETF dips > 1% two days in a row, buy it on sale (buy on the double dip)
• If possible, direct capital gains / dividends to underperforming style (buy low - rebalance)
• Rebalance ETFs using sell limit order at all time high when assets are uncorrelated (sell high, buy low)
• Wait for opportunities to happen, don't try to force them (be patient)
• Grow Roth faster than IRA
• Fund Roth with taxable assets that lost value (tax loss harvesting)
• Pay taxes from taxable account if Roth conversion is performed
• Realize dividends / capital gains in UTMA accounts up to $1,250 annually by December 31st (as of 2023)
• Trade based on known history, not unknown prediction
• Bond fund prices trade within a range, stocks do not (i.e. don't speculate on stock price)
• Fade into / out of long-term bonds to realize Roth gains / IRA losses
• Past performance is no guarantee of future results
• Increased risk provides no guarantee of excess return

History doesn't repeat itself, but it often rhymes. Mark Twain