Worksheet – Physics

For homeschool I created a worksheet covering a few fundamental concepts of physics, and the link below is to a pdf version of that worksheet.

Physics

Worksheets – Spanish

Below are links to a few worksheets I’ve created in order to help my daughters learn Spanish.

Basics

Colors

Days of the Week

Numbers 0 – 15

Numbers 16 – 30

Numbers > 100

Personal Pronouns

Sentences – 01

Worksheets – Knowledge, and Branches of Knowledge

Below are links to a series of worksheets I’ve prepared for homeschool. This set of worksheets deals with knowledge in general, and with some of the more popular branches of knowledge.  This group does not include a worksheet on various arts such as painting, sculpture, knitting, etc., although conceptually it would be a logical inclusion.  My daughters already know the terms for most of the popular branches of art, so I don’t have a need for a worksheet regarding them.

Knowledge

Branches of Knowledge – Math

Branches of Knowledge – Physical Sciences

Branches of Knowledge – Life Sciences

Branches of Knowledge – Medically Related Studies

Branches of Knowledge – Other Human-Related Studies

Branches of Knowledge – Occult Studies

Note:  The inclusion of occult studies is not an endorsement of the occult; however, the popularity of these areas of human activity have played a prominent role in human thought for many centuries, and I want my daughters to understand these terms.

Creating A Low-Risk Portfolio, Part 3: Background and Details

[For many years I've been very undisciplined in regard to financial matters, but I now have an appreciation for the importance of putting money to work.  This is the portfolio plan that I will use for myself, and which I also intend to use as a beginning investment plan for my children.  Whether they continue this plan or some variation of it into their adulthood will be up to them, but I will strongly encourage it.  I am not a professional financial advisor, I do not have any certifications in that field, nor has this plan been approved by any certified financial advisors.  This is just one man's opinion.]

Continued from Creating A Low-Risk Portfolio, Part 2:  Investment Process

Creating A Low-Risk Investment Portfolio

An investment portfolio is the collection of financial instruments held by an individual or an organization, and can also include tangible assets such as real estate, precious metals or other items of value. When creating a portfolio, there is no one way which is correct to the exclusion of all others. Different people have different financial goals, and they also have differing views regarding the desirability of certain types of investments. This particular plan is based on a conservative viewpoint regarding the goals of the portfolio, a factor which will greatly influence the investments themselves.

Why Invest?

The first question that should be answered is: Why invest at all? Why not just put one’s money in a safe or in a safe-deposit box? There are times when that strategy would have been a profitable one. Money kept in cash over certain time periods would have retained its value better than investing in either stocks or real estate. Unfortunately, over larger time periods the value of money that is not backed by a commodity will usually be eaten away by inflation. The best way to protect that value is to invest it in other items which will rise in price at a rate equal to or better than the rate of inflation.

Setting Goals

When creating a portfolio, the decisions at every subsequent stage depend upon the goals that have been set. In a situation where an investor has begun his investing career by purchasing a scattered variety of securities, establishing a set of written goals will help that person to understand whether the current investments are appropriate for achieving the desired financial objectives, and will give direction to future investments. A systematic approach is more likely to be successful than an undisciplined one.

There are three goals for this portfolio:

1. Protect purchasing power.
2. Create income streams.
3. Increase capital.

The reason for using the term purchasing power rather than the word money is that purchasing power is the real value, not the amount of money. Fiat currency, which is money that is neither a commodity itself nor is exchangeable by law for a fixed amount of a commodity, has no inherent value. Its only value is what you can get for it, and for some items, such as stocks, what you can get for it can fluctuate wildly. In a deflationary economic environment it is possible to actually lose money and gain purchasing power, and during inflationary times it is possible to gain money and lose purchasing power.

Since the first priority with this portfolio is to protect purchasing power, conservative investments will be preferred over riskier ones. This portfolio isn’t designed with an eye toward getting rich quick, but rather toward maintaining value as much as possible; putting money to work and getting income streams from the investments; and slowly increasing the overall value of the portfolio. The investment strategy contained herein can be likened to purchasing milk cows that will profit slowly year after year, rather than meat cows that must be killed to be of benefit.

Speculative practices such as short selling, managed futures, and investing with borrowed money (leveraging) will be avoided in this portfolio. This is strictly an investment portfolio, and not a trading portfolio. In an investment portfolio, excess capital is placed either in assets that have durable value, or in the hands of organizations in search of capital so that both parties can potentially benefit. In a trading portfolio, items are bought and sold only with an eye to changes in their market prices, and, in the cases of selling stocks short and with managed futures, are traded in such a manner that the only way for one party to win is for the other party to lose. With traditional investments win-win outcomes (as well as lose-lose outcomes) are possible, but with more speculative practices the only types of situations possible are win-lose or lose-win (except for the brokers and the exchanges, who stand to make a profit no matter who wins, just as casinos and racetracks profit from pari-mutuel betting regardless of who wins the bets).

Choosing a Benchmark

A benchmark is a number used for comparison to the rate of return on the portfolio in order to determine the degree to which the goals for the portfolio are being met.

For the goals of retaining purchasing power (goal number one) and increasing purchasing power (goal number three), it is important to know what it is that is to be purchased in order to establish a reasonable benchmark. The reason for this is that the cost of different items often changes at different rates. If the main purchase that needs to be made for the future is medical equipment, then an index of the cost of medical equipment would be necessary for gauging success. If wages are the primary expense then an index of wages would be needed. For a hospital, it might be that a blend of the cost of medical equipment and wages might need to be created to give a more realistic measure of the achievement of investment goals.

This portfolio is set up to benefit individuals, so the benchmark that will be used for comparison will be the Bureau of Labor Statistics (BLS) Consumer Price Index All Items (CPI-U).

The Investment Universe

Transactions are fundamentally about an exchange of resources, and from the point of view of the buyer can be divided into two types of transactions: investments, and expenses. Investments are purchases which are either done with the intent of making a profit or of storing value (or both). The following list is an attempt to enumerate all of the major areas in which a person or organization could theoretically invest. This list is not intended to include every possible investment, but should provide an idea of the wide variety available.

1. Business Ownership

   1. Publicly traded shares (Stocks)

   2. Privately offered shares (Private Equity)

   3. Sole proprietorships/Partnerships

2. Credit (loans to businesses, governments, and/or individuals)

3. Real Assets

   1. Real Estate

      1. One’s own residence(s)[or building, if a business]

      2. Land held for long-term gain providing no intermediate income

   2. Portable Assets

      1. Durable goods (includes precious metals)

      2. Perishables

      3. Intellectual capital (e.g. patents, trademarks, copyrights)

   3. Real Asset Hybrids (e.g. Real estate purchased with mineral rights)

4. Cash (fiat currencies only; otherwise cash is a security for a commodity, or is the commodity itself, and would belong with Portable Assets)

5. Self-improvement

6. Whole life insurance

7. Speculation (short selling stocks, trading managed futures, flipping real estate, racetrack betting, playing poker, etc.)

8. Hybrids

   1. Convertible stock (Credit/Business Ownership)

   2. Rental property (Business Ownership/Real Asset])

Components

The next step is to determine the subset of the investment universe that will be included in the investment plan. For this particular plan, there will be six divisions:

1. Cash
2. Savings
3. Real Estate
4. Bonds
5. Stocks
6. Precious Metals

Real estate, bonds and stocks were chosen because they have the potential to meet all three of the investment goals: maintain purchasing power; generate income streams; and gain purchasing power.

Precious metals are included for goals number one and three: maintain purchasing power; and increase purchasing power. During inflationary times the value of currency drops, but the value of precious metals usually rises. Also, due to the increasing population of the world the demand for these metals will probably continue rising, so barring unexpected discoveries of vast amounts of new supplies, the purchasing power of the holdings in this asset class should increase over time. Historically, precious metals have been one of the preferred means of storing value, and in the unlikely event that the national currency should no longer be accepted due to some economic or natural disaster, precious metals almost certainly would be.

There are two divisions of cash: the cash account and the savings account. Cash is the most readily exchanged of all stores of value, and it also acts as a protection during deflationary times. As the prices of goods drop during deflationary periods, the purchasing power of cash increases with no added risk.

With the inclusion of these five asset classes into six divisions, all three of the goals for this portfolio have the potential to be met.

With regard to the investments which were excluded, this exclusion was not meant to minimize their potential value. However, with each level of decision making that is added to the portfolio the number of potential combinations increases, so for the sake of simplicity this portfolio is limited in regard to which sectors of the investment universe are included.

Three of the included asset classes have two potential valuations: their value on the market if sold; and their value as providers of income streams. Those asset classes are stocks, bonds, and real estate; and they will be limited in the following ways:

1. Stock limitations: only shares of stocks that are members of the S&P 500 Dividend Aristocrats will be picked. The companies that are included in this group are members of the S&P 500 that have returned an increasing dividend every year for at least the last twenty-five years. This limitation focuses on stocks that will pay a dividend, which supports goal number two (creating income streams). In this section of the portfolio, there will almost certainly be a stream of income, and there should also be an increase in the market value of these stocks during inflationary times, which will support goals number one and three. This plan will not include investments in overseas businesses. The United States still represents a significant portion of the world’s economic activity, and tends to be more stable than most of the rest of the world. The larger U.S. corporations also have vast operations overseas, so investments in those companies include a share in the activity of economies worldwide without the addition of potential tax complications. The selections in this asset class allow the investor to participate in the advantages of business ownership in a relatively low-risk manner.

2. Bonds limitations: preference for, but not limitation to, tax-exempt municipal bonds of U.S. localities with a credit rating of AAA as determined by Standard & Poor’s, said bonds having a maturity date of two years or less, to be held to maturity; ETFs traded on U.S. exchanges that are limited to long-only purchases of such bonds; or U.S. mutual funds and investment funds that are limited to long-only purchases of such bonds. The primary value of this asset class is in providing an income stream with little risk of loss of principal. Municipal bonds are preferred because the income is tax-free and the principal is at very little risk. However, there will be some diversification to other types of bonds, if for no other reason than to teach about the various classes of bonds available. Because this is an investment portfolio rather than a trading portfolio, bonds are held to maturity. These investments have a low risk of loss other than to purchasing power erosion caused by inflation. The maturity date is limited in order to minimize the loss of purchasing power during inflationary times. During deflationary times the purchasing power of the bond sector should grow.

3. Real estate limitations: limited to real estate investment trusts (REITS) that operate primarily in the United States; and to the real estate directly owned by the investor. Companies that specialize in real estate but which are not REITS are excluded from this class, but not from stocks.

4. Precious metals limitations: only gold, silver or copper in coins, bars, or ingots will be purchased. Because part of the purpose of this asset class is protection against extreme disasters, the actual location of at least some of these holdings should be close enough to be obtained in the case of an emergency. Safe-deposit boxes at one or more local banks would be ideal, and possibly caches at banks near where one is most likely to travel. Jewelry is not included in this plan because its market value is not as easily measured as the precious metals described above. However, this category is the category to which jewelry would be added if the investor chose to include it in the portfolio.

Cash Flow

The way this plan is intended to operate is that income from stocks, bonds and real estate (and the savings portion of professional earnings, if applicable) will flow into the cash account. The principal of maturing bonds will also flow into the cash account. Money will first go from cash into savings, real estate, bonds, stocks, or precious metals in order to meet the asset class minimums, and excess cash will go to the real estate, bond or stock investment that has the highest yield.

Proportions

Cash: There are two cash accounts: the one labeled Cash, and the savings account. The portion of the portfolio allotted to cash is not a fixed percentage. The amount in savings is recommended to be equal to three months of the investor’s normal expenses. Having a cash safety net is important in case of ready need, but the income stream from cash in a savings account or money market account is generally lower than that from other sources. Since stocks, bond funds and real estate funds are highly liquid, there is no need for storing a large amount in cash. The advantage that cash offers in deflationary periods is also offered by bonds, but bonds usually have a larger income stream.

Precious metals: Like cash, precious metals are not allocated a fixed percentage of the portfolio. Precious metals don’t have an income stream, so storing a large amount of value in them is not recommended. The main value offered by this class is protection against major disasters. While it is unlikely that a situation wherein the current currency becomes grossly devalued or is no longer accepted will occur, the history of mankind has shown that disastrous events do occur, and they are usually not foreseen in advance. If people living in Europe several centuries ago had known that one out of four of them would be killed by a disease borne by flea-infested rats, in all probability they would have done something about the rats first. If Germany, France, Russia and Great Britain had known in 1913 what their treaty obligations were going to lead them into over the next few years, they probably would have rethought them before World War I brought them so much suffering. Had Austria-Hungary foreseen that its own destruction would result from its declaration of war against Serbia in 1914, Austria-Hungary probably would not have declared that war. A meteorite exploded over Tunguska, Siberia, in 1908, and it leveled an estimated 80 million trees in an area over 800 square miles. No one saw it coming, and it was only by luck that it didn’t explode over an urban area. The presence of precious metals in the portfolio is to give some measure of protection against unforeseeable calamity, and the recommended portion of the portfolio to be allotted is an amount equal to one year’s expenses.

Real Estate: The CPI-U, which is the Consumer Price Index for all urban consumers and which includes food and energy prices, currently (as of October 2011) establishes housing costs at 41.6% of the index¹. This includes the cost of shelter, utilities, and other associated housing costs, and it varies over time depending on the results of extensive surveys by the Department of Labor Statistics. The actual cost of the shelter is weighted at 31.955% of the total index as of this writing, a value which also depends on the most recent survey results. Many financial advisors, however, recommend that total housing costs not exceed 28% of net income². For these reasons, the recommendation for this portfolio is a 30% minimum allocation to real estate. This strikes a balance between the actual cost of the shelter and the recommended level. The expected effect is a general maintenance of the portfolio’s purchasing power of housing at a level proportionate to the share of the investor’s likely future housing budget.

Ideally, no more than 20% of the real estate portion of the portfolio would be invested in commercial real estate. The reason for this is that the profitability of commercial real estate is subject to decline during economic downturns, as are publicly traded stocks. Residential rentals, on the other hand, tend to perform better during economic downturns. As the economy recovers, stocks begin to go up and commercial properties tend to become more profitable due to increased demand; also, the percentage of households which are renting tends to decline. By striking this balance between residential and commercial property it is hoped that the portfolio’s volatility will be further dampened.

Stocks and Bonds: There is no way to know in advance whether stocks will be more advantageous than bonds in a given time period, or vice versa. It is clear that an allocation to each will aid in diversifying the portfolio, thereby decreasing its vulnerability to negative changes in a single market. For that reason, this portfolio is constructed with a minimum 20% allocation to each of stocks and bonds.

Remainder: The minimum allocations of real estate, stocks and bonds only add up to 70% of the total portfolio, and with savings and precious metals not being fixed percentages it is impossible to fix the remainder of the fund in advance. The remaining part of the portfolio will be invested in the real estate, stock or bond investment which is likely to pay the highest yield. The expected yield will be based on the previous year’s data in the case of stocks or real estate, or the next year’s yield in the case of bonds.

Monitoring the Investments

Rebalancing is the practice of returning the amounts invested in the asset classes to their originally assigned proportions. The way this is usually done is by selling off an asset class that has more invested in it than the investment plan prescribes, and investing that money in those asset classes which have less than their allotted targets. This practice has the advantage of maintaining the portfolio’s diversity, which is a key ingredient for protecting against financial shocks in individual markets. It also has the advantage of selling from an asset class when its prices are high and buying into asset classes when the prices are low.

The approach taken herein is a different one. The expected cash flow is from the asset classes to cash. When making new investments, those asset classes which are below their minimums are brought up to their minimum levels first, and then the remainder of the cash is used for the investments having the best yield. This accomplishes the same maintenance of diversification without the need for selling assets. The strategy that this plan follows is to slowly accumulate assets that generate income. Selling off assets that are performing to an acceptable level is not optimal. In case of a necessity to raise cash, gross under-performers will be chosen first for sale; precious metals will be the next choice since they do not have an income stream, but they would only be sold to fifty percent of their current value. If it were necessary to sell further assets, they would be taken equally from the lowest yielding stocks, bonds and real estate.

A stock will not be automatically removed if it is dropped from the S&P 500 Dividend Aristocrats Index. It will no longer be purchased, but in order to be removed the stock must not declare a dividend for eight consecutive quarters, or it must be delisted from its exchange. Another factor which would be sufficient reason to eliminate a particular stock would be the threat of a government takeover of that corporation. As the government demonstrated with General Motors, shareholder interests are of no importance to them.

Bonds would generally be held to maturity, and real estate funds would generally be sold only if they stopped declaring a dividend for eight consecutive quarters.

Because life has a way of presenting unexpected situations, the possibility that there would be some other compelling reason for divesting of an asset cannot be ruled out in advance.

¹http://www.bls.gov/cpi/cpid1110.pdf
²http://www.nytimes.com/2009/03/21/your-money/mortgages/21thirty.html

Creating A Low-Risk Portfolio, Part 2: Investment Process

[For many years I've been very undisciplined in regard to financial matters, but I now have an appreciation for the importance of putting money to work.  This is the portfolio plan that I will use for myself, and which I also intend to use as a beginning investment plan for my children.  Whether they continue this plan or some variation of it into their adulthood will be up to them, but I will strongly encourage it.  I am not a professional financial advisor, I do not have any certifications in that field, nor has this plan been approved by any certified financial advisors.  This is just one man's opinion.]

Continued from Creating A Low-Risk Portfolio, Part 1:  Summary

Next:  Creating A Low-Risk Investment Portfolio, Part 3:  Background and Details

Creating A Low-Risk Portfolio, Part 1: Summary

[For many years I've been very undisciplined in regard to financial matters, but I now have an appreciation for the importance of putting money to work.  This is the portfolio plan that I will use for myself, and which I also intend to use as a beginning investment plan for my children.  Whether they continue this plan or some variation of it into their adulthood will be up to them, but I will strongly encourage it.  I am not a professional financial advisor, I do not have any certifications in that field, nor has this plan been approved by any certified financial advisors.  This is just one man's opinion.]

Portfolio Summary

Goals:
1. Protect purchasing power
2. Create income streams
3. Increase capital

Portfolio Divisions:
1. Cash Account – balance varies with income flows; ideally less than $100 after investments
2. Savings Account – 3 times monthly expenses
3. Real Estate – minimum 30% of portfolio; preferred holdings mix: 80% residential, 20% commercial
4. Bonds – minimum 20% of portfolio
5. Stocks – minimum 20% of portfolio
6. Precious metals – 12 times monthly expenses

Money Flow:
1. Income from all sources, as well as cash from matured bonds, flows into the cash account.
2. Minimums are first met in savings, real estate, bonds, stocks, and precious metals, in that order.
3. For the remainder of the portfolio, real estate, bonds and stocks are compared, and the choice with the greatest yield is selected.

Rebalancing:
1. Rebalancing is achieved through the selection of new investments, not through the selling of current ones.

Notes:

1. Minimums for asset classes assure diversification.
2. Not having maximums for most asset classes allows dynamic composition of portfolio.
3. Items which are at highs in value are not purchased except to comply with minimums. New investments are made with prejudice toward maximizing income streams.
4. As the economic situation changes the portfolio naturally flows to the most affordable investments and away from the highest priced ones.
5. Division of real estate into 80% residential, 20% commercial affords protection during economic downturns wherein commercial real estate profitability often declines, and there is usually an increasing percentage of households that rent. It also allows, along with stocks, for participation in business prosperity during economic upturns.
6. Consistent with the goal of creating income streams, stock selection is limited to members of the S&P 500 Dividend Aristocrats.
7. Bond selection favors, but is not limited to, municipal bonds and short term notes.
8. Consistent with a conservative investment philosophy, speculative practices such as short selling, futures trading, and purchasing on margin are avoided.
9. The benchmark for the full portfolio is the CPI-U. There are no asset class benchmarks.

Next:  Creating A Low-Risk Portfolio, Part 2: Investment Process

The Cat in the Hat Neutered

The famous Cat in the Hat was caught yesterday roaming the streets of LaJolla, California, by LaJolla animal control. He was brought to the animal shelter, and since he had no tags and had been reported as a stray, he was neutered.

Kevin McBlevin, the animal control officer who caught the Cat in the Hat, was nonchalant about it.

“Some women had been calling in about this big stray cat that had been coming into their houses and playing with their kids,” he said. “This had been going on for years now.

“Well, I was making a routine patrol through one of the residential neighborhoods when I saw him, the Cat in the Hat. He was about six feet tall with his hat on, and he was whistling. I’d never heard a cat whistle before, but I thought, ‘Who cares? It’s just a cat.’

“He was a big one, all right; biggest I’d ever seen.  Well, I’d heard how friendly he was, and I thought, ‘I bet, with my net, I can get that cat yet!’ But then I thought, ‘Damn, he’s big, better not take a chance.’

“So I shot him with my tranquilizer gun. I never saw such a look of surprise on a cat’s face before. He took a few steps, and then he went down like a rock. When he hit the pavement, his hat came off and all these little cats with hats came running out and scampered away into the bushes. I let them go. I had the big one. I could come back for the little ones later. Most of them probably wouldn’t survive, anyway, unless someone took them in.

“So, I put him in my truck and brought him to the shelter. All the other workers congratulated me because we’d been looking for him for so long, and we hadn’t been able to catch him. I hung around the shelter to see what they were going to do with him.

“Due to all the reports that we’d had about him since who knows when, and since he didn’t have any tags, they went ahead and neutered him. Judging from the look on his face when he woke up, he didn’t seem to think it was good fun that was funny, but I’m sure I wouldn’t either.

“Tomorrow we’ll ship him out to the LuckyCat pet adoption center, and maybe he’ll get taken to a good home; someplace where they’re not afraid of taking care of a six foot cat. I know I wouldn’t want to be the one to clean his litter box every day.”