Goodbye paycheck

Today was our last day at Raytheon/Solidyn. After about 15 years as a software developer in the aerospace industry, I am retiring to pursue my own interests. I plan to do more reading, play the violin, and write the software that I want to write.

 

I’ve had some good experiences, made some friends, and learned some skills at work. But it has been a long time since I have enjoyed the job or found it fulfilling.

 

I will mostly miss the non-work parts of work. The opportunity to meet interesting people, the daily walks by the golf course, and the geese.

Trip to Las Vegas

We took a trip to Las Vegas with a friend to see the Star Trek convention. It was the 45th Anniversary and Leonard Nimoy’s last appearance. We also rented a car and went to the Hoover Dam and took the tour. We also went to an “Ice Bar” called Minus 5. The room was mostly made of ice and kept at -5 degrees C. They gave us coats and gloves when we went in. And the drink glasses were made of ice. The full set of pictures is here.

SimFinance Progress Update

The SimFinance application is mostly done.

As is always the case, the software was more complex than I thought it would be. The main complications were due to the fact that my partner and I aren’t married. So the application had to try to optimize who paid the bills to manage the size of each of our accounts and how much taxes we each had to pay. The other big complication was trying to manage our traditional and Roth IRAs to minimize taxes each year.

There are some big things yet to do:

  1. Come up with a model for stock dividends. Right now, dividends are simply included in the return of the S&P. However, that is not really accurate, as the yield of dividends lags behind changes in stock prices. Also, taxes are due on dividends the year they are paid instead of the year the stock is sold. Those two differences may end up balancing each other out in the overall results.
  2. Investment strategy comparison. Would dividing our money between bonds, i-bonds, and stocks be better overall than having everything in stocks? Does the reduction in volatility pay off? Or is it better to just accept the volatility and maximize returns?
  3. More optimization post 60. The order of IRA withdraws should change after 60. Need to model medicare.

The model is giving us an 85% chance of success right now. I don’t really think that the things that are left to do will change this number significantly. It is surprising how much money we have to have to get a 95% chance of success and how much variation there is in the possible outcomes.

It is possible that treating the S&P 500 as a random distribution is wrong. While the historic data looks random, there probably are some underlying “fundamentals” that keep the stock prices within a range. I am not sure how to add that to the model besides trying to put an overall cap on the market returns.

Student-t distribution for stock returns

I have been working on the SimFinance 2.0 application and have been struggling to find a way to simulate the stock market. (Note: I am not trying to predict the stock market, I just need a way to generate a random stock market return that is similar to historic returns)

My first idea was to use a normal distribution centered around the average return with the same standard deviation that the real data has. This was close to correct, but if I plotted sample returns from history against the normal distribution, the historical returns had much longer tails. Meaning that, in reality, there are more really bad and really good years than there would be in a normal distribution.

After doing some research (I am not the only one interested in simulating the stock market), I found that some people are using a Student-t distribution. After playing with the parameters of that distribution I was able to get a much more realistic curve. Based on the historical data for the S&P 500, I am using the following parameters for the distribution: DOF = 3.40234, SCALE = 35, OFFSET = 0.00725

In software, I am using the boost library to generate random numbers according to the student-t distribution.

SimFinance 2.0

I am starting work on SimFinance 2.0.

A long time ago, I tried to create a retirement analyzer/simulator. It would allow a user to enter everything about their finances, including their plans for the future. It then simulated the future by generating thousands of possible scenarios and displaying your odds of still having money when you die. It built these futures probabalistically based on historic performance of different investment types, the user’s life expectancy, etc. The project was too ambitious and I never completed it.

Now, as I consider retirement, I’d like to have this tool. And I realized that I could complete the project if I would limit the scope to just my own situation. It wouldn’t be useful for other people, but it would give me a better idea if I can really retire.

The old project was created with C++ and wxWidgets. I would like to build the new version in C# because it would be easier to create the user interfaces. But C++ would be faster for simulating thousands of futures month by month. It would also let me re-use some of the code from the original project. So I am going to compromise and build it with C++/CLI. I can use the GUI builder and the .NET libraries and also have the speed of native C++ for the time critical parts of the code.

Practice Log – completed

I have finished the PracticeLog software. Here is what it looks like:

 

I am happy with the software. I created countdown and stopwatch timer modes so that the program will time my practice and automatically update the log for today. I added the “Same as Yesterday” button since I practice a particular set of pieces for at least a week at a time.

I also put in a “10000 hours date” field. This is the date when I will have practiced 10000 hours. I have recently read Outliers by Malcolm Gladwell and am intrigued by the notion that, while talent matters, becoming an expert is mostly a matter of putting in the time practicing.

Practice Log

I am staring work on a new application for my own use. It is called the Practice log and I plan to use it to keep track of the time that I spend practicing violin. When I started violin, the first book contained a paper log where you would fill in your practice time each day and it had a column for your parents to sign off on the entries. When I switched over to the Suzuki books, the books no longer included a paper log. I kept using the paper system for a while, but now I would like to computerize it. I will be able to collect statistics and keep a running total of my hours.

I will keep the paper log format and have a way to add a note and a list of pieces practiced to each day.

I am going to develop this in C# using their DataGridView and a SQLite back end database.

New Photo Gallery

I have changed web hosting companies and re-designed my web page. The biggest change is to the photo galleries. There are a lot of photo gallery programs out there, but I couldn’t find one with the feature that I wanted. I wanted to be able to upload a large set of pictures, but only display a sub-set of them on the main page. The rest of the pictures would be “behind” the displayed set. So, if I go to Paris and take a bunch of pictures of the Eiffel tower, I can put one picture on the main page, but allow users to see the rest of them if that is something they are interested it.

I wrote my own system with php and mySql that lets me manage the photos and the galleries. It also lets me separate the galleries into public and private areas. I have been scanning prints of family photos from my childhood and I put those online for the rest of my family to see.