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Old 07-14-2018, 11:22 AM   #41
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Weekly % gain is $738/$25,000 = 2.95% and yet XYZ corp started the week at $25 and ended the week at $25. ...
Nice, but that is 2.95% of one holding. Are you saying that you only hold one stock in your portfolio? Or that you are able to do this regularly on all/most of the stocks in your portfolio, week after week after week?

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In a volatile flat market though I think the strategy, while having risk, can work...or at least it is working so far.
And that is usually what happens with a strategy like this. It works until it doesn't, and sometimes the "not working" stage can wipe out so much of the gain, that you are left below the index.

It can play out like you say - a stock dips, so you just hold it. Over time, another dips, and you just hold it. But you also took a quick profit on the stocks that go up above the averages. You end up with a portfolio of stagnant stocks.

Maybe you will avoid this, but I don't think it is likely. But good luck!

I was trying to work out a strategy where you play the volatility of the 10-20 largest holding in an index, against the index itself (which is less volatile, on average). I couldn't find enough alpha to make it worthwhile, though I do think the theory was sound.

-ERD50
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Old 07-14-2018, 11:34 AM   #42
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And that is usually what happens with a strategy like this. It works until it doesn't, and sometimes the "not working" stage can wipe out so much of the gain, that you are left below the index.
But to some extent isn't that also a risk we face by investing in the market in general, even in index funds? We remove the diversity risk but we still face the possibility that the whole market might decline or stagnate for decades, longer than our lifetime monetary needs will allow us to wait. This is likely why most older people reduce their stock exposure so much. If you reduce risk though, you reduce gains.
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Old 07-14-2018, 11:37 AM   #43
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Nice, but that is 2.95% of one holding. Are you saying that you only hold one stock in your portfolio? Or that you are able to do this regularly on all/most of the stocks in your portfolio, week after week after week?
Yes I am able to do that on most of my holdings, week after week. Perhaps this is a temporary phenomenon which will quit working when the market switches into a long term decline or long term advance. If we get a decade of stagnation though, it is really going to look genius.
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Old 07-14-2018, 12:05 PM   #44
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Perhaps this is a temporary phenomenon which will quit working when the market switches into a long term decline or long term advance.
Bingo - you figured it out.
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Old 07-14-2018, 12:14 PM   #45
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But to some extent isn't that also a risk we face by investing in the market in general, even in index funds? We remove the diversity risk but we still face the possibility that the whole market might decline or stagnate for decades, longer than our lifetime monetary needs will allow us to wait. This is likely why most older people reduce their stock exposure so much. If you reduce risk though, you reduce gains.
I think it is somewhat different. Yes, an index holds the stocks that drop/stagnate, but it also holds the zoom-zoom-zoom stocks.

With your strategy, you are likely to have to "chase" a stock that zooms, sometimes selling, and re-buying at a higher and higher price, often missing some of that rise. Or you stop chasing it, figuring it is now over-valued, but the market keeps buying it up (and the index keeps holding it for all the price rise). And then if it drops from a peak, you are just sitting on it.

But if you've had the kind of gains you say, you've built in a big buffer against periods where it might not work so well. It's a little like what I say to the people who talk down equities, saying I could see a 50% drop. Yes, but it's not a meaningful comparison to fixed income, because that 50% drop would come from a peak that fixed income would never hit. In the long run, stocks tend to be above fixed income even after a big drop, if you look at it realistically, where the stocks were purchased over decades. They were not just purchased from the peak.

Not trying to dissuade you, this might work very well for you. I'd just suggest you be on the look-out for reversion to the mean, and building up a portfolio of stagnant stocks (dead money) over time.

-ERD50
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Old 07-14-2018, 02:37 PM   #46
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With your strategy, you are likely to have to "chase" a stock that zooms, sometimes selling, and re-buying at a higher and higher price, often missing some of that rise. Or you stop chasing it, figuring it is now over-valued, but the market keeps buying it up (and the index keeps holding it for all the price rise). And then if it drops from a peak, you are just sitting on it.
Been there done that (with Microsoft). I didn't chase it though, I just stopped trading it when it got out of what I had calculated to be the bargain range...and it kept climbing of course.

That is sort of the strategy I employ. I research a stock that is out of favor but not broken (like I would not have touched Kodak, Sears, or Radio Shack but did buy and trade Microsoft when it was in the $30 to $50 range). If you pull $100 in gains out of a stock which is trading in the $30 to $50 range over a couple of year period, is it really that horrible that you miss the run from $50 to $100? It isn't great to miss those gains, but the $100 profit is a nice bird in the hand.

Of course sometimes you will get stuck with a Nokia. That is one good reason for at least attempting some level of diversification, even if it is only a dozen or two stocks. The discount trading houses now do help with being able to diversify.
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Old 07-14-2018, 03:24 PM   #47
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Still waiting for tickers... other than XYZ Corp... but it sounds like you are a day trader that had a good run in the first half of 2018.... good for you but that is not what we do here... we tend to be investors rather than traders... more boring for sure.
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Old 07-14-2018, 03:38 PM   #48
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Still waiting for tickers... other than XYZ Corp... but it sounds like you are a day trader that had a good run in the first half of 2018.... good for you but that is not what we do here... we tend to be investors rather than traders... more boring for sure.


Iím probably one of the boring investors myself but I like to see what others are doing.
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Old 07-14-2018, 05:32 PM   #49
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69% is only around 2% gain per week for 26 weeks.

I found a mix of stocks that I would be ok holding long term but also have enough volatility that the price swings 2% per week, or with some of them if the price doesn't swing that much, the deep in the money LEAP options do (which I will admit is leverage and is more risky).

If I buy 1000 shares of XYZ corp which is trading for $25 a share on Monday and on Tuesday it is trading for $25.50 and I sell it I make $500 - $6 in commissions = $494.
<snip>
Umm.... XYZ is not a valid ticker symbol as far as I can see. Did I miss something?

Most folks on this site want to see something that validates claims of making

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only around 2% gain per week for 26 weeks.
If you are making that, GREAT! But, more documentation of how this was done is needed.
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Old 07-14-2018, 05:41 PM   #50
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I day traded for about 2 weeks and yes, with options & 4 screens it is possible. However it is nerve wracking. After 2 weeks, I went to simpler options.

So if he's doing 4 legged options + margins, believable. But in the long run (>1yr) it may even out lower. It has to be approached as a 60 hr week job IMHO
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Old 07-14-2018, 06:01 PM   #51
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69% is only around 2% gain per week for 26 weeks.

I found a mix of stocks that I would be ok holding long term but also have enough volatility that the price swings 2% per week, or with some of them if the price doesn't swing that much, the deep in the money LEAP options do (which I will admit is leverage and is more risky).

If I buy 1000 shares of XYZ corp which is trading for $25 a share on Monday and on Tuesday it is trading for $25.50 and I sell it I make $500 - $6 in commissions = $494. If late afternoon Tuesday it is trading for $24.75, I might buy it again. It then falls to $24 on Wednesday because of trade war worries and I am a little sad but go get ice cream for $2.50 single scoop. I check back Thursday and the stock is back to $25 and I sell, making $250 - $6 commission = $244. Friday I take the day off and don't trade.

My weekly gain is $494 + $244 = $738. Expenses are $12 commissions and $2.50 single scoop ice cream cone.

Weekly % gain is $738/$25,000 = 2.95% and yet XYZ corp started the week at $25 and ended the week at $25.

This may sound unrealistic, simplistic, foolish and stupid but is pretty much exactly how I have creeped up on $90,000+ in realized gains and a boatload of commissions and ice cream cones.

Edit: I do have some stocks which I have had to hold for much longer in order to realize gains, but since I try to buy reasonable quality stocks with positive earnings, I don't fret too much if I have to hold them. I would miss out on a huge upturn in the market and likely get beaten by the index. In a volatile flat market though I think the strategy, while having risk, can work...or at least it is working so far. In a down market I would pretty much be in the same boat as everyone else, although not nearly diversified enough, holding about 10 to 20 stocks. Diversification is supposed to be a free lunch but is hard to do with limited funds if you are not just buying index. I have not been able to find enough volatility in index and index LEAPS though to do what I am doing, although I have tried some with SPY.



But are you doing that with 100% of your money? If so, I would never want to take that kind of risk...


I am flipping pref shares and grabbing their dividends.... Just checked and my weighted avg return is at 49%.... even calculating worst case (the most money I had invested vs income earned to date) I am 28%... but I do not invest that much money.... it is just a hobby for me... just made about $3600 YTD with an avg of less than $14K invested...


I do NOT want to put in much more than I am doing... if you are not spread out in different stocks you can get hit hard if one goes down...
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Old 07-15-2018, 12:47 PM   #52
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Mostly FANG growth fund.
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Old 07-16-2018, 01:48 PM   #53
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It's easiest to be way up when you are less diversified.
Of course that means you are taking more risk and it is much harder to beat the averages using that same strategy over many years.
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Old 07-16-2018, 02:19 PM   #54
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It's easiest to be way up when you are less diversified.
Of course that means you are taking more risk and it is much harder to beat the averages using that same strategy over many years.
I dunno? My Dad started as a security analyst at Moody's after WWII and went on to be VP of the first US Mutual fund (General American) before running his own money management company until about age 85. He died at age 99 with millions invested divided up amongst 6 stocks. Over the years I do not remember him having more than 20 stocks in his portfolio (and those of his clients) and 12 was probably the average. He was a value investor who sold his Berkshire shares to WB and also turned down a job offer from the same.
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Old 07-16-2018, 02:25 PM   #55
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Old 07-16-2018, 02:42 PM   #56
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Nice!
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Similar question on VWINX
Old 08-08-2018, 05:18 PM   #57
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Similar question on VWINX

I also questioned what's going on with VWINX earlier this year.
In the first week of Feb, there was a pretty big drop of 4% for that week.
And now that we're in August, ytd performance is still slightly negative. I would have thought that a balanced fund such as this would have performed better (mix of 60% bonds 40% stock). I understand
intermediate bonds didn't do that well, could have dragged it down, but I would have thought the performance of the stocks would have offset.
This last month seemed to do better, so hopefully, we end the year on the upswing.
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Old 08-08-2018, 05:45 PM   #58
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I also questioned what's going on with VWINX earlier this year.
In the first week of Feb, there was a pretty big drop of 4% for that week.
And now that we're in August, ytd performance is still slightly negative. I would have thought that a balanced fund such as this would have performed better (mix of 60% bonds 40% stock). I understand
intermediate bonds didn't do that well, could have dragged it down, but I would have thought the performance of the stocks would have offset.
This last month seemed to do better, so hopefully, we end the year on the upswing.
VWINX has Conservative Allocation, with a relatively high expense ration of 0.22%, and holds almost 64% bonds. In an up market this year, my only bond fund (BND) has been consistently losing a little. The largest holdings are not FANG stocks (insteand holding JP Morgan, Verizon, J&J, Cisco, Pfizer, Suncor Energy, Chevron, Philip Morris, Intel, and DowDuPont). I used to hold both Vangard Wellesley and Windsor II, but dumped them about 10 years ago, as they were killing my returns over the long-haul. The 10-year return after taxes and distributions for VWINX is only 5.45%.
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Old 08-11-2018, 06:59 PM   #59
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My 401k ytd is 7.3% for 2018. In 2017, it was 18.5%
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Old 08-12-2018, 07:54 AM   #60
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