Baby Boom Day Traders

[eytonxav]

I have certainly been guilty of periodically adjusting my asset allocation based on my view of the economic world, but hardly what I would call day trading as this article implies is taking place with boomers in their IRAs/401Ks.

I doubt this is being done in very large numbers, but who knows.

Anxious investors day trading with retirement accounts - ktuu.com

 

[Texas Proud]

An interesting article... but from what I read I would not call it 'day trading'... what a surprise... a headline that does not match the real story...

From the little bit of info that I know.... you can not trade on funds you do not have settled except once... IOW, you can sell a stock today, buy another today, but if you sell that stock before cash settles on the first trade it can freeze an account (I accidently did this on my mother's account which is not an IRA)... unless it is a margin account... and you can not have a margin account with 401 or IRA....

It might be that they are only using a part of their account (like one who said he was doing 1/3rd)... which would get you by this rule... but most of the examples are of people who trade often, but not day traders who are in and out of stocks in minutes...

 

[eytonxav]

They are probably terming it day trading due to higher frequency vs buy and hold. Certainly it would seem hard to day trade in ones 401K due to exchange and holding contraints, but in an IRA, it would be relatively easy if you can handle the transaction fees. I know Fidelity provides a variety of etfs with no transaction fees, but I am not sure to what extent they might limit trading in and out of those.

 

[haha]

Jeff Gundlach of Doubleline Funds did a webcast today. He feels that people are reaching for return, when in his opinion the return is unlikely to be there. He said, "you can lose money from fear, you can lose money from greed, but the greatest loss may come from need".

Ha

 

[Semiretired2008]

I trade a lot in my Roth accounts - not really day trading, but frequent trading (generally days to weeks at a time and sometimes in the same day)... Highest return I have is in this area.

 

[eytonxav]

. He said, "you can lose money from fear, you can lose money from greed, but the greatest loss may come from need".

Ha

I've lost before due to the first two cases mentioned, but hope to avoid the last one. I guess to some extent why I'm still behind my desk waiting for DD to graduate college

 

[Texas Proud]

They are probably terming it day trading due to higher frequency vs buy and hold. Certainly it would seem hard to day trade in ones 401K due to exchange and holding contraints, but in an IRA, it would be relatively easy if you can handle the transaction fees. I know Fidelity provides a variety of etfs with no transaction fees, but I am not sure to what extent they might limit trading in and out of those.

I agree... they used the headline to catch people.... but, from what I know (and it seems to be backed up by the SEC link below), day traders do not hold any stock at the end of the day... they buy and sell within minutes or seconds... you can not do this in FIDO or VG.... unless you have a margin account... you can not have a margin account as part of a retirement account...

But the headline 'Anxious investors trade a lot more frequently with retirement accounts' just does not get people interested in reading... I just wish for a bit more truth in the news...


Day Trading

 

[Chuckanut]

For what it is worth, most of the mutual funds I own have restrictions that prevent or discourage frequent trading. They don't want "In Again, Out Again, Finnegan" for a customer. I believe I benefit from that restriction in the long run.

I have yet to see any research done by the academic community that support the idea that day-traders, as a group, do better than we 'lazy' asset allocation folks - that is: people who set an asset allocation, choose no-load funds to implement the allocation, and rebalance once a year.

See Ferri's article here: http://www.rickferri.com/blog/strategy/don%E2%80%99t-let-models-doom-your-portfolio/

In particular, read his comments on Fama's theories about mid-way down.
As Mr. Ferri says at the end "The ideal portfolio is only known in retrospect."