Those of you who trade, do you ever stop?

[NW-Bound]

This investor actually loves volatility. Waiting for it to come back, patiently. Only in huge storms and waves can you find out who can sail.

Some prefer to travel in submarines. About 200 ft or so below the surface, it's calm as can be.

 

[Totoro]

Beware the monsters of the deep though!

Deep-Sea Creature Photos -- National Geographic

 

[Snidely Whiplash]

Which one would you listen to?

Both maybe? It doesn't have to be all or nothing. I'd take half off the table and keep going with the other.

I too trade or buy low when something in my "circle of competence" is on sale. I keep a core group of relatively stable blue chip equities and trade around the edges with maybe 10 - 20% of my portfolio. I only trade equities I'd be willing to hold for the long term and quite often keep my gains in them (ie. profits stay in "free shares"). I still find it enjoyable, keeps me mentally sharp, is profitable, and gives me great pleasure when I read those diehard indexers who came from the bogleheads board spouting off sarcastically about their broken crystal balls and how it can't be done successfully.

(Disclaimer: I think indexing is a fine investment strategy. i just found that I am personally able to beat average market returns quite easily by doing it my way. Your mileage may vary.)

 

[Fedup]

No, it's my Las Vegas fun. Why should I stop?

 

[Ed_The_Gypsy]

I have some individual stocks and make a trade about once a year, looking for value in the oil patch. When the dividends wear thin or I find I can't do better than Vanguard's VDE, their energy ETF, I will give up and put it all back into index funds.

 

[JacqJolie]

15% return in a year that the SP500 is up 5% - that is great.

I has to be understood that the last 3 or 4 years have not been normal and the market has went straight up with nary a significant correction. Volatility, the stuff that causes investors sleepless nights, has been at record lows. Any hack can generate market beating returns by using leverage (margin debt or levered ETF's) under these conditions. Buying the dip and selling the rip has worked every, every time. Will this continue - no way. At some point the party ends, and as Warren says - 'you never know who has been swimming naked until the tide goes out'.

I love to buy into dips in special situations, examples POT last year when the Russian cartel announced they would break ranks on pricing, APC after the Tronox ruling or AAPL when it broke down under 400. Someone else has mentioned GILD when the biotech scare went off three months ago - yeah I made some money off that one too.

I also buy stock and write at the money calls, aiming for 2% or 3% option premium gains per month. Or alternatively writing out of the money naked puts on stocks I would like to own at lower price points.

I am sure most of us have had the experience of being at a hot blackjack or craps table, having a significant winning streak and then giving every chip back to the casino.

So the key point is managing your money and your self. Pulling back , or altogether out, at some favorable point. When does the music end - I really have no idea. My thoughts are that so many are looking for a correction that the most likely scenario is that this bull move has yet some time left.






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Thank you very much for taking the time to respond wingfooted. I'm only about 60% invested right now with the remainder in cash/bonds so don't think I'm too aggressive (more because I'm on an RV roadtrip this summer and don't always have internet access, not really market timing). Am more concerned with learning how to best manage risk / reward and set things up properly so that it's replicable and consistent rather than making oodles in a one or two-off big win. Although that's fun too.
My weakness so far seems to be selling too soon. And trying to catch falling knives sometimes - would using a put strategy be helpful with that? Both things to work on.
Thanks again!

 

[Fermion]

I kept at it and now am at $85,000 and a bit over 60% return YTD. Other than a small Gilead spread I am all cash right now.

Question for those with trading accounts:

When you are unable to trade for awhile (vacation or other) and are mostly in cash, do you just leave it in cash to be ready for resumption in trading or do you park it in something?

I am going to be unable to trade for about 2 months. Part of me says just be happy with a 60% annual return but the other part doesn't want to leave $83,000 in cash just sitting there for 2 months doing nothing. I am not sure what I could earn in that short of a time period that would be worth the effort.

 

[wingfooted]

Question for those with trading accounts:

.

If you are up 60% YTD - why ask this board ? Great results !


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[check6]

When you are unable to trade for awhile (vacation or other) and are mostly in cash, do you just leave it in cash to be ready for resumption in trading or do you park it in something?

I continue to trade on vacation...works great when in Europe due to the time difference.

This last year has been terrific for trading. Meet some goals and will back off. Have been averaging 5 or so trades a day....mostly MU and airlines.

 

[Fermion]

I continue to trade on vacation...works great when in Europe due to the time difference.

This last year has been terrific for trading. Meet some goals and will back off. Have been averaging 5 or so trades a day....mostly MU and airlines.

My wife thinks vacation should mean not logging onto the internet...

 

[Rothman]

I trade, or more often market time focused index funds for quick 2-3% moves! one of my favorites recently IBB has been very good since even if you timed wrong hanging on a little longer made money since it's been on such a great long term rise. I do this with portion of traditional and Roth accounts, my taxable account has become illiquid because I bought a bunch of FBIOX a few years back and it grew so much I want to wait till retirement, have some $0 income years and harvest $73k capital gains for a few years unless it slows then I'll accept the 15% cap gain tax.


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[athena53]

I have a "sandbox" account at Fidelity for trading but started up buying and selling individual stocks again about 4 years ago. I seem to find it more fun in bull markets!

Yesterday I was watching a course on Financial Markets at Yale and Robert Swensen, the guy who got Yale's endowment fund form $1 billion to $16 billion in 25 years, said that he's concluded you need either 100% active investing, with all the resources that entails, or index funds with a planned allocation and periodic rebalancing. Nothing in the middle is as profitable over the long run.

Curious, I looked at all of the stocks I have now and those I sold last year. With one exception (a stock I bought on a whim and invested only $3,500) they all outperformed all indices.

I'm going to keep investing ("trading" probably implies more activity since I frequently have long-term gains). It was fund when I bought my first stock at age 20 and it's still fun at age 62! I'm now timing my trips to the fitness center so I can watch Cramer on CNBC.

 

[TomH]

Thank you very much for taking the time to respond wingfooted. I'm only about 60% invested right now with the remainder in cash/bonds so don't think I'm too aggressive (more because I'm on an RV roadtrip this summer and don't always have internet access, not really market timing). Am more concerned with learning how to best manage risk / reward and set things up properly so that it's replicable and consistent rather than making oodles in a one or two-off big win. Although that's fun too.
My weakness so far seems to be selling too soon. And trying to catch falling knives sometimes - would using a put strategy be helpful with that? Both things to work on.
Thanks again!

Good discussion. I trade and have been doing well since the big crash. I learned a lot after the crash and have been getting 40% to 100% returns. I recently sold LinkedIn after it doubled. It's best not to be too greedy (lesson #1 from the crash).

What is your exit strategy? Each stock you buy, you need to know when to sell. Don't look at the market. Know your own strategy but it looks like you are doing well.

Don't worry about 2 months off. Sometimes just being away from the market is a good break. Enjoy it!

 

[robnplunder]

I have set aside $250k to "trade" when I RE. Realistically, I am hoping to beat the market, and generate a little bit of side income. But of late, I am just getting too lazy and may just put the $250k in the rest of my main portfolio.

I started trading again in 2015 but with less "set aside" money. I call it my gambling money. So far in early Feb, I have 8% return. If I can keep that up, I am looking at 50% annualized return. That'd be enough for me to go to ER . But ... a two month positive return doesn't guarantee continuing success for the year.

 

[jim584672]

I read that if you trade too much the IRS could treat you as a "professional trader" and not an "investor". Since you are now a "professional" you need to pay Social Security and be treated like a business, utilize Schedule C for expense deductions.

"A taxpayer’s activities constitute a trade or business where both of the following requirements are met: (1) the taxpayer’s trading is substantial, and (2) the taxpayer seeks to catch the swings in the daily market movements and to profit from these short-term changes rather than to profit from the long-term holding of investments." -Forbes

 

[jim584672]

Just thinking about this...
So if you are a business as a "trader", then why not set up a 401k to defer those gains??

 

[harley]

I have a trading account I started around 1990 with $5K. Due to my extreme skill at picking which decade to start investing in I built that up to over $70K currently. Buying AAPL at a split adjusted $.75 helped too. I've bought and sold things off and on, sometimes making multiple changes in a week, other times not touching it for years. It's for fun money, or as Uncle Mick says, keeping the testosterone under control.

The past couple of years I've been selling all the stocks as best I can to not impact my taxes too much, and have set aside a Roth account to replace the taxable account. This will allow me to do any trading I want to without having to worry about short term CGs or any other tax implications. I've managed to sell about half the taxable stocks (thank you 0% CGs and tax loss harvesting). Most of the other half is in BRK.b, and my taxable income has increased, so I can't figure out how to sell now without a tax hit.

However, I've yet to buy a single stock in the Roth. My life has been real busy these past few years, plus I sort of think the market in general is priced pretty high. But that's why it's a play account. If I don't play for a few years, no harm, no foul. Eventually something (oil?) will call to me and I'll make a purchase and start again.

Edit: I forgot, that $70K is what's left after funding DD's Roth for 5 years. So closer to $100K. The '90s rocked!