That would mean if you buy 2 stocks, you are more likely to track or prosper than lose.
Self-directed Investing
- Thread starter asechrest
- Start date
That would mean if you buy 2 stocks, you are more likely to track or prosper than lose.
PaulS
Touchdown! Greaser!
See? He did the math!
Holy hell Paul, I pay LESS than a couple grand a year in property taxes. You need to come West!
It's probably more boring than Massachusetts, but we can go shooting or ask the neighbor if we can ride the horse around a bit.
Or we could "invest" some of your property tax savings in a four wheeler that goes really fast.
And even though they find ways around it regularly, we have the Colorado TABOR law that forces tax increases to be voted on by the People. The taxists claim that our society will fall apart because of it, of course. Haha.
$750/mo in property taxes. Good lord. The politicians really do own most of the population out east, don't they? I mean really OWN. That's sad.
Colorado would be one of my choices. The tax situation around here is ridiculous and it'll be going up again this year. This state has: Income tax, cap gain tax, excise tax, sales tax, high fees, property tax, toll roads, gas tax, cigarette tax, alcohol tax, carbon credit scheme and I've still missed some. I'll probably always have a base here, but I'm thinking I need to establish residence in a state with a better tax deal. We'll see.
Interestingly, we just elected a republican governor, as our last governor didn't seek reelection. He has a $1.5 billion deficit to overcome, we'll see how he does. Keep your eye out for our last governor, Deval Patrick, a friend of Obama, we call Deval Mini-me here, anyway, Deval has presidential aspirations.
comanchepilot
En-Route
That's ALOT of work - to find credit worthy small business and invest directly. And most small business people are pretty bad at creating things like business plans to get the business to work.
denverpilot
Tied Down
comanchepilot
En-Route
And thats what the market generally shows - almost every mutual fund is within 1 SD of the median gain . . . its HARD to outperform the market - either way - you have to be lucky and smart usually.
Do you own an off the grid home, Henning? Seashells even?
You want to know that will REALLY be valuable in the societal collapse? Liquor.
If you REALLY think that society will collapse buy a warehouse of all kinds of liquor. It NEVER goes bad [hard liquor] needs almost zero storage conditions - warm and even hot is ok, wont freeze in normal cold, can get wet, and its all still good inside the bottle. You'll be able to trade liquor for fuel, housing, food and all sorts of conveniences. . .
comanchepilot
En-Route
No, think more like title loans and kneecapping.
That comes naturally to a Sicilian . . . especially one with a Bonanno mothers maiden name [no worries -I never use it as a password hint]
Currently no, but I have lived over half of my life off grid producing everything we needed, and on some boats that's a considerable bit. I have also had an off grid ranch in TX with no water except some surface water tanks I made.
I own a few seashells because I live near the sea shore and occasionally find a pretty one.
EminiTrader
Cleared for Takeoff
OP asked me via PM to elaborate a bit more on my short trade.. Here's a little write up for you OP and anyone else that may be interested.
Here is a 2 year chart of the SPX and the VIX (Volatility Index). Generally speaking when the markets are strong the fear is low and therefore the volatility index goes down. When the markets are in turmoil and go down, the VIX goes up.
I could go into a very boring conversation about how the vix worth but nobody would read it - so simply put - market goes up - vix goes down, vice versa.
Notice that in Chart 1. The SPX is on the left the VIX is on the right
You'll see as the market (S&P) is making highs the VIX is making lows:
[/url][/IMG]
But lately there is a divergence between the SP/VIX. As the market makes higher highs the VIX is NOT at the lows, or making lower lows. The divergence is huge...
[/url][/IMG]
SO the divergence is reason 1. Reason 2 the market is overbought (based on my opinion and technical analysis) .
Now we COULD see a small bounce off of this trendline I drew on this chart:
[/url][/IMG]
If it does bounce I don't believe it will be much as the market is losing steam. Current oil prices have helped fuel this but that's only part of the story...
My expectations are that we will be in a range of 2100 down to about 1800. If we break the trendline above, we will go and test the 1800 level. Will I be right? Who knows.. I sure don't. But its sound analysis and I am willing to put my money out there on it.
In an earlier thread I made it clear that my MAX loss was 1700 (Per contract traded - or spread traded). now that is if the market rallies and goes aboves 2100 by december.
However, my stop is right past the highs. Should we break the highs - CLOSE above the highs then I will simply cut my losses and move on.
My goal on this is to earn $1500 per contract/spread traded. For this to happen I need the market to go to the 1850 - 1800 level - which is pretty viable if we break this trendline and the volatility increases.
Best of all I have until December to be right....
The charts above are of the SPX (S&P 500 Cash) but I traded on the SPY (sometimes called SPiders) it's the ETF of the S&P. I use the SPY because the options are VERY liquid with easier and faster fills...
Hope this helps!!
Here is a 2 year chart of the SPX and the VIX (Volatility Index). Generally speaking when the markets are strong the fear is low and therefore the volatility index goes down. When the markets are in turmoil and go down, the VIX goes up.
I could go into a very boring conversation about how the vix worth but nobody would read it - so simply put - market goes up - vix goes down, vice versa.
Notice that in Chart 1. The SPX is on the left the VIX is on the right
You'll see as the market (S&P) is making highs the VIX is making lows:
But lately there is a divergence between the SP/VIX. As the market makes higher highs the VIX is NOT at the lows, or making lower lows. The divergence is huge...
SO the divergence is reason 1. Reason 2 the market is overbought (based on my opinion and technical analysis) .
Now we COULD see a small bounce off of this trendline I drew on this chart:
If it does bounce I don't believe it will be much as the market is losing steam. Current oil prices have helped fuel this but that's only part of the story...
My expectations are that we will be in a range of 2100 down to about 1800. If we break the trendline above, we will go and test the 1800 level. Will I be right? Who knows.. I sure don't. But its sound analysis and I am willing to put my money out there on it.
In an earlier thread I made it clear that my MAX loss was 1700 (Per contract traded - or spread traded). now that is if the market rallies and goes aboves 2100 by december.
However, my stop is right past the highs. Should we break the highs - CLOSE above the highs then I will simply cut my losses and move on.
My goal on this is to earn $1500 per contract/spread traded. For this to happen I need the market to go to the 1850 - 1800 level - which is pretty viable if we break this trendline and the volatility increases.
Best of all I have until December to be right....
The charts above are of the SPX (S&P 500 Cash) but I traded on the SPY (sometimes called SPiders) it's the ETF of the S&P. I use the SPY because the options are VERY liquid with easier and faster fills...
Hope this helps!!
So you are betting on the effects of group psychology and mob mentality rather than investing in a product.
EminiTrader
Cleared for Takeoff
That's certainly a way of looking at it Henning.... I dont really use the term bet - but it's a very calculated bet... with a bit of experience behind me.
I'll make literally hundreds of trades this year and I guarantee you over HALF of them are going to lose... The way I structure my trades, I can be right only 30 % of the time and make money. 2014 I had a 44% win rate on my trades.
So every 10 times up to bat I struck out 5.5 times- but I made a decent living... food for thought
EminiTrader
Cleared for Takeoff
Henning - however, I must say - I do have a portfolio of dividend paying stocks as well
That's certainly a way of looking at it Henning.... I dont really use the term bet - but it's a very calculated bet... with a bit of experience behind me.
I'll make literally hundreds of trades this year and I guarantee you over HALF of them are going to lose... The way I structure my trades, I can be right only 30 % of the time and make money. 2014 I had a 44% win rate on my trades.
So every 10 times up to bat I struck out 5.5 times- but I made a decent living... food for thought
Understood, but your actions in the stock market have nothing to do with actual values of market products. As a financial professional you are using psychological profiling of a group's fears under known conditions to determine market values. The fears are driven by nothing but imagination though, so there is nothing to stabilize this function. All it does is generate more money from nothing but imagination. We have too much of that already. Money is not supposed to be its own commodity for this very reason.
Alexb2000
En-Route
OP asked me via PM to elaborate a bit more on my short trade.. Here's a little write up for you OP and anyone else that may be interested.
Here is a 2 year chart of the SPX and the VIX (Volatility Index). Generally speaking when the markets are strong the fear is low and therefore the volatility index goes down. When the markets are in turmoil and go down, the VIX goes up.
I could go into a very boring conversation about how the vix worth but nobody would read it - so simply put - market goes up - vix goes down, vice versa.
Notice that in Chart 1. The SPX is on the left the VIX is on the right
You'll see as the market (S&P) is making highs the VIX is making lows:
[/url][/IMG]
But lately there is a divergence between the SP/VIX. As the market makes higher highs the VIX is NOT at the lows, or making lower lows. The divergence is huge...
[/url][/IMG]
SO the divergence is reason 1. Reason 2 the market is overbought (based on my opinion and technical analysis) .
Now we COULD see a small bounce off of this trendline I drew on this chart:
[/url][/IMG]
If it does bounce I don't believe it will be much as the market is losing steam. Current oil prices have helped fuel this but that's only part of the story...
My expectations are that we will be in a range of 2100 down to about 1800. If we break the trendline above, we will go and test the 1800 level. Will I be right? Who knows.. I sure don't. But its sound analysis and I am willing to put my money out there on it.
In an earlier thread I made it clear that my MAX loss was 1700 (Per contract traded - or spread traded). now that is if the market rallies and goes aboves 2100 by december.
However, my stop is right past the highs. Should we break the highs - CLOSE above the highs then I will simply cut my losses and move on.
My goal on this is to earn $1500 per contract/spread traded. For this to happen I need the market to go to the 1850 - 1800 level - which is pretty viable if we break this trendline and the volatility increases.
Best of all I have until December to be right....
The charts above are of the SPX (S&P 500 Cash) but I traded on the SPY (sometimes called SPiders) it's the ETF of the S&P. I use the SPY because the options are VERY liquid with easier and faster fills...
Hope this helps!!
It's an interesting analysis and I agree the market is over bought. I have predicted that in the recent past and been proved wrong. The best reason I can come up with is that there just isn't an alternative, so money keeps coming into the market propping it up despite the fundamentals lacking enough support. I believe we'd see a much different picture if we were back in the days of the 10% CD's. Even 5% CD's. How knows what the real inflation number is, but it is certainly higher than bank yield and that keeps everything in play.
Of course even if the trend line is up, doesn't mean we won't take a correction and let you get out.
denverpilot
Tied Down
Better not keep it in the warehouse though, huge target. It'll be shot to hell and then set on fire long before all the liquor is gone.
dans2992
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Dans2992
That's certainly a way of looking at it Henning.... I dont really use the term bet - but it's a very calculated bet... with a bit of experience behind me.
I'll make literally hundreds of trades this year and I guarantee you over HALF of them are going to lose... The way I structure my trades, I can be right only 30 % of the time and make money. 2014 I had a 44% win rate on my trades.
So every 10 times up to bat I struck out 5.5 times- but I made a decent living... food for thought
How long have you been doing this and beating the market (not counting your dividend payers)?
What else do you trade besides SPY?
denverpilot
Tied Down
That's not really true. When he wins, someone else loses. The money isn't made out of nowhere in his trade. I generally understand and agree with much of your beliefs about the banking/government money printing system being quite cocked up, but his trade isn't a money creation product. His trade is a direct bet against someone else's bet, fair and square.
Sometimes the Chartists win. Sometimes the Market Timers and cyclical investors. Sometimes the Value hunters. Sometimes ... Hell, sometimes the inside info people win. (I don't pretend it doesn't still happen.).
Sometimes... Well there's a lot of trading strategies out there.
He's betting his imagination against someone else's. They shake hands on the bet via the trading system which also forces them to pay up, even if they decide later that their bet was dumb.
With a December date, a whole lot of things could happen between now and then. But he's not printing money out of thin air.
He's also not capable of changing the betting rules. Our government did that when they screwed the bond holders of GM, for example. If you can't let the game play by the rules...
dans2992
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Dans2992
What are some of your favorite energy picks?
Lockheed Martin.
Chip Sylverne
Final Approach
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Quit with the negative waves, man.
Better not keep it in the warehouse though, huge target. It'll be shot to hell and then set on fire long before all the liquor is gone.
Besides which, substitutes are easy. Just ask the folks in the hills of WV and NC. May not be as smooth, but gets the job done.
Chip Sylverne
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Quit with the negative waves, man.
And OP, don't forget, your best investment is always in yourself. I don't know what you do or what your skills are, but if you are willing to work like hell, you'll never regret being your own boss. But don't start with a debt overhang.
Last edited:
ClimbnSink
Ejection Handle Pulled
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Greg
Better not keep it in the warehouse though, huge target. It'll be shot to hell and then set on fire long before all the liquor is gone.
Same holds for stashes of ammo and gold bars.
PaulS
Touchdown! Greaser!
This is real good advice, up to the last sentence, which is still pretty good advice but very tough to do and usually one of the main reasons for the demise of a new business, under capitalization. When my partners and I started our business we mortgaged our homes to get working capital. We had a good business plan, and fortunately we executed it. We were very profitable but we always had loans and lines of credit. Ironically one of our biggest requirements for the line was to pay our taxes every April, the government doesn't give you net 30, they want their money when they want their money.
bflynn
Final Approach
That's true every time. Every time a stock is bought or sold, it's because one person believes it will be worth more to them in the future and one person believes it will be worth less to them in the future. And every time, one of them is right and one is wrong.
All that quants are doing is technical analysis that tries to edge a percentage point ahead or others.
asechrest
En-Route
OP asked me via PM to elaborate a bit more on my short trade.. Here's a little write up for you OP and anyone else that may be interested.
Here is a 2 year chart of the SPX and the VIX (Volatility Index). Generally speaking when the markets are strong the fear is low and therefore the volatility index goes down. When the markets are in turmoil and go down, the VIX goes up.
I could go into a very boring conversation about how the vix worth but nobody would read it - so simply put - market goes up - vix goes down, vice versa.
Notice that in Chart 1. The SPX is on the left the VIX is on the right
You'll see as the market (S&P) is making highs the VIX is making lows:
[/URL][/IMG]
But lately there is a divergence between the SP/VIX. As the market makes higher highs the VIX is NOT at the lows, or making lower lows. The divergence is huge...
[/URL][/IMG]
SO the divergence is reason 1. Reason 2 the market is overbought (based on my opinion and technical analysis) .
Now we COULD see a small bounce off of this trendline I drew on this chart:
[/URL][/IMG]
If it does bounce I don't believe it will be much as the market is losing steam. Current oil prices have helped fuel this but that's only part of the story...
My expectations are that we will be in a range of 2100 down to about 1800. If we break the trendline above, we will go and test the 1800 level. Will I be right? Who knows.. I sure don't. But its sound analysis and I am willing to put my money out there on it.
In an earlier thread I made it clear that my MAX loss was 1700 (Per contract traded - or spread traded). now that is if the market rallies and goes aboves 2100 by december.
However, my stop is right past the highs. Should we break the highs - CLOSE above the highs then I will simply cut my losses and move on.
My goal on this is to earn $1500 per contract/spread traded. For this to happen I need the market to go to the 1850 - 1800 level - which is pretty viable if we break this trendline and the volatility increases.
Best of all I have until December to be right....
The charts above are of the SPX (S&P 500 Cash) but I traded on the SPY (sometimes called SPiders) it's the ETF of the S&P. I use the SPY because the options are VERY liquid with easier and faster fills...
Hope this helps!!
Fascinating (channeling Spock). Do you use mostly technical analysis? During my little foray into swing trading, head buried in candlestick charts, I'd sometimes get a pervading sense that what I was seeing wasn't "real", meaning action within the chart was all in my head. Probably just my inexperience.
I do remember finding options neat (but complex) because they allowed me to substantially get in the game with my smaller cash amount (than most traders). Buuuut, I needed to do much more reading to feel comfortable with it.
Chip Sylverne
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Quit with the negative waves, man.
Perhaps I shoud clarify. I meant personal debt overhang. Someone above mentioned debt as being appropriate when yield is more than cost, and of course business debt is deductible. Personal credit card, personal auto etc. debt isn't. Don't know about student loan, never had one.
But I agree with you, sufficient capitalization is important, no question. But there are creative ways to do that too.
Chip Sylverne
Final Approach
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Quit with the negative waves, man.
Or somebody is front running the trade...
EminiTrader
Cleared for Takeoff
That trade is up VERY nice this morning $645 per spread traded
EminiTrader
Cleared for Takeoff
Fascinating (channeling Spock). Do you use mostly technical analysis? During my little foray into swing trading, head buried in candlestick charts, I'd sometimes get a pervading sense that what I was seeing wasn't "real", meaning action within the chart was all in my head. Probably just my inexperience.
Mainly technical analysis.. nothing too crazy - just stuff i've learned along the way. A little luck doesnt hurt too
sourdough44
En-Route
Max 401k(or similar), Vanguard Roth IRA(Traditional if unable Roth), diversify, listen to Bob Brinker, then read some books by John Bogle.
Avoid the sharks along the way, that's it in a condensed version.
Avoid the sharks along the way, that's it in a condensed version.
JoseCuervo
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JoseCuervo
He owns huge chunks of public companies you can purchase on your own. He always has, and, he has always made more of those investments.
Names like Coke, American Express, Wells Fargo, .....etc....
He also owns whole companies, including candy companies and a furniture store.
Again, like a Mutual Fund, you are paying him to manage your money buying shares of non-tech companies.
JoseCuervo
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JoseCuervo
Here is a list of Berkshire holdings as of last September.
You can go buy them and try and copy him.
Company Symbol Holdings Mkt. price Holding value Stake
American Express CompanyAXP151,610,700$87.99$13,340,225,49314.65%
Bank of New York Mellon CorpBK23,377,603$37.71$881,569,4092.08%
Chicago Bridge & Iron Company N.V.CBI10,701,110$38.19$408,675,3919.88%
Charter Communications, Inc.CHTR4,950,096$159.99$791,965,8594.49%
ConocoPhillipsCOP471,994$61.54$29,046,5110.04%
Costco Wholesale CorporationCOST4,333,363$139.80$605,804,1470.98%
NOW IncDNOW1,825,569$22.80$41,622,9731.71%
DIRECTVDTV30,000,000$84.12$2,523,600,0005.97%
DaVita HealthCare Partners IncDVA38,565,570$74.57$2,875,834,55517.95%
Express Scripts Holding CompanyESRX449,489$83.34$37,460,4130.06%
General Electric CompanyGE10,585,502$23.67$250,558,8320.11%
Graham Holdings CoGHC107,575$874.34$94,057,1261.86%
General Motors CompanyGM40,000,000$34.37$1,374,800,0002.49%
Goldman Sachs Group IncGS12,631,531$181.96$2,298,433,3812.90%
International Business Machines Corp.IBM70,478,012$155.54$10,962,149,9867.12%
Johnson & JohnsonJNJ327,100$104.00$34,018,4000.01%
The Coca-Cola CoKO400,000,000$42.44$16,976,000,0009.13%
Kraft Foods Group IncKRFT192,666$62.76$12,091,7180.03%
Liberty Global plc - Class A Ordinary SharesLBTYA10,401,007$47.54$494,463,8734.85%
Liberty Global plc - Class C Ordinary SharesLBTYK7,346,968$46.08$338,548,2851.31%
Lee Enterprises, IncorporatedLEE88,863$3.26$289,6930.17%
Liberty Media CorpLMCA4,000,000$34.90$139,600,0001.16%
Liberty Media CorpLMCK8,000,000$35.02$280,160,0002.33%
Mastercard IncMA4,715,400$82.93$391,048,1220.41%
Moody's CorporationMCO24,669,778$93.54$2,307,611,03411.83%
Mondelez International IncMDLZ578,000$36.30$20,981,4000.03%
Media General IncMEG4,646,220$15.16$70,436,6953.59%
M&T Bank CorporationMTB5,382,040$116.70$628,084,0684.07%
National-Oilwell Varco, Inc.NOV6,382,360$57.18$364,943,3451.48%
Precision Castparts Corp.PCP2,082,222$224.62$467,708,7061.46%
Procter & Gamble CoPG52,793,078$89.96$4,749,265,2971.95%
Phillips 66PSX6,202,400$59.81$370,965,5441.12%
Sanofi SA (ADR)SNY3,905,875$45.10$176,154,9630.15%
Suncor Energy Inc. (USA)SU18,477,730$28.72$530,680,4061.28%
Torchmark CorporationTMK6,353,727$51.60$327,852,3134.94%
United Parcel Service, Inc.UPS59,400$109.60$6,510,2400.01%
U.S. BancorpUSB80,094,497$41.51$3,324,722,5704.48%
USG CorporationUSG39,002,016$29.70$1,158,359,87526.95%
Visa IncV2,146,290$257.03$551,660,9190.35%
Viacom, Inc.VIAB7,708,200$69.56$536,182,3921.88%
Verisk Analytics, Inc.VRSK1,563,434$63.07$98,605,7820.95%
Verisign, Inc.VRSN12,985,000$56.42$732,613,70010.72%
Verizon Communications Inc.VZ15,000,928$46.84$702,643,4680.36%
WABCO Holdings Inc.WBC4,076,325$99.00$403,556,1756.92%
Wells Fargo & CoWFC463,458,123$51.51$23,872,727,9168.93%
Wal-Mart Stores, Inc.WMT60,385,293$87.84$5,304,244,1371.87%
Exxon Mobil CorporationXOM41,129,643
You can go buy them and try and copy him.
Company Symbol Holdings Mkt. price Holding value Stake
American Express CompanyAXP151,610,700$87.99$13,340,225,49314.65%
Bank of New York Mellon CorpBK23,377,603$37.71$881,569,4092.08%
Chicago Bridge & Iron Company N.V.CBI10,701,110$38.19$408,675,3919.88%
Charter Communications, Inc.CHTR4,950,096$159.99$791,965,8594.49%
ConocoPhillipsCOP471,994$61.54$29,046,5110.04%
Costco Wholesale CorporationCOST4,333,363$139.80$605,804,1470.98%
NOW IncDNOW1,825,569$22.80$41,622,9731.71%
DIRECTVDTV30,000,000$84.12$2,523,600,0005.97%
DaVita HealthCare Partners IncDVA38,565,570$74.57$2,875,834,55517.95%
Express Scripts Holding CompanyESRX449,489$83.34$37,460,4130.06%
General Electric CompanyGE10,585,502$23.67$250,558,8320.11%
Graham Holdings CoGHC107,575$874.34$94,057,1261.86%
General Motors CompanyGM40,000,000$34.37$1,374,800,0002.49%
Goldman Sachs Group IncGS12,631,531$181.96$2,298,433,3812.90%
International Business Machines Corp.IBM70,478,012$155.54$10,962,149,9867.12%
Johnson & JohnsonJNJ327,100$104.00$34,018,4000.01%
The Coca-Cola CoKO400,000,000$42.44$16,976,000,0009.13%
Kraft Foods Group IncKRFT192,666$62.76$12,091,7180.03%
Liberty Global plc - Class A Ordinary SharesLBTYA10,401,007$47.54$494,463,8734.85%
Liberty Global plc - Class C Ordinary SharesLBTYK7,346,968$46.08$338,548,2851.31%
Lee Enterprises, IncorporatedLEE88,863$3.26$289,6930.17%
Liberty Media CorpLMCA4,000,000$34.90$139,600,0001.16%
Liberty Media CorpLMCK8,000,000$35.02$280,160,0002.33%
Mastercard IncMA4,715,400$82.93$391,048,1220.41%
Moody's CorporationMCO24,669,778$93.54$2,307,611,03411.83%
Mondelez International IncMDLZ578,000$36.30$20,981,4000.03%
Media General IncMEG4,646,220$15.16$70,436,6953.59%
M&T Bank CorporationMTB5,382,040$116.70$628,084,0684.07%
National-Oilwell Varco, Inc.NOV6,382,360$57.18$364,943,3451.48%
Precision Castparts Corp.PCP2,082,222$224.62$467,708,7061.46%
Procter & Gamble CoPG52,793,078$89.96$4,749,265,2971.95%
Phillips 66PSX6,202,400$59.81$370,965,5441.12%
Sanofi SA (ADR)SNY3,905,875$45.10$176,154,9630.15%
Suncor Energy Inc. (USA)SU18,477,730$28.72$530,680,4061.28%
Torchmark CorporationTMK6,353,727$51.60$327,852,3134.94%
United Parcel Service, Inc.UPS59,400$109.60$6,510,2400.01%
U.S. BancorpUSB80,094,497$41.51$3,324,722,5704.48%
USG CorporationUSG39,002,016$29.70$1,158,359,87526.95%
Visa IncV2,146,290$257.03$551,660,9190.35%
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Chip Sylverne
Final Approach
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Quit with the negative waves, man.
When I looked at BRK.A many moons ago at $22k a share, I thought it was too expensive. coulda bought 4 at time. Didn't think the multiple was good. (Is there a kicking' yourself in the butt emotithingy?)
JoseCuervo
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JoseCuervo
OP asked me via PM to elaborate a bit more on my short trade.. Here's a little write up for you OP and anyone else that may be interested.
Here is a 2 year chart of the SPX and the VIX (Volatility Index). Generally speaking when the markets are strong the fear is low and therefore the volatility index goes down. When the markets are in turmoil and go down, the VIX goes up.
I could go into a very boring conversation about how the vix worth but nobody would read it - so simply put - market goes up - vix goes down, vice versa.
Notice that in Chart 1. The SPX is on the left the VIX is on the right
You'll see as the market (S&P) is making highs the VIX is making lows:
[/url][/IMG]
But lately there is a divergence between the SP/VIX. As the market makes higher highs the VIX is NOT at the lows, or making lower lows. The divergence is huge...
[/url][/IMG]
SO the divergence is reason 1. Reason 2 the market is overbought (based on my opinion and technical analysis) .
Now we COULD see a small bounce off of this trendline I drew on this chart:
[/url][/IMG]
If it does bounce I don't believe it will be much as the market is losing steam. Current oil prices have helped fuel this but that's only part of the story...
My expectations are that we will be in a range of 2100 down to about 1800. If we break the trendline above, we will go and test the 1800 level. Will I be right? Who knows.. I sure don't. But its sound analysis and I am willing to put my money out there on it.
In an earlier thread I made it clear that my MAX loss was 1700 (Per contract traded - or spread traded). now that is if the market rallies and goes aboves 2100 by december.
However, my stop is right past the highs. Should we break the highs - CLOSE above the highs then I will simply cut my losses and move on.
My goal on this is to earn $1500 per contract/spread traded. For this to happen I need the market to go to the 1850 - 1800 level - which is pretty viable if we break this trendline and the volatility increases.
Best of all I have until December to be right....
The charts above are of the SPX (S&P 500 Cash) but I traded on the SPY (sometimes called SPiders) it's the ETF of the S&P. I use the SPY because the options are VERY liquid with easier and faster fills...
Hope this helps!!
Keep in mind that Options are a Zero-Sum game. For every position that you make money on, the opposite side lost the same money.
For somebody to Buy a Call, somebody has to be willing to write and SELL the Call. There bet is just the opposite of yours. (Same for puts, etc.)
Options are great, if you are smarter and/or luckier than every one else. But, I don't think the OP would be well served, and, if a Broker is following the regulations, he would not be allowed to make the above trades.
Let's give him a couple of years to learn the basics of investing before allowing smarter option traders to clean him out.
JoseCuervo
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JoseCuervo
OP,
Here is some good advice, independent of what investment strategy you pursue.
Go open up accounts with Charles Schwab (regular brokerage account with a margin agreement signed and an IRA account). You can walk into one of their branches or do it online, either way.
Then, transfer the assets from your IRA at Sharebuilder into Schwab and fund the brokerage account with the "6 months cash" you have stocked away in your savings account.
For the rest of your life, you will now have your money held in a reputable, long established and safe institution that provides you as much service as you want. (You can also use Fidelity, or E-trade, but, in my opinion, Schwab is much better, offers much better service, plus has branch locations all over so you can wander in if you ever need one.)
It will make your life easier as your portfolios grow that they are all located at one company, and, as your situation changes, it can expand to meet your needs (custodial accounts, other retirement accounts, etc.)
If saving the $6-8 commission on a trade that Schwab, Fidelity, et al. is important to the profitability of the trade, then you don't have very good investment ideas. And, there is a lot more to running a brokerage business than an App on a phone.
Once you get your 6 months cash into your brokerage account, then you can start deciding what you buy. And, unless your job is real risky, you will likely be ok having your "6 months" in an investment with some sort of appreciation potential as opposed to the 0.08%.
asechrest
En-Route
JoseCuervo: Thanks for the comments. I am a reasonable guy and recognize my limits. My dabbling with swing trading and options (I was only Level 2 approved) was with a quite small amount of money that I had already set aside for that purpose and was willing to lose or nearly so. That's part of the reason commissions were painful; the cash I was playing with was small, and the strategy I was using called for relatively frequent trades. That limitation, as well as an admission that I needed lots more study, caused me to put the "trading" aspect on hold. Still, it was fun and I learned something in the process.
Right now, my goals are long term, and would not involve trading (vs. investing) without substantial additional study and practiced strategy, and that might never come to fruition.
Thanks for your advise and I will give it due thought.
Right now, my goals are long term, and would not involve trading (vs. investing) without substantial additional study and practiced strategy, and that might never come to fruition.
Thanks for your advise and I will give it due thought.
That's what I liked about USAA, they gave me 90 free trades for signing up.
Jimmy cooper
En-Route
It all depends on who is starting the company and how bright they are. Fred smith, graduated from Yale, the professor gave him a failing grade on his company startup thesis, he did it anyway, using his credit card to make the last payroll , went to Las Vegas, won a few thousand to keep going, it worked. The company is federal express, another started in his mothers basement, graduate of univ. Of maryland in business, had played college ball and realized a better jersey was necessary, now a billionaire in not too long a time, kevin plank, underarmour founder and president. Etc. etc.
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EminiTrader
Cleared for Takeoff
Since the 90's.. NOt always succesful at it either
took a long time.. I don't get into a position I can't hedge. For example the CAT trade I just closed. It's a real company but the chart still tell me the market was moving down. I put on the trade with limited risk that is defined before I ever enter. If I am wrong I simply get out quick.Dividend stocks are stocks I will keep forever. When they start falling down, I sell naked puts hoping to get exercised - and this allows me to "buy in " cheaper! If I am not exercised, I keep the premium and do it again until I am filled.