Down goes the Dow

random canuck wrote:

Have any of you ever read of the "2 minute portfolio" discussed by Rob Carrick in the Globe and Mail (Toronto/national paper in Canada). It's based on choosing the two biggest cap dividend-paying stocks from each of 10 sub-indices of the Toronto Stock Exchange. Historically (over more than 20 years) it has tended to out-perform the TSX. Last year it had a banner year, making 24% compared with the TSX 10.5%. So far this year it's again on pace to outperform. I re-jigged my "2MP" portfolio on 5 January this year and as of yesterday it was up 3.5% (over 16 days which means nothing admittedly) compared with 1.2% for the TSX.

So random canuck, how is your 2MP doing now, April 8?

Also, how do you define "dividend-paying"?

Here I go again, I just bought a TON of VOO, and will sell it shortly...

BTW, bought at 190.66

I got it, my goal was to sell as soon as it went below 190, and it sold at the low of 189.86

I will make about a hundred bucks after all is said and done. I didn't think it would go down too much, which is why I bought what I thought was a lot. Unfortunately I was right. The real drag was that the window to sell was so small, really I just got a bit lucky I think.

My gut told me to hold it until tomorrow, but I stuck to my original guns and sold. Hopefully I won't be clawing my eyes out Thursday. One thing I have learned, you really have to trade a lot on these bets to end up making anything.

no capisco

you bought high, sold low and made $100?

What kind of investment voodoo is that? How do I get some?

Covered a short.

Sorry about that, I'm new to all this. I only recently set up a brokerage account, and these are my first few trades. This was my very first short! Because of that, it was really the broker's decision to pick under 190 as a sell. I would have picked lower, left to my own devices. I was betting that there would be a dip after the fed minutes, only I thought the immediate dip would be greater than it was, I was hoping for around 100 points on the DOW, and that even if it didn't happen immediately, that it would happen the day after.

My broker talked me out of it, and said that since this was my first, to be conservative. Considering how much money I put up, I made effectively nothing, but I must confess, it is a real ride, "trading" like this. I guess it's like a horse race. This is only my 3rd transaction, at all. My prior VFINX was my second, and I "moved up" from there to a short on an ETF.

I think that I will quit this game while ahead, my heart can't take it. As my transactions have progressed, ending in this one, the saying "Fraught with Peril" comes to mind. I feel like a bank robber who keeps risking more and more each time, I can't help but feel like at some point I'm going to be "caught", and I haven't yet even traded any stock in an individual company.

You guys have more guts than I do. I will keep you posted, but I can see why people "buy and hold" at this point. "Going long" will save my life, although admittedly, I don't have as much life left as I would like. It's too complicated, and the relationship with my broker seems too much like a partnership, with me assuming all of the risk, then splitting the winnings.

After all is said and done, after I will have paid the tax on these 3 transactions, I will have made about $470-500.

Seriously, I feel like I either need to have a drink, or crash, I'm spent.

great post - that's why I got out of the active management biz - just too crazy

Just for the record, the terminology is thus:

You sold short at 190 and bought to cover at 189.

or

You shorted VOO at 190 and bought it back at 189.

And yeah, the broker makes money no matter what you do, right? he makes a commission? or if he doesn't, he's just playing with your money not his, hoping for a few scores on your dime. Pretty good deal for him.

I bought VOO not too long ago @ 179+. I'm still holding...no plans to sell.

You are wise to stop this speculation. Sooner, probably not later you will get burned. It is not investing, even the experienced traders using someone elses money do not have a good long term track record. The odds of being wrong are a lotbhigher than you think. This type of speculation is common at this part of the economic cycle. Your broker gave you good advice to be more conservative, I probably would have told you not to do ithe trade period.

Thanks for the terminology, but I can't really see myself doing this type of thing again.

The way it was explained to me was that I effectively "bought an obligation to buy and resell". Yes, he takes a commission. I can't tell if he's a good guy, or not. I have made a little bit on each trade, but I don't know if that's just to get me hooked. I still think that I would have done better had I held out for a better deal because I think that it will go lower yet tomorrow. I also "purchased" some sort of thing to "cover" any losses (not sure of terminology here) I may have had. My understanding was that I would still lose money in that case, only not as much. Also if I made money, as I did, I would not make as much.

He said I have been doing everything right, but I can't do it. I will admit it, I am scared. It probably has something to do with the fact that really the only thing I have been trading on is my assessment of where the general market will move in response to an event. I have been right on direction, but very conservative with my guesses on the magnitude of the move, or on the responsiveness of the instrument, like VFINX.

Maybe there's a better way to trade, but I can't see that any way is actually better, unless it involves insider information--all I know is that my "trading for dummies" approach, telling my broker what I think will happen and letting him suggest a mechanism to trade on that belief, has already given me an ulcer. I did crash, by the way, for about half an hour. I just passed out in a chair.

You also stated "I also 'purchased' some sort of thing to 'cover' any losses." The only investment that would allow you to do it would be options. Are you sure you did not purchase a spread that would execute at a buy point on VOO at 190, and another side of the spread that would limit your risk?

Nice try, but aren't you a week late? It's April 8 not April 1 .

Ghost of igloi, that wasn't my understanding. The broker said that they have a fund that goes the opposite of VOO, but that the degree of swing isn't proportional--it swings less when VOO goes up and it goes down, and it swings more when VOO goes down and it goes up, so that it doesn't interfere with gains as much as it works to limit losses. Sounded good to me.

In any case, things are down today but VOO is still above 90. My thought was that it would go down yet today, which it has, but not yet enough. I can't resist watching, even though the deal is done.

La gente, this is no fooling. I have normal retirement accounts, but came into a bit of money that I thought I could trade with. I must admit that I feel remiss, not knowing exactly what I have been getting into, but at my age I have come to trust experts in these matters. My broker is fairly young, 35-40, but he seems like a responsible guy, and works for one of the large concerns--plus, and this was important for me, his office is in a major bank building only a few blocks from me, and I can drop in to see him pretty much whenever I want.

It's not only the panic of the whole thing that I don't think i can stand, it is the complexity. I have followed this thread for a while (34:32 10k when I was young), as well as many others all over the web, and the amount of information to know keeps getting ever-larger, to the point where I have tuned out, and proceeded on the basis that I would only call my broker when I really felt like the market was going to move one way or another, then he would suggest a trade based on that guess, and on the fact that I don't know anything about trading, and that I'm scared to do it. There is no way I would ever try to do this myself

I talked to him this morning. I'm going to keep the account open, but I think it will be quite some time before I use it. Probably, I will use it to make a large buy, to hold, if there is ever a decent drop in the market.

A few things that it would be good if you understood:

(1) Your broker seems like a responsible guy. Great. Probably he also seems reasonably intelligent and knowledgeable, no? What you should probably understand here is that every trade has a buyer and a seller. Every time you buy based on the advice of your "responsible guy" broker there is somebody on the other end selling based on his/her "responsible guy" broker.

Think about what that means for the likelihood of you ending up ahead of the game through your active trades.

(2) Too much information forced you to tune out. Believe it or not that is a good thing. About all you really need to know is (as some brilliant poster on this thread has said) markets go up, markets go down, repeat. That, and that they go up more than down but that nobody can reliably predict the ups and downs.

Think about what that means regarding being in or out of the market or for getting in and out.

(3) You "would only call (your) broker when (you) really felt like the market was going to move one way or another"? So, somehow your "feelings" make it likely that you know better which way the market is about to turn than the millions of other individuals and institutions who are in the market? Because that is what the market is - millions of individuals and institutions out to make a buck.

I'm going to guess that the answer to this question about your feelings is "no".

Think about what that means regarding the wisdom in calling your broker to move money into or out of the market based on your "feelings".

- Trying to help you out here

POWERFUL and INFORMATIVE training website :

http://tinyurl.com/ns9xzqu

Simplicity, the 3 times I traded were on 3 Fed events. Yes, the direction I thought things would go was based solely on my feelings and thoughts, and nothing else, but here's the thing: Although "nobody can time the market" is a well-known saying, I have this neighbour, who can, who has, and who does. As proof, for years he has told me in advance of what he was about to do, then afterward would gloat about how it went. This has been going on for quite some time, he doesn't trade all the time, only when there are certain events, which is where I got the idea to trade on how I felt about the easiest, most obvious, and quickest event, anything to do with the Fed.

But here's the kicker: I think the guy is a complete you-know-what. I can't stand him, but there you have it. Really, his attitude was the only reason I ever tried this in the first place. I must admit, it felt absolutely fantastic to have told him how the trading was going. I must also admit that I lied to him about the amounts that I placed at risk. It was worth it, seeing him salivate like a dog.

One thing I have learned for sure is that you have to put up one heck of a lot of money to make anything in this way. Maybe it's because I have been so conservative, but maybe if I hadn't been, I wouldn't have made anything. Look at today, VOO never went below 190, and is now at 191.46--if I had done what I wanted and not what the broker recommended, I would have lost money. Yes I would have finished the transaction because the event, and its aftermath, are finished. But (and I haven't done any tight math on this) my feeling is that if I were to continue like this, I could make just as much at the end of the day by buying-and-holding some sort of value portfolio with the money, that included some muni's.

Finally, by "responsible", I meant that my broker worked to dial me back. I wanted to put in more each time, I predicted greater swings each time. He made me put in less, operate with a less volatile instrument to prevent me from doing something stupid, and this time to choose a more conservative target, and take some insurance. He was laughing this morning when I thanked him for saving me from myself, and told me something that I found shocking: he doesn't manage his own money. He doesn't even use his firm, he has someone else do it entirely. He said that things are different when you take a step back and can look at something more objectively. I thought this was a bizarre attitude from a guy who makes his professional living doing this kind of thing, but whatever.

One last thing, I strongly agree with those who say that you should never risk more in the markets than you can afford to lose.

To that I would add that the price of loss is not only financial, but emotional. Even just the thought of losing (as well as of winning) winds my jockeys up my butt.

If you're a "play" type person, by all means, go ahead and trade a little bit, but believe those who tell you not to risk more than you can afford to lose. In fact, consider it lost, and it will probably be a lot easier.

OK, what you owned was an inverse ETF to the VOO. You just need to understand that these are trading vehicles and not investments. That is not to say they are not valid, but one needs to understand the risk, and limit your exposure to moderate the risk.