The year at a glance:
12/31/10 12/30/11 percent
SPY 125.75 125.5 -0.2%
TLT 94.12 121.25 28.8%
GLD 138.72 151.99 9.6%
SLV 30.18 26.94 -10.7%
EEM 47.64 37.94 -20.4%
IWM 78.25 73.75 -5.8%
The clear winner for 2011 is U.S. long treasuries. Clear loser is emerging market stocks. Gold held its own for its 11th straight up year. Silver managed a loss despite a run back up to near all time highs.
There were mini-crashes in silver, and stocks. I got caught in both, and a few big losing trades made break even for the year a decent result. I think I am down just a tad for blog posted option trades. It was a deep hole that I dug with some ill-timed put sales in SLV, SPY and IWM. I had some decent winners with some put backratios.
Friday, December 30, 2011
Thursday, December 29, 2011
Jaffe: goals for 2012, and F-U-money
Chuck Jaffe at MarketWatch writes about his personal goals for 2012 (link). Included on this list are:
Taking care of myself first [health]
Reducing financial stress
I am big believer in balance, that money and finance are only one part of life.
As for #2, I sometimes talk about wealthy people not having to worry about their money. I no longer enjoy financial rollercoasters. Yes, options can be extremely volatile, but position size takes the edge off.
In conversation, I sometimes use the term F-U-money (yes, the expletive). It was a term I heard from President Ronald Reagan's Secretary of Treasury, Donald Regan. Regan talked about the president's close circle of advisers, and how he alone had enough money to really protect himself. Regan felt that he had enough money, that he could tell his boss F-U, even though his boss was the most powerful person in the world. If a person has enough money to tell their boss that, that in a nutshell is where the term comes from. And no, I don't have that much. It would be nice.
Taking care of myself first [health]
Reducing financial stress
I am big believer in balance, that money and finance are only one part of life.
As for #2, I sometimes talk about wealthy people not having to worry about their money. I no longer enjoy financial rollercoasters. Yes, options can be extremely volatile, but position size takes the edge off.
In conversation, I sometimes use the term F-U-money (yes, the expletive). It was a term I heard from President Ronald Reagan's Secretary of Treasury, Donald Regan. Regan talked about the president's close circle of advisers, and how he alone had enough money to really protect himself. Regan felt that he had enough money, that he could tell his boss F-U, even though his boss was the most powerful person in the world. If a person has enough money to tell their boss that, that in a nutshell is where the term comes from. And no, I don't have that much. It would be nice.
Monday, December 26, 2011
Swedroe: Indexing is a Rational strategy
Larry Swedroe (a passive index type of investor) makes the argument against investing based on news driven fundamentals (link).
>>
The reason is simple. If we know there are problems, the market surely also knows and that means the problems are already incorporated into prices. And why would you buy when things look safe, and thus valuations are high and thus expected returns are low, only to sell when risks show up, and thus valuations are low and expected returns are now high? That doesn’t seem like a rational strategy, yet it is exactly what most investors do, and it explains why they do so poorly, underperforming the very funds in which they invest.
>>
Many folks that I observe on the Internet do just that, investing in what WAS the best performer, which often turns into the worst performer going forward.
I like to look at fundamentals, technicals, sentiment, cycles and seasonality. Yes, there are successful investors that primarily focus on one kind of data, and mostly ignore the others. Yes, a person can become overwhelmed by amount of data as well. I tend towards simple in terms of analysis, but look at most indicators.
As I always tell others, finding your own style is perhaps the most important step in becoming a successful investor or trader. That successful style for you, may lean heavily towards one kind of data, or it may be a more holistic approach as I tend towards.
For the majority of average folks, the clearest path is the Swedroe approach, passive low cost indexing and asset allocation (the Boglehead way, link to forum). It has proven over time to beat 80% of other investors using every thing else. Of course it tends to give up the chance for grand slam home run investments, but only a very few have any realistic chance at those kind of results, and those few tend to have extreme talent, and/or extreme luck.
Obviously, as an active options trader, I stray far from the Boglehead way. For the vast majority of every day folks that don't have a burning passion for investments, I still believe that low cost indexing is the way to go.
>>
The reason is simple. If we know there are problems, the market surely also knows and that means the problems are already incorporated into prices. And why would you buy when things look safe, and thus valuations are high and thus expected returns are low, only to sell when risks show up, and thus valuations are low and expected returns are now high? That doesn’t seem like a rational strategy, yet it is exactly what most investors do, and it explains why they do so poorly, underperforming the very funds in which they invest.
>>
Many folks that I observe on the Internet do just that, investing in what WAS the best performer, which often turns into the worst performer going forward.
I like to look at fundamentals, technicals, sentiment, cycles and seasonality. Yes, there are successful investors that primarily focus on one kind of data, and mostly ignore the others. Yes, a person can become overwhelmed by amount of data as well. I tend towards simple in terms of analysis, but look at most indicators.
As I always tell others, finding your own style is perhaps the most important step in becoming a successful investor or trader. That successful style for you, may lean heavily towards one kind of data, or it may be a more holistic approach as I tend towards.
For the majority of average folks, the clearest path is the Swedroe approach, passive low cost indexing and asset allocation (the Boglehead way, link to forum). It has proven over time to beat 80% of other investors using every thing else. Of course it tends to give up the chance for grand slam home run investments, but only a very few have any realistic chance at those kind of results, and those few tend to have extreme talent, and/or extreme luck.
Obviously, as an active options trader, I stray far from the Boglehead way. For the vast majority of every day folks that don't have a burning passion for investments, I still believe that low cost indexing is the way to go.
Sunday, December 25, 2011
OT: Like Christmas Morning
It is Christmas morning, and I am taking some time to post an off topic story. I went to church on Christmas Eve, and one part of the service included a short video. One of the members has a son serving in Afghanistan. The son is home for Christmas. Earlier in the year, the church members assembled and sent over a care package, with snack food, toiletries, some small toys, and other items in short supply over there.
The young soldier thanked the congregation for that act of kindness, saying whenever they get a package from home in Afghanistan, "it's like Christmas morning." Surprisingly, the small toys had a great impact. They weren't asked for, after all, these are men getting paid, who can afford many small toys. The soldier was able to re-gift the toys to the children of the village.
Now for the typical middle class American kid, a Hot Wheels car will generate a shrug or be ignored. For a third-world kid, it became a prize, something they have never seen before.
Investors are in the upper half in this country because half the U.S. population does not save money at all. American investors are typically better off than those in other countries. Sure, we as a group would like to have more money. That said, a story about a Hot Wheels car becoming a prized possession serves to give me more perspective.
We have so much to be grateful for, not the least, is having a son, a soldier (not my son, but someone in my church) home for Christmas. I also know that especially for some, giving can be difficult, even sneered at. The need seems so great, making any difference seems so unlikely. There are two points to the story, about being grateful for what we have, and that sometimes the unexpected, even a small gift, can sometimes brighten someone's day, and turn an otherwise ordinary day into Christmas morning.
The young soldier thanked the congregation for that act of kindness, saying whenever they get a package from home in Afghanistan, "it's like Christmas morning." Surprisingly, the small toys had a great impact. They weren't asked for, after all, these are men getting paid, who can afford many small toys. The soldier was able to re-gift the toys to the children of the village.
Now for the typical middle class American kid, a Hot Wheels car will generate a shrug or be ignored. For a third-world kid, it became a prize, something they have never seen before.
Investors are in the upper half in this country because half the U.S. population does not save money at all. American investors are typically better off than those in other countries. Sure, we as a group would like to have more money. That said, a story about a Hot Wheels car becoming a prized possession serves to give me more perspective.
We have so much to be grateful for, not the least, is having a son, a soldier (not my son, but someone in my church) home for Christmas. I also know that especially for some, giving can be difficult, even sneered at. The need seems so great, making any difference seems so unlikely. There are two points to the story, about being grateful for what we have, and that sometimes the unexpected, even a small gift, can sometimes brighten someone's day, and turn an otherwise ordinary day into Christmas morning.
Saturday, December 24, 2011
Merry Christmas
Merry Christmas to all.
My TBT assignment was at first some bad luck, now some good luck. The market giveth and taketh. The assignment 6 cents in the money was a bit of bad luck, as was the down move on the Monday after expiration. The rally off that low, now makes it look like a stroke of good luck.
Long BRKB, TBT
My TBT assignment was at first some bad luck, now some good luck. The market giveth and taketh. The assignment 6 cents in the money was a bit of bad luck, as was the down move on the Monday after expiration. The rally off that low, now makes it look like a stroke of good luck.
Long BRKB, TBT
Saturday, December 17, 2011
4-0 for December (edited)
Four winners zero losers for the December option cycle. All winners were short puts, two for SPY, one in BRKB, one in TBT. The TBT actually closed in the money at 17.94, but as of this writing it looks like I didn't get assigned.
Going forwards, I only have one small position, short Jan BRKB puts.
I steered clear of the gold train wreck. I am still cautious, and see the latest bounce as more of a chance for bearish folks to get short than anything else. Long term, the gold uptrend is intact, but a lot of damage has been done in the short and intermediate term. Bullish seasonality alone is not enough to tempt me at this point.
/edit to add: crap, I did get assigned on TBT, and it is lower this Monday 12/19.
Going forwards, I only have one small position, short Jan BRKB puts.
I steered clear of the gold train wreck. I am still cautious, and see the latest bounce as more of a chance for bearish folks to get short than anything else. Long term, the gold uptrend is intact, but a lot of damage has been done in the short and intermediate term. Bullish seasonality alone is not enough to tempt me at this point.
/edit to add: crap, I did get assigned on TBT, and it is lower this Monday 12/19.
Saturday, December 10, 2011
Last two days=year in a nutshell
The violent down move and then up move during the past two trading days is the year in a nutshell. A lot of movement, but not a lot of change in prices. At some point the market breaks out from the range, but for now it is range bound. The scalpers seems to be tightening the range.
My schedule allows less time than ever for following the markets. I have a few small positions expiring 12/16, and only one open position for January 2012. I have little appetite for additional risk given my time constraints.
Long BRKB, SPY, TBT
My schedule allows less time than ever for following the markets. I have a few small positions expiring 12/16, and only one open position for January 2012. I have little appetite for additional risk given my time constraints.
Long BRKB, SPY, TBT
Saturday, December 03, 2011
V bottom
The stock market just had another V-shaped bottom. Supposedly these are rare, but that makes two V's in the past few months.
I was not, and tend not to be nimble enough to make money during fast moving markets.
Some other writers are noting the big daily movements, but very little actual movement year-to-date, or month-to-month.
Overall, I believe 2011 has been a difficult often frustrating year for many traders, myself included. Like the broad stock market, I am oscillating just slight above and below the break even mark for my trading account.
I'm sure there will be some blaring claims by a few who did well, because there were some exceptional moves. I'm not so sure that those making those claims have that much of a repeatability factor. As always I read any claims, especially those that don't have an audited track record, with a large grain of salt.
I was not, and tend not to be nimble enough to make money during fast moving markets.
Some other writers are noting the big daily movements, but very little actual movement year-to-date, or month-to-month.
Overall, I believe 2011 has been a difficult often frustrating year for many traders, myself included. Like the broad stock market, I am oscillating just slight above and below the break even mark for my trading account.
I'm sure there will be some blaring claims by a few who did well, because there were some exceptional moves. I'm not so sure that those making those claims have that much of a repeatability factor. As always I read any claims, especially those that don't have an audited track record, with a large grain of salt.
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