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  • The Day I Sold Everything: Questions Answered [View article]
    SM:

    I was contemplating for quite a while whether leaving a comment on this post. But, I am going to do it anyway, from a very different perspective among the commenters who have shed much of their investment insight.

    First of all, let me say that I am not a long term investor, I am a trader. More precisely, I am a swing trader. I am sure as soon as I said this, I will be met with eyes of disgust. But, guess what, this does not bother me. Frankly, the more the long term investors think traders are voodoo masters, the easier for us to make money.

    I believe you had sold everything. I applaud your decision, but suggest a different action.

    What you have experienced is a typical phenomenon of over-trading. Your portfolio carries too high of the risk that make you very uncomfortable. You made an excellent decision to reduce your risk. Do I (or you) know if the market will go up or down in the next day, next month, next quarter? No, but that does not matter. You sold because you cannot bear the risk.

    This is where, IMO, you are "smarter" than other long term investors. The others hold on, and try to numb themselves with theories of diversification or dividend investment, and sometime they lucked out, sometime they didn't. And when they didn't, the outcome is usually too painful to bear. I congratulate you for avoiding it.

    On the other hand, I think selling everything takes you from one end of spectrum to the complete other end. Your action is saying you believe there is absolute no chance the market will move up from this point on. I don't think this is your opinion. Your action is more a panic reaction than a calculated adjustment. I beg you to think: Do you really need to sell everything? If not, what is the percentage you should hold? Only you can come up this answer if you examine it hard and deep, but I guarantee that it is not 0%.

    Good luck with your investing.


    Jul 27, 2014. 11:43 PM | 3 Likes Like |Link to Comment
  • The Downside Of Buying Stocks On Sale Through Selling Puts [View article]
    Good articles and great comments, especially Meltdown's.

    We can debate to death the pros and cons of selling put, but the missing point is that any strategy requires an accompanying risk model. Without it, you are doomed to blow up your account.

    Would someone be interested in commenting how to build a risk model around selling put?
    Apr 15, 2013. 11:41 PM | Likes Like |Link to Comment
  • Dividend Stocks Are Cheap And So Is The Stock Market [View article]
    10,

    Aside from other commenter's valuable suggestions, I offer my two cents...

    I suggest you revisit your investing/trading thesis, why you buy these stocks in the first place. If the company condition did not change to invalidate your investing thesis, hold these stocks; if it did, sell it with no question asked. This approach does not guarantee to turn these two stocks into winners, but this is the approach I have been using personally and successfully.

    To rephrase, even with my best trading strategy, I can not tell you which specific trade/stock will turn into a winner, but aggregately, I know precisely what the probability and how much I can win each hand.
    Mar 31, 2013. 10:39 PM | Likes Like |Link to Comment
  • Building A Simple Trading System To Diversify Your Portfolio: Part 1 [View article]
    Hi Maik -- I mostly trade liquid equity options. Among the 0.3%, I attributes 0.2% to slippage and 0.1% to commission. This is both based on my experience, and I believe there is an academic paper specifically determines the cost of slippage to be (approximately) 0.2%. Also, I am fully aware that as a retail options investor, I certainly did not get the best execution and fee. For institutional investor, the fee may be lower.

    Looking forward to read your other articles. If you cannot find the article I referenced, let me know and I will try to google it again.
    Mar 18, 2013. 10:30 PM | Likes Like |Link to Comment
  • A Finite Amount Of Alpha? In The Real World, Hardly [View article]
    I have been pondering on this idea for quite a while ...

    I call the "zero sum game' theory a first-order, primitive approach. It is assumed that one's winning is based on "taking away" from his trade partner. The upside is that such a scheme is easy to design. The downside, however, is that it is unsustainable. Sooner or later, the trade partner will wake up and stop playing the game.

    Unfortunately, most of the Wall street products are built with the "zero sum" approach. Investors always get the short end of the stick.

    A higher-order approach is to design a scheme that you win a little, but I win a lot. Both of us get some alpha. This way, your trading partner is always "hooked" to the trading as they see it profitable. This is a much more sustainable structure and much more profitable as well.

    To get back to the topic of this article. Whether there is finite or infinite alpha very much depends on how the trading scheme is designed.

    Mar 18, 2013. 10:09 PM | Likes Like |Link to Comment
  • Building A Simple Trading System To Diversify Your Portfolio: Part 1 [View article]
    Maik,

    Thanks for writing up a detailed explanation and performance metrics for your system. Very helpful.

    The "trick", however, is that the cost of trading commission and slippage is omitted. By estimate, those two add to approximately 0.3%, which will render your system not-profitable.
    Mar 18, 2013. 04:22 PM | 1 Like Like |Link to Comment
  • Netflix Remains The Best Short On The Board [View article]
    I am neither long or short NFLX. The difficulty I see here is the lack of edge or catalyst. Short or long, you gamble either way.
    Mar 16, 2013. 02:32 PM | 2 Likes Like |Link to Comment
  • Time In, Not Timing Dividend Growth Stocks [View article]
    Precisely because we don't know where the market will go tomorrow, why not do both, time in and timing the market. To start, invest half of your capital in DG today, and save half for later.

    You could refine the model better than 50/50, but this ratio is a good place to start.
    Mar 16, 2013. 11:33 AM | Likes Like |Link to Comment
  • 'Sell In May And Go Away' Might Come Early This Year [View article]
    I stick with "sell in May". Still one more month to go with the bull run. No hurry to exit. Stay LONG.
    Mar 12, 2013. 06:47 PM | 2 Likes Like |Link to Comment
  • A Portfolio For A Young, Aggressive Investor [View article]
    Chris,

    This may not directly toward you specifically but for all young investors.

    Your first priority is to "invest in yourself". That does not mean you have to play in the stock market. Investing requires a lot of time. If at this stage of your life, your time commitment of developing a career is competing with investing, please develop your career first. Passive indexing is the best way to go.

    If you are passionate about investing and willing to commit time, and you have a talent with numbers, you investment goal is to SYSTEMATICALLY make every investment mistakes ever possible. If you can learn from all the mistakes in the next ten years, you still have thirty more years to go and you will be very rich at the end.
    Mar 10, 2013. 11:52 PM | 1 Like Like |Link to Comment
  • A Major Shift In The Market Just Happened. Did You Catch It? [View article]
    This is a good observation, but there are maybe more to it.

    Usually, vol reduction precedes price recovery. You could wait until vol get below 50 before committing to the investment. This way, you may miss a short initial reversal, but capture most of the long leg with a safer entry point.
    Mar 9, 2013. 03:39 PM | 1 Like Like |Link to Comment
  • The Young And Restless Update: This Aggressive Portfolio Is A Premium Performer [View article]
    Regarded,

    I am quite intrigued by this portfolio in comparison with your team alpha. Such a difference in style.

    Congrats on the 25% return so far, but is it sustainable? Or better yet, where is the edge? Why investors keep bidding up these stocks? The only thing I can think of is "hot money" leaving AAPL has to be somewhere else, which indirectly benefit this portfolio.

    Lastly, recommendation to robertpen (I cannot resist). He should keep buying AAPL till he gets 10% of the company. It is much more fun to SUE Tim Cook than begging with emails.
    Mar 1, 2013. 12:24 AM | Likes Like |Link to Comment
  • Confirmation Bias, Your Investments, And The Seeking Alpha Counterpunch [View article]
    Yes, totally agree. This was the exact point I try to make.

    As for how much cash allocation is needed, it depends on how good DGI win/loss characteristics is. My preference is a bit higher than 10%, but 10% is definitely far superior than 0.
    Feb 12, 2013. 12:09 AM | 1 Like Like |Link to Comment
  • Confirmation Bias, Your Investments, And The Seeking Alpha Counterpunch [View article]
    If you are fully invested, where do you get money to buy in a bear market? Your dividend is approximately 4%.

    I don't think I can change many DGI investors' mind. But, I merely point out you probably left some money on the table.
    Feb 11, 2013. 11:41 PM | 3 Likes Like |Link to Comment
  • Confirmation Bias, Your Investments, And The Seeking Alpha Counterpunch [View article]
    Tom,

    I have been reading some of your articles and comments, and shared your thoughts that DGI is a viable investing method. You present a balanced tone in approaching DGI, which I think will serve you well.

    The biggest issue I see with DGI today is that most investors are fully invested. There is no strategy to cushion when the tide "sink" all the boats. DGI investors have a tendency to say that the price does not matter, as long as the dividend remains the same. It is going to be a lengthy and painful process to go through a bear market.
    Feb 11, 2013. 10:20 PM | 2 Likes Like |Link to Comment
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