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Robert Zingale

 
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  • Debunking The '100 Minus Your Age' Rule Of Thumb [View article]
    The simulation chose the 5-yr periods without replacement. I was thinking of the returns from a go-forward perspective, but I could've adjusted for inflation.

    Thanks for reading.
    Mar 31, 2014. 07:54 PM | Likes Like |Link to Comment
  • New Strategic Volatility ETF Concept Shows More Promise Than Volatility ETF [View article]
    Completely agree. This strategy should be 5% or less allocation to a portfolio. Risk of ruin is real, but VXZ wouldn't protect you much during that event, as I would expect the VIX term structure to be extremely backwardated during a 1987-style crash. If you are concerned about drawdown, you can always set a stop loss.
    Mar 27, 2014. 08:10 PM | Likes Like |Link to Comment
  • Why Long-Term 401(k) Investing Doesn't Need Dollar-Cost Averaging [View article]
    Yes, regularly saving at any time interval is by default a form of dollar-cost averaging. However, there is a perception among investors that the more frequent you dollar-cost average, the better it works.

    Therefore, for most typical investors saving each year, the real decision is to save sooner in the year vs. monthly dollar-cost average in your retirement account (401k, Roth IRA, IRA).

    Although the outcome from this article is obvious to you, many individuals wouldn't have realized how many fewer days your savings will actually be invested if you dollar-cost average over the year.
    Oct 23, 2013. 06:51 PM | Likes Like |Link to Comment
  • Why Long-Term 401(k) Investing Doesn't Need Dollar-Cost Averaging [View article]
    By DCA-ing annually vs. monthly, one does not presume they can time the market. Both contributions would be agnostic of market conditions, but invest when you have available money.

    Also, if you don't think equity markets are going to go up over time (negative return expectations), then why would you invest in equities?
    Oct 23, 2013. 04:34 PM | Likes Like |Link to Comment
  • Why Long-Term 401(k) Investing Doesn't Need Dollar-Cost Averaging [View article]
    Very well said.

    I think the issue that arose while writing this article is that I've been in a situation where I am capable of frontloading my 401(k) without hurting my match. I hadn't realized how less common this is without hurting the employer match.

    This article is more relevant for individuals saving in a Roth IRA or IRA.
    Oct 23, 2013. 03:50 PM | Likes Like |Link to Comment
  • Why Long-Term 401(k) Investing Doesn't Need Dollar-Cost Averaging [View article]
    I agree with you that the difference is dollar-cost averaging annually vs. monthly. However, many would argue that dollar-cost averaging monthly is better vs. beginning of year annually (which is why I wrote this article).

    For many people, this might be a good-to-know but doesn't really matter for me because I can't contribute everything at the beginning of the year.

    However, if it makes sense for you to save at the beginning of year in a 401(k), Roth IRA, IRA etc., then you should go ahead and do so because monthly dollar-cost averaging doesn't really matter in the long-run.

    The order of importance for savers are as follows:
    1) Max out employer match (however their plan requires you to achieve this)
    2) IF POSSIBLE, contribute earlier vs. later
    Oct 23, 2013. 03:37 PM | Likes Like |Link to Comment
  • Why Long-Term 401(k) Investing Doesn't Need Dollar-Cost Averaging [View article]
    Erik - the point of this article is actually that you can't beat market returns. Which is why you shouldn't care about the timing of your contributions and invest it into the market as soon as you are able each year.

    Therefore, if you are investing over a long-term horizon, you shouldn't be overly worried about market volatility, which monthly dollar-cost averaging is meant to mitigate.
    Oct 23, 2013. 12:59 PM | Likes Like |Link to Comment
  • Why Long-Term 401(k) Investing Doesn't Need Dollar-Cost Averaging [View article]
    There are companies that do not cap the individual contribution limit of each paycheck.

    If your company's plan does not work for this strategy and you'd miss your employer's matching contribution, then don't do this.

    Also, this article is applicable to more than just a 401(k). This would also be true for Roth IRAs and IRAs. In these vehicles, you can directly control the timing of your contributions.

    The main take-away of this article is that for passive investors, investing your money each year sooner vs. later is better as the stock market has a positive expected return.
    Oct 23, 2013. 12:55 PM | Likes Like |Link to Comment
  • Why Long-Term 401(k) Investing Doesn't Need Dollar-Cost Averaging [View article]
    I understand many individuals can't invest $17.5k all up front. However, many savers don't max out their 401(k) each year.

    Therefore, if they are able to defer 100% of their paycheck in January to reach their $5,000 savings target for 2013 (for example), then this article is still applicable to them.
    Oct 22, 2013. 07:35 PM | Likes Like |Link to Comment
  • Why Long-Term 401(k) Investing Doesn't Need Dollar-Cost Averaging [View article]
    Because assuming a positive expected return, you will have more days invested and therefore a higher expected return. For example, investing $10,000 in 1972 will yield a higher ending value than waiting until 2012 to invest $10,000. The same occurs by investing in January vs. October but on a shorter scale.

    Overall, it is better to invest earlier even if you are unable to invest all in January. Saving everything in Jan, Feb and Mar would still be better than saving over the course of the entire year.
    Oct 22, 2013. 07:29 PM | Likes Like |Link to Comment
  • An Almost Risk-Free Way For Annual Return Of 50%+ [View article]
    Max drawdown is a measure from peak to trough. Therefore, Blix is correct that this strategy is much riskier than you are implying.

    When I wrote an article about a similar strategy back in 2009, I was contacted by hedge fund performing this. They said the biggest problem that you run into is the shares are really difficult and expensive to borrow. I don't think they are still doing the strategy anymore either.
    Dec 15, 2012. 01:50 PM | 7 Likes Like |Link to Comment
  • iPath S&P 500 VIX: Time To Prepare For Bearish Trading [View article]
    I guess I'm responding to "This risk is minimal at this point in time". This seems very subjective.

    I would agree with your strategy if you led with the cap and didn't suggest that a uncapped strategy is prudent.

    Also, I'm not sure how your losses are only limited to 15% when VXX went up 343% in Fall 2008. You are long one call and short two calls, so the one call has unlimited risk.
    Dec 11, 2012. 03:27 PM | Likes Like |Link to Comment
  • iPath S&P 500 VIX: Time To Prepare For Bearish Trading [View article]
    This strategy will get slaughtered during epic rises in VXX, which occur more frequently than you think (%s represent trough to peak over the same period of trading days in which you are selling these calls):
    * Summer 2006 (61%)
    * Spring 2007 (40%)
    * Summer 2007 (98%)
    * Winter 2007 (46%)
    * Fall 2008 (343%)
    * Summer 2010 (86%)
    * Spring 2011 (36%)
    * Fall 2011 (182%)

    Selling VXX calls before the Fiscal Cliff seems like risk seeking behavior.
    Dec 11, 2012. 02:38 PM | 1 Like Like |Link to Comment
  • Predicting VXX Intraday Price Movements [View article]
    This strategy wouldn't trigger the day trading rules because the n-count of trades are lower. If you'd like to see how I manage longer term positions in volatility, check out this article. http://bit.ly/JsqsLI

    I started using this technique beginning in 2012 when I got burned from backwardation during the craziness of August and September 2011.
    May 16, 2012. 03:06 PM | 2 Likes Like |Link to Comment
  • Mispricing In VXX Put Options [View article]
    This strategy has thus far turned out successfully. Based on the current rolling costs of VIX futures, there is even a "slimmer chance" than before that VXX will fall below $11 by June. I say "slimmer chance" in quotes because I thought there was a 0% chance of this happening when I wrote this article. I had to make unrealistic modeling assumptions to just get VXX slightly below $11.
    May 15, 2012. 01:16 AM | Likes Like |Link to Comment
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