IBDaMann
Well-known member
If you examine it closely, it differs not from a gambling addiction.
I predict that the S&P 500 will be well under 5,000 by September 30th
- Thread starter Walt
- Start date
Not the big payday, but a nice little bump.
An "online investing seminar" would want to deliver profits quickly, so would be selling "picking up nickels in front of a steam roller", or better yet picking up $20 bills in front of a kill bot. This is more putting down nickels in front of a steam roller. I lose a bit every week or so, until I have a huge payday.
No, I have very little formal business education. I do have a Masters in Engineering, and half of a PhD in Engineering. It was from a top school, which is a slightly different claim than a top program.
Do you have car insurance, homeowners insurance, life insurance. even health insurance? You pay a bit in every year, so that if something bad happens you do not lose a huge amount. Losing a bit every week in hopes that there will be a huge payday in a reasonable amount of time is considered a disciplined, but advanced strategy.
Maybe I am taking on more than I should, but I have made quite a bit of money taking on more than I should, so there is that.
Assuming there is a big downward move in the next year, what would be a better strategy to take advantage of it? Buying puts, along with buying the entire market, allows me to profit off of both ups and downs in the market. A conventional short would more cancel out buying of stocks, making any profit almost impossible.
Both customers and casinos are making bets. One group will win overall, and one will lose overall. Do you know why there is that division?
cawacko
Well-known member
Your insurance analogy does not work. Insurance protects you from disasters. You are rooting for the disaster so you can get paid, which is the exact opposite of how insurance works (unless you hate your spouse or you were a NYC landlord in the late 1970s).
And you still have not answered the core question. If this is a disciplined strategy, what is the actual track record? So far, all you have acknowledged is a string of losses and a hope for a home run.
you are correct. insurance is not a windfall - it is designed to only "make you whole again", not to profit or gain in anyway
IBDaMann
Well-known member
Incorrect, in the sense that you are trying to imply that everybody is gambling. That is not necessarily the case with trading, but it can be. Gambling is all one can do in a casino. The casino is purely random and the odds are against you, but induces an adrenaline response that can become addictive. Trading offers you a wealth of information to put the odds in your favor and the results under your control.
In your case, you are foregoing all the available information in order to maintain the thrill of the purely random gamble. As a result, you make really stupid "bets" when you could have made intelligent trades. Whenever one bases such decisions on emotion instead of reasoned analysis, the wrong answer results most of the time. Whenever one bases such decisions on TDS, the wrong answer results always.
Enjoy.
No, I am seeing a disaster on the way, and planning accordingly. My investment does not cause the disaster anymore than the weatherman causes the rain.
No, I have not. I have made a short string of gains, not losses. The strategy calls for a string of losses before a big gain, but the string of losses are theoretical.
Many long term derivative strategies have a period of losses before a hopeful huge win. Because each of the investments can be seen as discreet, that might look weird to you, but it is perfectly normal. If you invest in a house, you "lose" money up front by buying the house, then "lose" money by fixing up the house, only to hopefully make money off selling the house; a lot of losses before a hopeful big win.
Taking a risk is not about gambling. When investing, risk should not be avoided, for it is one of the biggest return generators. Risk should be managed. If you do not want risk, get a bank account paying 0.5% interest. Sure you will lose money when adjusted for inflation, but there is no risk.
Risk management is about taking lots of risks that counter each other. It is about dialing the risk up and down until you find the perfect level. It is not about avoiding risk.
Most of all it is about finding when the risk has been misestimated by the market.
I have never seen a situation where "all available [market] information" agrees. The fact is that valuations as a multiple of earnings are at an all time high. There is good reason to believe that the market will drop.
cawacko
Well-known member
You wrote all that and still didn’t answer the question. List the trades and the net results. If this approach works, show the numbers.
IBDaMann
Well-known member
Would you mind elaborating on this "disaster" that you are seeing, that is "on the way," for which you are planning accordingly?
All the addicted gamblers say this. Every single one of them.
True.
Trading is not investing.
All non-systematic risk should be avoided.
Always.
That still has risk. There is risk in everything.
There are nonetheless several types of risk in a simple bank account.
Nope. You are describing "diversification." Risk management is a broad field of study.
In some cases it is. In some cases it is about transferring risk. In some cases it is about mitigating risk. In some cases it is about simply accepting the risk.
So you believe that a market correction is forthcoming. Great. Those happen all the time. Why do you believe this market correction will be a market crash?
That has happened a few hundred times since July. Please tell me that you have a significant point beyond this.
Every time an option pays off, my strategy would have worked. It becomes a question of time. If you start the strategy too much before the payoff, you will lose money.
Let me give you a simple example, one day the S&P 500 will drop by 20%. That is not an if, but a when. It will happen, sooner or later. If I buy SPY(an S&P etf) puts 5 weeks off at $645 every week for $5, then when it drops by 20%, I will have made more than $176 per share, so for five weeks $545. That means that as long as it happens in less than 109 weeks, I have made money.
That is an oversimplification, but it explains the basic idea. It is one of the simpler strategies for investing in options. Given that exact dates of moves are tough to estimate, it is a popular strategy.
The oversimplifications are that options contracts are for a 100 stocks, and I am buying more than one of them. The stock movement does not need to be exactly 20%, can be greater or lessor. If you are willing to sell and buy a little on the ups and downs, and there is some market volatility, you can make some money while you wait for the big payout.
Enjoy your 0.5% interest on your savings account. It is fully insured by the FDIC, so has no risk.
Even something as simple as a broad stock/bond mix will have its ups and downs, but overall will return 10+% a year... If you accept the ups and downs, you can make some real money.
Freddy Figbottom
Was it me?
he's into cosplay and he's likes being a Parisian fashion model.
Freddy Figbottom
Was it me?
to keep bifurcating society along financial lines, as big bankers feel they must cull society on purpose, to replace god?
IBDaMann
Well-known member
Economics is not your strong suit. Ask me how I know.
Economics is definitely not your strong suit. Ask me how I know.
... yes, exactly ...
This is a very stupid statement.
If you accept the ups and downs, you can lose some serious money.
Now that we understand the full domain of what is possible, please explain your short position in the markets.
They are trying to take away healthcare from 22 million Americans just to keep the government open for one more month. At that rate, no American would have access to healthcare in 16 months.
Freddy Figbottom
Was it me?
well just pass a law that people have to buy healthcare, that will help.
And if you want no chance of any downs, then you will also lose all ups, and will definitely lose money overall. The way to make money is to accept the ups and downs, but to try to make more in the ups than downs.
The market is overpriced, and trump is doing damage to the market. There is a big correction coming in the next 15 months.
I am even more heavily invested in the market than taking short positions. I may lose money in the correction, but over decades I will make money.
IBDaMann
Well-known member
Correct.
... or one might decide to actually invest the money rather than engage in trading.
Yes.
Yes. Learn the difference between systematic-risk and non-systematic risk.