# Buy and Hold Versus Trading



## Belguy (May 24, 2010)

"The least sexy of all investment strategies (and most boring!), a buy-and-hold strategy, will never see you hailed as a baron of Bay Street. Still, selecting a range of quality investments and hanging onto them through thick and thin has long been the consensus choice among investment strategists. Although recent turbulent markets have taken the shine off the safe approach, Gina Macdonald of Macdonald, Shymko & Company says the old way is still the best. She also reminds us that nobody has a crystal ball. If they did, there wouldn't be investment advisors because they'd be off on a beach somewhere. People can be right for a year or two, but not over the longer periods such as 10 or 20 years. Asset class investing, that is keeping a diversified portfolio over the long term is the way to go."

--Steve Burgess, Toronto Star, November 17, 2012

I would be particularly interesting in hearing about the ten and twenty year returns of some of the active traders out there who we often hear bragging about their one, three, and even five year returns or their profits on some stock that they bought a few weeks or months back and sold at a good profit. For those who have been actively trading for much longer periods of time, how has it worked out for you?

Just wondering.


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## thenegotiator (May 23, 2012)

Belguy.
20 years ago the cost of 1 trade /stock was not possible for the ultra low prices we have today.
u could absolutely do nothing with 50k for online trading purposes.
u also had several limitations in regards to internet speed and internet costs.
taking that into acct and if u actively trade I am a firm believer that buy and hold is ok but u can make more money trading.
u are absolutely right that u can also lose more money by doing wrong trades.
i recently lost a fair amount of money in 1 trade in a tech stock.
I have not recovered yet all the losses on that particular trade.
nevertheless i cut my losses and with the money that originated from that loss i already recovered 40% of my loss.
that is what i think.
there is no bragging in trading.
u trade .
u win than excellent.
if u trade believing that u can double ur money in 1 month u are dreaming.
20% in 1 month definitely.
loss of more than 20% , by all means.
it all depends on the trader .
I am holding a few stocks though.
very few.

i am answering because u say u are retired.
then i ask you the following .
if u managed to average a gain of 1 to 2 % gain (average) on a daily basis would u be o.k with it?
when i say trading is trading from stocks to ETFS .it does not matter how.
u have nothing else to do in ur life right?
u are retired.
look at it as a part time job for yourself.


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## Snuff_the_Rooster (Oct 26, 2012)

I firmly believe that buy and hold = full loser mode but it is commonly accepted axiom, which proves my thesis quite well.

Couch-tater site states 6.5% over very lengthy term which also does not change my belief one bit.

Now that I have browned-off couch taters I will state also my same firm belief that minimum 80%? of traders will under-perform couch taters.

There's too many people using the same old broken ideas that don't work because they're not complete enough as a system to give you edge. A trader is the only one, as Belguy states that even has a chance of out performance but they're not going to ever reach pot of gold with same old broken trading ideas that are mainstream and on every platform as standard set-up that everyone and their dog see.

I'm not going to argue even one post but Belguy, we make good returns and laugh at couch-taters, but I tell you I know hedge-fund guys that make me look like I am running backwards as fast as I can. They make me sick what they can pull off and I can't even keep up with conversation let alone trading. I feel like dumb monkey when I talk to them.

It's a whole different world out there my friend and you so underexposed to it it's not worth the effort for me to defend an idea you and most can't, or actually won't, fathom because you set so firmly in broken belief that taught to you from cradle to grave. When U see it it is like 2nd coming almost because it's that different from mainstream teachings. But how many get the chance? Every time I think I've seen enough its like Russian nesting doll and rabbit hole gets so deep I forget why I show up after 4 or 5 iterations.

How many people here ever hear of Bridgewater? You think that accident?

Anyway have a good night, I'm not arguing this point for even one post. It's like politics and religion threads. Pointless to drive in circle with people that have steering wheel locked. You either going to believe it or not and I am happy most do not but still willing to help regardless. If I have to play WSOP with full-on pro's right and left I lose every time I do believe.

As to above return I don't make anywhere near 1-2% per day on average and neither does anyone else that I know and I would be suspect of returns otherwise. This year I under 0.15% / day on average to tell U truth if U really need 2 know. - off cuff #'s.


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## thenegotiator (May 23, 2012)

snufftherooster.
i am not going to make a biggie of this either.
make it 1% a week then.
that will be 52% a year.
there is no couch potato portfolio that pays that.
since i do have a life and a job i cannot make 1% a day.
Belguy can.
he has to work for it.
we can go on and on about this.
i agree that it is useless to discuss it maybe?
basically u are telling me that u CANNOT MAKE 500 bux a week if u had 50k (only) as capital in anything just daytrading.
i do not care if ur long a stock or short a stock or etfs ... whatever.
by the way not all hedge fund guys do make money.
a lot of them also loose money.
u do not always win like i said a gazillion times here.

I will again reiterate that if a retired person with the will to learn to trade and to make money cannot make 1% a week in returns , then that person should definitely be a couch potato investor.
endeth here too


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## GoldStone (Mar 6, 2011)

Snuff_the_Rooster said:


> How many people here ever hear of Bridgewater? You think that accident?


I heard of Bridgewater, read Ray Dalio's papers and watched the videos. It's not an accident, but.....



> Bridgewater manages approximately $130 billion in global investments for a wide array of institutional clients, including foreign governments and central banks, corporate and public pension funds, university endowments and charitable foundations.


I have no chance in hell to replicate their strategies, or invest with them. So it doesn't matter to me one bit what it is that they do.


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## Snuff_the_Rooster (Oct 26, 2012)

GoldStone said:


> I heard of Bridgewater, read Ray Dalio's papers and watched the videos. It's not an accident, but.....
> 
> 
> I have no chance in hell to replicate their strategies, or invest with them. So it doesn't matter to me one bit what it is that they do.


Point is you can replicate enough of what they do but problem is how many people get to look through any good manager keyhole?

Bigger problem is people think they can't so they don't even try which goes back to why I don't bother most of time.


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## Eclectic12 (Oct 20, 2010)

Snuff_the_Rooster said:


> ...There's too many people using the same old broken ideas that don't work because they're not complete enough as a system to give you edge...


*shrug* - Who needs an edge? 

I want to make money with the time and skills I have, without running the risk of someone else running off with my money.
I know there are people making more than me and there's lots making less or losing a ton. 


Most "buy & hold" versus "active stock picking" versus "trading" threads don't end up being discussions.


Cheers


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## thenegotiator (May 23, 2012)

GoldStone said:


> I heard of Bridgewater, read Ray Dalio's papers and watched the videos. It's not an accident, but.....
> 
> 
> I have no chance in hell to replicate their strategies, or invest with them. So it doesn't matter to me one bit what it is that they do.


exactly.
forgot snuff in the rooster mentioned bridgewater.
u could not have said it better.
What and why do i care about bridgewater?
dallio is worth what 10 billion dollars by now?


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## thenegotiator (May 23, 2012)

Eclectic12 said:


> *shrug* - Who needs an edge?
> 
> I want to make money with the time and skills I have, without running the risk of someone else running off with my money.
> I know there are people making more than me and there's lots makeing less or losing a ton.
> ...



agreed 
everyone has their own way of trading right?
apparently snuff thought and thinks that POT is at a good price.
why?
can it go lower ?
can it go bankrupt?
who on earth knows?
i am not the CEO of potash but i have a feeling that they will be around for quite awhile.
same applies to CCO . does it not snuff?
maybe u think CCo will cease to exist.

just brought POT and CCO because those 2 are on the radar and i am using both as an example.
and continuing with the example snuff, what are the chances of CCo trading back at 20 bux level?
none?
lets say u bought 3k shares at 16.5 last week and the stock goes to 20 bux in who knows 3 months 6 months or whatever , i am sure u are going to make some coin.
is it a bet? 
u betcha


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## Snuff_the_Rooster (Oct 26, 2012)

thenegotiator said:


> by the way not all hedge fund guys do make money.
> a lot of them also loose money.


Mostly that's because media have everybody tied up in idea that auto erotic poster child of year like John Paulson is somehow hedge fund manager when all he is is monkey rolling dice with OPM. You don't lose 50% per for at least 2 year running and get moniker of hedge fund except in eyes of media and gullible public. Other problem I admit is hedge fund guys make cut of return so yes incentive to roll dice for every greedy bugger is there. I admit I almost close all positions 3 weeks ago and coast to cut at end of year but I play on like Dec 31 is as good as May 14 = any other day.

Sure we all lose money but I find it hard 2 believe actual hedge and not monkey lose that much on sustained basis. From memory I have 1 losing year -12.50% since early 2000's? so maybe my record not long enough for Belguy, and it not 2008 to show you I can be monkey too when I shut off brain completely. haha I cry uncle and tap out and come back another day.



> basically u are telling me that u CANNOT MAKE 500 bux a week if u had 50k (only) as capital in anything just daytrading.


Yes, on average over long period that's what I would tell you.


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## Snuff_the_Rooster (Oct 26, 2012)

thenegotiator said:


> What and why do i care about bridgewater?


same answer as I give gold. But I don't talk about 1% per day, then 1% per week when I know you ain't doin' it. You think per week and per day is that little difference? haha Go find fresh batteries for TI-84 and tell me annual on both.

This is why I don't argue pro+con on decision to eat hand grenades with people who don't know difference between night and day.



> apparently snuff thought and thinks that POT is at a good price.
> why?
> can it go lower ?
> can it go bankrupt?
> who on earth knows?


You even want to re-write my POT purchase as if U or other monkey making my trade. Go back and PM me with what trade I make in whole? What U think I lose if POT=0 Monday?

People can't get to square one without stepping all over laces in dark.

I definitely done with monkey-speak.


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## jcgd (Oct 30, 2011)

I'm not really sure how traders trade. I've read a few books on the subject, but even using some technical analysis I cannot figure out how a person is using a strategy to trade. For example, say I flip a coin 298772234959238477510103 times. Next I search within the results for patterns. Now I look for one of those patterns and make a bet based off a pattern that happened before. I cross my fingers and hope for the best, when in reality the result is as random as everything before it. I simply do not understand how a trade is predictable. 

I (think I) can, however, make a educated guess that a stock will rise from $10 to $12 over the next year. I can't understand how to make an educated guess that a stock will rise from $10.02 to 10.07 in the next 42 seconds. Maybe I'm missing something obvious, but I don't get how traders come up with their trades. 

Snuff_the_rooster, what exactly do you do and what is your investment style? If a person has zero interest in overseeing their investments do you still think couch potato is a fool's game?


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## thenegotiator (May 23, 2012)

my first ignore ever on this site.
it feels good.


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## scomac (Aug 22, 2009)

Belguy said:


> I would be particularly interesting in hearing about the ten and twenty year returns of some of the active traders out there who we often hear bragging about their one, three, and even five year returns or their profits on some stock that they bought a few weeks or months back and sold at a good profit. For those who have been actively trading for much longer periods of time, how has it worked out for you?
> 
> Just wondering.


Lots of near unintelligible bluster. Not much substance. Now, aren't you glad you started this thread, Belguy?


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## Square Root (Jan 30, 2010)

Obviously, their trading skills exceed their language skills.


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## kcowan (Jul 1, 2010)

belguy likes to start threads. They all involve quoting some reputable source like the Torstar or CNBC. They never involve his position nor his experience. Then he sits back and watches. I think he does it as a break from watching cartoons. But he has never taken away anything from this forum on changing his investment approach to my knowledge.

(Yes the Ignore button works well, TN! I only see belguy when someone else quotes him.)


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## Snuff_the_Rooster (Oct 26, 2012)

jcgd said:


> I'm not really sure how traders trade. I've read a few books on the subject, but even using some technical analysis I cannot figure out how a person is using a strategy to trade. For example, say I flip a coin 298772234959238477510103 times. Next I search within the results for patterns. Now I look for one of those patterns and make a bet based off a pattern that happened before. I cross my fingers and hope for the best, when in reality the result is as random as everything before it. I simply do not understand how a trade is predictable.
> 
> I (think I) can, however, make a educated guess that a stock will rise from $10 to $12 over the next year. I can't understand how to make an educated guess that a stock will rise from $10.02 to 10.07 in the next 42 seconds. Maybe I'm missing something obvious, but I don't get how traders come up with their trades.
> 
> Snuff_the_rooster, what exactly do you do and what is your investment style? If a person has zero interest in overseeing their investments do you still think couch potato is a fool's game?


I like your entire post as to me you're asking all the right questions with the amount of skepticism you should always have.

I don't care what your strategy is based on if you have no money management rules you are in trouble. When you say I am trying to predict something I don't really think it goes to that extent. I can't predict anything and I know it so I just make a move based on strategy I define and then hedge position in methods that I define. It is not just a one-way bet and leave it at that. It is working an entire system within the confines and taking advantage of moves that I can while I sit and wait. Included in that is always proviso for stock over-night 50% haircuts or flash crashes etc because we want to take advantage of such and not be victim of if possible. In effect I am like you in that I simply take-believe stock market as an unknown odds coin toss. You can make math equation around that.

For my method I don't take one-way bets on 5 ticks in 42 seconds as you say. That is not what I do as a rule. You're not missing anything. I will do them if they fit into my plan already but it's not an every week trade. You are on to more than you may know when you say it is easier to predict a move over 365 days than it is 42 seconds. I bet some smart person could use those ideas to make advantage o stock trading companies that you know are going to be around in 365 IE all big names + divs? I think there more than enough movement in all big names every year that it's just smarter to trade say KO than it is to roll dice on penny stock with value of -$10 similar to putting gun in mouth and pulling trigger before checking safety. Of course first mistake is putting gun in mouth as Argonaut state in other thread.

I have algo that is nothing but number running but it's applied to only certain trades which brings up another important point that I won't get into details but just put it out there for what is likely more whining and complaining but there are trades out there that are just better odds than others so I focus on them. I will tell you that i don't run algo on any stocks and 99.9% of retail traders will never make connection and put smarter plan together.

My first answer in thread was my best answer as to couch-tater game and I repeat. If they say 6.5% long term I accept math without reservation. To that I say it is waste of my time, but next statement was to trading crowd that I see in rough tally 80%? of traders under-perform couch-tater over same length as they make their own downfall.

It may be best you can do to couch-tater. I have seen much worse, to point that I usually tell people when they start bitching about their broker-advisor whatever, that are doing a poor job in their eyes that I never see one take client to 0 yet I see many self-run people do it all the time.

Last week I post little picture of actual position somewhere on forum where you see I make money if stock does -3% to + the world over next 6 weeks so what do I care for that period of time where stock moves really? I predict very little but stock moving in range. I adjusted that position based on recent market tank and now it's different but ready for next moves that I also cannot predict but is on little consequence as I have not been able to lose initial capital on trade that started in May, since Aug or so? Where in above position am I making a whole pile of predictions that need to be right or I go wash dishes? 

Problem is people don't want to work at learning game or they work at wrong end of stick IE become better TA stock picker. I laugh when i see that. I don't hold Big Bertha Head and hit ball with grip myself but as society fond of saying - to each his own. haha most foolish trading statement I ever heard but it spawn Elliot Wave for comedy so not all bad haha.


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## Snuff_the_Rooster (Oct 26, 2012)

kcowan said:


> belguy likes to start threads. They all involve quoting some reputable source like the Torstar or CNBC. They never involve his position nor his experience. Then he sits back and watches. I think he does it as a break from watching cartoons. But he has never taken away anything from this forum on changing his investment approach to my knowledge.
> 
> (Yes the Ignore button works well, TN! I only see belguy when someone else quotes him.)


haha old guy has wiley ways. I enjoy that on some level. I will try and quote less :smilet-digitalpoint


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## Sherlock (Apr 18, 2010)

Snuff_the_Rooster said:


> I'm not going to argue even one post but Belguy, we make good returns and laugh at couch-taters, but I tell you I know hedge-fund guys that make me look like I am running backwards as fast as I can. They make me sick what they can pull off and I can't even keep up with conversation let alone trading. I feel like dumb monkey when I talk to them.


There are some brilliant people, it's a shame they are not putting their intelligence to use in medicine or engineering instead of trading money around which generates no value to the world.


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## Sherlock (Apr 18, 2010)

kcowan said:


> belguy likes to start threads. They all involve quoting some reputable source like the Torstar or CNBC. They never involve his position nor his experience. Then he sits back and watches. I think he does it as a break from watching cartoons. But he has never taken away anything from this forum on changing his investment approach to my knowledge.
> 
> (Yes the Ignore button works well, TN! I only see belguy when someone else quotes him.)


For someone you're ignoring, you sure like to mention him a lot. Are you sure you don't miss him?


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## Sherlock (Apr 18, 2010)

Snuff_the_Rooster said:


> This year I under 0.15% / day on average to tell U truth if U really need 2 know. - off cuff #'s.


Isn't this a sign that it's time to stop trading and start being a couch potato?


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## Snuff_the_Rooster (Oct 26, 2012)

Sherlock,

Sad but very true statement in my eyes. That reminded me of something that I teach my kids from day 1. Don't ever be a martyr for a lost cause or one you can't change. The world will eat you up and spit you out and you no better off for it. Yes the world is hopeless to me, bu we here so lets deal and play game by rules in place.

I think medicine is big business and I am not sure what I think about ratio of good to evil. whoa we way off topic now haha.


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## Snuff_the_Rooster (Oct 26, 2012)

Sherlock said:


> Isn't this a sign that it's time to stop trading and start being a couch potato?



You do annual math on that? haha

I help you a bit with IRR calc I did at close month 9 or 10 of year. It state something like 52.8% to my bad memory or some such number for annual but I laugh as we know that is not sustainable into final 2-3 as we on lucky roll and above slope by country mile but we push bet and down some since then.


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## james4beach (Nov 15, 2012)

Buy & hold is a topic I've spent much of my professional life thinking about.

1. Buy & hold is only pushed as a "great strategy" because people got used to the 20 year bull market (secular bull), pre-2000. Sure, in a ridiculously long bull market you can buy and hold just about anything, and it will go up.

2. Japan's stock index is at the same place today as it was in 1983. That's 29 years without gain... so what happened to buy & hold here? It didn't work, because there was no secular bull. So buy & hold only works in a long-term bull market, and you're not always going to get one. Japan hasn't had one for 30 years. There is no guarantee that US, or Canada, will continue to have one either for the rest of your life. We might, nobody knows. The S&P 500 has gone nowhere in 13 years now.

3. Based on #2, this tells us buy & hold is *not intrinsically "safe" or "low-risk"*. Instead, it's actually a massive gamble -- for the duration of your investment life -- on whether the market is in a secular bull or bear. The reason we hear so much about using this strategy is that a ton of baby boomers had the good luck of making the right gamble into the 20 year American bull market. Because they succeeded, they came to the conclusion that buy & hold is a really smart idea. My dad for example bought mutual funds in his working years throughout the 80s and 90s, and it worked for him, so he thinks he's an investment genius. Now, go ask someone who tried buy & hold starting in 1999, or in Japan, and it's a totally different story. It's just a gamble in the end.

4. Now the industry's dirty secret... there isn't a single fund manager who does true "buy & hold"! Mutual funds and ETFs have turnover as they trade positions, and they tend to trade a lot. Many mutual funds turn over their entire portfolio within just a year or two! And indexes you say? Well guess what, that index changes too. They drop companies that no longer meet inclusion requirements, so they (wisely) drop companies who are failing and on their way to bankruptcy, and replace them with new additions. In the end, all index funds trade -- at a slow rate and low turnover mind you -- but they are trading. *So what "buy & hold" really means is: buy & hold our investment FUND, and leave the trading to us.* It's much more of a sales pitch for the industry than it is any kind of deep wisdom.

5. Based on #4, I suggest really that the key is to trade in a disciplined way, but don't trade too often: stick to positions for years, or until there's a compelling reason to drop a holding. Use a methodology. This trading activity is similar to what the index creators use. So yes you DO buy a basket of stocks, you DO hold them for years, but when you detect problem criteria (e.g. problems filing their financial statements, or market cap drops below a threshold, or negative earnings for X quarters) you ditch them! Buy & hold doesn't mean hold it forever, it means you hold it so long as it meets your criteria.

Personally, I think you should only dabble in individual stocks if you're bothering to read the company's financial statements. This means reviewing the financial statements every quarter, or at least the annual report. Since most people don't want to do this, I think index funds are the way to go.


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## Marino_238 (Apr 18, 2009)

/\ /\ /\ Well said 'james4beach'


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## Toronto.gal (Jan 8, 2010)

Belguy said:


> 1. Although recent turbulent markets have taken the shine off the safe approach...
> 2. She also reminds us that nobody has a crystal ball.
> 3. People can be right for a year or two, but not over the longer periods such as 10 or 20 years.
> 4. I would be particularly interesting in hearing about the ten and twenty year returns of some of the active traders....*who we often hear bragging about their one, three, and even five year returns.*


1. Though the above are not your words, but a quote, what would you say is your definition of 'recent'? 'Safe approach'? LOL, I didn't know there was one [minus the er]. 

2. Thanks for the quote/reminder, LOL. I actually do have one, but I guess not the 'safe' kind, but the volatile one.  









3. I don't think a single person has ever thought, or said that there is such a thing as being right all the time, but what is the harm is changing/mixing strategies during very long periods of volatility? 

4. Now, these are your words, so tell me, what is your definition of 'bragging'? 

You have asked the above question at least 6x this year, but why are you so curious when you don't believe what has been posted already & simply 'get a kick out of what they say'?

My question to you is why do you keep asking, when you know full well & have told us repeatedly that the only strategy you believe in/follow & pay attention to, is the buy & hold? How you & others invest here is entirely their business, however, your belief is so strong that you have ridiculed here those that trade a % of their portfolio by labelling them [us] as 'braggers/gamblers', and as though we had no skills whatsoever. 

Your 2nd most recent quote regarding this topic:
*'I get a kick out of all of the TRADING antics...'*

I think you forget at times that the purpose of forums is to exchange ideas/information & to offer constructive criticism, not to insult/mock/ridicule those you disagree with. Of course you're not the only one here guilty of doing that, but because of people like you, I have limited my comments & no longer waste my valuable time answering certain posts [aren't you glad that I'm no longer 'bragging' & that you no longer know what I buy/hold/sell?].

Having said the above, you're also very entertaining for sure & would not dream of putting you on my ignore list.


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## Toronto.gal (Jan 8, 2010)

Sherlock said:


> There are some brilliant people, it's a shame they are not putting their intelligence to use in medicine or engineering instead of trading money around which generates no value to the world.


You are making a lot of assumptions here.

Whether a person is a trader full or part-time, it does not mean they are not positive contributors to society. Do you know how traders, or anyone else for that matter, use their money? Do you know if they contribute to medical research, for example? Do you know if they volunteer their time?

Also, no need to be Einstein to contribute value to this world [in $$$ or otherwise]. Un-'brilliant' people are also very capable of contributing value to society, no matter what they do for a living.

And by the way, traders do provide a lot of services or 'value' as you put it, but you have been around long enough to know what these are.


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## Toronto.gal (Jan 8, 2010)

jcgd said:


> 1. I can, however, make a educated guess that a stock will rise from $10 to $12 over the next year.
> 2. I can't understand how to make an educated guess that a stock will rise from $10.02 to 10.07 in the next 42 seconds.
> 3. If a person has zero interest in overseeing their investments do you still think couch potato is a fool's game?


1. What is low/goes down, must *eventually *come up, hence I would not exactly call it an 'educated guess', but a given that a stock will rise & fall & vice-versa.
2. Have you ever followed any stock for say, 5 minutes non-stop? I would ask you to pick a very volatile stock and do this one day; I recommend BAC.
3. A person with 'zero' interest should not be doing it alone, JMHO.


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## jcgd (Oct 30, 2011)

I'm not trying to speak for others, and there will always be the issue of interpretations and such. For example, when I think of buy in hold - I say it is what I attempt to do. Which is buy undervalued companies and hold on long enough for them to be valued properly. For the next person buy and hold may be buying any old company (out of a hat) and coming back 20, 30, 40 years later. That to me isn't really a strategy if you literally just pick any old company. Although with many blue chips or whatever this might work out. My grandfather made off pretty well by buying mostly RBC stock as he worked with them his whole career. Is that skill, or luck? I think even he would tell you it's mostly luck.

The thing is, with most traders, who trade in seconds to weeks either can't, or (typically) won't tell you their strategy. Ironically with TA, the more people who know your strategy, the better it works. If someone asks me to explain my method I will say buy low, sell high, and throw you a copy of security analysis. I've got nothing to hide, I've got no special algorithm or top secret method. I don't try to go out and buy $10 stocks and sell them tomorrow for $12 as a flip. I try to buy $10 stocks today for $9 and wait till the sale ends. 

Ironically, I may be absolutely terrible at what I'm trying to do. If after five years or so couch potato is deep frying my butt I will simply switch to couch potato. I advocate couch potato to anyone who doesn't want to think about their investments. I advocate value investing to anyone who does. I'm not going to try to change anyone's mind (because that is a fool's game) but if you ask me what I think I'll tell you I like value investing. 

It's as simple as learning everything you can and exploiting some method that makes sense, but above all else WORKS. If couch potato works for belguy, great. If long term investing mixed with a trading method works for T-gal, great. If having two million in cash works for John Snow, great (well, something is working there).

So to sit here all day trying to convince everyone that your method is best... well... post up your entire record and prove it. I can't say my personal method is working or the best. I have no numbers to prove anything. In fact, my 1 years results say if I were to follow the sp500 (for my US account) I would be better off. I'll give myself the benefit of the doubt and give myself a few more years to make sure I suck. I have seen some pretty fantastic evidence that value investing works, but just because having bought certain companies would give me an edge doesn't mean I have the edge to find these companies in the first place.


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## jcgd (Oct 30, 2011)

Toronto.gal said:


> 1. What is low/goes down, must *eventually *come up, hence I would not exactly call it an 'educated guess', but a given that a stock will rise & fall & vice-versa.
> 2. Have you ever followed any stock for say, 5 minutes non-stop? I would ask you to pick a very volatile stock and do this one day; I recommend BAC.
> 3. A person with 'zero' interest should not be doing it alone, JMHO.


1. I wouldn't say it must come back up (maybe it's going bankrupt) but if the company is still fine and dandy, well, why wouldn't it rebound?
2. I haven't for any length of time but I will try that out with BAC.
3. Yes, you are right. But even someone with zero interest (unless they don't save at all) needs to open a savings account, or go visit a financial planner to set something up, etc.


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## Toronto.gal (Jan 8, 2010)

jcgd said:


> 1. I wouldn't say it must come back up (maybe it's going bankrupt)....
> 2. I haven't for any length of time but I will try that out with BAC.


1. Well, your 'educated guess' example was going from $10 to $12, not $10 to $0, hence I ruled out the bankruptcy aspect, lol, but of course that's always a possibility & I think u knew what I meant. 

2. You won't believe your eyes! [do this with other stocks as well for comparison purposes, but pick the ones with high volume].


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## rassmy (May 7, 2010)

I think the best way to invest in this market, where we have a financial hiccups every year or so, is to split your asset into 2, a core holding of quality dividend paying stocks that would be your buy and hold portion. The second portion is your trading that follow the big guy money flows in and out triggered by the current financial situations. 
If you look into the market movement in the last 3 years, it is clearly shows the 6 month cycle up and 6 month down, I would trade this period in and out, only buy the index when down and sell it at peak.


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## Cal (Jun 17, 2009)

^ I like to be paid to hold. Otherwise I would not consider it a longer term hold.


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## james4beach (Nov 15, 2012)

Toronto.gal said:


> 1. What is low/goes down, must *eventually *come up


You're kidding right? Nortel, Enron, Fannie Mae, Freddie Mac, AIG, Washington Mutual, and most tech stocks from the late 90s.

You absolutely must have an exit strategy, from any stock. There is no stock that you can simply "hold forever"


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## Toronto.gal (Jan 8, 2010)

Did you read my subsequent post james? 

There is no such thing as forever, so you're right on that point and yes, I always have a plan that includes entry/exit points & risk management.


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## thenegotiator (May 23, 2012)

Toronto.gal said:


> Did you read my subsequent post james?
> 
> There is no such thing as forever, so you're right on that point and yes, I always have a plan that includes entry/exit points & risk management.


I really do enjoy reading ur posts.
u do know i am ur fan right?:encouragement::02.47-tranquillity:


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## Sherlock (Apr 18, 2010)

Toronto.gal said:


> You are making a lot of assumptions here.
> 
> Whether a person is a trader full or part-time, it does not mean they are not positive contributors to society. Do you know how traders, or anyone else for that matter, use their money? Do you know if they contribute to medical research, for example? Do you know if they volunteer their time?
> 
> ...


But the financial industry has stolen a lot of very intelligent people who could otherwise be inventing new technology or curing diseases. I don't blame those people, most people will gravitate toward jobs that pay the best and working at a hedge fund will usually pay better than working at a lab. I know that when I was in university as a comp-sci student, the financial industry was the first choice of most students upon graduation.


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## james4beach (Nov 15, 2012)

Toronto.gal said:


> Did you read my subsequent post james?
> 
> There is no such thing as forever, so you're right on that point and yes, I always have a plan that includes entry/exit points & risk management.


Sorry I skimmed this topic too quickly. You're right, no problems there -- as long as you have a plan.

There are some people who actually do think you can buy and hold a stock forever


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## Belguy (May 24, 2010)

If there is no such thing as forever, why is it taking me forever to become rich from the stock market????:frown::grumpy::confused2:


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## blin10 (Jun 27, 2011)

rassmy said:


> *I think the best way to invest in this market, where we have a financial hiccups every year or so, is to split your asset into 2, a core holding of quality dividend paying stocks that would be your buy and hold portion. The second portion is your trading that follow the big guy money flows in and out triggered by the current financial situations.*
> If you look into the market movement in the last 3 years, it is clearly shows the 6 month cycle up and 6 month down, I would trade this period in and out, only buy the index when down and sell it at peak.


I agree, people who "trade" and try to prove how they can make consistent profits make me laugh, same goes for people buying stocks that don't pay anything and hold them forever... needs to be a balance


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## Snuff_the_Rooster (Oct 26, 2012)

blin10 said:


> I agree, people who "trade" and try to prove how they can make consistent profits make me laugh,.......


A never ending supply, hahaha. Pony up.


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## humble_pie (Jun 7, 2009)

_how they conjugate the verb:_

i trade successfully
you make a lot of mistakes
he's a loser couch potato living under his bed


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## blin10 (Jun 27, 2011)

you again, I been reading your posts and didn't want to get in to it but here it goes, you are full of s&#t... you're fooling no one here with your fantasy trading methods... I can bet any money you're a 20-25 year old with big dreams, no more then 20k in funds who are just discovered technical analysis, made few solid trades and think you will make millions... instead of making or loosing 1k here 1k there, I want to see you go in on a trade with 200g's where you're wrong and stay longer then a day.. and btw, wtf is pony up? is that what 5 year olds say ? 



Snuff_the_Rooster said:


> A never ending supply, hahaha. Pony up.


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## gibor365 (Apr 1, 2011)

_only buy the index when down and sell it at peak._
BS  you can tell when down and when peak only afterwards.... if not, pls tell us when there is a next peak? or the next "down"?


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## Snuff_the_Rooster (Oct 26, 2012)

haha blin10. 

Pony up. I not even feel need to defend myself ha. Must be a reason I not get offended either haha. Have good day, We thank you.


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## Snuff_the_Rooster (Oct 26, 2012)

gibor said:


> _only buy the index when down and sell it at peak._
> BS  you can tell when down and when peak only afterwards.... if not, pls tell us when there is a next peak? or the next "down"?


I thought I read that before but forgot who - Rassby??

I think same thing and chuckled. I great trader looking left of current candle, not as clear trying to see off right edge of screen, lol.

After we figure out we can't divine the next roulette wheel number coming up we decide hedging looks right when searching for unknown. From that stance + techniques after bottom might finally be found if that's what we're looking for, we find probability of success goes way up. It becomes straight forward management win or lose form there.


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## hboy43 (May 10, 2009)

james4beach said:


> There are some people who actually do think you can buy and hold a stock forever


I am working on it, though I may die one day. 

Of my 24 stocks, I have held 9 continuously for > 10 years. There would be 2 or 3 in the 15 year range, or half my adult life span thus far. My computer records only go back to 2002, so that is the most I can tell without hunting down the paperwork. From memory, I believe that 4 holdings in 2002 were bought out, and 3 went bankrupt. So 16/23 holdings from 2002 I either still own, were bought out, or went bankrupt.

Another 4 positions have been held > 5 years. So over half my current holdings (13/24) have been held > 5 years.

Not to say I don't buy more occasionally, and trim at good prices too. In fact every one of the 9 holdings has been added to over the years on a net basis.

Looks like 7 of the 9 trade at higher prices 10 years later, though not entirely sure. I am thinking specifically that some of the banks have split over the years, but not going to track that down for the purposes of this discussion.

Gross investment holdings in 2002 were $256,000 stocks plus a rental house $150,000 (?). Can't tell you net because I don't have the loan amount ($50,000 maybe) available in the electronic records. Indicated annual dividend year end 2002 was $5646, rental income was $10,000 (?), interest expense at 6% maybe $3,000, for net investment income of about $13,000 on net investment holdings of about $350,000. Current gross holdings low 7 figures, net high 6 figures. Current indicated annual gross dividend $42,526, or about $32,000 net after interest payments. In 10 years likely contributed savings from my wife's employment of $200,000. I have not worked in the interval.

So in 10 years, my approximation of buy and hold began with about $350,000, added about $200,000 in savings from employment, and has a current value of high 6 figures, for a gain of high 6 figures minus $550,000. About $120,000 of this gain was from real estate. Net investment income (dividends and rental income) has grown from about $13,000 to $32,000. Given the preceding, my 10 year average compound rate of return is likely between 6 and 8%. Given all the talk of a "lost decade", I find this an entirely satisfactory result.

Another fact is that my lifetime (30 years investing) number of trades both on the buy and sell side for my and my wife's regular accounts, and our RRSPs and TFSAs is estimated at 250, or about 8 PA. If you want to adjust for us being together half of the 30 year interval, the number of trades is about 6 per person per year.

Without being immortal, I would think that I am getting about as close as is possible to being a buy and hold forever investor. I think all would agree that I am polar opposite to a day trader. Seems to be working out too. The money pool is growing at an acceptable rate, I am still not working, and I have a boat (paid for with all the management expenses I have not incurred perhaps?)

Maybe what I do is buy and try to hold forever, but adapt to the reality around me: buy more when the price is stunningly favourable, trim back when things get a bit silly, occasionally rebalance a bit (often with new money). Mostly I leave it alone and let time in the market work its magic.

Some people will attribute my performance to luck. Is 6-8% PA really that outstanding that you want to label me lucky? But what exactly am I doing that is subject to luck, either good or bad? My investment strategy is mostly comprised of sitting on my hands. How lucky does one need to be to sit back and do pretty much nothing? For 30 years. What does one make of the 6 bankruptcies? Surely that would be evidence of bad luck. In which case doing pretty much nothing over the long haul will defeat bad luck. If you have good luck, you will do better!

Oh, I had the house 25 years.

hboy43


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## thenegotiator (May 23, 2012)

i am sure u subtracted inflation from that right?
i am not criticizing .
it is feasible but even a buy and hold investor has to do what u have done .
trim here rebalanced there.
but u traded very little.
nice work.
and what about gold?
nothing?
a little history about gold .
in 1980 gold value was around 900 bux and when adjusted to today's price ( after inflation) it is worth about 2400 bux.
so i guess gold did not really go up.
that is a fact.
by the way how is the boat?

gotta go 
i have to trade to try and be like you HBOY.
cheers


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## scomac (Aug 22, 2009)

hboy43 said:


> So in 10 years, my approximation of buy and hold began with about $350,000, added about $200,000 in savings from employment, and has a current value of high 6 figures, for a gain of high 6 figures minus $550,000. About $120,000 of this gain was from real estate. Net investment income (dividends and rental income) has grown from about $13,000 to $32,000. Given the preceding, my 10 year average compound rate of return is likely between 6 and 8%. Given all the talk of a "lost decade", I find this an entirely satisfactory result.
> 
> hboy43


You're not alone. Your experience has been similar to our own. We have 16 1/2 years worth of data that has returned between 8% and 9% per annum CAGR (depending on end-point) on a portfolio that has typically been about 2/3 equity, 1/3 cash and fixed income. I trade a bit more than hboy with an average hold of 31 months on equity positions. The importance is to allow compounding to work its magic. At the rate of return we have enjoyed, an initial investment will grow by a factor of four in that time frame without any capital additions, just reinvesting portfolio income. You don't have to shoot the lights out, you just have to be steady and avoid disasters.


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## Toronto.gal (Jan 8, 2010)

Belguy said:


> If there is no such thing as forever, why is it *taking me forever to become rich* from the stock market?


You like attention and I'll give it to you because you make me laugh.










- You told us last year that you had $600K.

- You told us a couple of weeks ago that you have done well the last couple of years with your Couch Potato approach [6%+ in returns, well done!]. 

- You told us that you're 69/live alone/enjoy & have a simple life, so: why are you still waiting to become richer? You're already rich! People buy stocks to eventually sell them, ie: even stocks have maturity dates [not just for dividend income or to take them with you]. You're holding everything 'forever' for what reason? :confused2: 

- I'm assuming that in addition to the above, that you also have a government pension.
- Given all of the above, I'm certain that you complain too much for nothing.


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## Beaver101 (Nov 14, 2011)

Toronto.gal;154170[img said:


> http://twelve-in-twelve.com/wp-cont...rst_postcard-p239688373470349410z8iat_400.jpg[/img]


 ... :encouragement: :encouragement: :encouragement:


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## thenegotiator (May 23, 2012)

toronto.gal said:


> you like attention and i'll give it to you because you make me laugh.
> 
> 
> 
> ...



and that is why i am ur greatest fan here.
Belguy stop crying.
Pension+home +600k .
Wow
what a life.
Look around you man.
Just for once.


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## Belguy (May 24, 2010)

Who's whining??:cupcake::cupcake::cupcake::cupcake:

Life is good but it will be better after we get the Christmas crap out of the way!!!


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## thenegotiator (May 23, 2012)

you are whinning.
what is going to get better after year end?
ur portfolio?


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## Belguy (May 24, 2010)

With each passing year, the world is becoming a better place!!:crushed::mad2::blue::grumpy:

Now, I'm going to watch The Factor. Maybe O'Reilly will cheer me up!!


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## thenegotiator (May 23, 2012)

sure.
go do that.
did u get enough attn today?
u had attn from T.gal and many others on ur thread.
including me lol:encouragement:


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## thenegotiator (May 23, 2012)

nowadays i buy and hold my cash.
Greeks pass austerity bill.
politicians fail to decide on Greeks assistance.
Hey belguy what now ?
do we commit suicide?:biggrin:

i am actually holding a few stocks . some are ok but my uranium stocks are so depressed that they are in need of some anti depressants lol:biggrin:

http://www.bloomberg.com/news/2012-...nce-as-u-s-housing-boosts-export-outlook.html

i think we are leaving the best times ever for trading purposes.
It is a traders mkt.


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## Toronto.gal (Jan 8, 2010)

thenegotiator said:


> and that is why i am ur greatest fan here.


Thank you TN. :wink:

*Belguy:* yes, if all you told us is correct, you have no reason to whine, but every reason to enjoy life [I don't mean in $s & cents necessarily]. And this is the last time I'm giving this well-meaning advice to you.


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## Square Root (Jan 30, 2010)

My buy and hold experience is similar to Hboy43. I trade less than him and my total returns maybe slightly higher. Portfolio currently low 8 figures yielding a little under 4% which helps fund my retirement. Frequent trading is for younger guys with more testosterone, I think.


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## humble_pie (Jun 7, 2009)

very dear Square Root,

i hereby move that every time you tell us how you are worth comfortably north of $10 million, CMF forum charge you $1,000, with the entire proceeds to be made over to a charity of your choice & with the donation receipt to be forwarded to you in your name ...


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## Four Pillars (Apr 5, 2009)

humble_pie said:


> i hereby move that every time you tell us how you are worth comfortably north of $10 million, CMF forum charge you $1,000, with the entire proceeds to be made over to a charity of your choice & with the donation receipt to be forwarded to you in your name ...


Lol. That should get him into 7 figure territory in no time.


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## humble_pie (Jun 7, 2009)

are you seconding the motion FP ?


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## Four Pillars (Apr 5, 2009)

Yes - consider the motion seconded.


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## dogcom (May 23, 2009)

I agree with this motion as well. if I had 10 million, I could purchase 1 million in gold and silver in case of some crazy devaluation of the currency and then live off the low risk income.


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## Square Root (Jan 30, 2010)

Sorry. Thought it was germain to the thread. if the traders stop telling us how well they are doing, and Belguy stops complaining, I promise never to mention it again.


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## Sampson (Apr 3, 2009)

humble_pie said:


> very dear Square Root,
> 
> i hereby move that every time you tell us how you are worth comfortably north of $10 million, CMF forum charge you $1,000, with the entire proceeds to be made over to a charity of your choice & with the donation receipt to be forwarded to you in your name ...


+1


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## Four Pillars (Apr 5, 2009)

Square Root said:


> if the traders stop telling us how well they are doing, and Belguy stops complaining


Touche!


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## Toronto.gal (Jan 8, 2010)

Square Root said:


> if the traders stop telling us how well they are doing......


Why does it bother you & why should anyone stop saying anything they like within forum rules? 

Passive, or any other type of investor for that matter, don't bother me one bit, except when they attack other strategies instead of just offering their ideas/opinions & constructive criticism.


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## leoc2 (Dec 28, 2010)

Square Root I am up for adoption...please pick me ... I will be a good son.:sentimental:


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## humble_pie (Jun 7, 2009)

Square Root said:


> Sorry. Thought it was germain to the thread. if the traders stop telling us how well they are doing, and Belguy stops complaining, I promise never to mention it again.



Square Root repeats of net worth are not comparable in the least to interesting, often intricate, market trades. The traders report some unusual activities because many other trader/investors here are following. I for one certainly learn a huge amount from these posts.

there are investors here - including some persons who say they are retired like hiboy, assetologist & kcowan - who are making supremely interesting moves. They have a great deal to teach others. I believe the forum appreciates their comments enormously; i know i do.

in addition, there are some members here - gobbie & toronto.gal, for example - who have done exceptionally well. Hopefully, Square Root, you can recognize that. They outstrip the indexers & nobody can deny. Quite by a miracle, these posters also write well. They're willing to show & tell. They're volunteering. They are not even seeking $$ compensation, although most of the toronto.gal-gob-type luminaries are far more skilled & far more knowledgeable than your garden-variety paid financial advisor who mostly knows only to sell, sell, sell.

so i am wondering Square Root why you would want to belittle such talent.

i do not recall one single successful investor in this forum who ever posted their net worth in the way that you, Root, keep on posting yours. And oh, how you do post ! Four Pillars was not exaggerating by much when he said that, if you were to donate $1000 to charity for every such post, the net worth figure would soon drop by a million or so ...

the thing is, nobody learns anything when you repeat that you own all these cars, houses & dollars. On the other hand, your banking commentaries are always super-excellent. Perhaps we could have more of those ? canadian banks should be the bedrock in any canadian investor's portf imho.

as for the diehard indexers, a few of whom keep on spouting what looks like exceptional jealousy in this forum, it is true that there is little excitement in writing about 20%canadianequity20%USequity20%internationalequity20%bonds. But that is the row that they have chosen to hoe.

as for belguy, surely the less said the better. Even Alice, who was compassionate for a long time, has given up.


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## Eder (Feb 16, 2011)

I would be curious how you reached 8 figures? Was it through hard work,business,investing? 

In my case most of my wealth was generated through risk taking in business and later selling but buy and holding dividend stocks,bonds,and HISA has paid my way since retiring 3years ago. 

I do lose my marbles at times and swing trade but never risk more than 2% on any trade.


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## Lephturn (Aug 31, 2009)

You folks will find this article applicable to the topic and pretty funny as well:

Timeless investment advice: *Good luck with that.*

Relevant to this discussion are several gems inclucing: "Be tactical and stay informed! But don't try to time the market. *Good luck with that.*"


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## dogcom (May 23, 2009)

Buy and Hold forever, except if you are invested in Japan since 1989, good luck with that.


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## Toronto.gal (Jan 8, 2010)

Lephturn said:


> several gems....


Like 'be flexible and open-minded' around here? *Good luck with that.* :biggrin:

Thanks Lephturn; enjoyed reading it. 

*Dogcom:* thanks for the laugh!


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## humble_pie (Jun 7, 2009)

Eder said:


> I would be curious how you reached 8 figures? Was it through hard work,business,investing?



actually, Eder, Root's story - the way he told it so carefully here in this forum - is a bit unusual.

at the age of 50, Root said he was left penniless following a bitter divorce. 

but only 6 years later, at the age of 56, he was able to walk away from his job at what seems to have been the TD bank with 10 million dollars. In stock options, he said.

now that's unusual. Matthew Barrett never was able to do that ... but root is not matthew, lately of bmo & barclay's fame. John Cleghorn might have been able to pull that one off at roybank ... but then, root is not cleghorn either.


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## Jon_Snow (May 20, 2009)

I've wanted to call BS on Square Root's supposed wealth for a while now. Just because I am so damn envious. Jealousy is any ugly emotion. At some point he casually dropped that he received 400k yearly from dividends.... that just about sent me into an apopletic state. How in gods name is that possible?

But I concede his story may very well be legit. Or not. We could all be compulsive liars here.


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## Homerhomer (Oct 18, 2010)

Jon_Snow said:


> We could all be compulsive liars here.


Quite often I find the once who are most suspicious of others telling a lie, are usually the biggest liars, they judge others by their own behaviour ;-)

Or they have too much time on their hands and worry about every word others say :02.47-tranquillity:


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## My Own Advisor (Sep 24, 2012)

@Jon_Snow,

...casually dropped 400k yearly from dividends???? Is he serious?


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## Square Root (Jan 30, 2010)

Sorry to ruffle your feathers. I will cease and desist immediately. Just for the record, I was indeed penniless at age 42 and retired at 56 from a big bank. Most of my wealth was the result of cashing employee options as well as leveraged investing in bank stock. Current divs about $430k pension is more. So if that bugs you guys.....sorry. Should I stop mentioning my education as well, as that might bother some of you too?


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## My Own Advisor (Sep 24, 2012)

No feathers ruffled here. Just curious (and impressed) you made you move from penniless to wealth so quickly. I'll be with you if 6/49 calls my #s tonight


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## thenegotiator (May 23, 2012)

Square Root said:


> Sorry to ruffle your feathers. I will cease and desist immediately. Just for the record, I was indeed penniless at age 42 and retired at 56 from a big bank. Most of my wealth was the result of cashing employee options as well as leveraged investing in bank stock. Current divs about $430k pension is more. So if that bugs you guys.....sorry. Should I stop mentioning my education as well, as that might bother some of you too?


what are u doing here talking and posting towards small timers like us then?
i am sure u are not looking for advice.
i assure you that if I had 1 million bux i would not be here.
maybe i would actually.
it definitely is entertaining


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## thenegotiator (May 23, 2012)

Toronto.gal said:


> Thank you TN. :wink:
> 
> *Belguy:* yes, if all you told us is correct, you have no reason to whine, but every reason to enjoy life [I don't mean in $s & cents necessarily]. And this is the last time I'm giving this well-meaning advice to you.


Like i said and i will always repeat it .
i am ur greatest fan here.
u take risk.
u acknowledge ur mistakes .
u also get very happy with ur wins.
we cannot always win right?

when we lose we get up and move on.
I think Gibor is going to have a hard time with PSN:rolleyes2:.
divvys divvys divvys


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## Lephturn (Aug 31, 2009)

Square Root said:


> Sorry to ruffle your feathers. I will cease and desist immediately. Just for the record, I was indeed penniless at age 42 and retired at 56 from a big bank. Most of my wealth was the result of cashing employee options as well as leveraged investing in bank stock. Current divs about $430k pension is more. So if that bugs you guys.....sorry. Should I stop mentioning my education as well, as that might bother some of you too?


Thanks for sharing - please don't be discouraged by the haters. Some of us actually value what you share even more knowing that you have been successful. 

@Jon_Snow - kudos for realizing it's jealousy that is behind your reaction.



> O, beware, my lord, of jealousy;
> It is the green-ey'd monster, which doth mock
> The meat it feeds on. That cuckold lives in bliss,
> Who, certain of his fate, loves not his wronger:
> ...


That's from Othello btw for those of you not so familiar with Shakespeare.


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## Toronto.gal (Jan 8, 2010)

humble_pie said:


> 1. I believe the forum *appreciates their comments* enormously; i know i do.
> 2. Quite by a miracle, these posters also *write well.*
> 3. nobody learns anything when you repeat that you own all these cars, houses & dollars.....They're willing to show & tell. *They're volunteering.*
> 4. exceptional *jealousy* in this forum.....


The simple fact is, that there are those that have a natural passion for learning and teaching, and others that have a stronger devotion & knack for complaining, but fortunately, the apish [mocking] behaviour is a minority here.

As with any public forum, there are those who are very helpful & knowledgeable here [professional experts even], and others who contribute little or nothing at all. This forum, however, does attract the crème de la crème with experts in options & other complex issues [like yourself]; retirement/taxes, etc.

1. I do as well & that's why I'm here, and not to waste my time nor brag about anything, but to learn and give a little back! Any advice/constructive criticism & positive contribution [in general], is certainly appreciated, even when such an advice may not apply to me atm, but it might in the future. For example, a lot of what MoneyGal explains with respect to retirement, does not apply to me yet, but I'm taking notes just the same. 

2. You meant that they write long posts. :biggrin: 
But that is what it takes sometimes to explain things clearly, especially for all the newbies that may be reading & feeling overwhelmed already at the massive amount to be learned, so not to discourage them, clarity & detail in the responses, is helpful.

3. 'Volunteering' is the exact word that describes some people here perfectly, who give generously of their time & mostly answer [not ask] questions here, like yourself & MoneyGal, but there are other great contributors/volunteers here! :encouragement: 

4. True, but fortunately, a tiny minority.


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## Sampson (Apr 3, 2009)

I'm a little surprised by all the backlash too. I value many of sqrt's posts, but like everyone else here, myself included, there are peculiarities, real or not that we all have to filter in/out when reading their contributions.


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## Beaver101 (Nov 14, 2011)

thenegotiator said:


> ... maybe i would actually. *it definitely is entertaining*


 ... maybe this comment should go to the Frugality section. Same agreement here - where can you get a daily dose of this for free these days? :biggrin: And I'm all for learning along the way. If I can can contribute positively with whatever little knowledge I have, then I'll share. Otherwise I'll resort to the Ignore button. :tongue-new:


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## Toronto.gal (Jan 8, 2010)

Square Root said:


> 1. I was indeed penniless at age 42...Most of my wealth was the result of cashing employee options as well as leveraged investing in bank stock.
> 2. So *if that bugs you guys*.....sorry. Should I stop mentioning my education as well, as *that might bother some of you too?*


1. I admire resilience! As the saying goes, 'our greatest glory is not in never falling, but in rising every time we fall.' 
2. It was you who seemed bugged by what traders were saying here & asking them to shut-up, not the other way around. :rolleyes2:


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## kcowan (Jul 1, 2010)

Toronto.gal said:


> Passive, or any other type of investor for that matter, don't bother me one bit, except when they attack other strategies instead of just offering their ideas/opinions & constructive criticism.


That is known as passive-aggressive is is very offensive.


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## Toronto.gal (Jan 8, 2010)

thenegotiator said:


> 1. u take risk.
> 2. u acknowledge ur mistakes .
> 3. get very happy with ur wins.
> 4. divvys


1. Lol, it takes one to know one. But yes, I do because I like jr. companies & value plays, but not blindly & not without risk management & a firm plan A and B, if needed.

2. So far, very few, and not only because of good research & choices, but because of risk management.

3. I do & it's related to #1 because my biggest successes have come from small pharma stocks [with a lot of research & time involved] & contrarian plays, like NOK, so yes, I do get a kick out of that & never shorting the market. :encouragement: 

4. They are important, but not my focus.

Thanks for your support.


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## Toronto.gal (Jan 8, 2010)

kcowan said:


> That is known as passive-aggressive is very offensive.


Indeed it is. :rolleyes2:

And I know just who you're thinking of. :biggrin:


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## Toronto.gal (Jan 8, 2010)

Lephturn said:


> 1. @Jon_Snow - kudos for realizing it's jealousy that is behind your reaction.
> 2. familiar with Shakespeare.


1. He has no reason to be jealous & I'm sure he did not mean it in the literal sense.
2. I am; that's where I got the 'apish' word. :chuncky:


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## kcowan (Jul 1, 2010)

Actually Square Root, why not give a brief blow by blow on what steps it took you from age 42 to age 56? That would prove instructive. (Include any lottery wins and inheritances.  )


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## kcowan (Jul 1, 2010)

HP
Alice has finally given up. Is there no hope for BG?
Keith


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## Toronto.gal (Jan 8, 2010)

Beaver101 said:


> If I can can contribute positively with whatever little knowledge I have, *then I'll share.*


+1 about the sharing, and by that, I hope you meant sharing what you have learned here or elsewhere, with those you care about that need help with financial literacy [like you {and all of us} did at some point, right?].

Any 'little knowledge' is better than none; it all starts from there! You could probably update your username to 301 by now. :wink:


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## Toronto.gal (Jan 8, 2010)

kcowan said:


> HP
> Alice has finally given up.


Perhaps a change in genre is required. How about some Shakespearean comedy/history/tragedy, or a harmonius blending of the 3, that hp seul pouvait composer/maîtriser.


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## Belguy (May 24, 2010)

Is this a psycho analytical forum or an investment forum?:confused2::dejection::topsy_turvy:

Just asking.


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## MoneyGal (Apr 24, 2009)

They are one and the same! I've found I don't get very good results when I walk down the street asking people, "what is your coeffecient of risk aversion?" So I have to come up with other ways to get the goods...


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## Young&Ambitious (Aug 11, 2010)

SquareRoot, I enjoy your insight and I agree with others; knowing that you've come so far and become accomplished financially makes your insight more valuable. You aren't some day 1 trader who pretends to knows it all. I don't mind the wealth number dropping, you've done well and want others to know. Congrats, that's a feat most cannot do.


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## Toronto.gal (Jan 8, 2010)

Belguy said:


> Is this a psycho analytical forum or an investment forum? Just asking.


- Doesn't psychology play a role in your investment decisions? 
- What happens when you [over] react to market news? Does fear come into play?
- Why do financial institutions require you to complete an investor profile?

Just asking.


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## Nemo2 (Mar 1, 2012)

Toronto.gal said:


> - Why do financial institutions require you to complete an investor profile?


I always figured it was a CYA sort of thing.......so they can say, in the event of a catastrophe, "Well, you _saaaaaid_". :rolleyes2:


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## Toronto.gal (Jan 8, 2010)

I had to think about the SEEYA for a second, lol, but you know, it's about KYC, too.

For those not familiar with it.
http://www.investopedia.com/terms/k/knowyourclient.asp#axzz2Cycw49zo
http://en.wikipedia.org/wiki/Know_your_customer


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## scomac (Aug 22, 2009)

Toronto.gal said:


> I had to think about the SEEYA for a second, lol, but you know, it's about KYC, too.


It is one in the same really.

Have you ever taken a look at Accredited Investor regulations? It's a bit of a joke really when you think about it.


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## Toronto.gal (Jan 8, 2010)

Yes, same, but I meant that it's also used for other reasons, such as AML/CFT, etc.


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## Jon_Snow (May 20, 2009)

Ah, jeez.... I admit to being "in my cups" when I made that post questioning Square Roots success... not my finest moment on this board, to be sure. :upset:

As can happen when one is "indulging", I was contemplating the end of my Mexican holiday, and a return to a job which I detest, and was in a general "malaise" state... apologies all 'round.


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## Belguy (May 24, 2010)

Toronto.gal said:


> - Doesn't psychology play a role in your investment decisions?
> - What happens when you [over] react to market news? Does fear come into play?
> - Why do financial institutions require you to complete an investor profile?
> 
> Just asking.


I buy and hold FOREVER and never trade out of fear or for any other reason other than for rebalancing purposes. Those investor profiles are a joke!! I just tell them that I have endless risk tolerance and they then let me buy anything.


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## Sampson (Apr 3, 2009)

Belguy said:


> I buy and hold FOREVER and never trade out of fear or for any other reason other than for rebalancing purposes.


Then price movement of the underlying asset should mean nothing to you. You need to focus on yield. If your investments generate $50,000 of dividend income for you per year, it doesn't matter if the underlying assets are worth $100 or $1,000,000. Price is meaningless for you.


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## humble_pie (Jun 7, 2009)

kcowan said:


> Actually Square Root, why not give a brief blow by blow on what steps it took you from age 42 to age 56? That would prove instructive. (Include any lottery wins and inheritances.  )


 
in all previous versions of this story, SQ was 50 when the marital rupture occurred which, in turn, produced the penniless state. The age of 42 has never previously been mentioned.

& the "leveraged investing in bank stock" that is now said to have helped produce the $10 million in 6 short years is also a brand-new detail added as of yesterday. Until yesterday, the official story always recited that the entire $10M came from bank options alone.

so far, all versions of the story are agreed that SQ did become the proud owner of $10M at the age of 56.

(aside to kcowan) imho your early success with lululemon is a terrific teaching tidbit. As i recall you rode those hot yoga pants all the way up the price chart from total obscurity to their glittering spandexed top. Then there's your long-term aapl interest, too. These are valuable hints & comments to pass on to young investors.


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## namelessone (Sep 28, 2012)

Buy and hold only works if you hold businesses paid with fair/cheap price earning let's say 10 to 20% on its capital consistently over extended period of time. The stock price will follow the business earning power or book value.

If you buy and hold a business that loses money, good luck with that. 
If you buy an index, I'll also say: good luck with that. 

If you do day trading or options trading and can acheive 15%+ annual return over decades, I'll say more power to you!


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## bayview (Nov 6, 2011)

I recall Sq is also a qualified CA & CFA :encouragement:


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## Ethan (Aug 8, 2010)

To answer the OP, my retirement accounts are buy and hold, although I sell the odd covered call when my stocks significantly exceed what I perceive to be their intrinsic value. I also have a margin account where I sell covered calls and naked puts, and purchase LEAPS from time to time. No short-term trades.

This thread appears to have derailed into commentary on Square Root so I'll chime in as well. I don't understand why people are critical of him. Posters provide personal balance sheets and cash flow statements in the "Money Diaries" section, what's wrong with a successful investor discussing their portfolio? I think success should be celebrated and hold no jealousy towards square root, I hope to one day be in his shoes where I can comfortably live off my dividends.

There was another poster that questioned why someone with the financial resources of Square Root would post here. To that, my response is "why not?" People come to CMF because they are Canadians who want to discuss money, your interests shouldn't change regardless of the size of your portfolio.


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## thenegotiator (May 23, 2012)

Ethan said:


> To answer the OP, my retirement accounts are buy and hold, although I sell the odd covered call when my stocks significantly exceed what I perceive to be their intrinsic value. I also have a margin account where I sell covered calls and naked puts, and purchase LEAPS from time to time. No short-term trades.
> 
> This thread appears to have derailed into commentary on Square Root so I'll chime in as well. I don't understand why people are critical of him. Posters provide personal balance sheets and cash flow statements in the "Money Diaries" section, what's wrong with a successful investor discussing their portfolio? I think success should be celebrated and hold no jealousy towards square root, I hope to one day be in his shoes where I can comfortably live off my dividends.
> 
> There was another poster that questioned why someone with the financial resources of Square Root would post here. To that, my response is "why not?" People come to CMF because they are Canadians who want to discuss money, your interests shouldn't change regardless of the size of your portfolio.


Ethan
i was the poster that mentioned that if i had a million bux i would be here for entertainment .
let alone 10 million.
when u said u are a trader of Potash and so on and so forth what did i say ?
I believe you.
ur jargon , ur posts and way of thinking induce me to believe in you.
i am nowhere near a million bux .
yet i wish that square root has 10 million.
good for him.
If not it is irrelevant to me.
10 million bux .... i do not need to trade for a living.
i assure you that.
I would definitely have more than one boat.
and I would still trade...... just for fun.
if u believe that we should post ideas and so on and so forth.... great .
so do i .
i do .
i post my losses more than my winners.
i do not go around saying .... boy look i made a killing today.
no need for that.

I had no intentions of offending anyone .
I just post as i see fit.
either way GL.


P.S i do not post anything on the money diaries.
i strongly believe that sharing ideas is one thing .
sharing my net worth is nobody's business


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## Homerhomer (Oct 18, 2010)

humble_pie said:


> in all previous versions of this story, SQ was 50 when the marital rupture occurred which, in turn, produced the penniless state. The age of 42 has never previously been mentioned.
> 
> & the "leveraged investing in bank stock" that is now said to have helped produce the $10 million in 6 short years is also a brand-new detail added as of yesterday. Until yesterday, the official story always recited that the entire $10M came from bank options alone.
> 
> ...


And why do you care so much??????


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## Homerhomer (Oct 18, 2010)

Jon_Snow said:


> Ah, jeez.... I admit to being "in my cups" when I made that post questioning Square Roots success... not my finest moment on this board, to be sure. :upset:
> 
> As can happen when one is "indulging", I was contemplating the end of my Mexican holiday, and a return to a job which I detest, and was in a general "malaise" state... apologies all 'round.


Good on you, we all do make mistakes and admitting to them speaks volumes.

Others on the other hand continue their pitifull attacks.:stupid:


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## Lephturn (Aug 31, 2009)

Ethan said:


> To answer the OP, my retirement accounts are buy and hold, although I sell the odd covered call when my stocks significantly exceed what I perceive to be their intrinsic value. I also have a margin account where I sell covered calls and naked puts, and purchase LEAPS from time to time. No short-term trades.


I'm not trying to pick on you Ethan (good post, well written and thought out :encouragement but I find it strange that I almost never hear married puts or collars mentioned among conservative strategies. Married puts are the most conservative strategy out there and I wonder why more people don't use it. Thoughts?


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## Toronto.gal (Jan 8, 2010)

thenegotiator said:


> 1. i am nowhere near a million bux .
> 2. i post my losses more than my winners.....i do not go around saying. boy look i made a killing today.


1. No worries, you're smart & still youngish. 
2. We learn from both; it's not about bragging or crying, it's about learning from one's [and others'] mistakes & successes.


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## scomac (Aug 22, 2009)

Lephturn said:


> I'm not trying to pick on you Ethan (good post, well written and thought out :encouragement but I find it strange that I almost never hear married puts or collars mentioned among conservative strategies. Married puts are the most conservative strategy out there and I wonder why more people don't use it. Thoughts?


Well, for starters you can't write options on a registered account, so when the bulk of retail assets are held in registered accounts (in terms of number or investors), the issue becomes a non-starter. Secondly, not everyone with a taxable investment account has or even wants option writing privileges. Options are an advanced strategy, so that likely eliminates 90% of account holders right there. Thirdly, the insurance is just too bloody expensive to carry it long term especially when you have markets like today. The volatility drives up option premia. These sorts of conservative strategies are more appropriate for money managers more concerned with periodic absolute returns rather than individuals who strive for long term total returns. if you're trying to protect your downside exposure, then it is much cheaper (and simpler) to reduce equity exposure. It will have the same net effect.


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## Ethan (Aug 8, 2010)

thenegotiator said:


> I had no intentions of offending anyone .
> I just post as i see fit.
> either way GL.
> 
> ...


No offense taken, I was mainly commenting on how the board holds wealth against some posters, even though most people come to this forum to discuss how to get wealthy. I don't think the size of a persons portfolio should affect whether they post here or not. The forum is for discussion, posters should be on CMF because they are Canadians interested in money/finance talk, and that shouldn't be restricted by the size of a persons portfolio. A poster with a small portfolio shouldn't hold a rich person's wealth against them, much like a wealthy poster shouldn't hold a poor poster's lack of wealth against them.


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## Lephturn (Aug 31, 2009)

@scomac
I hear you in terms of the vast majority not being educated about options enough to use them as a tool. But there are enough on this board that do use them that I am surprised that it almost never comes up.

First - you absolutely can write options in a registered account. You can't do it "naked" but you can write covered calls.
Second - the married put is not an option write. It is a purchase of a put option tied to stock, and yes you can do it in a registered account. RBC-DI won't let me buy a put in a registered account unless I do it married to stock, but I can do it. Do the two together (covered call + married put) and you get a collar.

How much do you think it costs to insure a portfolio against major loss / year? I'm curios... I hear this thrown out all the time but I don't think most folks know what the cost actually is. Yes volatility drives up the price of options - essentially that is how they are priced - but volatility has been extremely low at several points this year, most recently the end of the summer. During periods of low volatility put options are effectively on sale.

I disagree that reducing equity exposure will have the same effect as buying married puts. If I reduce equity exposure I cause 2 problems. First, if I reduce exposure and sell I no longer get the dividends which are the primary reason that I own these stocks and wish to hold them. Second, I am now attempting to time the market which at the least is very difficult to do successfully over the long term. With a simple married put I can now confidently hold solid dividend paying stocks for the long term and collect the dividend while HOPING for a big move down where I can cash in my puts to buy more of the solid dividend payers.


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## Toronto.gal (Jan 8, 2010)

Ethan said:


> how the board holds wealth against some posters......The forum is for discussion


I don't believe anyone is holding 'wealth' per se against anyone [it's more the personal strategies that are being attacked].

I would also say that it's the passive [wealthy] investors that tend to start the arguments here [not to be confused with discussion], and not the other way around.


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## Ethan (Aug 8, 2010)

Lephturn said:


> I'm not trying to pick on you Ethan (good post, well written and thought out :encouragement but I find it strange that I almost never hear married puts or collars mentioned among conservative strategies. Married puts are the most conservative strategy out there and I wonder why more people don't use it. Thoughts?


I think Scomac covered it in the sense that most posters are investing in registered accounts. My FI allows call option trading in registered accounts, but not put option trading. The strategies are also expensive for a typical individual's portfolio.

Personally, I don't believe in the efficient market hypothesis, especially in the short term. If markets were efficient, Warren Buffet would not be the billionaire he is today. I can't tell you where the share price is moving in 1 day, 1 week or 1 month, but I can start to get an idea quarterly as that is the frequency with which companies are required to post their results. My strength is in reading financial statements to determine how healthy a company is financially. I place bets on companies with strong free cash flows, healthy balance sheets, sustainable competitive advantages and high dividends/low payout ratios. I make no illusions as to being able to predict where the share price will go in the short-term, only to be able to determine whether a company is generally undervalued or overvalued and how the share price should correct in the medium to long term. In my registered accounts I try to buy undervalued companies that pay large, growing dividends while I wait for the share price to correct upwards. In my margin account I rely on returns from dividends and short covered call/short naked put option premiums, as I have interest expenses to cover.

I know what I feel the share price should be for any given stock, but that doesn't mean the market will agree with me. Often times, I think the difference between my valuation and the markets valuation is irrational, therefore share price movement is not something I typically deal with. Given that I cannot accurately predict share price movements, and especially not the time frame in which the movement will occur, a collar strategy is not of use to me. As I understand it a collar strategy involves selling a call and buying a put, hoping the share price rises but limiting both your upside potential and downside risk. If the share price goes down by expiry, even if that correction is not in line with my valuation, I'm still out the difference between the purchase price and the strike price on the put. Timing is key in that strategy and I just don't think it is possible for me to time share price movements consistently.

I realize that much of what I have just said contradicts a strategy of buying LEAPS, but sometimes I feel that a stock is so undervalued that a LEAPS strategy can be very profitable. In those situations, the risk of missing out on potentially large gains is greater than the downside risk that a collared strategy protects me from. I have only bought 5 call options in my life but I have profited greatly on the first four, the fifth is still open and is currently underwater, but I have 26 months for it to turn around.


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## Ethan (Aug 8, 2010)

To add to my previous post, focussing on dividends and cash flows, combined with a long investment horizon, means that volatility does not concern me.


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## scomac (Aug 22, 2009)

Lephturn said:


> With a simple married put I can now confidently hold solid dividend paying stocks for the long term and collect the dividend while HOPING for a big move down where I can cash in my puts to buy more of the solid dividend payers.


That's the plus side. The negative side is that as you roll over successive puts that go unexercised, you effectively have increased your ACB of the underlying. You have reduced your downside risk in exchange for a reduction in total return over time, much the same as reducing equity exposure incrementally. The other edge of the sword has you effectively converting dividends into a capital loss which has a tax consequence. Whether you write a collar or a married put, the only way that you can come out ahead over time using this strategy is if the market goes down. If the market goes up, you've incurred a sunk cost that reduces returns especially if you are interested in maintaining the insured positions. As you say, it's a low risk strategy, however, love risk implies low return. I just can't see how this will work out favourably as part of an on-going long term strategy. If you intend to do this only periodically during times of perceived risk, then you are in fact timing the market; precisely what you wanted to avoid. [Added]If what your are really after is reducing your cost base of your existing positions and adding more in a down turn, then you would be further ahead to sell puts on the positions you would be willing to add to and bank the premia. This way volatility works in your favour.

I have no idea how much it would cost to insure a portfolio against a major loss on an ongoing basis. I'm no expert when it comes to options. In my limited experience with options, rolling them over on a position will effectively consume all of the dividend income plus; when spread out over periods of variable volatility, which to my mind makes it a self-defeating undertaking.


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## Cal (Jun 17, 2009)

kcowan said:


> Actually Square Root, why not give a brief blow by blow on what steps it took you from age 42 to age 56? That would prove instructive.


Yes I agree, that would be interesting to hear. I recall reading 'The Art of the Deal' about Donald Trump, how at one point he was bankrupt, going in for a meeting to renegotiate his debts and he saw the beggar on the curb in front of the building and thought, technically this guy has more money than I do right now.

In regards to the naysayers or disbelievers. I give you respect for being more open about your financial situation than others, myself included. Thanks for sharing. Although most may not, or will not realize it. Getting a good education, having some good fortune, a lot of hard work, and not spending like a fool, it really is possible.


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## humble_pie (Jun 7, 2009)

scomac said:


> That's the plus side. The negative side is that ...



chiming in here to say that scomac has very valid points & so does lepht imho. Again, as always, it's a question of mostly win/win for both. Each party can do what he is comfortable with & all will be well.

i happen to side w scomac. Individual equity puts are considered to be the most expensive of all. Entire portfolios can be insured for index puts more cheaply, but i myself don't do these either. Reason: over a lifetime, the general trend of markets for more than a century has been up or at least uppish. So buying to maintain puts on long stock goes against the trend & over a lifetime will tend to become a costly millstone that will drag noticeably on portf returns.

these days i gather that many investment managers are running collared strategies on good old canadian dividend payors because the guaranteed return from this - in our times - with interest rates so low - is distinctly better than treasury bills. Generally speaking a same-strike collar will actually cost $$ now, whereas a decade ago an investor could collar same strikes while collecting a small premium.

collaring these days makes most sense imho in risk-averse rrsps or in any account held by a highly risk-averse client.

i recall from one example lephturn gave us in bce collaring more than a year ago - no idea what lepht is doing now, of course - he would sell his call side, then hunt & peck among lower put strikes in order to find something not too outrageously expensive to buy. Of course that meant that a risk window got opened, being the dollar difference between the 2 strikes ...

as it happens i would not do this myself, but hunting skilfully for collars that are difficult to execute, as lephturn was demonstrating, remains another excellent example of diff'rent strokes for diff'rent folks. I loved reading lepht's posts about his strategy each:.


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## Jungle (Feb 17, 2010)

Cal said:


> Getting a good education, having some good fortune, a lot of hard work, and not spending like a fool, it really is possible.


I love this line.


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## Toronto.gal (Jan 8, 2010)

Great points made today by CMF's great 'volunteers'. 

That's what I like, clear advice that = food for thought for the open-minded & flexible investors. Good luck with that! :encouragement:

Forgot to say THANK YOU!


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## MrMatt (Dec 21, 2011)

james4beach said:


> Buy & hold is a topic I've spent much of my professional life thinking about.
> 
> 1. Buy & hold is only pushed as a "great strategy" because people got used to the 20 year bull market (secular bull), pre-2000. Sure, in a ridiculously long bull market you can buy and hold just about anything, and it will go up.


Buying a strong profitable company and letting it earn money makes sense.
Forget markets, valuation and all that, and look at the basics.

If the company can make good money year after year, why would you want to sell?


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## Four Pillars (Apr 5, 2009)

MrMatt said:


> Buying a strong profitable company and letting it earn money makes sense.
> Forget markets, valuation and all that, and look at the basics.
> 
> If the company can make good money year after year, why would you want to sell?


How do you know any given profitable company will continue to be profitable?


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## namelessone (Sep 28, 2012)

Four Pillars said:


> How do you know any given profitable company will continue to be profitable?


Same as angry people tend to be angry although any angry people have the potential to change.Track records tell a lots about a business.
One way to check the resilience of the earning power of a particular business is to look at how it performs during recession/depression. 
Another important one is to understand how the business model works and how likely that model can exist in the long term. No one can be right 100% of time but if one is right about 80 to 90% of time, and diversify then they'll do really well.


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## Lephturn (Aug 31, 2009)

humble_pie said:


> chiming in here to say that scomac has very valid points & so does lepht imho. Again, as always, it's a question of mostly win/win for both. Each party can do what he is comfortable with & all will be well.


Well said humble_pie - and eloquently as usual.  The beauty of options is that they allow one to construct an very nuanced position around their viewpoint of risk and reward.

I will say that this year I have changed things somewhat. I still protect almost everything with puts - but I do it with very far OTM puts - "teenies" or puts that are about .05 delta. These are strictly disaster insurance and they are very cheap. Generally I can put these on for 1-2% a year with careful timing. These are far out of the money puts - I am not insuring them based on strike price, I am buying way OTM puts that will increase rapidly in value if there is a large and rapid move in the underlying - more than the Black-Scholes model would suggest. While not "black swan" events per-se, 2+ standard deviations events happen far more often than the normal distribution and the models based on it suggest.

Yes I am buying insurance. Yes that means that if the securities do not suffer a large drop that premium is "wasted" and a drain on returns. It is insurance - most of the time those insurance contracts will not "pay off". When they do pay off though, they pay off very well. Enough that say a 20% drop in an underlying will be a profit instead of a loss. You don't have to cover yourself for very many 20% drops to make up for many years of premiums and then some. Think of it as collision insurance on your car or theft insurance on your home, just because they are not "used" doesn't mean they are wasted. I am paying premiums to mitigate risk.

I also do more than just buy puts for insurance - I sell premium around that as well. Sometimes that means selling calls, but sometimes it means selling puts too as the position develops.

Not everyone will agree with my strategy - not everyone has the same risk tolerance or investing goals that I do. The funny thing is that in my retirement accounts where I do this, my risk profile is FAR more conservative than the long-only portfolios that almost everyone else employs. Although some may consider me a trader my retirement accounts are very secure. My trading plan for my retirement accounts includes mitigating the risk of a more than 20% decline in my account for any reason. When the next 2008/2009 comes around I'll be very well prepared and it means I don't have to worry about those accounts. That security is worth the premiums I pay.


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## humble_pie (Jun 7, 2009)

this is a really interesting new strategy that lepht is doing. He explains it well so i'll say no more; but i am going to reflect on about whether & how to incorporate into my trading portf.

i know that the history of put buying messages in this forum is chaotic. An interested newcomer would be hard *put* to find an assembly of posts that is not totally higgledy-piggledy.

by far the best posts are lephturn's. The interesting thing is that (significant dividends from blue chip payors less cost of puts) will nearly always outstrip HISAs & certainly will outstrip Tbills.

there are many HISA buyers in cmf forum now because in recent couple of years HISA has come to replace short-term bonds & Tbills. Therefore i ask myself perhaps there would be some members here who would take the trouble to learn options & start pulling in guaranteed 2-3% instead of lower HISA bond & Tbill returns.

i think i will do this myself where i have HISAs tucked away, although maybe not until after xmas holidays.

the neat thing about learning this strategy is that it will remain effective even if interest rates rise. The put-call parity will change also, so that collared protective puts will nearly always offer an increment over other short-term paper.

too bad we don't have the perfect teaching document entitled There's No Ring Around My Collar, but perhaps santa will deliver one ...


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## scomac (Aug 22, 2009)

Lephturn said:


> Well said humble_pie - and eloquently as usual.  The beauty of options is that they allow one to construct an very nuanced position around their viewpoint of risk and reward.
> 
> I will say that this year I have changed things somewhat. I still protect almost everything with puts - but I do it with very far OTM puts - "teenies" or puts that are about .05 delta. These are strictly disaster insurance and they are very cheap. Generally I can put these on for 1-2% a year with careful timing. These are far out of the money puts - I am not insuring them based on strike price, I am buying way OTM puts that will increase rapidly in value if there is a large and rapid move in the underlying - more than the Black-Scholes model would suggest. While not "black swan" events per-se, 2+ standard deviations events happen far more often than the normal distribution and the models based on it suggest.
> 
> ...


This is a very complex strategy. Lephturn, I'm wondering if you could provide a real world example for us to follow as a sort of virtual tutorial? A thread dedicated to the topic following an individual position over time would be great.


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## kcowan (Jul 1, 2010)

BFS Canada said:


> The Toronto Argonauts won the 100th Grey Cup on Sunday. While good news for Torontonians, it may not be the best result for the markets.
> 
> BFS Canada calculated how the TSX has reacted following Argo (or predecessor named Toronto teams) winning the Grey Cup. According to their sources (Wikipedia), of the 17 times Toronto won since 1920 and not including this latest victory, the TSX has risen a paltry 3.3%. And the market was down about half the occurrences. There were some big numbers in there, including -37% following the 1930 victory.
> 
> Truth be told, everyone should have been cheering for Calgary. While not the same history, there were six occasions that Calgary won the Grey Cup and the market advanced an impressive 18% on average. There was only one year that the market declined after the 2001 victory, an 11.5% drop. But the years with gains had some big ones. Following the 2008 Grey Cup, the market rallied 39%. Also big gains in 1971 and 1992.


  Something else for BG to worry about?


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## humble_pie (Jun 7, 2009)

ah, the dedicated example. Well, there's the classic collar, which has just about gone the way of the dodo because put prices have gone to the moon (in a classic collar, puts & calls must be at the same strike price.)

& there's the fukushima collar, which lephturn says he has lately embraced, being a form of get-out-disaster insurance but nothing else.

but still i say to myself, if BCE dropped from 42 to 34 because the world was ending, would i really need a 32 put in my corner to help me out ? it would not have appreciated by near as much as BCE would have dropped, not by a long shot ...

besides, what was i doing as the world ended & BCE plunged from 42 to 34 ? was i asleep ? wouldn't i have noticed anything ? any little thing ? like maybe to sell my stock around 38 ??

i still think good disaster insurance for an entire portfolio is best obtainable from an index put. One could buy XIU puts to cover a multitude of sins each:


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## Ethan (Aug 8, 2010)

humble_pie said:


> but still i say to myself, if BCE dropped from 42 to 34 because the world was ending, would i really need a 32 put in my corner to help me out ? it would not have appreciated by near as much as BCE would have dropped, not by a long shot ...


I was intrigued by the idea so I tried to model some trades, but I couldn't find any realistic trades. I was trying to find a trade where the spread between the dividends received and puts purchased was greater than the yield on a t-bill, but I couldn't do it. The puts are too expensive for me to buy them as disaster insurance. I've actually been selling lots of naked puts lately as they seem to be priced expensively as of late.


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## humble_pie (Jun 7, 2009)

Ethan said:


> The puts are too expensive for me to buy them as disaster insurance.



yea you are right. Thankx for the modelling.

in the year or more that has passed since lephturn first posted his example of collaring BCE, the cost of the put side has risen painfully.

what lepht was doing a year ago was dropping down a strike increment from sold call to purchased put. In puts, he was going approximately one strike increment below the market price of BCE at that time.

but today, puts have risen in price so much that, in BCE, one would have to drop down at least 2 increments or more in the strike price. This opens such a risk gap that i for one doubt it's worth it.

i do believe that this is why lephturn has moved on to the Fukushima collars. Extremely far OTM puts that cost almost nothing & will only come to serve if Armageddon happens. But in such a scenario i'm asking myself, Why not insure the entire portf with XIU puts ...


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## thenegotiator (May 23, 2012)

Toronto.gal said:


> 1. No worries, you're smart & still youngish.
> 2. We learn from both; it's not about bragging or crying, it's about learning from one's [and others'] mistakes & successes.


how could i miss this post?:redface::greedy_dollars:
thks for praising me.
in a serious note item 2 that u mentioned is the most important one.
I am actually feeling in neeed of learning something new .
i just cannot grasp the tech arena..
the basic parameters that actually drive those companies eludes me.
in the energy arena u have several indicators as guides .
maybe it is just not for me.
same with biotech.
take care.
i am actually glad that I have met someone smart and savvy as you are.


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## Belguy (May 24, 2010)

Bottom line, when all is said and done, is there, or is there not, long term proof that simply buying and holding the indexes over the long term, beats the returns of most active traders no matter how smart they are or how convinced they are that they can beat the system over the long term.

Or, is this question simply too difficult to answer? Surely there must be data available to convincingly show that a substantial percentage of so-called 'Couch Potato' investors either do or do not achieve superior overall results not withstanding that there are a small percentage of active traders who, by good luck as much as anything else, will beat the indexes over the long term. Approximately what percentage of active traders do then achieve superior long term results? Ten per cent? Twenty per cent? More?

The longer the term, the less likely that superior returns will be achieved by the active traders compared with buy-and-holders of a properly diversified 'Couch Potato' portfolio.

Simple question: Is the above statement more true than false or will the majority of active traders outperform the indexes over the long term?

It seems to me that there should be enough research out there to determine the overall better method. With no guarantees, which approach is likely to bring you better long term results--buy and hold or active trading? What does all of the research tell us?

A simple question that should result in a simple answer.

Can we put this one to bed for once and for all?


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## Toronto.gal (Jan 8, 2010)

Belguy said:


> Buy and hold or active trading?


- How many times will you ask this question? Are you a troll after all? :confused2:
- Why is it so difficult for you to understand what a mixed strategy is all about?
- Why is it that you still have not understood the role of short & long term consequences of stomach-turning volatility lasting years?!
- You have been paralyzed by what has been happening around you. 
- Stop looking for mirages in the investment world. 

If you're just bored to tears, I recommend you borrow this from the library, not to trade, but for you to learn a little about what trading is all about.


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> Are you a troll after all?


I'm pretty sure I (and others) answered that question a long time ago.


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## Spudd (Oct 11, 2011)

Belguy said:


> Bottom line, when all is said and done, is there, or is there not, long term proof that simply buying and holding the indexes over the long term, beats the returns of most active traders no matter how smart they are or how convinced they are that they can beat the system over the long term.


By definition, the indexes are the sum of all active traders activity and all indexers activity. Indexers will match the index minus fees. All active traders averaged together will match the index minus fees. In general, the indexers will come out ahead since the fees to hold an index fund are low compared to the fees to actively trade. However, some active traders are beating the indexers and some are losing compared to the indexers. That's because the index is simply an average of ALL activity taking place in the market. 

It is impossible to say which strategy will be better for you, because nobody can predict whether you will be one of the active traders who beats the indexes or one who doesn't. Hence, taking the indexing route leads to at least average returns.


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## scomac (Aug 22, 2009)

Belguy said:


> Simple question: Is the above statement more true than false or will the majority of active traders outperform the indexes over the long term?
> 
> It seems to me that there should be enough research out there to determine the overall better method. With no guarantees, which approach is likely to bring you better long term results--buy and hold or active trading? What does all of the research tell us?
> 
> ...


You're right; this is a simple question that deserves a simple answer, one that I'm sure you've been given countless times before. Your statement is more true than false because the market is simply the sum total of all participants. Therefore, the average participant will receive the return of the market minus their costs. This is Sharpe's Principle. Because the cost of investing in a "Couch Potato" portfolio is below the cost incurred by the average investor, the passive investor will enjoy a superior return over time. *What you are doing is forgoing the chance that you could outperform for the assurance that you won't underperform* the market by more than your costs. It's as simple as that.


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## Toronto.gal (Jan 8, 2010)

Four Pillars said:


> I'm pretty sure I (and others) answered that question a long time ago.


*FP:* and I'm pretty sure that Harriet Beecher Stowe was right also when she said: *"Every man {and woman} had his own quirks and twists".* It does not necessarily make the person malicious, which is what trolls are IMHO, but we can agree to disagree!

***********

I will illustrate one real example of mine that just might explain the goal/mixed strategy & motivation of the investor/trader that you don't seem to understand. 

Whether you believe the figures or not, it's not important, but at least, it might give you [and other habitual doubters] food for thought. And despite what some passive investors may think, trading has value indeed & not only for the investor, but also the markets.

*A. Long-Term:*

- Invested close to $20K in 2009 in a particular stock [before I knew anything about options].

- I'm down -55% from my initial purchase price [less when you count the reinvested dividends, but I don't console myself with that, though I love the free shares].

- Never sold, just: i) added more shares periodically [commission-free via transfer agent] with mostly trading profits of same stock, and ii) reinvested full dividends.

*B. Short-term:*

- While the stock took a steady roller-coaster ride [or should I say dive?] since I purchased it, I have been trading it for 2+ years [day & swing trades not to lock the capital for too long].

- To date, I have made $28,327 trading the stock in high volume, which I could afford thanks to the punished price.

- Traded it 51x in that period [commission = $514.30 {paid for 37 trades as some of them were multi-day-trades for which I'm only charged consolidated fees}].

- My time: mere minutes per trade, which is the case with most of my trades of stocks that I also hold long-term, hence, I know them like the palm of my hand.

*Conclusion:*

- If I had taken the easy couch-potato approach and/or taken no action at all, I would be down -55% today, which is 3.1 years after having bought/held the stock, ie: i) huge losses in that period, ii) dead money [unless dividends console you], iii) lost additional investment opportunities in same or other stocks, and last, but not least, iv) how long before I would have just recovered  [not profiting even], if I had just stayed with step A above? 3 additional years for a total of 6 from purchase date? And the list of negatives from being passive goes on and on.

- Instead, my trading has: i) financed my initial investment, ii) purchased additional shares [commission-free], which in turn iii) increased my dividend payments, hence I'm now iv) the proud owner of several free shares as a result.

When you do next to nothing & don't adapt to *severe market conditions* during long periods of volatility & just cry and complain, it surely would take you a very long-term to recover if you took no advantage of the amazing short-term opportunities that volatility presented [without having abandoned your long-term strategy]. For someone that does not have a 30 & 40 year horizon, I'm surprised how stubburn you are to understand this.

Can you tell me how I'll be worse off 10/20/30 years from now for having taken step B. above?

In some cases, I have used trading to exit certain positions without gains, but without and/or minimal losses.


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> *FP:* and I'm pretty sure that Harriet Beecher Stowe was right also when she said: *"Every man {and woman} had his own quirks and twists".* It does not necessarily make the person malicious, which is what trolls are IMHO, but we can agree to disagree!


Unfortunately, this is where you are wrong - trolls aren't necessary malicious. In fact they can be very well intentioned.

Regardless, neither one of us is a moderator of any type, so it really doesn't matter what our opinions are on this matter.


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## Eder (Feb 16, 2011)

The more money invested in XIU, the more lucrative trading those stocks(TSX60) rather than indexing becomes ... ducy?


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## Toronto.gal (Jan 8, 2010)

Four Pillars said:


> trolls aren't necessary malicious. In fact they can be very well intentioned.


In that case, you and I will soon start sounding like trolls, too. :biggrin:


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## Belguy (May 24, 2010)

Just so that I understand what I am, what exactly is a troll anyway?:confused2::confused2:


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## Sampson (Apr 3, 2009)

Mike, I've always thought of you as this forums' Troll's troll, or possibly anti-troll.


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## jcgd (Oct 30, 2011)

Troll (Internet)
From Wikipedia, the free encyclopedia

In Internet slang, a troll ( /ˈtroʊl/, /ˈtrɒl/) is someone who posts inflammatory,[1] extraneous, or off-topic messages in an online community, such as a forum, chat room, or blog, with the primary intent of provoking readers into an emotional response[2] or of otherwise disrupting normal on-topic discussion.[3] The noun troll may refer to the provocative message itself, as in: "That was an excellent troll you posted."
While the word troll and its associated verb trolling are associated with Internet discourse, media attention in recent years has made such labels subjective, with trolling describing intentionally provocative actions and harassment outside of an online context. For example, mass media has used troll to describe "a person who defaces Internet tribute sites with the aim of causing grief to families."[4][5]


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## thenegotiator (May 23, 2012)

Toronto.gal said:


> *FP:* and I'm pretty sure that Harriet Beecher Stowe was right also when she said: *"Every man {and woman} had his own quirks and twists".* It does not necessarily make the person malicious, which is what trolls are IMHO, but we can agree to disagree!
> 
> ***********
> 
> ...


wow.
patience is a real virtue.
you do have a lot of it.
Belguy get off the couch man and do something besides complaining.:rolleyes2:


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## Toronto.gal (Jan 8, 2010)

*Neg:* TRM, the quote police, will soon come after you. :chuncky:

I should have been a teacher some say, but not because of patience, lol. But now I have truly given up, as I'm sure in 2013, there will be another 1/2 dozen threads about this very topic, but maybe others might learn a thing or two whenever I respond. :rolleyes2:


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## mrPPincer (Nov 21, 2011)

Belguy said:


> Just so that I understand what I am, what exactly is a troll anyway?


it's a term used in the internet forum world in usually a derogatory manner mainly I think to describe people who are just trying to stir up things just for a joke or to annoy people, which I don't you are doing Belguy.
I don't recall ever seeing a post in which you have been insulting to anyone.
Usually you are showing something you have read recently and are asking for an opinion.

I think some of the more active investors here have become frustrated or annoyed with you because they have tried to explain their perspective and seem to have more or less hit a brick wall.
I think that your understanding in regards to passive investing is not incorrect and also that each of us has to chose a unique path wrt investing depending on each individual's situation and understanding and interest.

btw I don't read the newspaper a lot, but I do often have a quick look at some of the articles you put out there.


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## Sampson (Apr 3, 2009)

jcgd said:


> Troll (Internet)
> From Wikipedia, the free encyclopedia


jcgd, posting a definition of internet troll on a thread about buy and hold vs. trading is "otherwise disrupting normal on-topic discussion".

We need a new emoticon that shows a troll.


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## thenegotiator (May 23, 2012)

Toronto.gal said:


> *Neg:* TRM, the quote police, will soon come after you. :chuncky:
> 
> I should have been a teacher some say, but not because of patience, lol. But now I have truly given up, as I'm sure in 2013, there will be another 1/2 dozen threads about this very topic, but maybe others might learn a thing or two whenever I respond. :rolleyes2:


but u are a teacher:tongue-new:
how many times are you going to keep lecturing others here?
one either trades or does not trade.
it is that simple.
if i wanted to sit on my arse and collect divvys , i am sure i would not profit as much.
wether they are SPECIAL divvys or not
example PSN .
i watched the spinnoff of that garbage that pays divvys .
imagine if one bought 10k shares at IPO.
stock is trading at 3.98.
divvys or no divvys.
now lets say u buy 500k in TRP then i can assure you that TRP is not going bankrupt anytime soon..
gotta watch the police though:biggrin:


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## jcgd (Oct 30, 2011)

Sampson said:


> jcgd, posting a definition of internet troll on a thread about buy and hold vs. trading is "otherwise disrupting normal on-topic discussion".


I'm not sure if that was a shot at me or not... but Belguy asked what a troll is and this is his thread, so I put up the answer.



Sampson said:


> We need a new emoticon that shows a troll.


I don't think so. It's bad enough with everyone calling people trolls. I'm pretty most people here haven't encountered a true troll. They can be very damaging to a discussion group, and because they often enjoy it, they can be very good at it. Some people annoy me, and I'm sure I annoy some people. It doesn't mean they are purposely trolling.


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## Sampson (Apr 3, 2009)

just continuing the good humor, no harm meant. its just fun to get off topic every once and awhile.


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## lonewolf (Jun 12, 2012)

Buy & hold, trade or have fun

I say have fun, this is the ultimate game of self mastery, the challange of mastering the harmony of the mind with emotion. When your up to bat & everyone is calling you a bum having the self confidence & disapline to swing weather it is a hit or a miss letting noone pinch hit for you & playing your own game is the real reward not the money.


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## kcowan (Jul 1, 2010)

Maybe we need a new term: unintentional troll: One who posts the same stuff repeatedly and expects different answers.


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## Four Pillars (Apr 5, 2009)

kcowan said:


> Maybe we need a new term: unintentional troll: One who posts the same stuff repeatedly and expects different answers.


Wouldn't that be an insane troll? 

I'm enjoying this thread.


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## Belguy (May 24, 2010)

Isn't the internet a wonderful thing!! You can post whatever the heck that you feel like posting and never have to sign your real name to anything that you say and any putdowns that you post. I guess that is why many newspapers insist that you sign your name to any 'letters to the editor' that might be printed. Not so on forums like this where you can hide behind a pseudonym. A good rule to follow might be to never post anything that you wouldn't be prepared to sign with your real name even when that is not required all in the interest of civility. Many of the putdowns often border on harassment to outright bullying. 

For a good example of so-called trolls changing the subject and hijacking a thread, look no further than the 'Europe and the Lost Decade' thread which has oftentimes been turned into a travel thread by those who choose not to stay on topic.

And yes, I have usually try not to take the bait and post critical or holier-than-thou comments in response to anything that is posted here by others.

Civility and the internet do not always go hand in hand.


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## scomac (Aug 22, 2009)

Belguy said:


> For a good example of so-called trolls changing the subject and hijacking a thread, look no further than the 'Europe and the Lost Decade' thread which has oftentimes been turned into a travel thread by those who choose not to stay on topic.


What makes you think that talking about travel to Europe is off topic? After all, we are talking about the real "on-the-ground" Europe, not the one that graces the pages of CNBC/CNN/BNN/etc.


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## Sampson (Apr 3, 2009)

Belguy said:


> For a good example of so-called trolls changing the subject and hijacking a thread, look no further than the 'Europe and the Lost Decade' thread which has oftentimes been turned into a travel thread by those who choose not to stay on topic.


TGal and I turned it into a sports thread a little while ago but that that was hardly off topic. Remember the epic Germany v.s Greece match? It was interesting to see Chancellor Merkel cheering for her team and probably secretly wishing that those on the pitch embarrass the heck out of the bailout needing greeks.


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## Four Pillars (Apr 5, 2009)

Toronto.gal said:


> In that case, you and I will soon start sounding like trolls, too. :biggrin:


Lol - good point.




Sampson said:


> Mike, I've always thought of you as this forums' Troll's troll, or possibly anti-troll.


"Troll of the trolls"? 

Thanks.


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## donald (Apr 18, 2011)

I think the ''buy & hold vs trading" is largely a lifecycle factor.Most people are better off spending there time advancing in there employment and work related prospects.A trader may profit in a ''trade'' that took mere seconds to place but how about the hours and hours of preperation leading up to-identifiying it in the first place.

Most of the traders here it ''seems''(might be wrong)don't have outside employment other than the market.(if your spending all day everyday following the market and treating it like a business,which it is clear some of the trader here do)Then you have to factor in the time spent.If your up 25% in a yr on a trading portfolio and you spent 6 hrs a day,5days a week,52 weeks in a year,back out what really is your ''profit" You might not really be making a lot.

Frugal traders ''way''imo is superior than trading.......he is diversified across may things(blog,employment,income from market ect)That type of buy and hold will always come out on top.(the market should be a extention of wealth building,a aid,not the main thing,m.o)

Also most don't have the base to trade(or nerve)......imo you need @least a few hundred thousand to even consider trading for a living(probably more like 750-1mm) and even then it might be a zero sum activity.(the market is complex as hell)


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## kcowan (Jul 1, 2010)

I had a boss who spent the first 2 hours of his work day on the phone with his broker. But he was very effective in the remaining 8 hours at his job. He just focused on things he considered serious to his success.


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## Toronto.gal (Jan 8, 2010)

Belguy said:


> 1. Isn't the internet a wonderful thing....putdowns often border on harassment to outright bullying.
> 2. trolls changing the subject and hijacking a thread, look no further than the 'Europe and the Lost Decade' thread
> 3. Civility and the internet do not always go hand in hand.


It's always entertaining when Mr. B.guy is around! 

*1.* Indeed it is, that's why you're a senior CMF member for 2.5 years now, right? So I would say that the 'bullying & harassment' has not been that intolerable here [& at times you have contributed to such responses as well, so you're partly to blame].

*2.* Those are the funny/well-informed/well-meaning/well-travelled 'unintentional trollers'. :biggrin:

'Europe & the Lost Decade' is the title of the thread, so anything related to Europe is kosher. Even Nemo's description of the Pera Palace was not off-topic at all, as after all, Turkey has tried to join the EU for decades. :rolleyes2:

The title also does not suggest that only negative topics are allowed, though no doubt that that had been your intent. :highly_amused:

*3. *100% civility can't be found in the 'real world' & not even with your own family members [immediate or not], let alone the' virtual' one! But, if you want to be part of the virtual community, you just have to ignore those you dislike and make use of the ignore list & moderator in extreme cases, that simple! That's where the trolls that I dislike are.

You gotta lighten-up a little and *laugh along with the rest* of the 'trolls' there. 

I tried to be serious & helpful in this thread and you see, the topic got hijacked by nothing but talk of trolling, but so what, sooner or later it might get back on topic & Donald saw to that already!

*Sampson:* yea, EURO 2012 was sooo much fun; can't wait for the 2014 World Cup in Brazil! But for next week, I have to settle for the 'Grand Prix of Figure Skating Final' in Sochi, Russia. :love-struck:


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## Toronto.gal (Jan 8, 2010)

donald said:


> 1. I think the ''buy & hold *vs trading*"
> 2. A trader may profit in a ''trade'' that took mere seconds to place but how about the hours and hours of preparation leading up to-identifiying it in the first place.
> 3. following the market and treating it like a business,which it is clear some of the trader here do)Then you have to factor in the time spent.
> 4. That type of buy and hold will always come out on top.


1. Buy & hold AND trading [not one or the other]. :rolleyes2:

2. I love to read about everything, which includes investments, so it's not just preparing for trading per se, and my time [and that of my family] is much better spent reading than spending 'hours and hours' watching reality BS on tv./spending time on fakebook, etc., etc. [though i enjoy youtube music videos!].

3. It goes without saying that when you work for a living, no matter what that work is [and not everyone works for a salary btw], you divide what you make by the total # of hours worked. Some traders may be retired; others may do so p-time; in fact, even you trade sometimes & are your own boss in something else as well. :encouragement:

4. That is undeniable when you have a long-term horizon [should be more than 10 yrs. IMO].


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## lonewolf (Jun 12, 2012)

Statistics from back testing a method is perhaps the best way to know weather a method should be hedged.

The longer the time period of the back testing & the larger number of stats collected the higher the odds one will know if the system needs to be hedged.


Below is just an example. Pulled out of thin air

If for example a system is back tested going back 100 years & the parameters for buying & selling are met 1500 times (1 000,000 would even be better then 1500) & the largest drawdown is 5%, average drawdown of 1%, percentage of wins 90% with an average gain of 10%. It would not make sense to hedge such a system for a 20% drawdown if the average gain decreased to 7% & the averaged loss increased to 3% & the largest drawdown then increases to 8%

Putting less money on the table @ the get go I think would be more practical & let it compound @ a higher rate of return & perhaps taking some off the table. Because it is still possible that those odds will not repeat.


On the other hand if a system was only back tested for 8 years & only a total of 5 statitics were recorded then based on the low numbers the odds decrease that an investor/trader has found a system that gives them an edge & such a method it might be more practical to hedge.


As regards to trading taking a lot of time, it does not have to be that way. A seasonal trader that buys in the fall & sells in the spring would hardly spend any time playing the market. There are so many differnt combinations of methods a trader can use & they all take differnt amounts of time & energy. i.e., a trader selling @ the top of the suspot cycle & buying @ the bottom of the sunspot cycle can go years without doing any trading & a day trader could place 10 or more trades a day spending a lot of time @ it. A busy person might prefure to trade the sunspot cycle rather then a day trading method that took up much time.


From experience we all have differnt knowledge & understanding this is one of the reasons not all systems are suited for everyone. Based on ones knowledge & understanding one should develope there method. If based on back testing, a trader comes up with a better result then buy & hold then they might want to consider trading instead of buy & hold providing trading is practical i.e., if they have to spend 8 hrs a day @ trading it might not be suited method.

There can only be one best of anything & it is best to use the best method but one has to be carefull not to change methods all the time to just simply conform to the herd.


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## kcowan (Jul 1, 2010)

Toronto.gal said:


> It's always entertaining when Mr. B.guy is around!


He has this quaint idea that he "owns" any thread that he starts. Even when they are vague like "Europe and the Lost Decade".

The only good thing is that he never takes any advice here so we can chat on without any negative consequences.

(Also he removes even the last vestiges of any need to watch TV. He will tell you everything he thinks is relevant to his perspective.)


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## Nemo2 (Mar 1, 2012)

Toronto.gal said:


> Even Nemo's description of the Pera Palace was not off-topic at all, as after all, Turkey has tried to join the EU for decades.


Even? _EVEN?_ It so happens that much/most of Istanbul is in Europe. :biggrin:


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## Belguy (May 24, 2010)

kcowan said:


> He has this quaint idea that he "owns" any thread that he starts. Even when they are vague like "Europe and the Lost Decade".
> 
> The only good thing is that he never takes any advice here so we can chat on without any negative consequences.
> 
> (Also he removes even the last vestiges of any need to watch TV. He will tell you everything he thinks is relevant to his perspective.)


No sense arguing!! Last words to you!!!


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## Toronto.gal (Jan 8, 2010)

Nemo2 said:


> Even? _EVEN?_ It so happens that much/most of Istanbul is in Europe. :biggrin:


5% of the country's land is in Europe? At any rate, that is not the issue of why they have not been successful at joining, but I don't want to go off-topic, take it to 'Europe and the Lost Decade' thread. :chuncky: 

*Lonewolf:* I don't know why so many accused you of being someone else when you're clearly the much more patient of the two. Moreover, the person you were accused of being has never pretended to be anyone other than himself.

I agreed with 50% of what you said; was unclear about 20%; disagreed with 20%, and lost with 10%. :wink:


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## lonewolf (Jun 12, 2012)

I make mistakes, Belguy makes mistakes everyone makes mistakes. I have a lot of respect for Belguy, I appriciate reading his posts. He has done well for himself & I think a lot of people fail to realize he has been of great value to this site.


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## kcowan (Jul 1, 2010)

All the historical points of interest are in the European side of Istanbul. The Asian side is all the new stuff (last 200 years). The bridge joining the 2 sides was not completed until 1972. Ergo Istanbul is OK to discuss in this thread.


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## Toronto.gal (Jan 8, 2010)

lonewolf said:


> I make mistakes....everyone makes mistakes.


Sure we do *lonewolf*, but in investments, with a mixed strategy, as I mentioned earlier, you can correct/reverse them as well, rather than cry, like for example, you could have recovered some or all your trading losses in AMD; up over 30% in less than a week. Of course the tricky part is that you have to understand the news & be a good trader; the latter is no easy task for sure, but doable!

*kcowan:* Turkey talk here is definitely off-topic, but what you said is true; the Old City of Istanbul is in the EU side [Sultanahmet district].


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## Argonaut (Dec 7, 2010)

What is this "Istanbul" people keep speaking of. Is it somewhere near Constantinople?

Signed,
Argonaut ca. 1453


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## Belguy (May 24, 2010)

YTD, as of November 29, my buy-and-hold portfolio of mainly index products is up 6.9%.

This represents a new high with the previous high being reached in April 2011.

Since then, my portfolio is up 0.3 per cent--in 19 months!!

I should have bought a GIC!!!:stupid::stupid::stupid::stupid:


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## Sampson (Apr 3, 2009)

Belguy said:


> previous high being reached in April 2011.
> 
> Since then, my portfolio is up 0.3 per cent--in 19 months!!
> 
> I should have bought a GIC!!!:stupid::stupid::stupid::stupid:


No!

You should have learned how to trade.


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## Belguy (May 24, 2010)

Sampson said:


> No!
> 
> You should have learned how to trade.


What percentage of traders come out ahead?


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## Sampson (Apr 3, 2009)

It doesn't matter what percentage come ahead, just as long as you/I do. Who cares which method is better for the average investor, I'm not an average investor I am me, so I just want to make sure whatever strategy I have chosen gives ME the best returns.

Clearly your strategy is losing, perhaps you need to adopt a different one? You always highlight the shortcomings of your holdings, maybe it is time to own up and lose the losing strategy.

p.s. as I've posted about before, I'm not a trader.


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## donald (Apr 18, 2011)

Hey T-Gal,My point was more from the angle(while in the building stage)To focus more on concrete and ''safer'' ways.Def have investments ect,but the mere activity of trading/speculating early on doesn't make sense to me until after ''you'' have extended yourself as far as you can in your employment(If your doing heavy trading ect,watching markets,are not fully engaged in your day to day business)You run the ''risk'' of short changing yourself and not advancing as far as you could ie)In my case im better off focusing on getting more sales,spending my time upgrading my skills in business ect,building and maintaining realtionship and the list goes on.

I'm in a tradition business(trade,construction)but even if i was in finance(and had a distinct advantage in the market)I would rather aim for trying to be a partner ect-foucusing on building up the company/firm i'm working for(overtime,making sure my bosses recognize me ect)

If your busy trading aapl or any stock ect(for example)that takes commitment(you have to be up early,checking asia,checking news,fact checking ect ect)It's too much(and im not sure the gains are worth it,depending what kind of capitalyou have on)-------That why i was saying life-stage & why i side with buy and hold-----i have done abit of trading and it requires alot of energy and focus(mine have been swing trades)You get what i'm saying.

No doubt you are a good trader.(i admit i took a beating after the election(i knew about the taxes,obama ect)but for some reason didnt see that drop coming(making me evaluate my plans going foward)


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## webber22 (Mar 6, 2011)

Sampson said:


> ....
> *Clearly your strategy is losing, perhaps you need to adopt a different one? You always highlight the shortcomings of your holdings, maybe it is time to own up and lose the losing strategy.*
> .....


I like this statement :encouragement:


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## jcgd (Oct 30, 2011)

Personally, I think right now is a good time to move into indexing if you are leaning that way anyway. I think the US market is a little expensive because compared to the rest of the world's low or slowing growth the US is slowly coming around. Europe has been hammering away at anything with exposure so things could go well if it starts turning around. Even with China's cooling there is still huge growth potential there. 

I think there is lots of upside to the world economy.


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## Sampson (Apr 3, 2009)

jcgd said:


> I think there is lots of upside to the world economy.


Hard to disagree. Europe seems poised for accelerated growth if/when they can sort out the current problems. I think a sideways market (assuming the economy will continue 90s/00's style growth in the future) is a fantastic time to accumulate. Money put in now should payout down the road.

If not, we can always work longer into retirement age.


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## Spudd (Oct 11, 2011)

I have to disagree that Belguy's strategy is a losing strategy. He's up 6.9% on the year! That's way better than any GIC would do. He's just a little dramatic.


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## hboy43 (May 10, 2009)

Spudd said:


> I have to disagree that Belguy's strategy is a losing strategy. He's up 6.9% on the year! That's way better than any GIC would do. He's just a little dramatic.


I think his is a losing strategy because he is (seemingly) perpetually unhappy with it. Elsewhere I estimated my decade return was 6 to 8% PA for little to no work on my part. I am quite happy with that even there are rumored to be those who do better. I could take the position that I didn't do as well as someone else and be unhappy, but I don't. Based on my satisfaction it is a successful strategy even if there is a John or Jane Doe getting 15% somewhere. 

hboy43


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## Toronto.gal (Jan 8, 2010)

donald said:


> 1. activity of trading/*speculating early on* doesn't make sense to me until after ''you'' have extended yourself as far as you can in your employment....
> 2. If your doing heavy trading ect,watching markets,are *not fully engaged in your day to day business*)
> 3. i side with *buy and hold*
> 4. (mine have been *swing trades*)You get what i'm saying.
> 5. (i admit i took a beating after the election


1. I have always said that only experienced investors should trade a *%* of their portfolio.
2. Of course you should not be trading while your employer is paying you to do another job; that goes without saying! 
3. As do I; I hardly ever look at my long-term portfolio [the one I wish to keep until retirement], except for some type of balancing & of course, accumulating is my focus at this point.
4. That's also in my repertoire & can be done by anyone working full-time as it does not require much time.
5. We all did!

Sampson is right, people should not worry so much about what the average investors do, just what works for each of them!


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## PuckiTwo (Oct 26, 2011)

Sampson said:


> ....... Who cares which method is better for the average investor, I'm not an average investor I am me, so I just want to make sure whatever strategy I have chosen gives ME the best returns.


That only works as long as you know what strategies are around and then see which one fits best your personality. Investors in training need to look at what the "average" investor or many individual investors are doing. All this information from different investors will form your opinion where one wants to be personally.


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## humble_pie (Jun 7, 2009)

donald i think U posted the above because you head up a challenging, engrossing, absorbing micro-business, therefore the work you can put into it must be limitless, round-the-clock. For an entrepreneur like yourself, losing time in stock markets quite possibly does not pay at all.

but think about this. What if you could earn 100k a year with a couple hours work per day. Work that's easy, fun, fascinating, in many ways a by-product of the news & geopolitics that is happening right outside the door. Wouldn't you choose it ?

i know i know roofing pays better. The problem is i'm afraid of extension ladders. Free-lance poetry doesn't pay & meanwhile i have kids to support & educate. In the end i had to settle down on the portf.


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## mrPPincer (Nov 21, 2011)

humble_pie said:


> this is a really interesting new strategy that lepht is doing. He explains it well so i'll say no more; but i am going to reflect on about whether & how to incorporate into my trading portf.
> ...
> 
> there are many HISA buyers in cmf forum now because in recent couple of years HISA has come to replace short-term bonds & Tbills. Therefore i ask myself perhaps there would be some members here who would take the trouble to learn options & start pulling in guaranteed 2-3% instead of lower HISA bond & Tbill returns.


rolling back to just over a week ago. I meant to respond to this line of thought.

Sadly a search of the entire local library network comes up with only one book on options but it is a book that focuses on this concept.
Mountains of books on personal finance and investing etc., but just this one on options.

I do mean to read it sometime and had it checked out for a while, but never did get around to reading it at that point in time.
I find this idea potentially very useful and intend to pick up the book again and read it soon.

The book is Insure Your Investments Against Losses: Strategies for Investors Who Can't Stomach Losing Their Hard-Earned Cash by Robert Goldin.
http://www.amazon.ca/Insure-Your-In...=sr_1_1?s=books&ie=UTF8&qid=1354650208&sr=1-1

The one book on options that I have read so far was borrowed with an interlibrary loan from outside my area:
Understanding Options by Michael Sincere, very good reading and I practically inhaled it in two days and I still do from time to time consider purchasing it, (but there are more advanced books I'm also considering purchasing)
http://www.amazon.ca/Understanding-Options-Michael-Sincere/dp/0071476369

I don't know about using the options-insured equity as a replacement for my HISA component but I am considering separating out a portion of my equity component for a strategy such as you have suggested or alternatively, insuring equity in general from another 2008 event using an options strategy with possibly a broad based highly liquid US based etf or with LEAPS if it can be done not too expensively.

I hope I do have some greater understanding of options and have something set up before 08/09 happens again.
It does seem preferable to trying to time these events and adjust one's equity component beforehand based on a foggy crystal ball.


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## bayview (Nov 6, 2011)

This is *Jack Schwager's Trading for Beginners!* 

It's a 54min video. Some may not find it useful. 

Do not expect an instant roadmap to Trading success; otherwise this video would have gone Gangnam style

For what it is worth!


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## Belguy (May 24, 2010)

Sampson said:


> It doesn't matter what percentage come ahead, just as long as you/I do. Who cares which method is better for the average investor, I'm not an average investor I am me, so I just want to make sure whatever strategy I have chosen gives ME the best returns.
> 
> Clearly your strategy is losing, perhaps you need to adopt a different one? You always highlight the shortcomings of your holdings, maybe it is time to own up and lose the losing strategy.
> 
> p.s. as I've posted about before, I'm not a trader.


As stated multiple times, I am not trying to beat the indexes over the long term--just match them less fees. My objective has never been to set the world on fire nor am I interested in doing research on individual companies. Thus, while you may spend your time "chasing returns", I just buy-and-hold the broad indexes and hold them forever. I do not agree that my strategy is a losing one. Many traders will beat me over time, but the longer the time frame, fewer and fewer will end up beating me.

I will leave it to others to decide whether I am "always outlining the shortcomings of my strategy". In fact, when all is said and done, I am still convinced that it is the correct strategy FOR ME (and certainly not for all investors). The fact is that I probably over promote my strategy by constantly driving it home.

Let's get together in thirty years, compare notes, and see who comes out ahead in the long run.

Again, I refer you to one of the greatest investment books of all time--'The Tortoise and the Hare'. While it is a children's book, it does carry a powerful message.

One could also use the 'Core and Explore' method whereby the core of your portfolio is invested in the lowest fee, broadest based index products while a small percentage is set aside for research on individual stocks and then knowing when to buy them, how long to hold them, and when to sell them.

I couldn't be bothered!!!


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## donald (Apr 18, 2011)

No doubt i would choose that humble(100k a yr living from trading)My main point is-Trading seriously seems to me like a progression of time and expierence(goes without saying)

I'm in my early 30's,What were you and tgal doing in your 30's?(were you employed?freelance?raising kids?married?figuring out life?ect ect)

I highly doubt you were trading jr.old stocks?or were you?did you need need to raise your own capital to do it seriously?Did you suffer bad beats?did you have the support of your partner(if you were married)because trading for a living is rare?Who taught you how to trade?(mentor,grew up in a house where a parent taught you?self taught?,came from money,did you take a econ major in school?)do you know what i mean........I'm taking about the path to trading.Imo one needs substantial wealth behind them to trade seriously.


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## jcgd (Oct 30, 2011)

I would think the urge to trade would fade as one had more money. Has anyone here gotten rich from trading? Or did anyone here get rich by other means and then get much richer trading? Just curious.

Likely because I've looked into it I can rattle off many famous investors, an also relatives, acquaintances and such that have slowly gotten wealthy through investing. Never day trading though. Can someone provide examples of some more famous day traders?


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## donald (Apr 18, 2011)

That is my point jcgd.I'm not expecting humble or tgal to be transparent but there are factors.I personally know a few millionaire and they all made there money in business(real estate agent/small business owner/home builder)and all of them have there money handled by wealth firms.

I'm intrigued by both tgal/humble........


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## jcgd (Oct 30, 2011)

Well T.gal does post up many of her trades so I can see (assuming everything is true) that she's definitely doing something right. Humble... well, a lot of the options talk is jargon to me so I tend to skim, and skimming his posts doesn't really equal understanding. But with T.gal's method I cannot tell if it's luck or skill. Who's to say the method won't breakdown over time. Who's to say it exists at all?

My main peeve with the day (or short period) traders who are unable or unwilling to teach/ describe/ enlighten us to their methods aren't really teaching me much. Unless I'm missing the point, all I've learned is to be patient, learn, learn, learn (learn what?) and only trade profits. I can post up some buys and sells, but the only thing anyone can take from it is I've done some good or bad trades. You might learn that I'm a good or bad investor, but you will gain no knowledge that affects you. Unless I tell you why I bought when I did, and sold when I did. 

T.Gal I find particularly valuable to my learning on this board. But on everything except trading. She is particularly perceptive and makes me think of issues from many perspectives that generally don't even cross my mind. Just adding some love in here because I know she is going to make me want to cry when she debates this post.


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## bayview (Nov 6, 2011)

I tend to take more "Investment risks" be it in securities, RE or businesses when I have much more €£$. 

These are calculated risk adjusted returns investments - trading included. I woudnt have ventured into them in a "material" way unless I have attained an absolute mimimum fund size coz I risk what I could afford to lose. 

Of course each of us have varying degrees of risk aversion - Im less risk averse when I have more funds above my absolute minimum threshold.


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## Young&Ambitious (Aug 11, 2010)

donald said:


> I personally know a few millionaire....and all of them have there money handled by wealth firms.


Question: How is that working for them? I mean obviously, the service provided exceeds basic financial planning and likely involves trusts and corps, different income sources, overseas banking, private investments, tax advising, etc etc. But overall, are they satisfied with the return, both on investment and on advice?


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## Sampson (Apr 3, 2009)

@ Belguy, I'm just fanning the flames of the fires you start.

You are the one questioning whether the approach is worthy or not. you yourself concede that you should have bought GICs. Well, this suggest to me, as to others I assume, that you are not satisfied with your choices, nor with your returns.

People who are satisfied do not check how green the grass on the other side is. If your goal was to match indexes less fees, then your posts should probably read "hurray! my investment portfolio is still mirroring the underlying indexes it was designed to track. Yippee, I have a 0% return from Apr 2011 to now."

If you were truthfully not bothered, and know the answers to your questions, then it is a little annoying to have the seeds of a discussion started, and have you unwilling to discuss. Perhaps these are opportunities only to spout rhetoric about how passive indexing is so fabulous.

I also think you are misinterpreting my take on investing strategy.


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## Belguy (May 24, 2010)

There are a lot of factors that determine your investment philosophy. Age has a lot to do with it. Many of us get more conservative after retirement and that goes for investing and our political views. If your portfolio has to fund your retirement, it results in you taking on less risk than if you already have a comfortable income from public and private pensions. We don't all have similar personalities and risk tolerance and so what is applicable to one may not apply to another. One's personal wealth may be another factor and there are numerous other considerations, too numerous to mention, as well.

That is why we often seem to be talking past one another on this forum. It's because we are all so different in so many ways. Therefore, I will never convince everybody that I have found the best investment system and others' methods may never appeal to me.

It is all well and good to keep an open mind and to try to learn from others but, when all is said and done, we all come from different backgrounds and experiences and so will never see eye to eye on most things and most especially on the emotional subject of money.

In the end, there will be those of us of the trading persuasion and others convinced of the merits of buy-and-hold and never the twain shall meet.

To each his or her own.


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## Sampson (Apr 3, 2009)

See Belguy, I like these posts of yours, because they are more personable. Clearly everyone on the forum has wide expectations and personal situations that merit specific strategies and I fully agree that diversity is the benefit of a forum like this and that is how I learn the most.

Its the short short posts that get a little tiresome, but that's just me. I wouldn't even mind the short posts so much if they resulted in engaging conversation. I am reminded of another children's story called Chicken Little.


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## jcgd (Oct 30, 2011)

I'm just thinking out loud here, am I correct in thinking that the rebalancing of a couch potato portfolio would help you juice your returns? Say your US allocation is now overweight do to the bullish market over the last three years, the rebalancing would force you to take profits and move that money into flat (Canadian) or down (European) markets to bring the weightings back up. I would think over many years you might actually be able to beat the index returns because the strategy would force you to buy low, sell high rather than simply ride the same index. Does this make sense?


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## mrPPincer (Nov 21, 2011)

jcgd absofrigginlutely; that happens to be somewhat of a manta I have probably repeated way to many times for anybody in my circle to have wanted to hear but it's something I learned as a child playing a game called stock ticker and it most definitely does work.

edit-> I must admit I do not have the tracking/analysis tools atm to crunch the numbers of how it's worked for me so far and come up with hard statistics (just using the free version of globeinvestor portfolio tracker) but I think at the very least when you have low mers one should be able to use this to cover the MERs and presumably a bit more.
Trading fees is something else to consider though if that is a factor.


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## humble_pie (Jun 7, 2009)

mrPPincer said:


> rolling back to just over a week ago ... The book is Insure Your Investments Against Losses: Strategies for Investors Who Can't Stomach Losing Their Hard-Earned Cash by Robert Goldin ... insuring equity in general from another 2008 event using an options strategy with possibly a broad based highly liquid US based etf or with LEAPS if it can be done not too expensively.



mister pincer i did put up a later post in this thread saying that - alas - i could see that put prices these days are so high they are preventing successful collars.

so very sorry if the initial post was confusing. Mea culpa.

please see Ethan's message no. 135 above, which sums the put predicament up very well. Also i posted no. 136. Lephturn - who has done more protective puts than probably any of us - has also left a message saying that current high put prices are ... well ... offputting ... therefore he's now buying far-out-of-the-money puts for dirt cheap prices so as to insure against the end of the world and/or the mayan calendar, whichever first ocurs.

these extreme puts are the ones i call fukushima puts. They are not really trading vehicles, they are disaster insurance. As i understand it, lepht is currently turning his back on at least some traditional protective puts & some traditional put/call collar structures.

i hate to say this mister pincer but your book on protective puts is out of date. Seems it was published 2007, which means the author was writing in 2006. Put strategies that were commonplace even 6 years ago are extinct in today's low-interest era.

there's a serious problem with fukushima puts, as i see it, & it's one that lepht didn't touch on. If a global collapse worse than 08/09 were truly to occur, it would be reasonable to expect that many exchanges would close intermittently, perhaps some for even longer periods of time. It could become impossible to exercise the fukushima puts that one held. Notionally speaking, a put to sell BCE at 40 might look & sound profitable if stock were to drop to, say, 22 in a fukushima-style disaster. But if the exchanges would be closed, then in reality such a put would be worthless.

in the sino-forest scandal, holders of long stock who also owned protective puts were not allowed to exercise their puts once trading in the underlying had ceased. So the puts became worthless.

what i would do if fearing another global financial collapse. Increase cash. Keep cash in secure investment vehicles. Avoid most HISAs. Avoid most leveraged etf products. It's true there's no return from most of these arch-conservative strategies.

going back to options, please don't read too many books, i do beg of you. Did you look at gob's income thread under money diaries ? it's about income from selling mostly aapl puts.

gob says he started with a fast but hi-quality self-taught grounding. There are tons of up-to-date teaching resources in the internet & many are frequently linked here in cmf forum.

gob also knew that experience would teach him & that is exactly what happened. Even on the fiercest day of the siege on aapl, gob battled bravely on, although he was hampered more than all the other knights because he had to carry around his giant rogue elephant in a backpack on his back the whole time.

this am i sold a july 35/30 put spread in GG. Sold 5 at 2.85, bought 5 at 1.30, net profit was USD 743.00. A quiet, typical, low-key kind of day at the office.


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## Belguy (May 24, 2010)

I do consider rebalancing to be an important function of portfolio management and do it annually every January--even before I start my taxes.:upset:


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## mrPPincer (Nov 21, 2011)

humble, thanks so much for the in depth response.
No worries, not confused at all, unknowlegable yes.

I did catch the following posts and will relook over them now, but I thought there was possibly still some value in knowing the strategies first and then crunching numbers for myself but I did think the plan was a bit tenuous because for one, anyone and everyone of the same mind considering or forseeing (if such a thing is possible) such a dire siuation would drive up the prices at the very time the insurance would be most valuable.

I do not get why to avoid most HISAs, wouldn't something of the scale of an asteroid hitting Manitoba be the thing that breaks their insurance plan?

I will take another more thorough look through gob's thread, and yes I know there is a huge amount of eductional resources online wrt options and do know where to find them, thanks to you and others on this forum.

Among other things the scary part about the puts not being able to be exercised at the exact point at which you had planned for is something that I may come back to this thread to refer to as a reminder as I progress, thanks again.

$743 is a lot more than I've made on a day's work in quite a long time, I am happy to see this working so well for you


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## humble_pie (Jun 7, 2009)

mrPPincer said:


> I do not get why to avoid most HISAs



re risk in HISAs, this is not exactly a best-seller topic. But a good discussion of the risk passed through cmf forum recently & it is worth recycling from time to time just to keep people informed.

the knowledgeable party is new cmf member james4beach. Here is the recent discussion, beginning roughly with this post:

http://canadianmoneyforum.com/showt...thin-TFSA-RRSP?p=154057&viewfull=1#post154057

i myself have no way of knowing or analyzing risk that may accompany some HISA products today, at least not without a lot of research. However, common sense should tell investors that, at a time when bank & t-bill interest rates are one-half of one percent or less, there's something a wee bit strange when these upstart HISA funds can offer overnight cashability plus interest rates ranging up to 2%.

i'm reminded of 2007-08 when we had those "wait & see" funds that offered instant cashability plus high interest rates. They were a wee bit strange, but nobody knew exactly what.

then in june 2007 Coventry out in BC failed. It was a warning bell to me, that there was too much weak unbacked paper out there. And sure enough, a couple of years later all the juicy stories were out, about how financial houses had piled & stacked lo-quality debt, then cut & sliced it every which way, then farmed it out all over the world so that when the reckoning came it was a near-total global collapse.

so perhaps james4beach's view has merit & these HISA products & leveraged funds - which people think are so safe - are symptoms of financial circumstances that once again have gone - or could go - just a wee bit haywire.

i don't mean to scare anyone. I keep cash savings at ING, but i believe these are CDIC insured. I would myself avoid HXT or any other etf or fund that was built on futures.


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## Lephturn (Aug 31, 2009)

Buying fukushima puts as humble so eloquently put it - is something that you do when things are rocking and implied volatility is low. I can't always time it right, but I stay out far enough that I have a three month window most times to roll them out. The key is that these puts are far OTM - .05 delta. What that means is that when a large event happens they will increase in value much faster than the pricing model suggests. The idea is not that I would ever exercise these or that they would even be in the money, it's that I could sell when things dropped and implied volatility spiked. The trick is timing that event - but that is a problem I'll take over my account being down 30-50%.

In regards to single stock risk - well there is no way in hell I would ever be trading Sino Forest or it's ilk. I am only using good quality, dividend paying names with very high liquidity. RBC is not going to vanish over night. Yes in the case of a massive event markets may close for days at a time - but they will re-open and those option contracts will be valid. I will likely not exercise these options ever, just sell them in the market. Look at Sept. 11th for an example - markets closed, but if you had puts on the big liquid names the value of those absolutely exploded and when the markets did open again you were covered. This is one reason that for these particular contracts I roll them before they have less than a month to live - sometimes even when they have three months or less. I do this partly to roll them before the theta decay accelerates, but also so that I'm not stuck trying to deal with expiring options that I can't trade. I don't think that would actually happen anyway - the OCC would simply adjust those contracts in some way to deal with it, just as they do with other major events like mergers etc. In the case of the major disaster I would much rather be worrying about selling or exercising my options than I would being caught with the stock with no gap-risk and no way out. The exchanges will open again, the puts will do their job as insurance, and I will in minutes or days make up for years of under performance vs. had I not purchased this insurance.

mrPPincer nothing teaches like doing. I encourage you to both paper trade and after a while do some real money trades but VERY small. Even a few hundred dollars on the line will have you watching option values over time and teach you a lot.

After 2008/9 I vowed to run my portfolio in a way that would allow me to trade volatility and not be worried about big market downturns. I decided I would use options to prevent a major drawdown (I define as >20%) from happening to me. In this way when something major happens I know I am covered and I can calmly work out how best to profit from that situation. If I'm waking up one morning to my account cut in half I will not be able to make rational decisions knowing that it may take me many years to recover from that loss. It may well cost me 2% a year for that insurance, but that is a hell of a lot better deal than the 2% I used to waste paying some fund manager to do nothing but look for another job as my retirement funds get crushed. I think I can recover that 2% and year and more with other options strategies, but even if I do not, it's worth it for me. It's a hard thing to accept that I must do this consistently for years during the good times, but I am confident that some day this insurance will prevent me from suffering a crushing loss.


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## lonewolf (Jun 12, 2012)

Sampson
I agree with you.

Belguy posts are valuable because he has precisely what is needed to be successfull.

1, A method ( which which has worked over time, will it continue?)
2, disapline to follow the method
3, ability to accept losses
4, ability to accept huge gains

His method suits his personality so he is able to follow it.


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## humble_pie (Jun 7, 2009)

wolf the opposite is the case imho.

1. belguy doesn't have any method but instead ranges all over the map in hectic confused fashion;

2. has no discipline but plenty of panic;

3. you weren't here when he quivered under his bed couple summers ago, sceeching in pain the whole time, while markets turned down by a mere 20% ... that failure to deal with even small paper losses was disgraceful beyond belief;

4. he has no huge gains.


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## scomac (Aug 22, 2009)

Don't confuse the on-line persona with the real person. Every once in a while, the real person makes an appearance, more often than not when the on-line persona is under attack. It's actually pretty obvious after this amount of time.

The real person is quite comfortable with their investment program. The on-line persona is all about generating a reaction for entertainment purposes.


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## Toronto.gal (Jan 8, 2010)

jcgd said:


> 1. traders who are *unable or unwilling to teach*/ describe/ enlighten us to their methods aren't really teaching me much.
> 2. T.Gal I find particularly valuable to my learning on this board....She is particularly perceptive and *makes me think of issues from many perspectives that generally don't even cross my mind. *
> 3. Just adding some love in here because I know *she is going to make me want to cry* when she debates this post.


*1.* It's not something you can teach jcgd [though I do my best without giving away my top secrets, lol]. Keep in mind that nobody has to teach you anything here; you really have to learn your own method in the end. What's also true, is that you need to have an edge/knack for it, and some don't have it. For example, you need to be good at interpreting the important news [not noise], and as a result, being able to deduce the reaction of investors & applicable markets [talking about short-term trading]. Sounds easy enough, but believe me that it took me time to learn. There are no short-cuts, so yes, patience is key, and like the video that was posted by bayview mentioned, you can't read about brain surgery one weekend and perform a successful one the following Monday, but with trading, because of the probability factor, you can be successful a % of times with nothing but luck, but if that's all one wants, then casino is better. If you start with all the basic steps first, sooner or later you'll be able to identify all the pieces of the puzzle [give yourself a couple of years].

*2.* The reason I talk about/explain & post some of my trades, is not for any other reason than what you said above, ie: to make people think about situations they may not have thought of before, which I myself, realized on my own [talking about strategies and not the stocks/profit per se].

*3. *Yea, I'm the WWOTW. Sigh.  

*Donald:* I don't kiss & tell, but I'll tell you that I started with stocks a little later than 30's because as u guessed it, I was busy with child; f-time work, etc., but it was laziness, plain & simple, that had us hire an FA, who handled our investments for years. Another thing I can tell you, is that most of my trading  successes have come from making 'uncomfortable' trades [to quote Jack Schwager], ie: making risky trades not for the faint of heart, that I picked up when most investors would not have thought of doing so, and selling at decent & even stellar returns, and most times in the biopharma & tech sectors. For example, while many would trade AAPL [the comfortable stock], I was paying attention to NOK/RIM [uncomfortable for many]. :encouragement:

Trading/investing is not a job, but a passion of mine now.


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## lonewolf (Jun 12, 2012)

humble_pie

Without the precise information needed one can not judge rationaly. My impression was (dont know if it was right or wrong) that Belguy was an experienced disaplined trader. I really dont have the precise information to be certain in this case.

Toronto Gal

You are wise to do your own thinking & come to your own conclusions. Words are empty containers wih meaning we put into them. If we both put a little differnt meaning into a word & blindly accept what each other says is true our understanding of concepts & thier exact meaning will not be as precise as 1+1=2 but perhaps instead 1+1=2.1 or 1.9


People are more comfortable doing whatever others are doing. The more people come to your decision the more they confirm your decision. The thought process is that people would not make a decision, if they did not think they would win & if they lose, it is much more comforting to lose amoung friends & respected peers then by themselfs.

Through pain I have learned long ago to do what is right regardless of weather it conforms to the herd or not. I never judge my self worth by what others think which allows me to do the right thing for my financial situation from spending my money in the most practical way i.e., not buying clothes just based on the more expensive designer label to be part of the it crowd but buy based on that which is most practical.

To invest based on my understanding.
if I only understand addition, subtraction, multiplication & division & do not understand calculus & use calculus to solve a math problem. The answer would most likely be wrong. If everyone else is using calculus to solve a math problem but do not understand calculas but are simply repeating & memorizing what the so called Ivory tower intellects ( bank mutual fund sales rep) says is true. By failing to realize the answer might not be right but take comfort in trueth by consensus & saying to them selfs "who am I to think & judge" if its good enough for the Ivory tower intellect its good enough for me could have a negitive effect on ones investment account.

Iam not of the highest of intellect but from experience I have learned independent thinking has helped me financialy. I think the saying "that the herd is dumber then the dumbest person in it" is on to something. I think everyone here will have their most success if they can find the courage to trust in thier own judgement & do there own thinking.


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## Toronto.gal (Jan 8, 2010)

lonewolf said:


> 1. People are more comfortable doing whatever others are doing
> 2. I am not of the highest of intellect but from experience I have learned independent thinking has helped me financially.


1. Indeed, it's human nature, and though some here have ridiculed some of my trading choices, those same investments have given me 100%+ returns. But it's always the case that 'some' will look at you funny when you do your own thing.

2. Independent thinking [though not popular all the time], does help you in all areas of your life, and so I can thank my parents who taught me from a very early age, not to be a copycat.


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## humble_pie (Jun 7, 2009)

scomac who is the real persona ? the dude who lunges out from time to time w fists up in baby pink toy boxing gloves, howling that nobody-can-beat-the-index-he's-fully-index-so-gonna-win-traders-gonna-lose-so-good-luck-with-that-let's-meet-up-in-30-years-har-har ??


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## Cal (Jun 17, 2009)

I recently read The Strategic Dividend Investor by Daniel Peris, and he offers alot of reasons why there are much less long term investors these days than there has been in the past. Such as less companies offering dividends, which would be a reason to hold a company long term. Also, alot of brokerages, funds and such really don't care about long term results, they may simply care how the stock will fare in the short term, so that they can report how the fund did in its 6 month return. Also, the finance industry generates more $ if you trade. So why would they promote a buy and hold approach. He even alludes to the fact that some companies randomly change the recommended holdings for different risk classes just so they can call you up and recommend making a few trades to your portfolio based on the 'new' recommended risk allocation.

It is a bit of a dry read, but it does make you think about how brokerages operate, and why.


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## Toronto.gal (Jan 8, 2010)

mrPPincer said:


> *Understanding Options* by Michael Sincere, very good reading and I practically inhaled it in two days......


I read Sincere's book earlier this year & I believe I also 'inhaled' it in about 2 days or so. :tongue-new: Best book for option beginners IMO.

*'The problem is i'm afraid of extension ladders.'* LOL HP.


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## donald (Apr 18, 2011)

I don't get what is so funny about extension ladders-My boys are out today working  paying me----i show up with coffee's we bullshit for abit and i drive off........I make more than 750.00 a day like humbles ''day at the office".....and my builders keep going and going.

What's wrong with making 100k a yr that way?I aint a country bumpkin humble in a rusty half-ton.....might be hard for you to believe.


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## Toronto.gal (Jan 8, 2010)

donald said:


> What's wrong with making 100k a yr that way?


You totally misunderstood, but I'll let hp explain the humour behind such a comment.


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## donald (Apr 18, 2011)

Que alice and wonderland and a poem.


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## scomac (Aug 22, 2009)

humble_pie said:


> scomac who is the real persona ? the dude who lunges out from time to time w fists up in baby pink toy boxing gloves, howling that nobody-can-beat-the-index-he's-fully-index-so-gonna-win-traders-gonna-lose-so-good-luck-with-that-let's-meet-up-in-30-years-har-har ??


No. Every once in a while there is a reasoned post framed in the form of a factual, unemotional response. It's almost as though it was written by someone other than the by-line. There's no goading, no histrionics. With the exception of those brief glimpses, he fades back into his normal routine -- cut, paste and inflame.


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## dogcom (May 23, 2009)

I have to admit donald I am more of a straight up dumb comedy guy myself. When someone tries to make funny like Woody Allen I just don't find it funny at all and I would put sex in the city in that unfunny mix as well. Sorry for going off topic belguy except maybe buying and holding entertainment which does well in hard times.


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## lonewolf (Jun 12, 2012)

Lephturn 

Is right about a crash causing options to increase in value

I pulled out my tax record for 2008 to get the numbers on how option can dramaticaly increase in value & can protect a portfolio or make huge gains for the speculator @ the climax of a crash.

I never sold @ max momentum down but it was on a morning during a rally which ate up a lot of my profits. If memory is correct I think I lost almost half of the profits compared to the prevoius close.

I always have trouble reading these thing but for some reason I have 2 dates for when everything was bought or sold but they show up as back to back. so I will use first date I think secound date is settlemint date


strike price 400 Dec 2010 s&p 500 put
bought 6/03/08 price 1.97 sold 11/24/08 29.00
bought 6/05/08 price 2.00 sold 11/24/08 29.00




strike price 400 Dec 2009 s&p 500 put expired 12/19/2009
bought 05/23/08 price .7 & .9 sold 11/24/08 price 14.5
bought 06/05/08 price .7 sold 11/24/08 price 14.5



Strike price 600 put s&p 500 expire Dec 2008 12/20/2008

bought 02/13/08 price 1.5 sold 11/24/08 price 2.2 & 4.00
bought 06/05/08 price .35 & .18 sold 11/24/08 2.2 & 4.00


Strike price 600 put Dec 600 expire Dec 2010 12/18/2010
bought 02/13/08 price 15.1 sold 11/24/08 price 82.1


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## kcowan (Jul 1, 2010)

I would venture to say that the consensus here is that "Buy and hold" used to work but does not have the returns that many of us yearn for. Some have adopted it for the core but have a portion of their portfolio for playing the markets. That would be me. Others are pure traders and making out just fine.

But I think what it illustrates is that no one approach works for everyone all the time, in spite of belguy's passive aggressive position to the contrary. 

What I fail to comprehend is why he is here. He does not trade. And pays no attention to short term market moves. This is all to his credit. He is sticking to his knitting, even though it is not a classic couch potato mix. I suspect that he does not rely on his portfolio returns for living. And he has plenty of money, as a result, to last the rest of his life.

So come on belguy. Fess up! What are you looking for from your participation here?


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## PuckiTwo (Oct 26, 2011)

kcowan said:


> What I fail to comprehend is why he is here. He does not trade. And pays no attention to short term market moves.


I find Belguy thought-provoking - and he is very successful with it, otherwise he wouldn't create page long threads in which a fair number of seasoned and unseasoned CMFers participate. Provocation is the essence of thinking, it makes the Provoked focus on his/her own goals. Yes, he sticks to his guns, maybe a little bit too rigid but you need people like that in society too. There are a measuring stick against the ever and faster changing world. How boring if everybody would think and be the same as the next person.


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## Toronto.gal (Jan 8, 2010)

PuckiTwo said:


> 1. a fair number of seasoned and unseasoned CMFers participate... Provocation is the essence of thinking
> 2. Yes, he sticks to his guns, maybe a little bit too rigid but you need people like that in society too.
> 3. How boring if everybody would think and be the same as the next person.


*1.* Yes, with respect to having an audience, he's very successful with his threads; just look at 'Europe & the Lost Decade' and even this topic. :chuncky: And you're spot-on, his purpose is to provoke, but most times, in a contradictory & stubborn manner, albeit very entertaining! CMF would not be the same without Mr. Belguy; we need humour, too. :encouragement:

*2.* He likes to have his say & though often times points out that it's a discussion forum, he pays little attention/value to what anyone else has to say here, hence he's not here to discuss/learn. For example, I could count on one hand the # of times he has ever commented/responded to anything I ever said to him. I don't follow the passive approach, so I make no comments, however, if someone addresses me or asks me a question directly, I never ignore anyone. And if someone helps me out, I never forget to thank them either.

*3.* Indeed!


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## humble_pie (Jun 7, 2009)

donald said:


> I don't get what is so funny about extension ladders-My boys are out today working paying me----i show up with coffee's we bullshit for abit and i drive off........I make more than 750.00 a day like humbles ''day at the office".....and my builders keep going and going.
> 
> What's wrong with making 100k a yr that way?I aint a country bumpkin humble in a rusty half-ton.....might be hard for you to believe.



donald you originally posted a somewhat disdainful message that said investors would be better off concentrating at improving their work/employment paybacks because there are - so you claimed - not enough $$ that can be made from investments.

so i answered. In a lighthearted way. Yes extension ladders alarm me. There was no reason imho for you to fly into a rage.

according to your posts, you have been investing for less than 2 years. These have been 2 exceptionally challenging years, coming as they do after several years of a prolonged bull market.

it would be normal for a 2-year investor to experience this challenge as difficult & less rewarding than many businesses or professions. This does not mean that managing portfolios skilfully is a deadbeat cause, as you suggest. It does not mean you can label investors as losers who should instead have started up businesses like your own.

it does mean that you are a successful entrepreneurial businessman who could expect to succeed just as well with his own investment portfolio over a reasonable period of time, say 20 or 25 years.

hint: there's a long, challenging learning curve, as many here keep teaching. Parties who don't want to go to this trouble should find financial advisors instead ...


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## namelessone (Sep 28, 2012)

humble_pie said:


> this am i sold a july 35/30 put spread in GG. Sold 5 at 2.85, bought 5 at 1.30, net profit was USD 743.00. A quiet, typical, low-key kind of day at the office.


I am still learning about options and try to find a compelling reason to use some of the strategies.
So far, I like the idea of writing put as a perspective of a buy and hold investor. 

"net profit was USD 743.00."
I suppose that's the net premiums from both options. 
What would the profit be if GG goes to $31 close to expiration? And what would you do?


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## humble_pie (Jun 7, 2009)

good for you nameless, you are "getting it."

what would i do ? i monitor my options constantly. If GG dropped to USD 31 i would have rolled over into a pair with lower strikes but farther out in time ... a considerable time before expiration ... is why i sometimes say an options portf is like a dance that never ends.

it's an elegant court dance to 17th century baroque music except when it breaks down into a barbarian slaughter, like in aapl recently. Although i should admit that i find the slaughters pretty fun.


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## donald (Apr 18, 2011)

Fair enough Humble.....What i don't ''get'' is the pot shots of me ''heading'' up a micro business ect(like u think it cute or something,who talks like that?)I don't get the sing songs and the ''tea and biscuit" talk like were in a ole english novel.

Your one eccentric cat.

My point was:95% of people are better off ''not'' trading....it's m.o...and yes it has been challenging.....Good on you and t-gal to be raking in the profits,its clear you have skills and abilities.


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## Toronto.gal (Jan 8, 2010)

humble_pie said:


> hint: there's a long, challenging learning curve.........


Indeed! For example, I find Options challenging. Why? Because I'm still fairly new at it and need lots more practice [can't learn from just reading]. However, that is not to say that I don't pay attention to what the experts are teaching here, but you can't pick others' brains, you need to pick your own [when not possible for x,y,z reasons, I agree about hiring a FA].


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## humble_pie (Jun 7, 2009)

donald if you don't think you are heading up a microbusiness then wtf is going on over there in w'peg ? they're not known for tea parties in manitoba


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## donald (Apr 18, 2011)

Hey that aside----talking about trading then.......What is your take on freeport mcmahron?fcx?(Do you like the sell-off?,overdone?)

I'm self-employed humble,yes.


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## HaroldCrump (Jun 10, 2009)

IMHO, there is nothing whatsoever wrong with owning a "micro"business, or a "macro"business.
Micro does not necessarily imply insignificant and worthless and I don't believe humble_pie said that.
It simply means that a guy running a construction business with half a dozen contractors is indeed "micro" cap when compared to large cap construction giants.

It is entirely possible (and indeed is) for micro business owners to be successful and rich.
In the book _The Millionaire Next Door_ - the largest ever study of individual millionaires - they concluded that the vast majority of self-made millionaires were small business owners or self-employed folks.
They had built their wealth over years and decades by painstakingly working at their business and making it grow.
There is no shame in being a small business owner.


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## Toronto.gal (Jan 8, 2010)

The sell-off is not at all surprising.

Oil & gas demand won't disappear anytime soon, but they paid a high premium & the company's debt [close to 20 billion now with the purchases], is not exactly small. Not removing it from my watch-list though.


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## PuckiTwo (Oct 26, 2011)

Toronto.gal said:


> *1.*
> 1. ...... hence he's not here to discuss/learn.
> 2. if someone addresses me or asks me a question directly, I never ignore anyone. And if someone helps me out, I never forget to thank them either.


1. no, probably not. There are people who do not want to learn anymore, old as well as young ones. And unfortunately, you can't make them. If Belguy doesn't want to learn nobody will be able to convince him otherwise. Why not simply accept him as he is? Maybe he would soon be very bored if suddenly everybody accepted him as he is. A psychological platitude says "it needs two (or more) people to argue". If one stops the other runs out of steam. He can't argue with himself. 
2. certainly true, you are an exceptional individual there (and otherwise too)


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## Toronto.gal (Jan 8, 2010)

HaroldCrump said:


> Micro does not necessarily imply insignificant and worthless and I don't believe humble_pie said that.


Most definitely *not* what hp meant & neither did I in my response. At any rate, I'm glad I responded to the humour, otherwise Donald, it seems you would not have said anything, so at least now there is no more misunderstanding [i hope].

signed:
hyperactive-trader. :encouragement:


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## humble_pie (Jun 7, 2009)

last i looked at fcx it was the breX disaster but fcx knew there was something severely wrong & said so.

what are U expecting from china ? there's your answer, for all the miners.


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## donald (Apr 18, 2011)

Of course there nothing wrong with micro business--that is how a country is BUILT!

I don't ''get'' humble speak(that is all)It comes across as if we are in a court-yard and humble to speaking to ''unwashed'' poor/lame folk or something.

It's humble style(instead of ganghem style....lol)I like the (wtf) coming from Pie......know where getting somewhere!


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## Toronto.gal (Jan 8, 2010)

PuckiTwo said:


> There are people who do not want to learn anymore, old as well as young ones.


Very true Pucki, but I have nevertheless, been one very loyal fan of Mr. Belguy, ie: I try to encourage him not to panic, to have a little fun, and I pay attention to what he writes [even when I don't follow his strategy].

Thanks for your kind words!


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## kcowan (Jul 1, 2010)

Wow this thread is turning into a love-in. Where is belguy to stir the pot once again?


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## Toronto.gal (Jan 8, 2010)

What can I say, I have a soft spot for seniors, and you're missing him.


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## Belguy (May 24, 2010)

I already know so much that sometimes it feels as if my head is going to explode!! I don't want to know any more--least of all to do the research necessary on individual companies to determine whether or not to invest in them, when to buy, how long to hold, and when to sell.

Totally boring!!!:frown-new::eek2::uncomfortableness::sour:

I would rather spend the time in my easy chair watching cartoons!!!

I guess that I am the quintessential Couch Potato person.


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## mrPPincer (Nov 21, 2011)

bayview said:


> This is *Jack Schwager's Trading for Beginners!*
> 
> It's  a 54min video. Some may not find it useful.
> 
> ...


Worth watching more than once imo.

The main takeaway I get is the importance of finding a method that suits one's personality, that a trader can't get ahead by listening to other people's opinions; you have to generate your own ideas. That point alone probably can't be stressed often enough.

He also goes on to mention effortlessness being indicative of successful trading and losing being part of the process, successful traders knowing they've won the long term game before they've started, the importance of patience both in waiting for the right trade and in sitting in a trade in a right trade, and the importance of a lack of loyalty to a position, lots of valuable tips there.

I do understand that losing is going to be an unavoidable part of any trader's path, successful or not, and that is mainly what has been keeping me from edging over towards the dark side, also, the well known fact that human psychology tends to generally make us as a whole inherently worse traders than monkeys that throw darts.

For now although I do have some ideas it's still couch potato for me because I will not risk my hard earned pennies trading, pennies earned through hard physical labour, long hours, sweat, and even a little blood combined with a lot scrupulous saving, all from out of the back of a rusty half ton truck (not that there's anything wrong with that ;-)

The fiscal cliff and the euro-mess do scare me a little and my current strategy for any future roller-coaster rides is as follows, while remaining on the sofa.

I tend to be a serial rebalancer, with rebalancing being mostly cost-free for me the way I have things set up, but there is known to be a line, depending on what the markets are doing, where rebalancing too often begins to be counterproductive, thus earlier this year I've made a rule for myself in rebalancing not to sell within an allocation until at least 30 days after buying and not to buy until 30 days after selling, so this I think, helps me to capture trends a little more effectively. 

The latest adjustment I've made to my method was in early november after a several month ride up in equity valuations.
My cash allocation earlier in the year had been 10%, but I had let equity ride the upswing, counting some of the future cash to be added as a part of the total allocation when rebalancing other sectors.
In early Nov, I changed this strategy somewhat in such a way as to prepare for large changes in the market such that I'd harvest more gains on a sustained rise in equity or to dercrease my cash levels to zero given another 50% drop in the market such as what happened in 08/09, and yet to do this in a systematic emotionless way.

To do this I've counted in the amount of new cash that I will put in over approximately the next four years.
Without changing any real balances on that particular day one month ago, this imaginary amount of dollars changed my perceptional cash allocation to 19%, and any 10% equity allocations to 9%, 5% allocations to 4.5% etc.
So, if we have a four year bull market, by the end of that four years, I will be at an actual 19% HISA/fixed income allocation (depending on what's happened to interest rates in that time).

If we have another 08/09 I'm in for the full ride, but putting the most in at bottom if it's a 50% drop, and if it's greater than 50% I'm either SOL or I continue, just putting in everything I make, possibly picking up more work until it does hit rock bottom.

This is my current modified couch potato strategy, and it suits my personality, current risk comfort level, discipline level, knowledge and style.
I do think that down the road I will be looking at ways of using options to manage risk and possibly finding ways to harvest changes in volatility, and by that point I could be doing a little trading as a portion of my larger portfolio but that is not for me just yet.

Thanks for posting the video bayview!


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## mrPPincer (Nov 21, 2011)

mr pie, re HISA risk and the ISAs (investment savings accounts), I see james4beach's concern, considering how things went down in the US with liquidibility of some of their similar products known as brokered CDs. 
http://canadianmoneyforum.com/showth...l=1#post154057

I personally have not even considered holding cash in an ISA myself, I am happy take the extra half a percent or so over what they're paying and continue to keep my cash in real savings accounts in my own name in the Manitoba credit unions directly.

Granted, the CUs are not CDIC insured, but they are all DGCM insured without limit (Deposit Guarantee Corporation of Manitoba).
I feel safe keeping my cash there; if one or two Manitoba CUs run into trouble they are protected.
If they all fail, say armegeddon happens or something, I'm sure the province would step in to help.
Admittedly I do not know the first thing about how to assess risk wrt these CU HISAs but they are providing the best HISA rates in the country and seem safe enough to me.

Lephturn I find your risk management strategy intriguing and do see the importance of monitoring the positions and rolling them over before expiry, I'm putting a link to your post here so that I can easily find it again later, and I will put some thought towards doing some paper trading as you suggested to get a feel for things.
http://canadianmoneyforum.com/showt...Versus-Trading?p=156916&viewfull=1#post156916


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## Belguy (May 24, 2010)

For all of you buy-and-holders of index products, I found a couple of charts in today's Toronto Star interesting.

It shows that the iShares CDN MSCI EAFE is currently at the same level as it was in April 2010. It also shows that the TSX Composite Index is now at the same level as it was in September 2010.

Buy-and-holders sometimes have to have a great deal of patience which is a trait often missing from active traders.


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## webber22 (Mar 6, 2011)

-Whistle-
♩ ♪ ♫ ♬ ♭ ♮ ♯
Shed a tear cause I'm missin' you
I'm still alright to smile
BelGirl, I think bout you every day now
Was a time when I wasn't sure
But you set my mind at ease
There is no doubt you're in my heart now
♩ ♪ ♫ ♬ ♭ ♮ ♯

Sad woman, take it slow
It'll work itself out fine
All we need is just a little patience
Sad sugar make it slow it'll come together fine
All we need is just a little patience
♩ ♪ ♫ ♬ ♭ ♮ ♯
(Patience)
Mmmm, yeah 
♩ ♪ ♫ ♬ ♭ ♮ ♯


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## Sampson (Apr 3, 2009)

Belguy said:


> It shows that the iShares CDN MSCI EAFE is currently at the same level as it was in April 2010. It also shows that the TSX Composite Index is now at the same level as it was in September 2010.


Thankfully your time frame is too short. Look at the 5 yr returns. Those have been stellar.


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## Spidey (May 11, 2009)

I'm quite a fan of the "core and explore" strategy where one keeps the bulk of their portfolio in a well balanced mix of indexed funds and REITs (adding REITs as a category is my on personal bias/preference) and one shops for bargains with the remaining portion.


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## Belguy (May 24, 2010)

The long time periods when the indexes rise and fall on a daily basis but essentially end up going nowhere on a longer term basis just further points out the importance of those dividends especially to long term, buy-and-hold equity investors.


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## Sampson (Apr 3, 2009)

I think it highlights the true risk of investing in equities especially sequence of returns risk. For an average investor whom accumulates their savings and assets typically in the second half of life, it is important they have sufficient time to ride out extended periods of low real returns.

It also gives strength to life cycle investing. Even for a retiree going through this present down turn, had invested the majority of their monies some 20+ years ago, their average annual returns would actually be very good. The good thing about how people actually invest is that it is not all in one go, so looking at returns from point A to B does not actually reflect their portfolio return.


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## Young&Ambitious (Aug 11, 2010)

Sampson do you follow lifecycle investing? Maybe we should start a thread on lifecycle investing... 

It's something that intrigues me and while I don't know if I am persay a strict follower, the low HELOC rates make it an easy choice for me atm to use leverage to invest.


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## Sampson (Apr 3, 2009)

Young&Ambitious said:


> Sdo you follow lifecycle investing?


Not by strict definition, but certainly we had plenty of opportunities to pay down debt, and instead we invest into the markets. This has proven to be a very fruitful decision since 2007/08.

I'm to chicken to take borrow additional funds (outside the mortgage), but we will plan to do so in the near future now our debt situation is well under control.

I do believe it is a good decision (lifecycle investing) for some, those that would be able to tolerate loss of their investments and be able to carry the resulting debt, but as Belguy always points out, time is critical.


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## namelessone (Sep 28, 2012)

humble_pie said:


> good for you nameless, you are "getting it."
> 
> what would i do ? i monitor my options constantly. If GG dropped to USD 31 i would have rolled over into a pair with lower strikes but farther out in time ... a considerable time before expiration ... is why i sometimes say an options portf is like a dance that never ends.
> 
> it's an elegant court dance to 17th century baroque music except when it breaks down into a barbarian slaughter, like in aapl recently. Although i should admit that i find the slaughters pretty fun.


Thank you HBP, the more I look into some options tutorials, the more fasinating I become. 
Buy and hold/inteligent investing is definitely compatible with options. The key is not letting my positions being called away. 
I am planing to do some dance with covered calls in TFSA. I was getting bored sittig on my *** and waiting. Now I get something to do.


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## Belguy (May 24, 2010)

Getting your target asset allocation right in the first place, according to your time horizon and risk tolerance (most investors overestimate their risk tolerance and only find out when the markets tank), is far more important than chasing after returns of individual investments.

http://www.abcsofinvesting.net/chasing-investment-returns/


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## humble_pie (Jun 7, 2009)

yes a key is not letting positions be called away (tax consequences become more complicated) but the ultimate key to the Grail's chamber is finding the trading limits that will be close enough to the flame to deliver enough premium but far enough away to never be singed. GOB said this when he found out the hard way over on his aapl options thread.

one has to pick underlyings that are not only decent blue chips in their own right - preferably with nice big eligible dividends - but they also need enough volatility to have reasonable premium in their options. Canadian banks are OK. Canadian energy & mining stocks are OK. Telcos often have disappointing premiums imho.

in aapl, premiums are so fat that one can dance farther away from market price, ie more safely, while still harvesting decent premium. Argo does this. Lepht & i are somewhere in the middle. Curtsey & bow.


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## Toronto.gal (Jan 8, 2010)

webber22 said:


> -Whistle-
> ♩ ♪ ♫ ♬ ♭ ♮ ♯
> Shed a tear cause I'm missin' you
> I'm still alright to smile
> ...


Sounds like you had a boring/lonely Saturday night. :biggrin:


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