Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on Jul 18, 2016 2:18:08 GMT -8
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Post by mace on Jul 18, 2016 2:46:23 GMT -8
$100 is not a big deal, crossing above $105 is.
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Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on Jul 18, 2016 3:04:15 GMT -8
I look forward to asking if anyone can say 105...
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Post by dmiller on Jul 18, 2016 7:06:57 GMT -8
I can say, 100. Can anyone say 101? :-)
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Post by phoebear611 on Jul 18, 2016 8:18:43 GMT -8
Question for anyone: any reason Apple shouldn't be buying Twitter?
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Post by mace on Jul 18, 2016 8:42:22 GMT -8
Question for anyone: any reason Apple shouldn't be buying Twitter? Difficult to reconcile rich valuation and high pay of Twitter engineers. Is always a problem for big acquisition.
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Post by tuffett on Jul 18, 2016 9:12:42 GMT -8
- 6 years of data is awfully small for a study on buy and hold investing, don't you think? I constantly get ragged here because 4 years of underperformance is nothing for a buy and hold trader.
- 91-96 was a bull market, obviously suited for buy and hold in retrospect. This is just as useful as studying AAPL over the last four years, and would result in a completely opposite conclusion.
- This looks more like a study of buy and hold vs everything else, not targeted swing traders. Most of these traders are probably "average joes" who succumb to fear/greed. When I talk about swing trading I'm referring to buying dips and swallows rallies - a simple principle but one I'm sure the overwhelming majority of people in the study did not abide by.
- The market is currently overvalued on a historical basis and is ripe for swing trading (my opinion). AAPL, while not overvalued, has shown over the past several years that it likes to make huge moves up and down - a perfect candidate for swing trading (my opinion). I don't factor 20 year old data into my decision making.
- If you are going to cite old studies to back up your buy and hold strategy, then what about all the studies that decisively agree that diversification provides the best overall returns? After all, Buffett doesn't go all-in on one company. If you asked any profession wealth/investment manager or hedge fund trader now or over the last three decades they would have told to you sell out of 80% of your stake and put your money elsewhere. My point is that sometimes the best way forward defies conventional wisdom, as your success has shown. And whatever way you choose, there's a whole lot of good and back luck that can change everything.
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Post by mace on Jul 18, 2016 10:01:59 GMT -8
No point talking about trading vs buy n hold without talking about position size, and absolute size. Say, I have $300k investable fund, excluding owner occupied property. Buy n hold would invest $300k fully. Traders would probably limit $3k per trade and max aggregate $30k open. Assuming same counters, can traders perform better over any arbitrary Period that span a bull and a bear market?
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Post by Luckychoices on Jul 18, 2016 11:32:12 GMT -8
- 6 years of data is awfully small for a study on buy and hold investing, don't you think? I constantly get ragged here because 4 years of underperformance is nothing for a buy and hold trader. To be fair, I was responding to sponge's comment, "But plenty of opportunities to make money in swing trades.". Since I know butkus about swing trading, I did a search and came up with that link. It told me what I already knew which is that I'm not knowledgable or bold enough to engage in swing trading. It may be just fine for you, sponge and any number of folks on the board, but not for me. I'm too risk adverse. I've not lost a dime by buying and holding AAPL over the years. The VALUE of the stock has changed considerably at various times but I haven't lost money that was gone forever. The only time this happened was when I decided perhaps it would work well to sell and buyback AAPL stock from an IRA and therefore not have to pay taxes. I sold a portion of stock two different times and then bought it back at a lower level and it worked great until the third and last time I tried it. I wasn't an "average joe" that succumbed to fear/greed. I was just mistaken about what was a good idea for me. - 91-96 was a bull market, obviously suited for buy and hold in retrospect. This is just as useful as studying AAPL over the last four years, and would result in a completely opposite conclusion. That's true. Again, I wasn't trying to indicate that swing trading was BAD, in and of itself. I was just trying to point out that there was also plenty of money to be LOST in swing trading. - This looks more like a study of buy and hold vs everything else, not targeted swing traders. Most of these traders are probably "average joes" who succumb to fear/greed. When I talk about swing trading I'm referring to buying dips and swallows rallies - a simple principle but one I'm sure the overwhelming majority of people in the study did not abide by. You may very well be right, I'm sure there are a lot of "average joes" who lack the knowledge or discipline to do it effectively. - The market is currently overvalued on a historical basis and is ripe for swing trading (my opinion). AAPL, while not overvalued, has shown over the past several years that it likes to make huge moves up and down - a perfect candidate for swing trading (my opinion). I don't factor 20 year old data into my decision making. I don't factor 20 year old data in my decision making, either. However, I do factor a company and stock record that spans over 15 years. - If you are going to cite old studies to back up your buy and hold strategy, then what about all the studies that decisively agree that diversification provides the best overall returns? After all, Buffett doesn't go all-in on one company. As I said initially, tuffet, I didn't cite old studies to back up my buy and hold strategy at all. It's just what has worked well for my wife and I. But I'm not necessarily a fan of what most people might call diversification, either because we lost over $100K when we were "diversified". I've previously mentioned to someone on the board that if I felt we did well with AAPL because of my extraordinary financial ability, my username would be Brilliantchoices, not Luckychoices. If you asked any profession wealth/investment manager or hedge fund trader now or over the last three decades they would have told to you sell out of 80% of your stake and put your money elsewhere. I'm sure that's true, but I would ask them why they're working as a wealth/investment manager instead of following their own advice making millions for themselves. Greg, our Charles Schwab Financial Advisor, with whom we have a very good relationship, called us a month or two ago to ask us (again) to come to a presentation that would help us "safeguard" our investment. I believe it involved selling covered calls on our stock. I begged off because I just wasn't interested. In 2007-2009 when AAPL dropped from close to $200/share down to $85/share, Greg had tried to get me interested in a different investing strategy to regain our investment but I declined because I felt that we would have more opportunity with AAPL to return to where we had been financially. I'm really not advocating ANYONE do what we did by investing 100% in one company, even Apple. All I've said all along is that we were fortunate it worked out. But I will say that following the advise of wealth/investment managers in the past lost us a considerable amount of money. In fact, that helped us decide that we would take over those decisions completely because it's bad enough to lose money investing, but it's even worse to pay people for the "privilege". My point is that sometimes the best way forward defies conventional wisdom, as your success has shown. And whatever way you choose, there's a whole lot of good and back luck that can change everything. I agree with you completely about luck being a very important factor. Although sometimes choices we make can make it somewhat easier to be lucky. I really hope you and all the others on the board do well with your investments and, believe me, I really don't care if a person is long AAPL or a swing trader or uses a dart board to make their investment decisions.
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Post by tuffett on Jul 18, 2016 11:52:46 GMT -8
I agree with you and would never trust my money with anybody else. Although I have to say I've used covered calls very effectively lately. They are a great income booster.
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Post by rickag on Jul 18, 2016 11:58:10 GMT -8
I agree with you and would never trust my money with anybody else. Although I have to say I've used covered calls very effectively lately. They are a great income booster. I have thought about selling covered calls for quite sometime. Would you be willing to share any methods you use to determine strike prices and how far out you choose expiration dates? I was thinking fairly short term expiration dates and several dollars above max pain as starting points. Have not looked at volitility.
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Post by macster on Jul 18, 2016 12:04:27 GMT -8
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Post by incorrigible on Jul 18, 2016 12:16:19 GMT -8
I agree with you and would never trust my money with anybody else. Although I have to say I've used covered calls very effectively lately. They are a great income booster. I have thought about selling covered calls for quite sometime. Would you be willing to share any methods you use to determine strike prices and how far out you choose expiration dates? I was thinking fairly short term expiration dates and several dollars above max pain as starting points. Have not looked at volitility. Every time I think about doing this, I look at strikes and expirations and the amount to be made doesn't seem to be worth the effort and risk IMO. Maybe I'm approaching it wrong or just don't have enough shares.
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Post by tuffett on Jul 18, 2016 15:19:34 GMT -8
I usually do one or two weeks out and a few dollars up. It's a decent chunk of change if you're holding enough shares. But lately volatility has been really low so not as lucrative.
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Post by rickag on Jul 18, 2016 17:28:50 GMT -8
I have thought about selling covered calls for quite sometime. Would you be willing to share any methods you use to determine strike prices and how far out you choose expiration dates? I was thinking fairly short term expiration dates and several dollars above max pain as starting points. Have not looked at volitility. Every time I think about doing this, I look at strikes and expirations and the amount to be made doesn't seem to be worth the effort and risk IMO. Maybe I'm approaching it wrong or just don't have enough shares. I am probably wrong but here goes. If, and this is a really big if, you can make 0.35% selling a weekly call (re: this Friday's $101 sell for about $0.34) and you can repeat this for 52 weeks, at the end of the year you would net about 20% gains not counting commissions. Shooting lower at about 0.15% comes out to around 8%. (Re: this Friday's $102 sell for about $0.15) The downside would be getting called away, but assuming your average price paid is lower than $101 or $102 you get the premium plus made a few bucks. The sucky part is having to buy back in at a higher price which could get ugly quickly if your average price paid becomes higher than the current AAPL price and you get called away. For example if your average price paid is now $102, AAP drops to $90 and you get called away, NOW THAT WOULD BE MAX PAIN. Anyone with a financial calculator that can check my feeble math abilities?
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Post by rickag on Jul 18, 2016 17:45:09 GMT -8
I forgot to mention the IRS. I would be doing covered calls in an IRA. In a taxable account the IRS would become your new best buddies. Let's say your cost basis is $50 and you get called away you may owe a hefty tax bill. I don't know the tax law and how it would affect taxes owed if you immediately buy back into AAPL.
So even in the best case, you don't get called away and make 20%, your friendly tax man/woman gets their take of that 20% in income tax.
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Post by Odd-Lot Richard on Jul 18, 2016 18:55:26 GMT -8
I forgot to mention the IRS. I would be doing covered calls in an IRA. In a taxable account the IRS would become your new best buddies. Let's say your cost basis is $50 and you get called away you may owe a hefty tax bill. I don't know the tax law and how it would affect taxes owed if you immediately buy back into AAPL. So even in the best case, you don't get called away and make 20%, your friendly tax man/woman gets their take of that 20% in income tax. As long as you don't sell calls in the money by more than just the first strike lower than the closing and at least a month out and your underlying AAPL is purchased at least one year ago or more, it's taxed at the capital gains rate, plus the extra percentage for the ACA, I can't remember where I was going with this sentence. Yay IRS?
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