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The buying opportunities seem wildly unprecedented. The drops in NAV..the discounts in price to NAV..the unbelievable yields.
They say when things seem too good to be true, they usually are.
At the prices, the dividends could be halved, and still have a nice return.....surely half of American/Global companies are not worthless, are they?
On one hand it seems like a once-in a lifetime financial opportunity. On the other hand...could everything go bad, and buying is the worst thing you could do?
I think by the time this crisis is over I will either be grateful I had the cajones to buy while everyone was selling....or I'm going to be looking for a very cheap trailer home.
Cohiba...thanks for the reply..I don't know much Spanish..but I think that means "shy" or something similar? That doesn't seem to fit you, so perhaps I have that wrong.
Thanks for the excellent advice. What sorts of Basic Maintenance Requirements do CETF's have?? Is there a place where one can find this information?
I do not mind missing dividends for awhile..nor would I mind reduced dividends. What I see is a unusual opportunity to acquire a large amount of shares (because of depressed prices) of dividend paying funds. While it is true that having a large amount of shares, if they never pay any dividends or are at zero NAV, are worthless.......still, I venture that if one were to spread the risk among a number of cetf's..each of them diversified in various ways..that the risk of default could be minimized.
The alternative would be to assume that the ecomomies of the US and world are going to completely collapse...I think that is unlikely, and apocalyptic....still?
Do you see the price decline continuing past the end of year?
I see a lot of tax-loss selling in December..but think the first quarter may see a bottom form in financials, and then some recovery begin...that is only a guess on my part.
Regards, and thanks for your reply.
Hi..my first post here, but I have posted on other IHub boards.
I am moving from trading etfs, to looking for dividend income..age constraints..wife who would not be able to continue trading, etc.
I will just watch for awhile..but my tatic is to invest in closed end funds that are paying good dividends. Is there any interest by anyone in cetf's? Thanks and regards to all.
Tom...You continue to be a wonder in the resource helps you provide so freely. Thanks so much for taking the time to type that comprehensive reply. I have all the information (or know where to get it) that I now need. EDIT: TooFuzzy..thanks also for your reply..I saw Tom's first..yours is very helpful as well. Regards.
OT..How about those Brewers?..they did good to get into the playoffs. Too bad the Univ of Wisc football is down this year. Hope the Packers make the Super Bowl.
Best Wishes and Best Regards,
Bud Weeder
All...Please forgive my ignorance..I have never owned an income producing instrument. I have some limited understanding, but not much...I hope I don't sound too dumb to be answered. Thanks.
1. Take HYG for instance. I note that it has paid about $.60 per share over it's lifetime..and holds so-called junk bonds. I am also interested in similar junk or investment grade bond etfs's..the latter pay a bit less, of course.
My questions:
A. If I hold HGY and the price goes down, my net worth goes down...but doesn't the dividend stay about the same? If not, what happens? If the price goes up in say two or more years from now, my net worth will be more..but doesn't the dividend stay about the same??
B. I think the risk of holding the etf is the composite risk of one or more of the companies going bankrupt. That would mean they would no longer pay their portion of the dividend. Would that only mean that the total dividend paid monthly by HYG would drop by a small amount..and NAV drop a bit..or would there be more serious consequences to the holders of HYG?
C. In your opinion, if the amount to be invested in these junk bonds was what you would call pretty large..how would you reccomend reducing the risk of failures? Would you split your pot into 4 segments, for instance, and buy equal amounts of four etfs?....say, HYG, LQD, ACG, and PHB? Or, what other method would you use?
D. What other income producing instruments would you use in place of the ones I have mentioned?
Sorry for the lengthy questions. All replies will be gratefully received. Thanks again.
Bud Weeder
Hi Tom Veale...my old board name was huske..I have been gone for awhile..hope all is going well with everyone here.
Tom, I am interested in moving some money into high yield instruments at the lower prices we are now seeing.
Would you please comment on what vehicles you now view in a favorable way? I am familiar with HYG and PHB..are those good ones?? What others do you reccomend I investigate.
Best Regards to all
Bud Weeder
Tom Veale.........Hi again..I've been gone from the board awhile, but still doing well....and hope you are too.
I have been watching the high yield etf's (like HYG), come down in price to a more reasonable level. The yield payouts seem to continue to be in the 7-9% range..and paid monthly, which seems like a benefit.
Would you mind listing a few of your favorite income/dividend producing investments at this point in time??
I would like to move a portion of my portfolio to a secure, but well paying instrument. I have investigated HYG, PHB, and another, but would like your take on those two..plus any others that are attractive.
Thanks Tom, and Best Regards.
Bud Weeder (old board name huske)
Hey learn'....."Everyone is expecting a 1-2 month DCB (Dead Cat Bounce)." Well..maybe most everyone..I have no guess.
If someone were holding a gun on me, I would guess that the unwinding into safer instruments has only begun, and will take months, with brief rallies..but I will be happy to play an uptrend, if one develops.
One observation, often made over the years...when the herd thinks a particular thing is right..it is often wrong. Good luck.
euterpe1...first, sorry that you took personally any chiding..as I said I am just amazed at the number of people who try to trade against the trend. I was never any good at "guessing" when a support level would hold..when an overbought signal of any kind would signal a reverse, etc. You apparently have successfully done that in the past, under far more normal conditions.
I guarantee an obvious thing..I have made many trading mistakes..and will until I quit trading, I'm sure. That is not even a question.
Sorry you can't go short in some of your accounts. Before I retired, my company IRA had the same limitations. That's a real bummer, because some of the best gains, in the least amount of time, come on the short side.
Yes, the volatility on the days you mentioned was extreme..but you will notice that the weekly chart cancelled those days, and remained short. As I recall, it was a very trying time to stay with the plan. I allow for a 20% drawdown..never invest more than I can afford to lose..and never use margin or futures or options.
Good luck with your system. It will reward you again in time.
Eddie...I am reluctant to speak too much here because I have found there are those waiting in the weeds to ridicule when the inevitable whipsaw occurs.
I just love the renko charts because they do for me what I have laboriously done for years using P&F boxes. If you are interested in trend trading, I don't think they can be beaten..but you should study them a long while, in order to see the opportunities and pitfalls.. and be creative in minimizing the whips.
One thing you may notice as you work on minimizing whips is..the day to day swings are very large, compared to 10 years ago..for instance. Monday may be hugely down..Tues and Wed recover most of that..Thurs flat..and Friday way down.
Day to day you might be whipped......on a weekly chart, those daily moves cancel out to a degree, and the primary trend remains visible. regards.
euterpe1......yes, whipsaws are a part of the downside of renko trading. They can't be eliminated..but they can be minimized. I did have a whipsaw in August, as you mentioned.....over the years, that is only one of many..and yes, a whip reduces the profit.
I have spent a large amount of time in finding techniques to minimize the whips using renko. Of course they will still occur despite all...it's just part of the drawdown of the system. Fortunately, I have remained in the MZZ trade since early Sept, on a portion of money..and never received a box reversal signal..
The larger principle is following trends. The renko charts are simply a clear way to do that........there are other methods that have been used for years..including moving average crosses, or P&F. Both of those systems also suffer whips, as trends move back and forth.
There are advocates of many indicators and systems..perhaps as many advocates as there are traders. Renko charts work for me..but I realize they appear slow to many traders.
Good luck to all systems. regards.
Hi Ron.....it's amazing how most people scheme in various ways to make trading as difficult as possible.
I don't know what it is that makes so many reject the concept of simply going with the renko trend..white boxes long..red boxes short....ah well..
I'm sure when they look back to the unbroken trend downward since early Sept, they wish they had been there short since then..my account devoted to renko is up nearly 60% since early Sept..and I didn't capture it all. I don't know why others weren't..at least with a portion of their accounts..but most weren't. Of course, I will give back about 4% when the trend reverses..but if it happens tomorrow, I will still be up 54% in that account. I lost in another account though, that is a subscription.....I may devote more to renko for awhile, because I think the conditions today will overwhelm conventional TA for awhile.
In the meantime, Ron..there is endless discussion about a trend reversal..when?..how?..where? I suspect the first ones to know when a trend has reversed will be renko followers..lol.
ummmm...remember how our teachers used repetition to reinforce teaching concepts??
The market is delivering another lesson it has taught many times before....don't fight the trend.
Fresh look at renko charts, anyone?
I have been hurt pretty badly on both sides trying to trade this market with about half of my money. Ouch!
I quit posting about the efficacy of renko charts because most here were into guessing about what the next 15 minutes would bring.....not a critique...many are quite good at it..I'm not.
OTOH..I'm grateful that I have followed the renko charts on part of my money. It has helped offset the losses of the former method..and although I'm down..I'm less down than I would have been.
You are great guys, but spare me the comments about renko "giving back too much on trend changes"...being "too little action"..etc.
Yep..it's like watching paint dry or grass grow..but it does keep you in major trends, and makes money.
I don't need the excitement of gambling...but I do like to make money. Have a look.......
"I'm sure we all appreciate these guys, accepting and doing their jobs, but $10 billon a month indefinitely is a big price for it."
I am always amused when I see a comment like this.....we have a standing military..what would be the cost if they were not in Iraq, but training in the U.S., or elsewhere?? Certainly the salaries would be the same, or nearly so, allowing for combat pay...training costs (arms, fuel, etc.) would be nearly the cost of war expenditures. I doubt there would be a huge difference in costs.
To imply that if our military were removed from Iraq, that the costs would be saved is disengenuous. The bottom line is that freedom is not FREE. We pay dearly with treasure and lives so that terrorists are fought on their ground, rather than ours.
I rue the costs..but in this dangerous world, the alternative is much worse.
sam..good for you being long today. I was too much short..it could have been worse, as I went to cash on part based on the MID daily reversing upward at the close Thursday..but only cash and not long, since the weekly remained short. Ah well...what can you do? A lot of money went to heaven, but this truly was a once-in-a lifetime event (surely).
Sammy...the volatility seems to produce whipsaws more frequently than "it used to"..how's that for an equivocal statement?? lol.
A reasonable indication of a reversal might be a price move of 6% or so...well, heck..the price might be up 5% on Monday..down 4% on Tuesday..down another 3% on Wed..up 3% on Thurs...................very little net movement, but if the box size is small, the user could get whipped. The weekly chart averages all that out, and still gives good returns..MVV has a return of about 70% over the past year using the weekly renko.
I sometimes take money on and off the table based on the daily..but am moving more towards wanting to see a reversal on the weekly to reduce whips. The renko provides a good counterpoint in risk to a sub system that is good in it's own right.
renkoron..........sorry for the absence. I have just been waiting and watching for a real trend to develop. There is nothing much to talk about when trading the weekly...but when the trend moves..boy, it's fun.
Dang..this has been a good move..I've been hugely short some 2X instruments for the past couple weeks, almost 100% in because an independent signal I use in addition to renko charts has also called for shorting. The move has been so profitable, that I will scale back soon, in order not to give back too much on the next turn. I hope those trading on short time frames have also profited.
I use some pretty large values for the brick size..to reduce the whips. I think a partial change of position on Wednesday of a weekly chart is the earliest I believe is prudent..by that, I mean..selling half the short position to cash if the weekly looks like a reversal. Thursday and Friday are legitimate days to assume a trend change has occurred, imo. There are a lot of other tea leaves to read that can influence the decision..breadth indicators (vix, nhnl, etc.).
Right now I am 100% short..annual profit targets on this system are nearly met, ..I try not to be greedy..I will scale back the commitment of dollars through the end of the year, and just follow the renko trend. Best Wishes.
ron...yeah..I look at breadth indicators too.
I was talking about some of the Ihub chat sites..where there is just endless blather about indicators, and the "guess" for what the next 15 minutes will bring. I think there are some lonely people on those sites..or maybe they are home-bound for health reasons, and use the net to pass time. All harmless, of course..the reason to go there for a look-see from time to time, is that occasionally someone posts something important and new.
I check the market a couple times a day for 10 min or so..and just see what is happening. Yesterday and today are interesting..we seem to be at a support level that is quite strong, and holding thus far. I am only 50% long based on following the renkos...the other 50% now in cash follows a completely independent system.
I really am ready for the market to put in a sustained move one way or the other...there is money to be made both ways, if the trends will last. regards.
ron...the renko of the Institutional buying ticked up late in the day..and of course MVV among other things followed.
I sold half of MVV to cash at the close..holding the other long, mainly because renko says to..
You know..one of the nice things I always liked about P&F was it eliminated the endless chatter about indicators. Price is the best indicator of all..and only renko and P&F focus on price alone.
Of course, if you enjoy the endless chatter about indicators and what "may" happen, possibly, maybe, outside chance, "it happened at this level in 1997", "there was another Hindenburg omen noted", etc..you don't care for renko or P&F. lol.
ron..yes, the weakness of the rebound from the days of selling is quite telling, I think. I will sell most of my MVV (and will sell the rest when the renko trend changes..meaning seeing a red brick at close, or another white brick made) and remain in cash until the trend becomes more clear. For those of us who have understood the power of P&F..it does make more impressive what Charlie Dow did years ago...renko just makes it easier. regards.
Wed..so far the MID has averted making a red brick, even intraday..although it came close. Intraday moves should be watched, but only the closing price of the day means a lot..imo.
If we close up for the day..and with the trend still showing positive..I am going to hold some of the account long. I trade part of my account following the renkos..and although it sounds trite, it's in reality, profound: "the renko trend remains a trend, until it's not"......meaning, until there is a close with a reversal brick, the present trend is intact. Using other indicators can help, but be aware that they are simply lagging the price. regards.
eu...I hope your fortitude is repayed with a winning entry.
I would not be surprised to see an intraday move tomorrow that appears to be a reversal downward brick filled..and then late buying finishing tomorrow with the uptrend bricks intact.
You mention a 3% loss in two days..yes, that is the 1X move..twice that on MVV of course..which is why I use renko settings that only reverse on moves over 6%. I think those who wish to take large long positions, know about what sort of decline it takes to scare those holding longs out of their positions.
Since we cannot see the future with absoluteness..we can only use probabilities, and the TA that supports what "usually" happens.
There are those who think the July lows will be tested..if so, I will be among those shaken out..and hope to make a dollar on the short side. regards.
Market makers trying to shake out the longs...they're coming uncomfortably close on my renko box size.
Another big down day tomorrow, and I will be forced to exit my long position..we must stay disciplined.
That said, I think it is merely a shakeout..and that there is some blue sky above. I hope tomorrows close is higher..regards.
Trend..do I understand correctly that you use a P&F chart of the BP's to determine the buy or sell confirmation? If so, do you use a standard three box setup from Stockcharts? Thanks.
ron....I think you suggested it. The renkos are price dependent, and independent of time. The overlays pick off the real-time price, while the renkos only show the filling of the price box..so the real-time price may be higher or lower than what the renko bricks seem to indicate. Since all the indicators are following price, there "appears" to be a non-correlation to the renko bricks.
Frankly, I don't know how to prove that mathematically, but logically, it seems to fit.
Further on the trend attributes of the renkos..when there is a trend change we will be the first to know (grin).....that is, unless we jump the gun by using too small box size, etc.
Nice, healthy, pullback this morning. Just the thing to set up another thrust upward. Amusing to read some of the amateur "analysts" expecting the catyclasmic event to occur at any moment, and incredulous that anyone would buy at this level.
I am in the same amateur ranks..but I see a sale going on in most stocks. Things have seldom looked so bullish for the next 6 months or so, imo. The hand-wringers seem to forget that the market always has "worries"..always.
Anyway, although it's interesting to speculate what may happen..the price action as shown by the renko bricks is what has happened. Right now it looks like most are in an upward trend.
bird & ron...I believe the most important thing in renko trading is choosing the box (brick) size.
Remember there is a caution by P&F gurus that 3 box reversals are normal market action.......what they are saying is that if you jump at a 3 box reversal, you could get whipped.
Since we want to act on a 2 box reversal (was a white trend, now the first red box is filled, or vice versa)..we need to fit the box size to the trading time frame.
Doing that is extremely important..of course we could use the default ATR..but I find that is often large for daily purposes.
I usually resort to trial and adjust measures..for the daily, I don't want a 2 box reversal (meaning white to red, or red to white) to trigger at less than about 5-6% moves on a 2X instrument.
So, I choose a box size in that range...look at the amount of whips over a few years..and adjust the size until the whips of 1 box reversals are infrequent to non-existant.
A whip that makes 2 boxes in a new direction doesn't cost much in return..and I tend to ignore them unless they are frequent. The breakeven return is 3 boxes filled in the new direction. More than 3 boxes filled before a reversal means a profitable trend has ensued.
Like everything else..there is no optimum that is always best..if the box size is quite large, the return suffers..if the box size creates many whips, the return suffers..there usually is a happy medium.
I do spend a good deal of time selecting the box size..once selected, I like to exercise discipline in honoring that 2 box reversal as a high-probability indication of a trend change, and make the appropriate re-positioning orders in my accounts.
I like Ron's ideas of putting more weight on reversal boxes that occur in OB/OS conditions. I think that has some merit.
Regards.
ron...good reply on your reversal decisions. Your plan to only take the reversal-short brick in an overbought condition may work well to reduce whips.
Do you have the software skills to back-test that idea?
I love the ease with which the returns can be evaluated with the renkos...compared to plotting the P&F's, it is a big step forward.
If the whips can be limited to only occasional happenings..and they can on every chart I've looked at..it seems like a good return is simply a matter of staying on the right side of the trend..and changing to the other side when the trend does. Best regards to you.
ron..very nice chart. Looks like one could do a profitable job of trading the Q's with that.
things sure look positive right now..bp,namo,nasi,etc.
What indicators would have to change for you to go short?
I am happily long pretty heavy...things look so good here, I hope it holds for awhile. Regards.
ron...sounds like I was preaching to the choir then..lol.
Some feedback I got from another board was that it gave back too much..was too slow..etc.
So many trying to make so much, so fast. I think many get caught up in trying to catch the cycles (trends) that happen on the 5 min charts..and it becomes something of a gamblers high..the excitement of the next throw of the die.
To each his own, however. I just don't like to hang out on the computer the entire trading hours. There are too many other, enjoyable, things to do...regards.
sorry..linked the wrong chart. This chart pertains to the previous message.
http://stockcharts.com/h-sc/ui?s=MVV&p=W&yr=3&mn=2&dy=0&id=p69770843841&a=145237717
For those willing to look at a longer time frame..here is a weekly renko chart of the MVV (2X long MID index). There is nothing shown but renko bricks..but what a story it tells:
1. Most importantly..what is happening in the now. The chart has made a white brick at the close Friday. That means that during last week, even though there were some big moves up and down from day to day..the net gain for the week filled a white brick, and reversed a multi-red-brick downtrend.
2. Is that white brick significant?? You'd better believe it..it puts an investor going long now in a high probability win situation. Look back to the left..all the way to over 3 years of data. Only once did a trend occur where not more than one white brick was filled before reversing downward again. Ironically, that was a week this past May-June..when only one white brick was made, and then the red trend continued. One
time out of more than 3 years.
3. Only a couple times was only two white bricks made before reversal back downward.........for the vast majority of the last 3+ years (all the time since the inception of the MVV, there have been healthy, profitable, trends both up and down.
It is probable that there was day-to-day volatility in both directions..but never, except as noted, did only one white reversal brick get filled at the end of the week..in other words, there were at least one subsequent brick filled, and usually several more.
So what does that mean to us?
1. If you would be satisfied with a an average of 45% annual return on your investment..that is what a simple trading plan that reversed positions between MVV and MZZ would have produced. If you were able to avoid the whipsaw in May-June of this year, the yield would be a little higher.
2. Now, I know this is not 1000% or 100%....but it is a darn good return, that if one could do each year on average, would build even a small amount into millions. Do a little math at your nest egg...and the number of years you have for it to grow...you may be surprised. Regards.
http://stockcharts.com/h-sc/ui
For those willing to look at a longer time frame..here is a weekly renko chart of the MVV (2X long MID index). There is nothing shown but renko bricks..but what a story it tells:
1. Most importantly..what is happening in the now. The chart has made a white brick at the close Friday. That means that during last week, even though there were some big moves up and down from day to day..the net gain for the week filled a white brick, and reversed a multi-red-brick downtrend.
2. Is that white brick significant?? You'd better believe it..it puts an investor going long now in a high probability win situation. Look back to the left..all the way to over 3 years of data. Only once did a trend occur where not more than one white brick was filled before reversing downward again. Ironically, that was a week this past May-June..when only one white brick was made, and then the red trend continued. One time out of more than 3 years.
3. Only a couple times was only two white bricks made before reversal back downward.........for the vast majority of the last 3+ years (all the time since the inception of the MVV, there have been healthy, profitable, trends both up and down.
It is probable that there was day-to-day volatility in both directions..but never, except as noted, did only one white reversal brick get filled at the end of the week..in other words, there were at least one subsequent brick filled, and usually several more.
So what does that mean to us?
1. If you would be satisfied with a an average of 45% annual return on your investment..that is what a simple trading plan that reversed positions between MVV and MZZ would have produced. If you were able to avoid the whipsaw in May-June of this year, the yield would be a little higher.
2. Now, I know this is not 1000% or 100%....but it is a darn good return, that if one could do each year on average, would build even a small amount into millions. Do a little math at your nest egg...and the number of years you have for it to grow...you may be surprised. Regards.
Well...I won't be an activist moderator, in the sense that I think people should have a voice unless there is egregious behavior. Perhaps it is good to have someone like myself who trades in a different time frame than most here apparently do.
I plan to talk about daily trends, and show daily or weekly charts to define the trends in those time periods.
You will notice that I use few indicators...the reason is twofold:
1. Any indicator which is based on price (almost the entire gamut of indicators is based on price), is, by it's very nature, a time lagging indicator to what has happened in price.
2. There is inherently no better indicator than price itself...price is the master of what is really happening in the markets. The emphasis on price is the reason that renko is so attractive..if the proper brick size is displayed, the renko chart literally shouts at the direction of trend.
It seems there will be a good mix of ultra short-term, short-term, and intermediate-term ideas here.......and that provides a healthy choice for regulars and visitors to evaluate. Good luck and good trading to all.
If one were intent on trading the 2X versions of the MID, as I am..(the MVV and MZZ)..it is interesting to see how the ma of the MID is led a bit by the stocks that the institutions are buying or selling. Looking at the institutional action can give a good idea of where the MID is heading.
http://stockcharts.com/h-sc/ui?s=$XII&p=D&yr=1&mn=0&dy=0&id=p71186040766&listNum=1&a=147503419
Everyone would like to know when a major multi-week trend up or down is going to develop on the NDX..wouldn't they? Does a moving average on the NAHL do that..as shown by a weekly renko on the NDX? Seems like a person could not fail to do well if they were on the correct side of those trends.
http://stockcharts.com/h-sc/ui?s=$NDX&p=W&yr=3&mn=0&dy=0&id=p71331097951&a=146681951&listNum=1
learn...nothing wrong with taking profits..especially when you leave 1/2 position in the direction of the trend.
There is now a positive confirmation of a trend change on the weekly..confirming the daily, which is what we really trade.
There will be days of pullback..and reasons to question whether a trend is in place..but I don't know of a lower-risk time than right now to enter long as heavily as one is comfortable with..there is a good probability of a multi-week rally. At least, that is the way I am playing it. Regards.
learn..I linked a chart of the MID daily, so you could see what I was talking about.....at this time in the day, it is close to making another white brick, and the Trix has remained in an uptrend. In this case, the Trix has prevented a couple nasty whips..so, it is a valuable tool, it appears.
http://stockcharts.com/h-sc/ui?s=$MID&p=D&yr=1&mn=0&dy=0&id=p57563544480&a=141809216&listNum=1
learn..I linked a chart of the MID daily, so you could see what I was talking about.....at this time in the day, it is close to making another white brick, and the Trix has remained in an uptrend. In this case, the Trix has prevented a couple nasty whips..so, it is a valuable tool, it appears.
http://stockcharts.com/h-sc/ui?s=$MID&p=D&yr=1&mn=0&dy=0&id=p57563544480&a=141809216&listNum=1