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Hi TF, REML looks about the same as MORL except it hasn't been around as long. Both are 2x ETFs and have similar ranges but when MORL was going up, REML was going down and vis versa.
I'm not sure how one would do it but it might be that they could be paired in some way. Perhaps when one has a sale in one the other might have a buy. This would keep one's cash from sitting idle, a good thing and would not move cash away from roughly equal dividends.
The long bull market has had more sales for me than buys so I've had more cash sitting around in low dividend positions, total a bit less than inflation overall so actually losing money. Not much but annoying. I actually pulled money from my account and put it into one of my credit union accounts to get roughly 2% while sitting idle.
Hi Toofuzzy, I have almost 20% of my cash in MORL which is paying just over 20%/year in dividends based on the current price of $16.23.
I got into it at $16.79, and I've had a couple of buys and no sells so my current price/share is now $15.746/share. I've gotten 6.87% in dividends so far this year, that's about 9%/year. It would have been more if I had been willing to risk more when I started out.
MORL is a bit screwy in that the dividends are quite low for two months and then jump high for the third month. It looks like the best time to get into it is somewhere after one of the big dividend months and then sit on your hands and collect your dividends and wait for the next downturn to buy some more.
Hi Adam and Gang, I use limit orders as well, but I tend to set them a nickel or dime lower or higher, depending on whether I'm buying or selling, than the expected price because there is always some variation in price during the day. Typically I see prices tend to hit a low point around 10:30-11 and a high point around 2-3. True, the amount is trivial but it often almost pays the commission costs and that's enough for another cuppa joe.
Hi Ken, If you drop me a line at 60e20f21@opayq.com I'll send you a copy of the Husky spreadsheet.
Also I'd love a copy of EZMoney, if you don't mind.
Thanks,
Allen
You're more than welcome Jon.
What this study and others I've done indicate that there is no simple approach to maximizing one's return. One's return is quite dependent on a variety of factors.
The key one, it seems to me, is whether people are scared s#$%less by something, like the current Facebook plunge, and continue selling as it slides down or enough of the big boys jump on it it goes back up. This seems to me to be more likely to happen this way when it is a single position that does this. If a bunch hit the skids all at once then it can be a much longer time frame before recovery begins.
The second big issue is when you get into a position. Is it near a top, skidding down, or in the bottom range. The spreadsheets don't have settings for these market trends, you have to figure out what settings to chose yourself, not an easy chore.
Tom's settings seem to work best in a vacillating market, neither headed significantly up or down.
The 15% SELL safe I used in testing the HUSKY spreadsheet with CGNX worked better because, on the whole the market was on its way up. However, simple BUY and go away worked better in a long term up trend.
Orcroft's method for buying in works best when the market is collapsing, otherwise one wold have a rather long wait to get started.
Well, Tom and Gang, Guess what! The HUSKY spreadsheet does better than the AIM spreadsheet over the last 5 years with CGNX but still not as good as Buy & Hold. And the other interesting thing is that it works best when BUY safe is 0% and SELL safe is 15% as does the AIM spreadsheet.
AIM, with the same BUY safe is 0% and SELL safe is 15%, gets 23.32%/year.
HUSKY gets 25.35%/year but B&H gets 27.29%/year.
In general the HUSKY spreadsheet seems to better when the market has significant down turns, AIM does better in up markets and Buy & Hold does best over time in up markets, but as we all know is a total disaster when there is a severe downturn and a longer time to get back to where it started in price.
I'll do a few more tests when I get a chance to see what else is important.
Hi Gang, JDerb sent me a copy of the HUSKY spreadsheet and the document about it.
WOW! It is significantly better than the basic AIM spreadsheet that I modified a bit to improve it. I've only done the one test, the one with the data it came with, against the AIM spreadsheet, 2/1998 through 10/2003.
The AIM spreadsheet did 6.06%/year while HUSKY did 16.258%/year.
I can't test it with more modern data because the symbol, VTSS, does not appear to exist any more. I'd love a suggestion for a symbol to use that had a similar run up, $12.70 to $103.81, and somewhat similar downfall from the top down to $0.68. I suspect that SPY may be a good test although its range wasn't that big.
Hi Firebird, If I recall correctly my machine ran W98 originally so I could go back to that. Could I buy a copy of your disks? Please drop me a note at 60e20f21@opayq.com.
Thanks,
Allen
Hi Cap10 Kaoz, in looking a previous history of ^VIX it looks to me that a step of 5 might be too much most of the time. Just guessing I'd suggest 2 to 3 range, but when the index takes off, like it did in 2008, 2011, and 2012 it just flies up, and comes down almost as quickly. Given this perhaps the way to go is to use a 2 point move for the first move off the base, then double that for the next move, and double it again for the next move, etc. So it would be 2%, 4%, 8% and then 16% for the next move. Doing this would take us to 30%. That might not be enough and it also might be too swift.
Another possible way might be to use the Fibonacci sequence, 1%, 1%, 2%, 3%, 5%, 13%, 21%, 34%. I'd start at the 2% and move up in that pattern. This would move up 78% more than enough for all the history of ^VIX. It would be a slower move to start with and then it would accelerate.
I'll have to play with it a bit to see how the spreadsheet could handle it.
So JDerb & Tom, where do I get the software and the needed documentation? I've got my little Neoware computer up and running just fine so I'm ready to install it once I get the stuff.
Thanks,
Allen
Hi Cap10 Kaoz, What frequency do you think the adjustment should be made, daily, weekly or monthly? Daily might require more time than people have and monthly might have too big of a lag so I'm guessing weekly is best, what do you think?
Hi Lostcowboy, Yeah HD crashes really take a big bite out of your butt, don't they?
Anyway, do you have any clues as to where one might find the Husky Spreadsheet?
Thanks,
Allen
Thanks for the insight, Tom. Do you do this, if so do you do it manually or can Newport handle it?
I had so much trouble with Newport on my regular computer (Win7) I stopped using it, but recently I decided to resurrect an old XP machine I've had around so I can try Newport on it. Please refresh my memory as to where to get the details for Newport,
Thanks,
Allen
Hi Gang, I had a thought about AIM and market direction. Currently AIM is not set up to work differently when the market is going up versus when the market is vacillating in either a top or bottom of market range or when the market is diving.
It occurred to me that in a down trending market one would want to set BUY SAFE higher so that it would take more of a drop before you were given a signal to buy more for your position and the opposite when the market was on an up swing.
Tom has suggest that the SELL SAFE be set at 0%, the BUY SAFE at 10% and that seems to work because we are in a still swinging up market. The drops in an up market are mostly low so this means that the number of buy signals will be relatively few but the sell signals will be a few more overall.
This is with a 10% share buy/sell quantity
In a overall down market there will be a fewer upswings compared to downswings so maybe raising the BUY SAFE to 15% or 20% might make sense, but only in a down market otherwise one would never get a buy in an up market and after a while one would be trading on a few stocks for relatively few dollars because you were not replenishing your positions.
Thinking about this led me to the idea of reducing the buy/sell percentage during a sideways market. With a narrow range reducing this seems to increase overall activity. However, there is a potential problem with this if the position size is big enough, the dollar total is small enough that by the time one knocks out the cost of the shares in a sell, the percentage that is the commission cost swings way up, eating into any profits, so, I guess that one can only do this with rather large positions.
Does all this make sense?
Hi Toofuzzy, I remembered wrong about the CALL option. I now recall that one can exercise the option at any time up to expiration. I've not done any buying of CALLs, just selling PUTs and then selling covered CALLs once the PUT has been exercised. So now what you are saying makes more sense.
But, back to volatility. I'm not sure why one should wait for more volatility. EWZ could sell a out of the money CALL at a strike price of $35 for $1.55/share. If on exercises it at the total cost of $33.95 then one would get $2.60/share for a 67 day option, assuming that it did get exercised. $2,600 over 90 days ain't to be sneezed at, especially if there was a dividend collected while holding it.
Hi Toofuzzy, Yeah, I know one will always pay a time as well as a value premium for the option.
Sometimes the short nature of these posts leaves gaps in understanding what the other person is saying, alas.
First, you said:
Thanks Tom for posting the Value Line info. To read that myself I have to drive to Berkeley or San Francisco and the traffic is so awful I hate it. Takes over an hour to get to San Francisco, only 18 miles away. Berkeley, 8 miles takes a half hour. Then, of course double that by the time I get back home.
Hi Toofuzzy, Ah, I'm beginning to see what you mean. I've never been charged a margin fee because I keep a significant amount of cash on hand.
As to a deep in the money CALL, you are asking for assignment once the purchase of the option is completed, right? If so then you make $100 on the deal, not much but not to be sneezed at either.
So, if I understand you correctly you look for a deep in the money call where the cost of the call and the cost of the stock/ETF combined total is less than the the current market price by as much as possible, right?
Thanks for your patience!
Allen
Hi Toofuzzy, As to having money in my account to pay for the stocks I can transfer the money in 24-48 hours so the margin cost would be nill or not at all if I get it in prior to the trade's closure.
Now, I'm not sure I understand what you are you saying, buying a LEAP at a price of exercise price of $15/share where the cost of the LEAP is what?
In a quick check of EWZ, a position I have an option on at the moment, the Jan 17 2020 CALL doesn't even go as low as half the current price. with the current price being ~$34.05, the lowest CALL is $20 and the last price is $13.95 or $13,950 for the one thousand shares. This would get you in at a total price of $20,000 for the shares plus what you paid for the option, $13,950, or a total of $33.95 per share, about $100 less than current price with a wait of 553 days. If the shares dropped to $30 prior to exercise you would lose $3.05/share.
I looked at several other options and buying CALLs seemed to cost about the same, or slightly more, total cost, what you paid for the options and what you pay for the share when you exercise the option.
Maybe I don't understand buying CALLs, but I thought you can't get the shares unless the price of the shares stays above the exercise price of the CALL. If it drops significantly but stays above the exercise price it seems to me you can lose a bundle.
If I understand it correctly when buying an in the money call one wants the share price to go up to make a profit.
"A call option buyer stands to make a profit if the underlying asset, let's say a stock, rises above the strike price before expiry."
https://www.investopedia.com/articles/active-trading/091714/basics-options-profitability.asp
But one mustn't forget to include the price one paid for the option.
Check out https://www.optionsellers.com/ or read their book. Although they are talking about options on commodities, as I understand it roughly the same holds true for stocks and ETFs except that commodities have regular cycles while stocks and ETFs don't making them riskier on the whole.
Hi Toofuzzy, I confess I do not understand your logic in buying deep in the money calls. Yeah, they are cheap but, given the low volatility currently it seems likely that the 60-80% expiration worthlessness that is often mentioned for buying calls will happen, losing what you spend on the call. The other thing is that having sold your positions you will be sitting on cash that is earning 0.01% or so. Hardly worth it.
What I have done is transfer a bit less than half of my cash to a credit union account that earns 1.75%. Not as much as inflation but one hell of a lot better than 0.01%! This leaves me some handy money to meet any GTC orders of PUTs I have sold. In addition I have set up ACH transfers in both directions so should I need more cash in my trading account I can get it in a day or so.
So far this approach is earning me more money than straight AIM. I haven't had any AIM directed trading for the last several months.
There is another approach to getting in, do it on a down tick on a position that often happens on an ex-dividend day. SMHD, for example, was down a bit over 5% today at the opening of the market, not bad.
SMHD has two months of low dividends and then a monthly dividend that is, typically, 5-8 time bigger than the prior months. This seems to trigger a sell off so following the AIM rule, buy from the scared, is likely the right thing to do.
Hi Toofuzzy, Hope the hike is going well.
As to how to use the info about volatility and AIM, easy, hunt for the highest beta positions you can locate, check their history, and if they pay dividends or if they have options.
Paying dividends helps in small ways in keeping your available cash from going too low.
Options help in getting into a position by letting you sell a PUT below current market so that when it goes down in its volatility swings you get in lower than current price plus you get a few bucks for waiting.
That combo is working relativity well for me at the moment. However, if the market takes a serious dive it won't be as good as just sitting on your hands and following Orcroft's advice.
Given that we're only 7 or 8 months from matching the longest bull market in American history, I'm not sure, but sitting on our hands may make the most sense, especially given the current tariff kerfuffle and the unknown direction things will be driven.
Hi Gang, I just found out something totally crazy! TDAmeritrade uses the last bid price to set the value of your position. Say you have a position that the last sale was at $80 a share and you have 400 shares, $32,000 value as of the last sale, and then in the after market hours a crazy someone puts in a bid of $1.00, the value of your position as they display it is now $400!
Gack! How crazy can you get? Yahoo at least tells you the last price at the end of the normal market and then tells you the sale price in the after market, not some crazy wacky bid.
When I called them because the figure I had earlier was ~$800 different than what is displayed at 11:30, PDT this is what was explained to me. The guy was nice and said they have gotten lots of complaints about this. He also said, "...they are working on this."
Hi Gang, Up 1.1%, down 1.23%, up 1.08%, down 0.81%, up 0.93%, down 0.87%..., it's making me a bit dizzy. Up, down, up, down, up, down.... What I want to know is when it is going to crash? Are we talking brown bear or grizzly bear stalking us? It's been almost 10 years since the last attack so I'm sure the bear is hungry as hell.
Anyone got a crystal ball or a Ouija board handy? Talk to it and please let me know what it tells you. :p
Hey Tom, having a drink, coffee or other, while watching the market sag is one hell of a lot better than being chased by a grizzly bear market.
Too true, Toofuzzy. However, one can use an approach like Orcroft has suggested to not buy until you see two buy prices in a row higher. Yes, this prevents you getting in at the very bottom, but it does hint that one might be in a significant enough upswing that one could adjust the metrics a bit. I wouldn't make all that big a change but sometimes even a small change can be rewarding.
Oh, Tom, it was a curse! In a way it is much like the Arab curse: "May you be so rich that you own a palace with a thousand bedrooms, and may you be sick a year in each one."
Thanks Tom, I just did an analysis over two periods, 6/2011-6/2018 and 6/2016-6/2018. For the longer period EEMS does a hair better at 3.62%/year versus 3.56%/year for DGS. This includes dividends and commission costs and uses weekly positions price.
However, to get the best results for DGS over that period I had to do some crazy testing stuff.
30% Cash, 50 shares initial minimum trade (12.6%), 15% Buy Safe, and 4% Sell Safe. Reducing the Sell Safe to 0% reduced the income rate to 3.45% and reducing the Buy Safe to 10% raised it to 3.86%/year but you have to raise the Cash to 38% to avoid going into negative cash.
Adding that "Cash Below Zero?" cell sure makes life much more interesting with less chasing one's tail.
Anyway, DGS does much better than EEMS over the last two years. DGS gets to 18.24%/year by reducing Cash to 5%, setting Buy and Sell safe at 10% each and raising the minimum trade to 95 shares (11.85%).
EEMS results are 12.58%/year with a 5% Cash, 10% Buy Safe, 5% Sell Safe and 10% Buy Safe, and a minimum shares traded being 65 (9.35%).
However the Buy Safe can be almost anything as there are no buys by either position in the last two years.
Using monthly data DGS gets 9.92%/year while EEMS gets 8.2%/year.
Of course, backtesting is not what happens in reality going into the unknown world. There is two possible bits of wisdom, however, that one should use different settings for Bull markets or Bear markets and it might be best if one was using weekly data instead of monthly.
Allen
Hi Tom, Which "international small cap emerging markets ETF" is this? EEMS?
Thanks
Allen
Okay, my option on NKTR expired today, 9 days after I sold it. Does anyone have an idea how to calculate the annual return on it? I got $894.92 after commissions for 9 days.
The only way it seems to be worth calculating is to assume the cost of the stock if it was to be assigned would the basis and that plus the earnings is the other figure to do the calculations with. Doing this I came up with ~404% annual return.
Does this make sense?
Hi folks, Remember me asking about NKTR and its 40+% drop a couple of weeks ago? Well I looked at it and the relatively short term Bolsa Index and felt it was likely to go back up over the next few months so I sold some PUTs at $55, figuring it was likely to expire today just under that price so I would get in at a reasonable price, ~$52.75/share, a price slightly below the EOD low point since the big drop of $53.04.
My idea was to then buy about 30-35% more than the options would provide so I could AIM the total position, like I should have done with IJR. I'd use the combo of selling a CALL at $55, $55.50 or $56 and also use the AIM signals to buy and sell along the way. If the CALLs expired worthless, it'd just be more money in the pocket for selling the option. If the shares were called away then I'd make about $2.25 to $3.25 per share plus the amount I'd get for selling the option, depending on which option price I selected, another ~$1.00-$1.50/share. And I'd have some leftover shares to continue on the AIM path.
I think I had the right idea; to take advantage of the spooked shareholders, the volatility with a BETA of 2.77, a 52 week range of $17.51 - $111.36, and buying from the scared so I could sell to the greedy, but, alas, unless it crashes before the end of the day, I won't get the stock, only the gain from selling the PUT.
However, the idea of finding high BETA positions that have taken a plunge and combining selling options and AIM seems like a worthy approach in markets that are vacillating like they have been for the last while.
Too bad Indivior, PLC. (INVVY), doesn't have options available. The ~28% drop today would make it worth looking at in more depth.
Oh well, can't win 'm all.
Have a great weekend gang.
Hi Gang, The other issue in backtesting is being sure your cash reserve isn't being blown away. Five or ten dollars ain't no big deal but more, eow! So, here is how you can put a warning on the top of the page.
Use =SMALL(F23:F505,1)
Change the column "F" to whatever column your cash is listed in. Change the blue numbers to the first row with cash listed and the last possible cell in that column that you have in your spreadsheet.
Then right click on the cell that you have designated for the report and go to "Format Cells..." and select Currency and the display for a negative number that is red and looks like (1234.56), that way you can tell in an instant if the parameters you are using are out of line.
If you like I can send you a copy of my version of the AIM Spreadsheet. Just drop me a note at: 60e20f21@opayq.com
Hi Gang, I finally found the way to look up the last date in a column! The formula is a bit strange but it works.
=LOOKUP(2,1/(B:B<>""),B:B)
You can adjust which column you are using by changing the "B" to whatever column you need.
BTW, it can also be used to find any ending data that you might want to look at without having to scroll through the whole page.
This is great because I have all the results in the top two lines and don't have to scroll to the bottom of my backtest anymore to see how I'm doing.
Now if I could figure out how to find any negative figure that might occur in the cash column it would make backtesting even easier.
Good Morning Gang, I've revise my AIM spreadsheet to include the Compund Annual Growth Rate calculation. I have it set up to grab the starting date but I can't figure out how to get the last date in the Date column.
Anyone know how to do this?
Anyway, in playing around with a variety of ETFs/ETNs it dawned on me that Toofuzzy is not only right about having a minimum investment in a position of $20,000 but that if fact it is better and much easier if you have at least $30,000 in a single position.
There are a couple of interlocking reasons. The first is to keep one's commission costs as low a percentage as possible. The second is that by having a larger position it is then possible to lower the buy/sell safe and the total number of shares to buy/sell which creates more buy/sell action because the spread is less between the current position and the new buy/sell points. This helps overcome the two key limitations of most ETFs/ETNs, low total range over the years and the generally slower movement over time. In a way it seems to multiply "volatility" much like 2x/3x ETFs/ETNs do.
Quite funny Tom!
I truly don't understand why TD seems to have so many problems with their web pages. To check up on the stocks/ETFs I can use Yahoo and it is stable. I've not figure out how to use Yahoo for options or tracking a single account as opposed to merging the three into one total, but that is not all that big a deal as it gives me a single figure I can track.
TD's display of options is so flaky, in one account but not the other with options, I just can't trust it and I not sure what to do about it. Suggestions?
Best,
Allen
Talk about shocking! When I opened TDAmeritrade just now I discovered all three accounts are $0.00!!!
At the top of the page is says:
Hi Gang, Did anyone notice the ~42% drop for NKTR yesterday? In looking at it, it has had a big run up and then crash about 18 years before and then a long run at a ~$20-$35 range and then up to over $100 again before coming down before yesterday's drop of 42%.
I'm guessing that since its beta is 1.8, it might have the kind of volatility we are looking for. What's everybody think?
Hi Medman69, If you'll drop me a line at 60e20f21@opayq.com I send you a copy of my AIM spreadsheet. It has 3 different, but very similar, buy/sell calcs, a couple of by the book tabs, as well as a master tab with both dividends and commission costs as well as other, potentially useful, tabs.
Thanks for the pointer, Tom. It's nice having it all in one place in simple terms.
Hi Ray, I don't know for sure but the whole blockchain/cryptocurrency thing reminds me of the pump and dump that I got caught in over twenty years ago. As a result of that I abandoned anything to do with the market until just a few years ago.
I used to subscribe to a newsletter from a guy in Florida who talked a lot about investing. It was fun to read, especially since he wasn't trying to sell anything. He even said he was a lot like his wife who, when asked for a recipe for something she made that was really liked, she would leave out a small, key ingredient so that her version would always be the best.
A discussion was started by one of the other readers about investing in new companies and how profitable that was. This went on for several months in a generic sort of way and then one month the reader asked the editor what he thought about a particular new company. Don't recall the name. Anyway in subsequent issues there was a posting of the stock value. I did a bit of research but it was before the internet was around so couldn't find much.
Anyway I decided I'd gamble $200 and see what would happen, thinking very foolishly, that it was bound to go up. It did for a couple of months and then it crashed, big time. It would have cost me more in commissions to sell it than I would get back so I just abandoned it. When I was as the Charles Schwab office trying to figure out what to do, the rep I was talking to told me about "pump and dump schemes" and that it was likely I had be caught by one.
I haven't looked all that closely at them because of my understanding of the nature of most of the companies involved so what I'm saying is not necessarily accurate. However, looking at the ETF, HBLK.to, you referred to, it when up for a bit and then has been steadily down, and it only started in February this year. Will it go back up? Who knows, I sure don't but if potential extreme volatility is your desire, then it might be a good choice.
Hi Clive, I forgot to mention one more privacy tool because it is not directly visible on the menu - too many thing to fit the space available - PrivacyBadger.
It's interesting to note that uBlock, Blur and Ghostery each list 4 trackers for this site while: