50% Annual Returns

[taowave]

Quote from Hybone:

I didn't surf ET for a few days and you rear your ugly head. It seems like the only thing that comes out of your mouth is "arse" or other similar vocabulary, as evidenced by your numerous jiberish on ET. I am not directing my comments at you, so please do not use that kind of language at me.

What i was saying about the return, I was not alluding to futures, or stocks. I am simply refering to an achievable return rate based on a small account size like 70K. If you don't think accunt size affects return rate, then I don't need to be acknowledge you. Out!

Not to get in the middle of you 2,but i believe it was you who posted

Whoever said account size doesn't matter obviously doesn't know trading. At 70K you should be able to return 50% per month, not per yr.

We are talking about unleveraged returns,and i doubt you are.My guess is you are trading at least 5-1 margin,and probably closer to 10-1..

At 10-1,you are returning 60 percent unlevereaged

 

[Hybone]

I've already stated that I am not talking about equities or futures. I'll end it here; I am really not interested in getting into a pissing match like so many threads ended up (show me your trading statement ... or, my daddy can beat your daddy, etc). I am sorry that I brought it up. This will be my final post on this subject/thread. Good luck!

Quote from taowave:

Not to get in the middle of you 2,but i believe it was you who posted

Whoever said account size doesn't matter obviously doesn't know trading. At 70K you should be able to return 50% per month, not per yr.

We are talking about unleveraged returns,and i doubt you are.My guess is you are trading at least 5-1 margin,and probably closer to 10-1..

At 10-1,you are returning 60 percent unlevereaged

 

[alphastocks]

Quote from cdowis:

You might consider selling calls far above the market price and use that premium to buy puts. It limits the upside but gives some protection on a move down.

Thought of that, however here lies a few problems:

1. Many of the stocks I hold are not optionable or provides too little premium to make a difference.

2. Limiting the upside is not acceptable as it needs all the profit possible to counteract loosing positions, in fact that is the whole key.

3. With a 20 day hold I would have to exit the option and loose too much on bid/ask spread on thinly traded issues.

I have found that what works best for me is a combination of shorting stocks and selling naked calls to hedge.

Not to hedge at all is fine too as long as you have a long term view and not put all your eggs in one basket.

 

[alphastocks]

CKCM has only been held for 15 days, however since Illinois Tool Works has agreed to acquire the company at $22.75 and the stock is now at $22.50 we will sell the position. Consequently there will be two new long entries for Sep 06.


STOCK TO BUY FOR SEP 06, 2006 - IIVI

STOCK TO BUY FOR SEP 06, 2006 - ALSK


STOCK TO SELL FOR SEP 06 - RES -2.3% RETURN

STOCK TO SELL FOR SEP 06 - CKCM 54% RETURN

 

[riskarb]

Quote from alphastocks:



I have found that what works best for me is a combination of shorting stocks and selling naked calls to hedge.

Short stock + short call = Texas hedge... which is no hedge at all.

 

[Q12]

Quote from riskarb:

Short stock + short call = Texas hedge... which is no hedge at all.

It is if you're long the stk as well (which I think was his point).

 

[taowave]

Quote from riskarb:

Short stock + short call = Texas hedge... which is no hedge at all.

you jumped in a bit late...He essentially has an equity portfolio that best correlates to the Midcap..he has a holding period of 20 days and rotates a buy and sell every day..

His return is apx 68% non leveraged,with 6% SD..I backed out a Sharpe of apx 3,which i find very hard to believe,but he may be the ultimate stock picker..

Quite frankly,with thoise returns,I would collar the position with the S&P and take on tracking and corrlation risk...

 

[alphastocks]

By the way I don't mean short the call and short the same stock.
One stock might be short, while another might be short the call so to provide a bit of extra cashflow, plus a hedge in case the market falls out of bed.

Anyway folks shouldn't get caught up in the hedge, that's not what this is all about.

 

[Hamlet]

Quote from taowave:


His return is apx 68% non leveraged,with 6% SD..I backed out a Sharpe of apx 3,which i find very hard to believe,but he may be the ultimate stock picker..

What I find astonishing is that 80% of the returns could be due to the stockpicking/fundamentals. With such a short holding period and since fundamentals usually take longer than 20 days to play out, I feel inclined to attribute more of the performance to the timing/technicals.

Alpha, any comments on this? Have you tried backtesting buying ALL of the stocks meeting both your fundamantal and technical criteria and then selling after 20 days, instead of using the one buy/sell per day method?

 

[Brian Diesel]

Alpha,

Excellent returns and great thread. I was wondering if you have read "How To Make Money In Stocks" and base your picks on CANSLIM principles.


Thanks,

Brian