Advice on how to make 5%/month on $1 million

[guru]

You apparently also miss that basic education and don't know calculus.

Maybe he cannot invest billions in it as that market might be too small. Even Renaissance/Medallion have limitations in size.
If he would get just 1 billion from the bank, the amount to invest after 10 years would be around 350 billion. That's a multiple of what Renaissance/Medallion can trade. But you don't even seem to understand that.

Banks will not lend him billions as they have no certainty that he will make the 5% in future and the risk is too big.
Banks who lend money for trading in general never give more than 50-80% of the value of the investments. So he would have to have 20-50% of the money himself. He needs between 200 and 500 millions from his own. So your statement: "and wouldn’t even need a $million to start." makes no sense too.
Next stupidity you wrote:" They would be super excited to get 10% because they can't be guaranteed that much anywhere.", so you are sure about the 5% a month in future. That tells all. What guarantee does the bank have that he will make 5%?

You must be really smart when you take everything literally, and assume that the OP is as smart as you. He probably is.
My whole point was everting that you wrote: the impossibility of things being as simple as the OP assumes. If any bozo making clueless posts in a forum could pull in 60%/year then there would be millions of other bozos doing this, Rentech would be making $trillions, the OP could outdo them, while everything I wrote would need to be true. Also pigs could fly. Now go ahead and analyze that, and make conclusions about how pigs cannot fly and how smart you are.

 

[Sig]

while you are right that on the ex-date the stock drops and you create a taxable event. i believe the market doesn't price these stocks correctly and the stock price quickly reflect the next dividend (far out in the horizon that the market was ignoring). otherwise stocks like PG, T, XOM, etc would be zero today after decades of paying out high dividends.

I would advocate that those are strong companies who continue to create value because the company creates value. The fact they pay a dividend has little to nothing to do with the fact that they continue to create value, i.e. the total value over time of a GOOGL/AMZN.... basket of large mature company stocks that don't pay dividends would be comparable to a MSFT/AAPL.... basket of similar companies that do pay dividends if you add the dividends plus stock appreciation. I would be interested if there's any research into mispricing of dividend stocks vs stocks of comparable companies that don't pay a dividend. It could be that there are enough people who don't get it that they create a self-fulfilling prophecy?

 

[danielc1]

setting an unrealistic objective isn’t doing anything right.

as one of the most successful traders on this site said: first find the strategy and the edge. The pnl will be whatever it is.

Is it unrealistic? I do not know, it really depends on how that person thinks.

Profit and loss statement of a trading strategy has nothing to do with setting objectives. The metrics of a trading system allow you to use the proper position size to meet your objectives.

 

[newwurldmn]

I would advocate that those are strong companies who continue to create value because the company creates value. The fact they pay a dividend has little to nothing to do with the fact that they continue to create value, i.e. the total value over time of a GOOGL/AMZN.... basket of large mature company stocks that don't pay dividends would be comparable to a MSFT/AAPL.... basket of similar companies that do pay dividends if you add the dividends plus stock appreciation. I would be interested if there's any research into mispricing of dividend stocks vs stocks of comparable companies that don't pay a dividend. It could be that there are enough people who don't get it that they create a self-fulfilling prophecy?

michael steinhardt was a huge proponent of dividend paying stocks outperforming the broad market. i think wisdom tree (mutual fund company) might have a lot of research on this topic.

this was before the big rally in tech stocks over the last 10 years however. so maybe times have changed.

There are economic arguments that dividends (and stock buybacks) keep executives honest as they don't have cash hoards to waste on frivolous projects and that produces better companies. Again, in tech, this wouldn't apply - as i think a lot of the spending tech companies do is on wild catting for just in case disruptive technologies.

 

[virtusa]

You must be really smart when you take everything literally, and assume that the OP is as smart as you. He probably is.
My whole point was everting that you wrote: the impossibility of things being as simple as the OP assumes. If any bozo making clueless posts in a forum could pull in 60%/year then there would be millions of other bozos doing this, Rentech would be making $trillions, the OP could outdo them, while everything I wrote would need to be true. Also pigs could fly. Now go ahead and analyze that, and make conclusions about how pigs cannot fly and how smart you are.

You clearly are not a guru but an uhu.

 

[newwurldmn]

Is it unrealistic? I do not know, it really depends on how that person thinks.

Profit and loss statement of a trading strategy has nothing to do with setting objectives. The metrics of a trading system allow you to use the proper position size to meet your objectives.

its like saying "i'm going to start a 1 billion dollar business."

that's great. we all want to start a 1 billion dollar business. it doesn't get you any closer to starting a business that will make you $1.

 

[Sig]

michael steinhardt was a huge proponent of dividend paying stocks outperforming the broad market. i think wisdom tree (mutual fund company) might have a lot of research on this topic.

this was before the big rally in tech stocks over the last 10 years however. so maybe times have changed.

There are economic arguments that dividends (and stock buybacks) keep executives honest as they don't have cash hoards to waste on frivolous projects and that produces better companies. Again, in tech, this wouldn't apply - as i think a lot of the spending tech companies do is on wild catting for just in case disruptive technologies.

Which goes back to the whole concept being a bet on a particular kind of company, i.e. a mature non-tech company vs mature tech companies rather than it being some kind of safe bet vs the overall market. Dividends are just an indicator of the type of company rather than the dividends themselves being some kind of magic.

I was actually taught that paying dividends are an admission of failure by management in that they're saying they can't put their profits to better use in their own business line than their investors can in other investments. With a few small exceptions like the phone companies spinning off their legacy pots business into high dividend stocks since there was no growth to be had there, as well as regulated companies like electric utilities that also have limited growth pathways in their core business.

 

[newwurldmn]

Which goes back to the whole concept being a bet on a particular kind of company, i.e. a mature non-tech company vs mature tech companies rather than it being some kind of safe bet vs the overall market. Dividends are just an indicator of the type of company rather than the dividends themselves being some kind of magic.

I was actually taught that paying dividends are an admission of failure by management in that they're saying they can't put their profits to better use in their own business line than their investors can in other investments. With a few small exceptions like the phone companies spinning off their legacy pots business into high dividend stocks since there was no growth to be had there, as well as regulated companies like electric utilities that also have limited growth pathways in their core business.

i've heard that argument about management admission as well. in my schooling it was coupled with, then the div is a good idea because the shareholders can decide what to do with the cash. But i didn't go to Stanford, i went to a school that was more old-economy focused.

I agree that a mature company should pay a dividend and a growing company should not.

but i don't believe dividends are zero-sum (ie. the dividend discount model isn't accurate.) A lot of div paying stocks are like perpetuities in practice. the on the ex-date the shareprice will fall but overtime it will rally back.

a stock is supposed to fall by the div because that's one less payment left in the life of the stock in theory; however, a perpetuity is valued as $div/interest rate and thus there is no concept of one less payment left.

 

[DevBru]

Ah look, another pointless thread from a first time poster that is never going to respond to his own thread again.

 

[antares66]

O.M.G. This guy is still around. How funny. I thought he disappeared a long time ago.

Markus Heitkoetter prefers selling naked puts to get premium. You can buy his software power x optimizer to find the best options for selling or you use TOS for free ;-)