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

[qlai]

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

Well, if he/she started an informative thread, why do we care!?

 

[guru]

You clearly are not a guru but an uhu.

Or a fake guru. Aren't all gurus fake after all?

 

[gkishot]

Mission impossible.

 

[Saltynuts]

Obviously I was providing a very simplified approach. Though in real life this is how hedge funds (and myself) make trades. If you can reduce the volatility of a trade that has a positive slope, you can lever up on it. Very important to distinguish pure leverage from an actual source of returns.

Thanks longandshort. I understand if you have a low volatility but positive expectancy trade you can lever up on it, but can you explain how you can lever up more than 200% of your cash buying power in stocks, ETFs, etc.?

Thanks!

 

[Pekelo]

50%/year on 1M is not all that impressive actually.

Yet you forgot to advise the OP how to do it.

Not to mention he wants an automatic approach. I don't know, buying SPX weekly calls on Mondays with 10% AUM does seem to do the trick...

 

[longandshort]

So imagine you buy a stock that pays a 5% dividend once a year. The price of the stock will drop by 5%, all things being equal, the day it goes ex. Therefore after the dividend you'll have exactly the same amount of money as you had before, just your split between cash and stocks will be different. Same thing if you had a stock with a 50% dividend yield, or 90%... Absent some tax arbitrage, the fact that a stock pays dividends in and of itself it absolutely meaningless when it comes to overall returns.

Which leaves me somewhat mystified as to this advice? It basically is simply a bet that stocks that pay dividends are companies whose performance will outdo the overall market reliably over the long term. I'm not sure there is any evidence that this is the case, seems like a bet just like any other except this one misleads one into thinking they have far less risk than they actually do? Am I missing something here?

Actually the goal of the strategy would be to harvest the returns of dividend payers. You’re right in that the portfolio value would not grow that much y/y — perhaps in the 2-4% range, which on 4-8x leverage, would translate into a neat return.

Is this actionable/feasible for an ET trader? Nope. The structure is true, but the hard part is actually finding a portfolio worth levering up on.

 

[Pekelo]

Here is another one:

Sell Cash Covered Puts on AMC 4-5 strikes away. Stock is at 14.9, the 10.5 puts a month out sell for 60 cents. If you get the stock somehow, just sell calls on it.

 

[Sig]

Here is another one:

Sell Cash Covered Puts on AMC 4-5 strikes away. Stock is at 14.9, the 10.5 puts a month out sell for 60 cents. If you get the stock somehow, just sell calls on it.

There's an ETF that has a very similar strategy, PUTW. Unfortunately over the last 5 years it hasn't done all that well.

 

[murray t turtle]

Would like to get some feedback on the following "not so hypothetical".

Consider the following constraints:
- U.S.-based brokerage account with $1 million in cash
- monthly target of 5%/month; this will be withdrawn, so account won't grow
- max trade limit of 50 trades/month
- ideally no more than 2-3 hours/day of watching/trading markets
- lowest risk to achieve the 5%; in other words, would rather have less risk than a return greater than 5%

How would you approach this?
what markets/instruments?
what trade sizes?
where to place stops and limits?
other thoughts?

Thank you for your time.

%%
5% or 7% per month can be done/SPXL/tqqq has done that plenty;
but the BIG probleM is SPXL/tqqq has never been that good for 3 years/5 years/10 years........
And even SPXL % since inception is good but they managed to start it almost @ end of 2008 bear.
Rule of 72 may help you, work 6 days a week 12 hours a day=72
I have lowered my risk on that same trade SPY+ SPXL , spy related @ same time.
The good news is 50 trades /bid \ask, easy to beat that,per month\ dont trade anywhere near that much.
With that plan , for sure withdraw 5% per month, because most likely account will not grow as you planned.
Strange\ sometmes SPY, or sso, will beat SPXL/strange.................................................

 

[Pekelo]

There's an ETF that has a very similar strategy, PUTW. Unfortunately over the last 5 years it hasn't done all that well.

In the last 14 months it worked. Probably time for another drop. Or wait for the drop and then start the strategy.