Anchoring an account with yield and money management

[MrScalper]

To "accumulate to speculate", you need time. Unfortunately, those that have time only want to "speculate to accumulate".

When they finally understand "accumulate to speculate" they run out of time.

Well, that is life.

Not necessarily..as there is always "frugality"

 

[ironchef]

Not necessarily..as there is always "frugality"

How many 20 year old understands frugality so they can accumulate to speculate in later years?

 

[ironchef]

Not necessarily..as there is always "frugality"

To have to be frugal in old age is sad because most don't need to be if they accumulate to speculate instead of speculate to accumulate.

 

[eaglefeather]

Accumulate to speculate, this is exactly the idea. Does this reference a specific book or article? I admit over a period of time myself, I am in the red one month, in the green the next, but what if you use yield in any form for highly leveraged strategies? Now it would be flat one month or several months and green the next, over time this looks better I would guess as a preference for some.

 

[kj5159]

I've been thinking about this same concept. It rings similar to what Nassim Taleb describes as his "Barbell" approach.

For instance having ~95% of the portfolio in 'safe' yield based investments like T bills/notes or highly rated corporates (it doesn't specifically matter for this explanation) such that you generate a 'base' yield on the portfolio , say 3% (relative to the total equity value of the portfolio), then using the remaining 5% of equity to make high risk high reward types of bets where your maximum loss is no more than 100% so that you can not possibly have a drawdown larger than the difference between your risky allocation of 5% of equity minus your 'base' portfolio income of 3%, of 2%.

The specific % allocations and whatnot could obviously be jiggered around but that's the idea. Is anybody here familiar with a strategy such as this?

 

[MrScalper]

Accumulate to speculate, this is exactly the idea. Does this reference a specific book or article? I admit over a period of time myself, I am in the red one month, in the green the next, but what if you use yield in any form for highly leveraged strategies? Now it would be flat one month or several months and green the next, over time this looks better I would guess as a preference for some.

if your returns are all over the place..that implies you do not know what you are doing..as..it really shouldn't matter what way the markets go if you are "clued in "

of course..this is far from easy..and requires dedication..time commitment..and the ability to act swiftly and decisively without hesitation

at the moment a lot of people think they know all about making money..just buy the dips and it will keep rallying to new highs..it might keep doing this fora week..month..6 months..or even a year..but..as sure as day turns to night..the first chance and it will tank so fast you won't know what hit you..

remember..there is nothing new here..just the same old story..but at a different TIME !!!

only fools speculative to accumulate..and clever people accumulate..then..speculate..with money they can afford to lose

 

[eaglefeather]

Accumulate to Speculate, this indeed works. I've used this as a basis for a mechanical strategy over the past months and it works as designed, I have and am doing some tweaks here and there. Now, I am trying to do some calculations based on a much larger pool of capital, and where to get it.

 

[ironchef]

if your returns are all over the place..that implies you do not know what you are doing..as..it really shouldn't matter what way the markets go if you are "clued in "

of course..this is far from easy..and requires dedication..time commitment..and the ability to act swiftly and decisively without hesitation

at the moment a lot of people think they know all about making money..just buy the dips and it will keep rallying to new highs..it might keep doing this fora week..month..6 months..or even a year..but..as sure as day turns to night..the first chance and it will tank so fast you won't know what hit you..

remember..there is nothing new here..just the same old story..but at a different TIME !!!

only fools speculative to accumulate..and clever people accumulate..then..speculate..with money they can afford to lose

Ahh, but many said this time is different, bitcoin is different....

I remember it very well: In 1999, 2000, we printed money by buying on a dip and selling on rally, until March 2000. I "retired" from my day job in March 2000 thinking I had so much money in the stock market I could never spend it all. I barely survive till 2003, by doing part time consulting. Then in 2006-7 everyone said this time it was different. It was not.

I don't know how many here understand what you are saying.

Best wishes to you.

 

[ironchef]

I've been thinking about this same concept. It rings similar to what Nassim Taleb describes as his "Barbell" approach.

For instance having ~95% of the portfolio in 'safe' yield based investments like T bills/notes or highly rated corporates (it doesn't specifically matter for this explanation) such that you generate a 'base' yield on the portfolio , say 3% (relative to the total equity value of the portfolio), then using the remaining 5% of equity to make high risk high reward types of bets where your maximum loss is no more than 100% so that you can not possibly have a drawdown larger than the difference between your risky allocation of 5% of equity minus your 'base' portfolio income of 3%, of 2%.

The specific % allocations and whatnot could obviously be jiggered around but that's the idea. Is anybody here familiar with a strategy such as this?

The idea is simple, appealing, the logic correct but it is very difficult to execute - didn't work for me.

The devil is in the details. Very few can find a working process using this concept. Why? Without good luck or good timing, you will mostly be running in place, year after year. Imaging you doing this since 2009, in 9-10 years, your returns would be near zero, if like him, you bought DOTM puts and waited for black swans while others were making 20% a year in returns year after year.

I suggest you back test this method and hunt for a process that could work using this strategy, maybe you can find something workable. Like MrScalper said, this time is not different and the black swans will surely be in our future, but no one knows when.

Regards,

 

[kj5159]

The idea is simple, appealing, the logic correct but it is very difficult to execute - didn't work for me.

The devil is in the details. Very few can find a working process using this concept. Why? Without good luck or good timing, you will mostly be running in place, year after year. Imaging you doing this since 2009, in 9-10 years, your returns would be near zero, if like him, you bought DOTM puts and waited for black swans while others were making 20% a year in returns year after year.

I suggest you back test this method and hunt for a process that could work using this strategy, maybe you can find something workable. Like MrScalper said, this time is not different and the black swans will surely be in our future, but no one knows when.

Regards,

I appreciate the response. I wasn't thinking of necessarily black swan type of events but using the risk allocation of the portfolio for highly levered directional types of bets in either futures or equity options, something like that.