Holy Grail Investment Plan

A

aeliodon

Okay so here's the deal - I'm going to sweeping all my trading profits into my investment account. I'm 28, and so I won't be touching the money for at least 35 years when I 'retire'. So my timeframe is 35 years.
What I'll be doing is buying SPY. I'm going to buy 1 unit of SPY upon every 5% pullback from every new highwater mark. So I define 1 unit as 5k dollars or some other amount that I define. I will never sell. I won't be doing any market timing, or predicting, or chasing the latest hot stocks, or 'taking profits'. I figure the worst case senerio would be a 50% decline in SPY (which as happened only twice in 100 years) - in which case i will have to buy 10 units.
Obviously another alternative would be to buy SSO instead of SPY. SSO is a 2x leveraged SPX index tracking etf. But my question is if SPX goes down 50% then how much would SSO go down?
As far as diversifying against dollar weakness. I may also buy into emerging market etfs as well and apply the same strategy.
 
Quote from aeliodon:

I figure the worst case senerio would be a 50% decline in SPY (which as happened only twice in 100 years) - in which case i will have to buy 10 units.
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The markets went down some 90% during the Great Depression. Othe markets have done similar things. You cannot make assumptions like this. They will work, until they don't
 
Quote from aeliodon:

Okay so here's the deal - I'm going to sweeping all my trading profits into my investment account. I'm 28, and so I won't be touching the money for at least 35 years when I 'retire'. So my timeframe is 35 years.
More...

That's a very good plan, and 35 years from now you'll be happy you stuck to it.

Unfortunately, human nature being what it is, you probably won't.
 
Quote from aeliodon:

Okay so here's the deal - I'm going to sweeping all my trading profits into my investment account. I'm 28, and so I won't be touching the money for at least 35 years when I 'retire'. So my timeframe is 35 years.
What I'll be doing is buying SPY. I'm going to buy 1 unit of SPY upon every 5% pullback from every new highwater mark. So I define 1 unit as 5k dollars or some other amount that I define. I will never sell. I won't be doing any market timing, or predicting, or chasing the latest hot stocks, or 'taking profits'. I figure the worst case senerio would be a 50% decline in SPY (which as happened only twice in 100 years) - in which case i will have to buy 10 units.
Obviously another alternative would be to buy SSO instead of SPY. SSO is a 2x leveraged SPX index tracking etf. But my question is if SPX goes down 50% then how much would SSO go down?
As far as diversifying against dollar weakness. I may also buy into emerging market etfs as well and apply the same strategy.
More...

You'd do even better buying 5% below a short MA of SPY rather than from the high.

Dortch
 
There really are only two holy grails of investing: the dollar cost average approch and the pullback approach I outlined above.
For some reason I believe the pullback approach would outperform the dollar cost average approach simply because you're taking advantage of every panic in the market and never buying at the euphoria at the HW marks.
 
The only holy grail I know at 28 yrs old (your age as you stated) is to marry a rich and beautifull wife, that will give you plenty of room for fun, and you need to invest only once, no need to wait for a pull back for re-investment.!

:D
 
Quote from timbo:

Dortch, you dork. Don't fck with the grail.
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I'll save you some time and trouble. It's been my experience there is no grail in trading, yet from a psychological standpoint the grail is always between your ears.
 
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