Investing in SPY using dollar cost averaging, searching for ideas.
- Thread starter FreakofNature
- Start date
I like that idea. Actually, I have to DCA into something next year, I may try it.
All these MM strategies use to make a lot more sense back when you could get 6+% in bonds.
Have you run the numbers on your strategy? What do you call it?
I always rely on mathmaticians to tell me if the crazy schemes I come up with actually improve anything or just make me feel better because I am too scared to take on risk. That's how I know DCA can improve most strategies.
When do you sell ?
FoN
I dont think I got lucky, I know SP500 cant go to 0, so chance of blow up don't exist, at least realistically. I was gutsy, not lucky.
I had anticipated a crash below 2009 lows so had planned again appropriately with my money management.
Never lost a penny doing this.
The problem is the money on the sidelines, that I didnt invest because of the crash anticipation I had planned for.
Sure i made 15% on some of the money, but what about the one I didn't use ? That's my concern with this strategy.
FoN
It can't be done in a cash account, you need margin to beat the market, there is no other way unless you are the greatest trader of all time.
Check and see how you would have done this year at 80% fully invested long in cash and 20% doing your DCA thing with SPY or ES.
It's hard to beat the index, IMHO it can't be done getting in and out. In a good year a trader will very rarely beat buy and hold, but in a stagnant and volatile year like 2011 a trader can enhance returns trading a small amount of the stash on margin.
But getting back to your original question which nobody answered, I'm still wondering what's better, SPY or ES? Especially if you're trying to DCA in.
I did SPY to keep it simple because my add ons were small, 100 share increments.
Like I said I had anticipated down to SPY 50
Naturally everytime my shares got divisible by 500 I could swap with 1 future, but I didnt do it when I had the time.
FoN
On a side note.
Still havent exited.
Going for new highs or more adds
FoN
Still havent exited.
Going for new highs or more adds
FoN
I've been invested in an S&P index fund since the beginning of time and will probably die still holding, but everynow and then I think about converting it to ES. Like I said, I thought about it more when I was getting 6.5% in bonds.Quote from FreakofNature:
I did SPY to keep it simple because my add ons were small, 100 share increments.
Like I said I had anticipated down to SPY 50
Naturally everytime my shares got divisible by 500 I could swap with 1 future, but I didnt do it when I had the time.
FoN
LIBOR is priced into equity index futures. There is no benefit in buying SPY vs. buying ES futures other than potentially a difference in tax treatment.
If you buy ES futures and then put the remaining collateral into 6% yielding bonds that trade would be identical to putting 100% of your capital into SPY and using leverage to buy 100% capital minus ES margin worth of the bonds, paying LIBOR for the leverage borrowing. Essential it's a carry trade that earns you bond yield minus LIBOR. Carry can be great.. until it isn't.
If you buy ES futures and then put the remaining collateral into 6% yielding bonds that trade would be identical to putting 100% of your capital into SPY and using leverage to buy 100% capital minus ES margin worth of the bonds, paying LIBOR for the leverage borrowing. Essential it's a carry trade that earns you bond yield minus LIBOR. Carry can be great.. until it isn't.