Is it possible to become rich by trading?

[InTheMaking]

TROLL ALERT TROLL ALERT TROLL ALERT!!!

Who? me?
Its stemming from the frustration that very few people have advise here. Or maybe the good guys don't participate any more?

What happened to discussions on better risk control. De-Correlating asset classes. Hedging against risk of the various greeks?

 

[qxr1011]

Its stemming from the frustration that very few people have advise here.

it's not an advisory board !

and the one looking for the advise should search the forum first to see if the issue was discussed previously and it was many times in almost any cases...

and better off one should try to find answers himself if one thinks he has what it takes to become a trader, rather than keep asking others to change his own pampers

 

[InTheMaking]

I never said I was successful at start.
Took me years and years to understand that this was about ego, psycho and process.
Seems everyone is successful with you. "Make 2/3 years of salary in only one month".
Trading is "easy", "easy money" after months of trading, then buy real estate (wow).
And you are wrong. Trading is simple but not easy.
I only say a basic truth : if you are successful at trading, don't waste any penny and trade to compound. Because this is not gambling, but repeatable process. Period.

CM

My portfolio pretty much quadrupled in the last 2 years, due to this raging bull-market. Yet I'm so fearful and know that this is not sustainable. Its just important to find more sustainable methods of investments.

You claim that you're not successful, but there's so much hope in yourself that trading is enough.

BTW, Real-Estate is no different from trading.
You buy a distressed asset for a 20% to 25% discount
- 75k on a 100k property
- Rehab it for 10k.
- Total cost 85k on a 100k property
- Finance and take 70% equity out of it. Bank gives you 70k
- Cash from hand 15k
- Rent it for 1200 per month
- Assume 90% occupancy (10 months rent at 1200)
- Mortgage/taxes taken from half of rent (12000/2 = 6000)
- ROI - 6000/15k = 40% Return!!!!

Compound the hell out of this and you have a very non-volatile investment that can supplement your trading!

These are round numbers, but if you're a good trader, you will know how to do good real-estate. Its very complimentary! If you are good at hunting for distress and cater to various niches, you can do 80% to 200%+ return per property. 200%+ return where you get more from the bank than what you paid for it. Technically DIV/0 % type of return. Try compounding that!

 

[InTheMaking]

it's not an advisory board !

and the one looking for the advise should search the forum first to see if the issue was discussed previously and it was many times in almost any cases...

and better off one should try to find answers himself if one thinks he has what it takes to become a trader, rather than keep asking others to change his own pampers

You're right!
This is really an entertainment and random thoughts ranting board!

OP asked for advise and I was pointing to the error of a dude who said he has'nt been successful and yet believes that trading is enough,

Anyways, what am I doing wasting time here. NDX, SPX and RUT Vol is crushing. Time to take profits!
Happy trading!

 

[volente_00]

My portfolio pretty much quadrupled in the last 2 years, due to this raging bull-market. Yet I'm so fearful and know that this is not sustainable. Its just important to find more sustainable methods of investments.

You claim that you're not successful, but there's so much hope in yourself that trading is enough.

BTW, Real-Estate is no different from trading.
You buy a distressed asset for a 20% to 25% discount
- 75k on a 100k property
- Rehab it for 10k.
- Total cost 85k on a 100k property
- Finance and take 70% equity out of it. Bank gives you 70k
- Cash from hand 15k
- Rent it for 1200 per month
- Assume 90% occupancy (10 months rent at 1200)
- Mortgage/taxes taken from half of rent (12000/2 = 6000)
- ROI - 6000/15k = 40% Return!!!!

Compound the hell out of this and you have a very non-volatile investment that can supplement your trading!

These are round numbers, but if you're a good trader, you will know how to do good real-estate. Its very complimentary! If you are good at hunting for distress and cater to various niches, you can do 80% to 200%+ return per property. 200%+ return where you get more from the bank than what you paid for it. Technically DIV/0 % type of return. Try compounding that!

I disagree on the non volatile part. As long as you are not leveraged out. During the recessions i have seen seen many lose it all on real estate by being over leveraged and undercapitalized when rents have to fall to keep the unit producing income. What I like about rental income is one can usually generate a minimum of 5% cash flow return unleveraged on it while capturing another 3-5% of appreciation annually.

 

[InTheMaking]

I disagree on the non volatile part. As long as you are not leveraged out. During the recessions i have seen seen many lose it all on real estate by being over leveraged and undercapitalized when rents have to fall to keep the unit producing income.

I rather be 80% leveraged in Real Estate than 80% leveraged on my trading account
Those people who lost it all during the recession were not investors! They were speculators. They were buying 300k+ properties and getting 1500 to 2k in rent.

My last property was purchased at 80k, valued at 140k by the bank and I have 7 year lease for 1650 per month. (Not a normal tenant) There are methodologies for buying distressed properties and still hedge against recessions. Just like there are methodologies to hedge stock market volatilities.

 

[InTheMaking]

I disagree on the non volatile part. As long as you are not leveraged out. During the recessions i have seen seen many lose it all on real estate by being over leveraged and undercapitalized when rents have to fall to keep the unit producing income. What I like about rental income is one can usually generate a minimum of 5% cash flow return in leveraged on it while capturing another 3-5% of appreciation annually.

Sorry, You may be an actual RE investor. So you will get it!
You're right! You cannot be overleveraged in all your assets.

But lets say you have 1M RE portfolio and 1M trading portfolio. If you are 80% leveraged in your RE porfolio and maybe 40% leveraged (or 60% margin cushion) on your trading portfolio, then your total leverage is only 60% (Avg(80%,40%) of your assets. Plus your trading portfolio gives you high level of liquidity to cover any unknown emergency costs.

 

[volente_00]

I rather be 80% leveraged in Real Estate than 80% leveraged on my trading account
Those people who lost it all during the recession were not investors! They were speculators. They were buying 300k+ properties and getting 1500 to 2k in rent.

My last property was purchased at 80k, valued at 140k by the bank and I have 7 year lease for 1650 per month. (Not a normal tenant) There are methodologies for buying distressed properties and still hedge against recessions. Just like there are methodologies to hedge stock market volatilities.

What kind of idiots are you finding to sell you 140k properties for 80k?
To each their own. Tenants break leases all the time especially when the economy goes to shit and they become unemployed. The problem with being overlevered in real estate sets you up to fail during the down turns unless you are sitting on a lot of cash to cover the notes. Being overleveraged in real estate also can force you to sell when prices are shit to cover your nut.

 

[volente_00]

If you think money is the secret to happiness, then why do many wealthy people commit suicide ?

 

[InTheMaking]

What kind of idiots are you finding to sell you 140k properties for 80k?
To each their own. Tenants break leases all the time especially when the economy goes to shit and they become unemployed. The problem with being overlevered in real estate sets you up to fail during the down turns unless you are sitting on a lot of cash to cover the notes. Being overleveraged in real estate also can force you to sell when prices are shit to cover your nut.

If you're finding properties on MLS, that might be the wrong approach. There are other methods; tax liens, short sales, bank notes to get better discounts on properties. Also, helps that you are paying cash upfront, to squeeze an even better deal. I don't sign leases with regular tenants. I'll leave it at, as this will give away my trade secret!

See other posting on maintaining various levels of leverage between RE and Stock holdings. If you evenly split, 40 to 50% levered on stock and 80% levered on RE, would make for very sustainable wealth management approach
Cheers!