K, I think I just figured out how to get almost GUARANTEED edge...

[DTB2]

"According to Ned Davis Research, dividend growers posted an average annual return of 10.07% between 1972 and 2013, which is slightly higher than the 9.28% returned by the broader dividend-paying universe. Annualized returns for both categories exceeded 23% during bull markets. Meanwhile, the equal-weighted index saw gains of 7.64% during the 41-year stretch. Non-dividend paying stocks rose just 2.34%."

 

[schizo]

So, the problem is so many people think they can find an edge by NOT buying and holding. But, as has been proven time and time again, it is EXTREMELY hard to beat buy and hold over any meaningful time period (several years plus).

So, why fight it? Why not just incorporate buy and hold?

So, here is what you do. You put 100% of your capital into SPY. In a margin account.

You've done your back testing, you know some scenarios where you should go in BIGGER or go in LESS. Like, for example, in some other thread someone said on days when the SP500 has had 3 down days, if you buy and hold for 3 days, you 3 days you hold will be, on average, far more positive than your average day.

But you are NOT going to NOT buy and hold, because the number of times such a scenario comes up are relatively few. You just could not compete with buy and hold.

So, again, you are going to be 100% invested in buy and hold. HOWEVER, on those days where you've done your back testing and you have statistical proof that being long or short those days were significantly outperform, you will go long or short ON MARGIN. So on those special days you might instead be 105% invested. Or 110% invested. Or 90% invested. You can adjust for your risk tolerance.

Now, if your back testing is even half arsed, and remains relevant for future time periods, you know you are going to profit on those trades. So you guesstimate what you anticipate profiting on those trades. Of that guesstimated profit, you buy some tail protection. Maybe like SPY puts 30% out of the money or something. Something so that, when 2008 comes around again, you are well protected. And those you are buying on margin, to be funded by the profits you make from your margin special trades. All the time remaining 100% invested (subject to less on those special days), thus buy and hold.

So what do you have? You have a portfolio that on average has all the benefits of a pure buy and hold strategy, but you have some marvelous tail protection. On average your portfolio will perform at least as good as a buy and hold, but with SIGNIFICANTLY less drawdown.

And that, my friends, is creating edge and beating the market...

Why don't you then do what you preach and then report back with the result come this time next year? Then we will know for sure, wont we?

 

[ironchef]

So, the problem is so many people think they can find an edge by NOT buying and holding. But, as has been proven time and time again, it is EXTREMELY hard to beat buy and hold over any meaningful time period (several years plus).

So, why fight it? Why not just incorporate buy and hold?

So, here is what you do. You put 100% of your capital into SPY. In a margin account.

You've done your back testing, you know some scenarios where you should go in BIGGER or go in LESS. Like, for example, in some other thread someone said on days when the SP500 has had 3 down days, if you buy and hold for 3 days, you 3 days you hold will be, on average, far more positive than your average day.

But you are NOT going to NOT buy and hold, because the number of times such a scenario comes up are relatively few. You just could not compete with buy and hold.

So, again, you are going to be 100% invested in buy and hold. HOWEVER, on those days where you've done your back testing and you have statistical proof that being long or short those days were significantly outperform, you will go long or short ON MARGIN. So on those special days you might instead be 105% invested. Or 110% invested. Or 90% invested. You can adjust for your risk tolerance.

Now, if your back testing is even half arsed, and remains relevant for future time periods, you know you are going to profit on those trades. So you guesstimate what you anticipate profiting on those trades. Of that guesstimated profit, you buy some tail protection. Maybe like SPY puts 30% out of the money or something. Something so that, when 2008 comes around again, you are well protected. And those you are buying on margin, to be funded by the profits you make from your margin special trades. All the time remaining 100% invested (subject to less on those special days), thus buy and hold.

So what do you have? You have a portfolio that on average has all the benefits of a pure buy and hold strategy, but you have some marvelous tail protection. On average your portfolio will perform at least as good as a buy and hold, but with SIGNIFICANTLY less drawdown.

And that, my friends, is creating edge and beating the market...

I appreciate you sharing your food for thought.

a 90/10, 95/5... strategy is similar to Taleb's 80/20 barbell strategy, or @Daal's 80/20 strategy. Why don't you read some of @Daal's posts to see his logics and compare that to yours.

Regards,

 

[Amun Ra]

So, the problem is so many people think they can find an edge by NOT buying and holding. But, as has been proven time and time again, it is EXTREMELY hard to beat buy and hold over any meaningful time period (several years plus).

So, why fight it? Why not just incorporate buy and hold?

So, here is what you do. You put 100% of your capital into SPY. In a margin account.

You've done your back testing, you know some scenarios where you should go in BIGGER or go in LESS. Like, for example, in some other thread someone said on days when the SP500 has had 3 down days, if you buy and hold for 3 days, you 3 days you hold will be, on average, far more positive than your average day.

But you are NOT going to NOT buy and hold, because the number of times such a scenario comes up are relatively few. You just could not compete with buy and hold.

So, again, you are going to be 100% invested in buy and hold. HOWEVER, on those days where you've done your back testing and you have statistical proof that being long or short those days were significantly outperform, you will go long or short ON MARGIN. So on those special days you might instead be 105% invested. Or 110% invested. Or 90% invested. You can adjust for your risk tolerance.

Now, if your back testing is even half arsed, and remains relevant for future time periods, you know you are going to profit on those trades. So you guesstimate what you anticipate profiting on those trades. Of that guesstimated profit, you buy some tail protection. Maybe like SPY puts 30% out of the money or something. Something so that, when 2008 comes around again, you are well protected. And those you are buying on margin, to be funded by the profits you make from your margin special trades. All the time remaining 100% invested (subject to less on those special days), thus buy and hold.

So what do you have? You have a portfolio that on average has all the benefits of a pure buy and hold strategy, but you have some marvelous tail protection. On average your portfolio will perform at least as good as a buy and hold, but with SIGNIFICANTLY less drawdown.

And that, my friends, is creating edge and beating the market...

I've heard of this system before. It's call trading around a core position. Congratulations though on thinking up something that's been around longer than you've been alive.

 

[SimpleMeLike]

So, the problem is so many people think they can find an edge by NOT buying and holding. But, as has been proven time and time again, it is EXTREMELY hard to beat buy and hold over any meaningful time period (several years plus).

So, why fight it? Why not just incorporate buy and hold?

So, here is what you do. You put 100% of your capital into SPY. In a margin account.

You've done your back testing, you know some scenarios where you should go in BIGGER or go in LESS. Like, for example, in some other thread someone said on days when the SP500 has had 3 down days, if you buy and hold for 3 days, you 3 days you hold will be, on average, far more positive than your average day.

But you are NOT going to NOT buy and hold, because the number of times such a scenario comes up are relatively few. You just could not compete with buy and hold.

So, again, you are going to be 100% invested in buy and hold. HOWEVER, on those days where you've done your back testing and you have statistical proof that being long or short those days were significantly outperform, you will go long or short ON MARGIN. So on those special days you might instead be 105% invested. Or 110% invested. Or 90% invested. You can adjust for your risk tolerance.

Now, if your back testing is even half arsed, and remains relevant for future time periods, you know you are going to profit on those trades. So you guesstimate what you anticipate profiting on those trades. Of that guesstimated profit, you buy some tail protection. Maybe like SPY puts 30% out of the money or something. Something so that, when 2008 comes around again, you are well protected. And those you are buying on margin, to be funded by the profits you make from your margin special trades. All the time remaining 100% invested (subject to less on those special days), thus buy and hold.

So what do you have? You have a portfolio that on average has all the benefits of a pure buy and hold strategy, but you have some marvelous tail protection. On average your portfolio will perform at least as good as a buy and hold, but with SIGNIFICANTLY less drawdown.

And that, my friends, is creating edge and beating the market...

I think for long term investing, its best to just buy the S&P 500 index every two weeks until your account reaches +$1 Million dollors. And then go enjoy the life and trade part time or full time.

Trying to predict long term whats going to happen the market seems like alot of work.

 

[ironchef]

I've heard of this system before. It's call trading around a core position. Congratulations though on thinking up something that's been around longer than you've been alive.

Shows you he is trying hard to improve his results.

You are aware of the strategy, are you using it?

Reinventing the wheel is better than those that in spite of knowing there are wheel barrels but still carry things on their back.

 

[deaddog]

I think for long term investing, its best to just buy the S&P 500 index every two weeks until your account reaches +$1 Million dollors. And then go enjoy the life and trade part time or full time.

Trying to predict long term whats going to happen the market seems like alot of work.

I did that in 2000. Didn't work out all that well as I watched my nest egg lose 50% of its value.

Came up with a trend following system that took me out of the market in 2008. Back in in 2009

I got lucky last year as the system wanted to take me out last Dec but I put off selling to avoid cap gain taxes and the market turned around in Jan.

I'm 100 % equities at present.

 

[SimpleMeLike]

I did that in 2000. Didn't work out all that well as I watched my nest egg lose 50% of its value.

Came up with a trend following system that took me out of the market in 2008. Back in in 2009

I got lucky last year as the system wanted to take me out last Dec but I put off selling to avoid cap gain taxes and the market turned around in Jan.

I'm 100 % equities at present.

Did you compare the results of your system now versus just sticking to your plan in 2000 and riding it out?

How much you be up had you stick with your plan in 2000?

 

[bone]

I think you misread my post Handle123. I would have puts with strike 30%ish below market, so very cheap, and they would protect me even in that scenario (heck, might come out ahead if I do it right).

You’d better get a quote on put premium and run a theta decay model - your insurance isn’t as cheap as you think, and with a strike at 30% below current levels chances are you’ll never be ITM before expiry and if the market falls, let’s say, 20% before expiry your negative delta will be huge unless you bought many more puts than your long exposure - and in that particular scenario of overweight Puts your cash flows will be quite negative unless the market drops precipitously shortly after your initial put purchases. In other words, buying overweight Puts or Puts nearer (say, strike = 15% below market) over a protracted period of time would most likely greatly diminish or wipe out long exposure gains.

 

[deaddog]

Did you compare the results of your system now versus just sticking to your plan in 2000 and riding it out?

How much you be up had you stick with your plan in 2000?

No I didn't . I have to assume I'm better off as I wasn't in the market for the melt down in 2008 and I bought back in in 2009.

I'm not buying the index, I'm buying individual stocks (Mainly Canadian as I get a bit of a tax break on the dividends).

My priority is to protect my capital. I sleep better at night that way. I'd rather be in cash as the market goes up than be in equities as the market drops.