long term position trading -primarily etf's-

I saw an Add tonight from WWW.Betterment.com. on CNBC.
It's a portfolio manager that reportedly uses it's model and diverse investment approach with low cost passive funds - It uses many of the funds sponsored by Vanguard-
It offers rebalancing & wide portfolio diversification with an extremely low $.15 fee.
Their portfolio blend mixes your age- years to retirement- and establishes a mathematical model - stocks- bonds- Risk Capacity- It also gives you a basic financial goal to get to for retirement- I see that by their model I'm a couple of hundred thousand dollars short of where i should be- considering my age and income. I don't think I can cover that void in the next few years- but one can only try - LOL!
There are similar funds out there- ICA - advisor- charges a full 1% of assets to do exactly the same thing- using their DBA funds.
This essentially is the principle of investing in Target Date Funds- and periodic rebalancing. They feel thir method/structure is an advantage.
Reportedly, Betterment.com does not charge for the transaction costs of rebalancing.
Their '.15 Fee is minimal if that indeeds includes the rebalancing at no costs- no additional hidden transaction charges-

https://www.betterment.com/portfolio/
 
sowterdad said:
As i got home before the market closed this pm- Everything was in rally mode-
It seems that the market has taken the FED speak to mean that rates may not be raised too sign, the dollar has given back & some decline- The market likes this scenario.
Let's touch on sector-and segment rotation-
Both the SPY and IWM (small caps) hit a high early in March.
Both declined hand in hand -4% or so, and then turned to move higher - IWM leading SPY off the bottom turn.
Today, Spy is at the prior March high, while IWM has moved above it's prior March high-by several %- outperforming the SPY- which includes large companies-
Interestingly , Biotech gapped higher at the open, but sold off through out the day, closing lower than yesterday's large move higher.
What was interesting is that all of the market pundits - Fast Money & Cramer- ALL spoke about how far the sector has moved. and perhaps the sector is overheated./overvalued.
When the overall market goes higher, but your group is not the leader- but a losing laggard-
it suggests it's time to tighten the stops if your position is not flowing higher WITH the strong market tide-. Or outperforming and leading the market.....
PJP - was weak- only gained .5% -but I added to the position regardless-
I watched the market for an hour or so- and going into the close- Tech looked strong- didn't give back the entire gap up move- - I elected to go long Tech- but should have waited into
the last 1 minute- as sell programs locked in gains on the higher move and the closing price dropped in the last 5 minutes-
HACK was also weak, declining hard at the close- My raised stop-loss should protect my entry.
I think this is sector rotation- and smart money repositioning .
If the market moves higher next week, TNA may be a good short term play- the leveraged
small cap ETF. but one has to be careful- 3x up is also 3x down- and any Gap is 3x as wide.
Tech sector- Nasdaq- trying to hold those 15 years - get back to old highs -This is a 2nd
push from the earlier high made at the beginning of the Month.
We had a gap higher open back to the recent highs- and price held that gap.
Today's close feels as though the market got a breath of fresh air from the dollar, the FED- and it's sails are filled momentarily-
I think everyone goes home this weekend feeling good and complacent- and the market finds reasons to go higher next week. I actiually put some Investment monies back to work on small cap world growth, I think the dollar decline will give strength there as well.
As for the Tech sector- I bought the TQQQ going into the close- which is the leveraged etf. It's a gamble- It's discretionary.
For next week, I am also going to tighten stops on my positions - I don't care for the weakness in XBI - and PJP didn't lead the Spy, it trailed-
Consumer discretionary is being talked up some on CNBC- and watch how the utilities perform- The transports used to be the go-to indicator of large trends in the markets- Goods being sold and needing to be delivered... Signs of growth when that occurs.
Amazon may derail the transports with their proposed use of Drones?
Next post will be discussing a possible site for asset allocation
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xbi spy 2015 3.20.15.PNG

XBI SPY 5 YEAR PERFORMANCE.JPG
 
sowterdad said:
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odd- HAD A COMPUTER GLITCH - OR FINGER TWITCH -
Price performance charts were attached to a prior post, and not the one I was writing this Sat.
Have to get back to the exterior chores- this Spring day in NC!
In the post I lost I was trying to point out that outperformance may come at a cost of higher volatility- look at the charts posted and the wider swings in the red line- XBI.
However, both XBI and pjp have significantly outperformed SPY over 3 months, 3 years, 5 years.
Going back to 2009 when the market rallied- XBI lagged- while PJP outperformed.

Finding market segments/sectors that outperform can make for better gains for a trader- and higher probability trades- better success rate- if the momentum & trend direction in the past continue in the future.
ONE earlier post illustrated XLU's period of 20% gain-= outperformance - as sector rotation and Investor concerns saw XLU as a safety trade- At one time, Gold was the safe haven trade- Not so in the recent market

XBI & PJP may fall out of favor- but perhaps not. They have multi-year trend momentum
behind them- So, on a significant decline- one might consider including them as a higher momentum trade.
If one is focused on SPY- the SSO is a 2x etf that offers greater movements-
 
While pruning some grape vines this 1st day of Spring, had some time to consider what different goals that people that engage in trading may have.
Part of what prompted this line of thinking was going to the Betterment.com site - filling out the basic questionaire- account- and reviewing their recommendations on How Much I need for retirement ideally- and how -based on my age- they would allocate my assets among the 12 different categories of stocks and bonds. The account portfolio -for my age- does not try to outperform SPY as the benchmark- I think it shoots for a 6-7% average return- and is designed to protect assets with a more conservative path- and about .5 Beta downside of SPY. I am well short of the recommended portfolio value- based on my present age- about a half a million dollars is the basic recommendation to have .....
That sounds like a lot of Money to have set aside.

One of the most common goals I think most hold is the desire to get capitol appreciation of their monies as opposed to simply investing it. Those of us with smaller accounts hope to grow them into larger accounts in a shorter period of time than the market itself gives on average. WHAT IS OUR GOAL? Is it defined or something general- IS it realistic? How do we get to achieve a longer term goal ? - Financial Independance.....

Some perhaps hope to make enough money trading to give up the day job and trade as their source of income- to provide their livelihood. (I was actually thinking- back in 1999 - That in 1 or 2 years i would be able to have grown my account to where i could quit the day job, and live on the proceeds of my trading prowess. I just bought the Nasdaq this week at about the same price it was at back 15 years earlier, I was also buying it then- "hand over fist" ) - shows what a good bull market will do to one's psychology!
It occurred to me that such a trader would have to make a considerable after tax return , and -in most cases- would need to wield a sizeable account for trading. Lacking knowledge in how this works-- I think that's Futures-trading-? being able to control large amounts of asset value with a smaller amount of money for the trade-for a short period of time- Or- Options are another method- or margin- Or leveraged ETF's might be another.
If i could live modestly & within my means- here in scenic and much less expensive North Carolina- If the House was paid for, Vehicle was paid for- I could likely pay living expenses and the frugal basics on -after tax- cash $25,000.00 - I think this would mean I would have to Net about $40,000.00 pre-tax. to meet this cost.
If i lived in a major Metropolitan area- the frugal basics there cost significantly more.
I would need to have a much larger net gain in my trading to provide adequate income for living expenses- but since i don't - let's stay with the Net $40,000.00 I need to get to pay expenses- and then let's add a bit extra - for a savings account- and also retirement/medical HSA account- let's allow $10,000.00 per year for Roth IRA- $5,000.00,
Savings $3,500.00 and $1500.00 medical- I will assume i am not paying for my children's college education- nor throwing too many extravagant parties. I am not even adding to the conventional IRA $6500.00 I should be taking advantage of in this scenario-
With the added $10,000 or beyond the basics costs- , let's assume I now need $55,000.00
net gain -pre tax- to cover the 'basics'- House, Car, College ED, IRA is not included.
To net $55,000.00 I would need to make a certain % return on my trading account-
If my trading account is $110,000.00 - I can meet my expenses with a 50% return.
If my trading account is $ 220,000.00- I can meet my expenses with a 25% return.
If my account is $500,000.00 I can reach my goal with an 11% return.
The "market's " average annual return is 7.5% ; My 11% goal at $5000,000.00 trading account value is only .50% better performance than the SPY Average.

NOW, If i had a Million Dollars- in my trading account- $1,000.000.00- to maintain my back woods NC lifestyle of $55,000.00 annual expense needed- I would achieve that goal with a 5.5% annual market return-

WHAT IS MY POINT?

The fact is- Most of Us likely under estimate what our actual financial needs are now- and also in the future. We get focused on the act of trading- but it is helpful to keep the eye on the total picture- and to be able to step back and see the Forest for the Trees.
Do we have a goal for our performance? What is our benchmark?
Are we younger, with decades ahead?
Are we middleaged- feeling we have 'peaked' and need to do more?
Are we closing in on retirement?

Each of us needs to have a plan to get to where we want to be- Self-reliant.
Younger members need to understand they will shoulder a greater responsibility for their own future than any prior generation.
The future may not be as bright as the past- 'be prepared' would be the boyscout motto.
 
Swift5 said:
To stay rich, you have to ensure that your expectations don't grow faster than your wealth.
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Wouldn't it be nice to start Rich? And to be able to Stay Rich!
Wouldn't it be nice to not give back as much of the profits from winning trades!
Expectations do need to be grounded in realism.-I agree!
LOL! Since i don't have the luxury of being Rich presently , and unless i pick a winning lottery ticket- I cannot see any way to get there in my life time. I am actually woefully underfunded to meet the possible financial needs as i quickly approach retirement-
I thought it might be worth sharing some of the reservations about how easily an account could grow- The Calculations were general- and not specific to my situation.

I think you were -" tongue in Cheek" - but the truth is- many of us have unrealistic expectations of what our trading results may bring. By establishing a long term goal- based on accurate assumptions of what one may need at some point in time- from their trading assets- or elsewheres- one can get a sense of whether the goal is unrealistic, needs to be reevaluated, - and how can the present method- or position one trades- get them there. There are a lot of promoters selling their trading programs and they love to use projected annualized results based on a select few outperforming winning trades- It comes down to what one's average net returns total over the course of a year-and what is one's account size?
If the goal is to Grow the account as large as possible-
What are the methods one will choose, and what will one be trading?
What is the RISK compared to the possible reward between Stock X and Stock Y- OR ETF's-

SPY went from $179 - $204.00 A gain of $25.00/179= 14%.
Annual returns in SPY are declining- Perhaps this year we get the historical 7-7.5% average- or even lower? SSO should give 2x the return .also the volatility will be 2x.

I think PJP presently succeeds in doing that, but that needs to be evaluated in terms of RISK to get the larger gain- XBI looks much Riskier /volatile.

QQQ's went from $85- 102. a gain of 17/85= +20%.
TQQQ went from $60- $95 = +35/60 = +58% 1 year gain. I've got a short term trade on expecting the momentum to move the markets higher next week- I need to assess whether i can stomach the potential volatility/downside.

The Goal continues to be to grow the trading account-IT has a LOOOOOng way to grow-
In seeking greater growth, it will be accompanied by greater RISK.
I think plan B will be to keep investing in the traditional IRA, but move it to a different low cost provider. and see if i can grow the trading account to outperform the benchmark SPY-
I recommend that most everyone should have a Plan B- I think that was the purpose of that post to begin with.
Thanks for posting!
 
On the 2 hr chart, XBI's decline was sharp- . Pulling back off an all-time high and selling off while the market rallied.
Entry price was $228.84 - this time around- . I could raise the stop to cover my entry- but that is too tight- Instead, I'll see if the trend line holds , with a stop under the recent sideways consolidation lows- Stop $219.00
xbi stop 2.22.15.JPG
 
PJP-
I set a tight stop for 30 @ $79.90 and a limit BUY for 30 $76.90.
Price appears to be at a momentum peak high. However, it closed at the low of the Daily bar- The 2 hr chart shows it declined after the opening bar.
I will see if I capture the $90.00 on the stop & limit repurchase on a pullback.
I will then also plan to purchase an additional 30 shares- ideally lower .
 
sowterdad said:
PJP-
I set a tight stop for 30 @ $79.90 and a limit BUY for 30 $76.90.
Price appears to be at a momentum peak high. However, it closed at the low of the Daily bar- The 2 hr chart shows it declined after the opening bar.
I will see if I capture the $90.00 on the stop & limit repurchase on a pullback.
I will then also plan to purchase an additional 30 shares- ideally lower .
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Going to work a few hours late this am- new granddaughter's arrival had us getting in very late -Woke up at 9:40- good to get to sleep in...
PJP sold this AM $79.86 2 minutes into the open on a stop loss I set there last night-
Looking at prior declines following a period of momentum, pullbacks ranged from 4, 3% in the recent months- With that, I raised the repurchase limit to $77.60- which is just above the prior price gap 3.16.
I deally, price declines and does not make a large momentum move higher-
Present order is a limit buy- I could also try a conditional order - one cancels the other- on a momentum breakout higher- but have not done that trade order before-
With this order today filling, I have enough cash free to buy PJP, and when today's order clears, I will look to add to PJP- assuming my limit gets filled- Goal would be to own 50- 60 shares in this position. That is very overweight position for this size account-
The only way to justify that is by protecting the downside with a split stop-loss- and evaluating the position Risk- So, before i make that larger position order- I need to give it some closer scrutiny.
I had intended to purchase TQQQ- and now that cash cleared, have a buy-stop waiting to enter on a higher move- essentially, price pushing the resistance of the past highs. $116.25.
xbi- small position in -10 shares. -this could easily hit 212-215 on the pullback- I need to consider how I will manage that- and whether I want to stop out there- or below.
pjp 2 hr sell 3.23.15.JPG
 
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