GRIC Trading Commentary
I have had numerous questions and PM's as to the types of strategies we use with our GrandRapidsInvestmentClub.
Well, it's a two part answer:
Part I: First, the dynamics of group trading is far different than that of an individual account. You feel more 'responsible' if it's someone else's money than if it were just yours (although I suppose it shouldn't feel this way). Secondly, group trading has to take into account the frequency of the meetings and involvement level of each group member.
Here in lies the tough part.... timing and effort. Over the past six years now, we have found that trading individual equities at a group level is difficult. Too many news events, reports, etc... occur too frequent for everyone to stay in touch and up to par... and as a whole group.... communication break downs occur. We've tried and certainly welcome individual stock plays.... but find it difficult to manage from start to finish. So, we do encourage index trading to the group members.
Part II: The club was started with a mission to educate, not make or create trade recommendations. We have found, even among our members, that people just 'want the trade', and don't want to understand the whys, the hows, or the whens. From a liability and risk management point of view... we steer far away from purely straight trade recommending. It's just not safe, prudent, or responsible to allow people to trade without fully understanding the risks involved.
We have set up a complete course structure of 24 classes. Eighteen of them are considered under grad classes, (basic stock and option info... from TA, FA, to volatility and greeks). Each class is followed up by an online assessment. The assessment must be completed and passed before moving onto the next class. We run upto four different level classes each meeting.
Upon graduating by passing a comprehensive assessment... our GrandRapidsInvestmentClub members become full blown GrandRapidsInvestmentGroup members. The 'group' members meet to discuss advanted topics, incluging strategies, taxes, speakers, seminars, webinars, etc. It is still mostly educationally based. We do show specific strategies with specific dates... but mostly for purposes of demonstration, not recomendation.
After completing the advance degree classes, graduates will become decision making member of our new 'Hedge Fund'. Here is where we discuss specific trades to be implemented into the group account.
So to answer your quesitions about what STRATEGIES.... well... it just depends on what the market will allow... or shoudl I say, what GREEK position is needed to balance the overall portfolio.
We actively trade:
Double Diagonals, Put Calendars, Call Credit Spreads, Straddles/Strangles and BrokenWingButterflies... for the current moment.
Again, it just depends on what 'greek' emphasis is needed at the time.
What type of Returns are you making?
As far as our Return on Investment over the past five years together.... I am reluctant to say, because you wouldn't believe me if I told you. We've been extremely lucky.... we've managed to have only a few losses over the years. It's managing the losses which I think we're most proud of.... the returns will take care of themselves.
Why do we openly share our Strategies and Ideas?
We have found that many investors appear so secretive about how they make money.... the truth is... it doesn't cause us to make any more or any less money if people are doing what we're doing. I really don't think we'll have much impact, as a group, on the market... no matter how large we become.
In fact.... it helps everyone as a whole who jumps on board by sharing their experiences.... similar to what coach is doing here on ET. Just wish more people felt the same.... it's always educational to learn from another person's point of view.
How do the meetings run?
Traditionally we begin and follow an agenda. It includes Economic Reports, Newsletter Reports, Committee Reports, Special Task Reports, and Strategy in Review Reports. The meetings begain at 6pm and last.... usually until 9ish.
In our investment group... we charge $5 per three hour session, twice a month. The $5 gets you a 50 page printed powerpoint presentation, all the Pizza you can eat, all the pop you can drink, wireless internet access, 315 investment website links, and a chance at winning the current 'used' stocks and commodities magazine for the month. It's quite a deal.
Many of the members say if we charged $25 a night, they would gladly pay it.... which would equate to about $1,000 every other week. In fact they said if we charged more... we would probably get five times as many interested members. I guess you just cant give away anything anymore for FREE!
Our mission is purely to educate... and what we've gained in return is a lot of great personal relationships. We could easily raise millions tomorrow from the group if we wanted... but our mission is to ultimately teach each person to become an independent investor for life.
I guess coming from public education employment..... I find giving much more rewarding the receiving..... you have to... or you'd never survive this teaching business. Besides, when you live to learn on a teachers salary.... a small winning trade feels like a jackpot!
Hope that slows the PM rate down a little.... for awhile at least!
Enjoy and remeber to always....
Sail On... ~ ~ _/) ~
Murray
