But isn’t this basically index investing, since you only stay in the best performers?
Strategy risk vs overall risk mandate
- Thread starter bln
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Back of the envelope, at 20% return you’d turn 1k into 240k after 30 years assuming zero volatility. Compounding is a miracle but not a big miracleUnless you are like me, already over the hill, with the magic of compounding, in another 30 years, you can turn a few thousand into a million with a 20% a year return.
True but if you added a grand a year you'd have your million.Back of the envelope, at 20% return you’d turn 1k into 240k after 30 years assuming zero volatility. Compounding is a miracle but not a big miracle
In a way it is, I rebalance more often than the index, don't have the diversification and don't suffer the drawdowns. For the most part I outperform the index.
Back of the envelope, at 20% return you’d turn 1k into 240k after 30 years assuming zero volatility. Compounding is a miracle but not a big miracle
I think compounding is not novel but it is a significant source of wealth creation.
He said a few thousand, not $1K.Back of the envelope, at 20% return you’d turn 1k into 240k after 30 years assuming zero volatility. Compounding is a miracle but not a big miracle
You are a trader, I am a speculator.
As I said in another post elsewhere, time will favor absolute returns in a volatile instrument with high drift vs a less volatile instrument with low drift.
(chuckle) I refer to myself as a speculator. I move in and out of the market speculating on the price movement of assets that investors invest in. What makes me a speculator is that I might hold for the long term as long as the asset price moves in my direction.
I'm a risk adverse speculator as I don't hold any assets that move against me.
I could be considered a trader as I move in and out of the market as dictated by price movement. The one thing I'm not is an investor.
How do you differenciate between trading and speculation?
I don't know. I think there is really a continuum.
I am thinking a trader is like a middleman, buying and selling, doesn't hold for long, makes money on the spread?? When I day trade, I trade in and out for small spreads.
A speculator? One who buys/sells, willing to hold out for huge profits and willing to risk it all if he does not get his price?? When I speculate with options, I hold it to expiration, willing to lose it all in return for potentially X times what I paid for.
I agree
Risk it all sounds more like a gambler.
I'm quite willing to hold on for huge profits but I see no reason to risk it all.
I maintain that the difference between a gambler and a speculator is prudent risk management.