Take the Index Piker Challenge

[Index piker]

Quote from bigarrow:

1)Piker you're crazy risking you and your families financial security on your unproven theory and risky as hell. 2) You come across as an arrogant prick but man I hate to see anyone throw away money, but hey it's your ass not mine. If I were you I'd make a couple of phone calls to verify talon then get a ticket to see what is possible. 3) Do you know how few opportunties there are for someone to offer to show you anything about trading one on one, almost zero. Good luck piker.

1) Perhaps.

2) I'm sure my confidence makes me look arrogant.

3) He's not offering to train me he just wants to show off.
I have no interest or need for either. I've done my homework, I know my risks and know when some decision making(near historic highs /lows) will be anything but certain and involve luck. At times like that I will simply interject my own wealth utility function for the correct action.

 

[Index piker]

Quote from Jesus:

1.) I haven't learned that, I have believed that for years, probably way before you've been "indexing."

2a.) Piker, you've actually got everything right when it comes to investing, except two things. The first thing is arrogance, you think that nothing catastrophic will happen to your portfolio even though a catastrophic event is a definite possibility.

2b)The second and most important thing is you do not understand leverage AT ALL! If your etf's are just 2X leveraged, then a 40% drawdown in the market would equal about 80% drawdown in your portfolio. Even with 15% cash, that kind of drawdown would take your $100 thousand (roughly) portfolio to $35 thousand.

Just to get back to even after that, your 2X leveraged ETFs would have to gain about 186%, and thus the market would have to gain about 93%. THATS JUST TO BREAK EVEN!

That is without subtracting maintenance fees of the etf, and that scenario assumes no price decay, and believe me, if the market dropped 40% there would be price decay!

If you were just holding a non leveraged security, you could easily ride out the highs and lows like you plan to. But by holding leveraged ETFs or buying securities on margin (I don't know if you're doing that) you simply cannot ride out the lows. You WILL be WIPED OUT. It doesn't matter what the pundits say, or what you or I say. It's just math. Your investing strategy is fine and you would probably beat 90% of traders and 98% of ET "traders" if you just got rid of leverage. 3)But if you insist on using leverage there are only 2 outcomes, you will get wiped out the next time the market takes a big dive, or you will get lucky and decide to sell before you think the market will take that dive (also known as market timing or trading).


3.) I have trouble believing some anonymous guy over the internet who guarantees he will get 100% every year for the next ten years, and then gets angry when you doubt him.

2a) Well I don't think anything catastrophic will happen but it certainly may. What needs to be determined to a certain extent is: events which would hose me in any case minus events that would only hose me only with this method.
1) loss of nerve , leading to exit at a disaster low,
2) missing a relative low or high without action
3) closing of the fund or underlying index (most likely at a low)
4) changing my plan
5) letting too much risk ride once initial retirement goals met.

2b) I understand how my leverage works just fine.
You need to research leveraged etf's and the constant leverage trap. I'm paying 2 premiums. one premium to the fund company for daily adjustment of the underlying securities.
The other, the constant leverage trap is the premium to virtually eliminate margin calls or a 100% loss. Plus there is the cost of the leverage itself.

3) I don't believe in market timing perse but I do think risk timing is possible and potentially profitable.

 

[bigarrow]

Piker why not a 3x ETF. If 2x is good then why not 3x?

 

[bigarrow]

Quote from Jesus:

LOL

Piker, you know how rediculous that advice is? There has been plenty of garbage advice given to you I'm sure, but the only advice you have to take is the advice that the laws of mathematics are shouting at you.

It wouldn't be that hard for Piker to verify if Talon is legit. Learning from others more skilled in their field it the way every other profession works.
But on the most important point you are right the math on the leveraged ETF doesn't work, IMHO is a disaster waiting to happen.

 

[Now is Now]

Quote from bigarrow:

It wouldn't be that hard for Piker to verify if Talon is legit.

I have neither met nor communicated with Talon,however if you take the time to read his thread and responses you will agree he is "legit".

It is not what one says, but the way it is said that matters......


NiN

 

[bigarrow]

Quote from Now is Now:

I have neither met nor communicated with Talon,however if you take the time to read his thread and responses you will agree he is "legit".

It is not what one says, but the way it is said that matters......


NiN

That's my opinion too.

 

[Index piker]

Quote from bigarrow:

Piker why not a 3x ETF. If 2x is good then why not 3x?

I'm not opposed to the use of 3x etf's, as a matter of fact their availability is essential to my plan.

 

[Index piker]

Quote from bigarrow:

That's my opinion too.

It's simply irrelevant.

 

[talontrading]

Piker I know you're smarter than everyone else here, even though you couldn't cut it as a trader (and you're about to repeat version 2.0 of your failed trader experience but this time with your retirement money. That will be fun!) But I have a question for you:

Compare SSO to SPY. Specifically, look at the decline from late '07 to early '09, then the recovery from early '09 to jan of this year.

Hmm... looks to me (unless my math skills are bad and you with your 5th grade math can correct me) like SPY made back 53% of the decline while SSO only made back about 31%. Golly gee... how can that be?

So my questions to you, genius, are:

1) Is this math correct?
2) If so, what does it mean? Why are these numbers different?
3) If my math is correct, does this have any implications for an investor holding these leveraged products through a downturn?
4) Are there predictable volatility characteristics to declines and rallies? (The answer is yes btw, but you probably don't know that.) What does that say about the "wisdom" of holding leveraged products as an "investment"?

Once you puzzle through those you can get to 5) how can a reasonably intelligent person think this is a good strategy? (Be clear, I am not calling you reasonably intelligent.)

If you can sort through this, there's an undeniable lesson here. Do you get it?

Quote from Index piker:

It's simply irrelevant.

Quote from Index piker:

It's simply irrelevant.

 

[Index piker]

Quote from talontrading:

Piker I know you're smarter than everyone else here, even though you couldn't cut it as a trader (and you're about to repeat version 2.0 of your failed trader experience but this time with your retirement money. That will be fun!) But I have a question for you:

Compare SSO to SPY. Specifically, look at the decline from late '07 to early '09, then the recovery from early '09 to jan of this year.

Hmm... looks to me (unless my math skills are bad and you with your 5th grade math can correct me) like SPY made back 53% of the decline while SSO only made back about 31%. Golly gee... how can that be?

So my questions to you, genius, are:

1) Is this math correct?
2) If so, what does it mean? Why are these numbers different?
3) If my math is correct, does this have any implications for an investor holding these leveraged products through a downturn?
4) Are there predictable volatility characteristics to declines and rallies? (The answer is yes btw, but you probably don't know that.) What does that say about the "wisdom" of holding leveraged products as an "investment"?

Once you puzzle through those you can get to 5) how can a reasonably intelligent person think this is a good strategy? (Be clear, I am not calling you reasonably intelligent.)

If you can sort through this, there's an undeniable lesson here. Do you get it?

My 6th grade math gives the return on SSO from the march 09 low- to last close at about 140% gain.

Not 31%.

If january was used the returns would be higher.

So much for your math logic and bull**** but thanks for playing talon.

Oh I get the lesson you are more interested in proving me wrong than being correct or accurate.

sso on yahoo finance