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What would you do if your account was in this situation?
- Thread starter xif99
- Start date
This is the best advice and you should take it.Quote from lescor:
Forget about where your position used to be, what your average price is, where you think it 'should be', etc. It's worth what it's trading at right now. The market doesn't care what you paid for it. Mark your positions to the market every day, don't focus on getting back to break even. Remember that hope is not a viable strategy.
"It's not a loss until you sell" is the motto of Loserville.
Ask yourself this: if you had a good and loyal friend with 12k of cash, what would you tell your friend to do with it? Would you really tell him to buy SPY or DDM? Are they really the best trade/investment? If so, then keep your position. If not, then sell SPY and DDM do something else.
Except for some minor tax-planning and transaction cost issues, your current holdings, basis, paper losses/gains are wholly irrelevant. The market won't go up or down solely because you are sitting on a loss or gain. All that really matters is to decide the best place to put your capital in the future (not the past). Pretend all your positions are cash and trade accordingly.
Quote from arizonadreamer:
The others have given sound advice.
Just a quick warning: DO NOT leverage into SSO. It cannot be viewed as a long-term instrument. Due to the derivatives, slippage, and other factors, it will likely not correlate as closely to the SPY as you think.
All the best.
AZD
is that the rule for all the 2x weighted index ETFs?
Quote from xif99:
you own 100 shares of SPY with an average cost of $100 (held over 1 year)
You own 100 shares of DDM with an average cost of $28. (held under 1 year)
You have $3k cash in your trading account.
What would you do?
Sell everything and start buying SSO with a small position and average down if it continues to drop?
Otherwise you're looking at years before your SPY is back up to break even.?
First of all you're an idiot for using the buy and hold strategy. Sorry, I say that to all Buy and folders.
Secondly you are an even bigger idiot for not following the one rule you need to follow when it comes to your strategy. Buy and HOLD. You have to hold no matter what. That is the strategy. Taking your money out or increasing the leverage in a long account when the market is tanking is going against your one simple rule.
Keep things where they are at and hopefully you will be at breaking even in 10-15 years.
Every investor who trys to break even once they have lost 40% of their money ALWAYS loses more money. A good amount lose all their money. Same with traders.
Quote from xif99:
is that the rule for all the 2x weighted index ETFs?
Leveraged Funds are a decaying asset. They seek to multiply the performance of their benchmark on a DAILY basis. There is no free lunch. If these funds could deliver 2Xs the S&P over the long haul, then why would anyone pay 2/20 to a hedge fund trying to so the same thing? The decay is especially severe in a volatile choppy market.
Lets say you purchase your leveraged fund shares for $100 and the market goes up 5%. Now you have doubled the return and you have 110. Then the next day the market goes down 5% and instead of being back to break even you are actually down because the fund performance is market daily so you lose 10% of your new total and you only have 99. Then add in the transaction fees the funds incur by buying and selling of derivatives all day -- and the management fees! This is of course an over simplified example but it does illustrate the point.
Leveraged ETFs are truly a suckers bet over the long haul. They are, however, a dream product for marketers and traders.
Quote from 5yrtrader:
Paul Tudor Jones had (or has) a sign on his desk saying losers average losers. What you are proposing is to not only average down on a loser but to add leverage on that loser.
Its like playing blackjack and every hand you lose you double your bet, eventually you have to win, but do you have enough money to wait?
5yr
Paul Tudor Jones didn't make that comment for this market.
It's not like playing blackjack
Don't listen to 99% of the so called "traders" on here especially if they're quoting Paul Tudor Jones
All you pathetic guys on here with this end of the world shit are really tiring. The market is going to come back in a very big way. You know why? BECAUSE IT ALWAYS DOES. It's just a question of when. Some companies are going to get tossed out and new ones will take their place. If you have the $ and the stones the best thing to do is some fucking research and buy as much undervalued, fundamentally strong companies and wait for them to pop back up when all the dust settles. IT WILL HAPPEN.
If you're an ACTUAL trader, then you shouldn't be holding shit anyway.
Never feel you have to make your money back in the same stock you're losing money on. By holding onto a losing stock, you are telling yourself you don't know how to find a better stock out there. That kinda like holding onto a bad girlfriend hoping she will get better. Dump that stock's butt and buy a stock worth your time.
Quote from xif99:
i'm proposing averaging down on the S&P, which cannot go to zero (if it does we're screwed and I have bigger things to worry about than losing a $10k portfolio). It's not like I'm averaging down on Enron.
Not so fast. The S&P average may not go to zero, but the instrument you are trading actually can if the company issuing the ETF goes bust.
Quote from SCI new york:
Paul Tudor Jones didn't make that comment for this market.
It's not like playing blackjack
Don't listen to 99% of the so called "traders" on here especially if they're quoting Paul Tudor Jones
All you pathetic guys on here with this end of the world shit are really tiring. The market is going to come back in a very big way. You know why? BECAUSE IT ALWAYS DOES. It's just a question of when. Some companies are going to get tossed out and new ones will take their place. If you have the $ and the stones the best thing to do is some fucking research and buy as much undervalued, fundamentally strong companies and wait for them to pop back up when all the dust settles. IT WILL HAPPEN.
If you're an ACTUAL trader, then you shouldn't be holding shit anyway.
The future must necessarily conform to the past? That's what one calls a logical fallacy. Just saying the market will keep going up because it always has is like saying that a trend has been so strong for the last 100 years that it must necessarily continue. Read up on EWT.
Buy 2 options on GDX and 2 options on USO , and trade it. Forget
about what these people say here , hope and vision and things happen.
about what these people say here , hope and vision and things happen.