With SPY, do stocks really matter for position trading?

S

short&naked

I guess unless you are under-capitalized, it would seem foolish to trade anything by the SPY. It has much more liquidity and almost no default risk.

Even if you can buy stocks at a discount to intrinsic value there are so many things that can go wrong even if a company has steady cash flow, etc. (law suits or management screw ups can happen any time and there is no way to predict them). You are basically walking the tight rope every day.

I am not sure that the larger returns promised by stocks outweigh the benefits that SPY provides. Thoughts?
 
all these spy,qqqq and etf and futures is for daytrading.

the less capital the trader say under $5,000, the more feasible daytrading or scalping becomes.




Quote from short&naked:

I guess unless you are under-capitalized, it would seem foolish to trade anything by the SPY. It has much more liquidity and almost no default risk.

Even if you can buy stocks at a discount to intrinsic value there are so many things that can go wrong even if a company has steady cash flow, etc. (law suits or management screw ups can happen any time and there is no way to predict them). You are basically walking the tight rope every day.

I am not sure that the larger returns promised by stocks outweigh the benefits that SPY provides. Thoughts?
More...
 
Quote from short&naked:
.....the SPY. It has.....almost no default risk.
.....buy stocks at a discount to intrinsic value there are so many things that can go wrong.....
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1) If you trade the SPY "badly", you can still lose a lot of money slowly compared to trading a single stock that may gap against you causing you to lose a lot of money quickly.
2) A stock trading at a discount to intrinsic value is a deception. The price can still move lower against you regardless of "fundamentals". :cool:
 
Quote from nazzdack:

1) If you trade the SPY "badly", you can still lose a lot of money slowly compared to trading a single stock that may gap against you causing you to lose a lot of money quickly.
2) A stock trading at a discount to intrinsic value is a deception. The price can still move lower against you regardless of "fundamentals". :cool:
More...

Frankly I have been thinking about whether value investing really works. You can still make money that way for the wrong reasons (i.e. the stock you bought gets pulled up with the general bull market).

Value investors talk about a margin of safety when you buy a stock at a discount, however, at this point I consider buying equities at a discount a fool's game.
 
Quote from short&naked:
Frankly I have been thinking about whether value investing really works. You can still make money that way for the wrong reasons (i.e. the stock you bought gets pulled up with the general bull market).
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It tends to "work" during a bull market, yes, but even better if you can force the company to do "things" to realize the value of the "discount" now instead of later via restructuring, greenmail, buyout et al. :cool:
 
Quote from nazzdack:

It tends to "work" during a bull market, yes, but even better if you can force the company to do "things" to realize the value of the "discount" now instead of later via restructuring, greenmail, buyout et al. :cool:
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Gotcha, but a bit hard to pull off if your name isn't Buffett. ;)
 
Quote from nazzdack:

It tends to "work" during a bull market, yes, but even better if you can force the company to do "things" to realize the value of the "discount" now instead of later via restructuring, greenmail, buyout et al. :cool:
More...
Great answer.

The "old school" investors of hedge funds and mutual funds (we're talking the 80's here folks) made this into an artform. I have no idea what techniques the modern quant-oriented investors are doing, but that type of investing requires rolling up your sleeves, doing a ton of work, reading and understanding a companies prospectus and debt restructuring options to a T, and being willing to take them to Court and be a pitbull to get your way, if necessary.

Boy, those were the days. :)
 
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