Advantage - Private Trader

[wayneL]

Often private traders speak of returns of 40 - 50 - 60%, or more per year on their share portfolios. Just as often, this is derided as not possible, pointing to the likes of Warren Buffet and other professional investors, who do not achieve such returns.

Well I just spotted this in a yahoo finance article:

Back in 1999, a national business magazine attributed a stunning declaration to one of the world's legendary financial minds. Reportedly Warren Buffet claimed that 50% profits were possible on a portfolio of common stocks-each year.

There was only one condition. You must have less than $1,000,000 to invest.

I've always tried to point this out, that size matters, small size in this instance. Elephants can't dance

Cheers

 

[tech/a]

Re: Advantage- Private Trader

Wayne.

Why then would it not be possible to have 5 or 10 or more portfolio's running at the same time all achieving Up to 50%.

Why couldnt the market handle multiple 50% portfolio's.

The arguement indicates that to be valid there could only be one portfolio under a million or a group up to a million.

In isolation I agree.

 

[wayneL]

Re: Advantage- Private Trader

Wayne.

Why then would it not be possible to have 5 or 10 or more portfolio's running at the same time all achieving Up to 50%.

Why couldnt the market handle multiple 50% portfolio's.

The arguement indicates that to be valid there could only be one portfolio under a million or a group up to a million.

In isolation I agree.

The market could handle multiple small portfolios quite easily. (It already does )It's the manager, or more specificall the amount under management assigned to that manager, that would cause problems.

From my viewpoint liquidity is the big bogeyman for very large accounts. Outside of the blue chips, you can move the market with large trades, and you would have to start reporting holdings etc.

The private trader, trades in and out without anyone knowing he's been there. Funds have to take time to build and unwind positions. Small caps (where the big growth is) are not an option.

You look at any fund, the vast majority of shareholding are in the market bohemeths, hardly any small caps at all.

 

[tech/a]

Re: Advantage- Private Trader

Wayne I dont know that consistant 50% returns year in and out could be gained trading anything other than Blue chips.

Particularly as you say with 1 million plus.

 

[GreatPig]

Re: Advantage- Private Trader

Tech,

I mentioned here earlier somewhere that Daryl Guppy trades a portfolio in his newsletter, based on about $100K capital I think, and has reportedly averaged 70-something percent a year over the - I think - nine years he's been doing it.

He does trade warrants in it as well though, during downturns particularly, but from what I've seen most are long, unleveraged share positions and by no means all blue-chip.

GP

 

[Milk Man]

Re: Advantage- Private Trader

Tech,

I mentioned here earlier somewhere that Daryl Guppy trades a portfolio in his newsletter, based on about $100K capital I think, and has reportedly averaged 70-something percent a year over the - I think - nine years he's been doing it.

He does trade warrants in it as well though, during downturns particularly, but from what I've seen most are long, unleveraged share positions and by no means all blue-chip.

GP

So it takes either a brilliant discretionary trader or a monkey with amibroker and a good plan?

 

[mit]

Re: Advantage- Private Trader

As my trading size has grown, I have been surprised at how quickly liquidity matters in the ASX. At a position size of just 20k for a lot of asx300 stocks you would end up buying more than just the lowest offer if you bought at market. It really has changed my buy/sell strategy.

Tech, Wouldn't multiple portfolios just start trying to out bid each other for the same stocks?

MIT