How much of your trading capital do you risk per trade?

[willoneau]

If I stuck to 1-2%, I would still be working for the man, instead I am the man, in my 30’s currently retired.

Hi Value Collector, would you be willing to share how that happened?

 

[Value Collector]

Hi Value Collector, would you be willing to share how that happened?

I have shared it already, I think it is in the education of an investor thread .

 

[willoneau]

I have shared it already, I think it is in the education of an investor thread .

Thanx Value Collector I look forward to reading it.
Do you have a link?

 

[Joe Blow]

Do you have a link?

This is the thread that Value Collector was referring to.

 

[willoneau]

thanx Joe, it was strange that when I went through his posts I couldn't find any reference to it.

 

[willoneau]

Wow that took me 3 hours to read.

 

[tech/a]

If I stuck to 1-2%, I would still be working for the man, instead I am the man, in my 30’s currently retired.

I hope you get a job soon VC

 

[willy1111]

If I stuck to 1-2%, I would still be working for the man, instead I am the man, in my 30’s currently retired.

I thought you were a business owner you're just not involved in running them.

Or you could also be a Portfolio Manager for a private investor.

How do you normally respond when asked what you do when you meet new people?

 

[Value Collector]

I hope you get a job soon VC

Haha, I don’t

 

[Value Collector]

I thought you were a business owner you're just not involved in running them.

Or you could also be a Portfolio Manager for a private investor.

How do you normally respond when asked what you do when you meet new people?

If asked what I do for work, I just say I am an investor, if asked where I work, I just say I work from home.

I pretty much don’t use the work retired, it generally gets a negative reaction, but yeah I have in affect retired from the work force, and no longer own any business directly, I just manage my Investment portfolio.

 

[Value Collector]

If asked what I do for work, I just say I am an investor, if asked where I work, I just say I work from home.

I pretty much don’t use the work retired, it generally gets a negative reaction, but yeah I have in affect retired from the work force, and no longer own any business directly, I just manage my Investment portfolio.

I meant to say “I pretty much don’t use the word retired”

 

[aus_trader]

I hope you get a job soon VC

Yeah man, we are still doing the 9 to 5'ish grind !

Although I am building up a side business to relieve myself of the grind eventually...

 

[tech/a]

Interesting.

Trading is a side "Business" for me
Making around a good average wage a year for my discretionary stuff
And better than Market for my Super.
Which represents a very small % of total income.

I'm a great one for Various income streams I didn't realize when I was younger how
important that decision would be as I became ancient!
Oh and Being my own boss meant I always have a job.

I interview people for my own company and unfortunately its the younger
people who generally get the position. I would hate to be looking for a job
at 50 and over!

 

[barney]

I am not a trader, I take longer term investment positions.

But in general I don’t want to be in more than 10 companies, and I may have 50% or more in my favorite one.

Interestingly I am very similar …… and I trade "Specs" … Works for me … till it doesn't

Apart from all the technical/psycho/fundamental mumbo jumbo …. Traders need to find their comfort zone, and work out how THEY should trade.

Basically, everyone is different …. but scarily similar …..

If you fail … admit it …. and work out why you failed … then, most times, do the opposite

 

[Value Collector]

I think Buffett explains the diversification issue perfectly in this short video.

 

[Value Collector]

i think investing is a little different , when you say you can have 50% in one company do you buy with one order or scale in?
if you do scale in what % would be your first position?

I generally value the company, eg work out what a rational price to pay for each share is, and then I design an operation involving direct purchases and selling put option etc to it into it at or below what I consider the fair price to be.

————

For example, if I thought a certain company was worth $7.50 a share and it was trading below that price, I would probably buy some immediately, while also selling some put options at a much lower price.

Or, if the share was trading above fair value I might just sell some puts to generate some income while I wait for the price to drop.

Sometimes my operations can last many years, eg for about 7 years I have been selling puts against fmg, accumulating shares when my puts went deep in the money, and rolling them or selling more puts if they went at the money or expired worthless.

———-

I can’t possibly know 50 different companies, but I can know a few, and I follow those few very closely, and develop very targeted operations around them, with the aim of purchasing them and generating income I can use to purchase them.

 

[aus_trader]

I generally value the company, eg work out what a rational price to pay for each share is, and then I design an operation involving direct purchases and selling put option etc to it into it at or below what I consider the fair price to be.

————

For example, if I thought a certain company was worth $7.50 a share and it was trading below that price, I would probably buy some immediately, while also selling some put options at a much lower price.

Or, if the share was trading above fair value I might just sell some puts to generate some income while I wait for the price to drop.

Sometimes my operations can last many years, eg for about 7 years I have been selling puts against fmg, accumulating shares when my puts went deep in the money, and rolling them or selling more puts if they went at the money or expired worthless.

———-

I can’t possibly know 50 different companies, but I can know a few, and I follow those few very closely, and develop very targeted operations around them, with the aim of purchasing them and generating income I can use to purchase them.

My only worry is what if the company crashes in a big way? Those puts will still be assigned to you right? Then you'll have to buy it at the much higher assigned price.

 

[Zaxon]

My only worry is what if the company crashes in a big way? Those puts will still be assigned to you right? Then you'll have to buy it at the much higher assigned price.

He chooses a deliberately low strike price.

For example, if I thought a certain company was worth $7.50 a share and it was trading below that price, I would probably buy some immediately, while also selling some put options at a much lower price.

So XYZ is trading at $10. He sells puts at $7. It does mean he has to keep the cash though, since he may be forced to buy them.

 

[Value Collector]

My only worry is what if the company crashes in a big way? Those puts will still be assigned to you right? Then you'll have to buy it at the much higher assigned price.

Yes, but I would be buying the shares at a cheaper than than if I had just purchased them outright at the start.

For example, let’s say we both think CBA is worth $72 per share.

So you purchase 1000 shares costing you $72,000.

Where as I might agree with you that they are worth $72, but rather than buy the stock as you did, I might instead sell a $70 put option for $1.50, expiring in 3 months.

So I end up keeping my $72,000 in the bank earning 4.90% interest + I collect $1500 in put option premium + if I do have to buy the shares I get them $2000 cheaper than you did.

So my strategy is actually a lower risk strategy than buying the shares outright upfront.

You would make more money if the shares skyrocketed, but I would make more money if the market were down or flat, so the put option strategy is a bit more conservative.

 

[Value Collector]

He chooses a deliberately low strike price.

So XYZ is trading at $10. He sells puts at $7. It does mean he has to keep the cash though, since he may be forced to buy them.

You may not even have to buy them even if the option does go in the money a bit, you can generally roll the option out to a longer time frame and collect another premium.

For example.

Let’s say I sold the $7.00 put for $0.50, and near expiry the share has dropped to $6.75

Because there is little time left the option will probably be selling for around $0.30.

I can by the option back for $0.30 and then sell a new longer dated $7 option, for maybe $0.75 cents.

So I end up with the same exposure, but have just extended the time and collected another $0.45 cents (75 -30)