The official "ASX is tanking!" panic thread

[Value Collector]

Yes, if you get in very early it can work well. My parents got into the CBA float and they're collecting a dividend per share more than the price they bought the stock for.

I few months back I discussed CBA with TechA, because he said he had actually considered putting $10,000 into them back in 1996.

So I did the Math, and if he had put that $10,000 in and just let the dividends reinvest it would be worth $436,000 today, which is a 15% annual return.

It makes me wonder with all the effort T/A put into trading over the years eg, reading/studying with trial and error, etc etc has his end results actually beat what he would have gotten from that $10,000 CBA investment just held.

In the discussion I had with Tech/A he seemed flabbergasted that I could be retired but still be in the highest Tax bracket. That made me think that perhaps despite all his efforts actively trading his stock market activities don’t produce earnings at a level that would put him in the highest tax bracket (other wise why would he be confused to my earnings)

However, if Tech/A had avoided his trading activities and instead just held his original $10,000 in CBA along with a steady dollar cost averaging savings plan into the market over the years he too would have a portfolio worth a few million dollars.

So in my opinion even though some traders like Tech/A have probably made money trading, if they actually compared how much they would have made with a simpler strategy they might find that their actual trading results are mediocre.

My point is just before you decide whether to trade or invest (or what portion of your capital to allocate to each) you should have an understanding of the pros and cons of both strategies.

 

[Rabbithop]

I few months back I discussed CBA with TechA, because he said he had actually considered putting $10,000 into them back in 1996.

So I did the Math, and if he had put that $10,000 in and just let the dividends reinvest it would be worth $436,000 today, which is a 15% annual return.

It makes me wonder with all the effort T/A put into trading over the years eg, reading/studying with trial and error, etc etc has his end results actually beat what he would have gotten from that $10,000 CBA investment just held.

In the discussion I had with Tech/A he seemed flabbergasted that I could be retired but still be in the highest Tax bracket. That made me think that perhaps despite all his efforts actively trading his stock market activities don’t produce earnings at a level that would put him in the highest tax bracket (other wise why would he be confused to my earnings)

However, if Tech/A had avoided his trading activities and instead just held his original $10,000 in CBA along with a steady dollar cost averaging savings plan into the market over the years he too would have a portfolio worth a few million dollars.

So in my opinion even though some traders like Tech/A have probably made money trading, if they actually compared how much they would have made with a simpler strategy they might find that their actual trading results are mediocre.

My point is just before you decide whether to trade or invest (or what portion of your capital to allocate to each) you should have an understanding of the pros and cons of both strategies.

Top mark for your conclusion.

 

[divs4ever]

now my problem would have been amassing $10,000 back in 1996

that would have been about half my yearly wage

but nice for those that made that investment

 

[rcw1]

I few months back I discussed CBA with TechA, because he said he had actually considered putting $10,000 into them back in 1996.

So I did the Math, and if he had put that $10,000 in and just let the dividends reinvest it would be worth $436,000 today, which is a 15% annual return.

It makes me wonder with all the effort T/A put into trading over the years eg, reading/studying with trial and error, etc etc has his end results actually beat what he would have gotten from that $10,000 CBA investment just held.

In the discussion I had with Tech/A he seemed flabbergasted that I could be retired but still be in the highest Tax bracket. That made me think that perhaps despite all his efforts actively trading his stock market activities don’t produce earnings at a level that would put him in the highest tax bracket (other wise why would he be confused to my earnings)

However, if Tech/A had avoided his trading activities and instead just held his original $10,000 in CBA along with a steady dollar cost averaging savings plan into the market over the years he too would have a portfolio worth a few million dollars.

So in my opinion even though some traders like Tech/A have probably made money trading, if they actually compared how much they would have made with a simpler strategy they might find that their actual trading results are mediocre.

My point is just before you decide whether to trade or invest (or what portion of your capital to allocate to each) you should have an understanding of the pros and cons of both strategies.

Good morning,
Would respectfully put on the table though, whilst there is merit in both methodologies, rcw1 would much prefer the colour of money back in the rcw1 account ASAP, at a small profit, medium profit and even a large profit via day (s) trading, the accumulative affect is second to none, rcw1 view. There are some exceptions, guessing there always will be. The statement you made, "My point is just before you decide whether to trade or invest (or what portion of your capital to allocate to each) you should have an understanding of the pros and cons of both strategies." 100% spot on for mine.

Have a very nice day, today

Kind regards
rcw1

 

[Rabbithop]

Unfortunately My Greed Power is stronger than Long Term Holding Power for a retiree. Had enjoyed that pot of money many many years ago in 1997 or was it 1998...only wish I did Hold it but again when it hit $A 100...how do one resist in cashing in the huge pot of gold?‍

 

[wayneL]

now my problem would have been amassing $10,000 back in 1996

that would have been about half my yearly wage

but nice for those that made that investment

Good point re inflation adjusted returns. I believe the oft invoked Warren has a little to say about that and retained earnings.

One of his other pearls is noting that smaller accounts (meaning up to about $1000000 {and that's 80s dollar of the time}), could easily outperform the massive funds, including Berkshire.

This Max his bet regarding hedge funds a little bit irrelevant as far as individual investors are concerned.

Just FWIW

 

[Value Collector]

now my problem would have been amassing $10,000 back in 1996

that would have been about half my yearly wage

but nice for those that made that investment

Well apparently Tech had it, and was considering making the investment.

 

[Value Collector]

Good morning,
Would respectfully put on the table though, whilst there is merit in both methodologies, rcw1 would much prefer the colour of money back in the rcw1 account ASAP, at a small profit, medium profit and even a large profit via day (s) trading, the accumulative affect is second to none, rcw1 view. There are some exceptions, guessing there always will be. The statement you made, "My point is just before you decide whether to trade or invest (or what portion of your capital to allocate to each) you should have an understanding of the pros and cons of both strategies." 100% spot on for mine.

Have a very nice day, today

Kind regards
rcw1

I am the opposite, I hate holding cash in my account, would much rather hold income producing assets.

I try not to hold more than a years living expenses in cash, I try to put excess money to work asap, I much happy holding a good business or piece of realestate rather than cash.

I do hold 5 years worth of living expenses in a special fund Inset aside to pay myself my weekly wage, but only about 1 year of wages is held in cash, the rest is invested in Plenti and a little bit in an unlisted property trust (the earnings from these funds is placed in my super)

 

[rcw1]

I am the opposite, I hate holding cash in my account, would much rather hold income producing assets.

I try not to hold more than a years living expenses in cash, I try to put excess money to work asap, I much happy holding a good business or piece of realestate rather than cash.

I do hold 5 years worth of living expenses in a special fund Inset aside to pay myself my weekly wage, but only about 1 year of wages is held in cash, the rest is invested in Plenti and a little bit in an unlisted property trust (the earnings from these funds is placed in my super)

Thanks Value Collector, to elaborate further, that cash rcw1 spoke of, don't just sit in account... is used pretty much in regular cycle re trades on a number of stocks at any one time. Buy / Sell, profit - free carry hopefully ... Hope this make sense.

Kind regards
rcw1

 

[wayneL]

Redux fwiw:

Allow me to quote Ernie Chan, A quantitative institutional trader http://epchan.blogspot.com.au/2007/02/in-praise-of-day-trading.html

Which brings me to day-trading. In the popular press, day-trading has been given a bad-name. Everyone seems to think that those people who sit in sordid offices buying and selling stocks every minute and never holding over-night positions are no better than gamblers. And we all know how gamblers end up, right? Let me tell you a little secret: in my years working for hedge funds and prop-trading groups in investment banks, I have seen all kinds of trading strategies. In 100% of the cases, traders who have achieved spectacularly high Sharpe ratio (like 6 or higher), with minimal drawdown, are day-traders.

 

[InsvestoBoy]

In 100% of the cases, traders who have achieved spectacularly high Sharpe ratio (like 6 or higher), with minimal drawdown, are day-traders.

Agreed, but how many survive through a cycle. The crazy Sharpe people, if only just a few of them were consistently profitable for long enough, should be in articles about all the new billionaires being minted and shooting up the HNW ranks.

Doesn't seem to happen. Either the niche they were occupying gets arb'd away, they blow up spectacularly, etc etc. Only a few make it. Nobody posting in this thread is demonstrating anything approaching the understanding, scope and breadth of a 6 Sharpe daytrader, sorry. Just bum specs.

 

[rcw1]

For mine maintaining profit over extended period of time within stock market sandpit, regardless of methodologies adopted, will always be a challenge.

Kind regards
rcw1

 

[divs4ever]

Agreed, but how many survive through a cycle. The crazy Sharpe people, if only just a few of them were consistently profitable for long enough, should be in articles about all the new billionaires being minted and shooting up the HNW ranks.

Doesn't seem to happen. Either the niche they were occupying gets arb'd away, they blow up spectacularly, etc etc. Only a few make it. Nobody posting in this thread is demonstrating anything approaching the understanding, scope and breadth of a 6 Sharpe daytrader, sorry. Just bum specs.

i understand enough that i can't do it reliably enough ( day-trade for the majority of my yearly income )

that doesn't mean sharpening up those skills is useless , one good trade a year ( even at my small buys ) could put that cherry on the pie

so instead of being a professional ( earning your income that way ) i have to be opportunistic ( grab the rare move when i spot one )

 

[wayneL]

Agreed, but how many survive through a cycle. The crazy Sharpe people, if only just a few of them were consistently profitable for long enough, should be in articles about all the new billionaires being minted and shooting up the HNW ranks.

Doesn't seem to happen. Either the niche they were occupying gets arb'd away, they blow up spectacularly, etc etc. Only a few make it. Nobody posting in this thread is demonstrating anything approaching the understanding, scope and breadth of a 6 Sharpe daytrader, sorry. Just bum specs.

I would say burnout is a problem, also there is the matter of scale. You can't day trade a 5mil position size, hence it's more of an income strategy than an accumulation of spectacular large wealth strategy... And as you need to be a screen jockey it is oh so incredibly boring.

That said, you don't need to be a 6 Sharpe to do well.

 

[Austwide]

I few months back I discussed CBA with TechA, because he said he had actually considered putting $10,000 into them back in 1996.

My intro to stock brokers was in 1991? when CBA IPO was $5.40. I put $20K in the account, told him I wanted $10K of CBA and the other 10K was up to him. He said CBA will be a waste, and suggested it all go elsewhere. I agreed and soon learnt stay away from brokers.
A retiring workmate was putting in for $200K of CBA at $5.40. I haven't heard from him since to see how he went.

 

[frugal.rock]

Love it.
Keep smashing this thread out.
The bots and algos with their text scraping abilities have ruled this out as a "fake news thread" (for now) because of a lack of correlation with the market.
It gets a 1 / 0, on / off, true / false logic assignment.

The thread that cried wolf. ?

Stop pussy footing around and get on with it.
Step on a crack, break your mother's back etc

 

[Value Collector]

I would say burnout is a problem, also there is the matter of scale. You can't day trade a 5mil position size, hence it's more of an income strategy than an accumulation of spectacular large wealth strategy... And as you need to be a screen jockey it is oh so incredibly boring.

That said, you don't need to be a 6 Sharpe to do well.

It kinda of reminds me of something a footballer once said.

He said footballers play football for 20 years until they have busted knees and shoulders and then they take up golf for the next 50 years, but they will never really be amazing at golf.

But the guys that play golf from the start end up being pretty amazing at it, So if your goal is to be good at golf, thinking about your golf game and not being distracted by football game is the way to go.

——————
I guess it all comes down to what your outcome is that you want, if your goal is to be a screen jockey with some income that’s all good, do the day trading thing.

But if your goal is have the kinda of freedom of time and income that only a decent size investment portfolio can bring, maybe work on that.

If you are truly a good enough trader that you can make a regular above average income, maybe allocate all your profits into a sound investment strategy that will allow you to step away from the screen when burn out or blow up comes.

Eg, start practising your golf game in your 20’s, not your late 30’s.

 

[gartley]

Agreed, but how many survive through a cycle. The crazy Sharpe people, if only just a few of them were consistently profitable for long enough, should be in articles about all the new billionaires being minted and shooting up the HNW ranks.

Doesn't seem to happen. Either the niche they were occupying gets arb'd away, they blow up spectacularly, etc etc. Only a few make it. Nobody posting in this thread is demonstrating anything approaching the understanding, scope and breadth of a 6 Sharpe daytrader, sorry. Just bum specs.

Just to get to your earlier comments re it's impossible to generate 30% returns consistently. This is probably a very difficult task trading stocks to do on a consistent basis. Granted the last time I did close to 30% on stocks was trading gold stocks in the gold run or 2019. However I would say that 10-15% consistently can been done easily by a private trader betting both ways with a good approach.

But trading FX and CFD's with high leverage or even leveraged complex ETF's it's VERY possible if you have a robust strategy that performs well in most market conditions.
I can't generate a performance graph for the following account because the broker ( Oanda Australia) with whom I deposited $20K last October to try them out ( my primary broker is FXCM although I have quite a few accounts) no longer generates them on their platforms. I have attached my trading summary month by month since October till July. Unfotunately I can't generate August for another 2 days but it was a really good month. But in 7 months from Nov till July a 46% return was acheived. This is not a big account, but there where no losing months and you have seen what the market conditions have been like during this time.....

 

[InsvestoBoy]

Just to get to your earlier comments re it's impossible to generate 30% returns consistently.

That was exactly my point, to the turnip who said "you need a big bankroll to live off dividends", as if you can live off trading income on a small bankroll. The rest of your comment I think further just proves that point.

English comprehension is a wonderful thing.

 

[gartley]

That was exactly my point, to the turnip who said "you need a big bankroll to live off dividends", as if you can live off trading income on a small bankroll. The rest of your comment I think further just proves that point.

English comprehension is a wonderful thing.

I never said anything about living off dividends, your putting words into my mouth. Go back and read my earlier comment, it was regarding the potential capital losses and drawdown from holding stock for long periods just for the divvy.

Your comments below pal:
"So you consistently earn massive, top of the board returns, year after year, with no disruption/drawdown/volatility and you achieve this with just a few hours of work a day?

No. You don't"
By top of the board returns massive you said 30% like it was totally unacheivable. Well you have a trading statement judge. Read it and you see how much disruption and drawdown there is...
Now I have just shown you that it's very acheivable and I am not gonna post any other statements of other accounts because you are a waste of bloody time and I have better things to do..