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Talking stocks, trading, and investing in general

Discussion in 'Business, Careers & Education' started by mikeman, Feb 2, 2011.

  1. stevent

    stevent Well-Known Member

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    ^^^ pretty basic? I usually just sell options to earn a little bit of cash or to get into stocks when I don't have enough money
     
    1 person likes this.
  2. idfnl

    idfnl Well-Known Member

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    I do this too. You set a target price and a date, then you sell the option and if the target is not met by closing date you keep your shares and the money. Otherwise the shares are sold, so be careful what target price you set if you want to keep them.

    The basic takeaway is the further out the date, the more you get for the contract, the closer the price to today's price, the more you get for the contract.

    In terms of buying options, they are a potential hedging strategy, but its most often used with large institutional positions. There are simpler hedges out there, the most obvious one being diversification. I think you need to ask yourself if you really need to bother with some of these more complex hedges. I personally diversify and make sure there is enough cash around to buy a correction.
     
    Last edited: Jan 18, 2014
  3. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    i personally prefer to 'hedge' with a cash position that I use in event of a downturn. it's never large enough to greatly effect gains, but in a shaky market it can really help smooth things. I'm in this to collect and/or reinvest dividends, so if I can lower my cost basis I'm raising the yield on my principle.
     
    Last edited: Jan 18, 2014
  4. amerikajinda

    amerikajinda Well-Known Member

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    I prefer to hedge with hedged mutual funds - I let the pros do the hedging for me. My general rule of thumb is that hedging strategies should account for between 5% - 10% of your total portfolio.

    This article mentions both MALOX and IVAEX - I've gotten nice results with my over 3,000 shares in these two hedged mutual funds so I recommend both (past performance is not indicative of future results):

    http://online.wsj.com/news/articles...96048?mod=WSJ_article_RecentColumns_FundTrack

    (Posting here since not sure if link will work without WSJ account)

    Mutual Funds From the 'Hedge'
    By ALISTAIR BARR & SAM MAMUDI
    Nov. 14, 2010 11:50 p.m. ET

    In the late 1990s, Stephen Roseman had a whiteboard in his office to keep track of all the companies in the nascent video-on-demand sector.

    But for all the hype, it would be years before video on demand would become widely adopted. These days, said Mr. Roseman, many people can barely remember life without the technology.

    This anecdote is how Mr. Roseman explains why he left the hedge-fund world to start a hedged mutual fund. While talk of using alternative strategies in mutual funds raged for years without much happening, it is now beginning to take off.

    "We're at the very early stages of a multitrillion-dollar wave that's going to wash over the long-only asset-management industry," said Charles Krusen of Krusen Capital Management LLC, which has invested in hedge funds, including Paulson & Co., Moore Capital Management and D.E. Shaw & Co.

    Hedged mutual funds provide stock-like returns with less volatility. Moreover, they provide more transparency and regulation than hedge funds. "We think there'll be a huge move to these types of funds," Mr. Krusen said.

    Mr. Roseman, chief executive of New York-based Thesis Fund Management LLC, oversaw about $2 billion in assets at hedge-fund firm Kern Capital Management LLC between 2003 and 2005. This year, he launched a mutual fund called Thesis Flexible Fund (trading symbol: TFLEX). Flexible Fund is down 0.4% from its launch in March to Thursday's close, according to research firm Morningstar. In that time, the S&P 500 is up 10%.

    He isn't the first hedge-fund manager to do this. AQR Capital Management LLC, co-founded by Clifford Asness, raised more than $1 billion in less than a year after launching several mutual funds last year.

    Mr. Roseman reckons he is at the vanguard of a movement that will see more managers take their trading skills to the retail-investing arena.

    "It's not that people don't want the strategy; it's that they don't want the hedge-fund structure," he said.

    Hedge funds take short positions, bets on falling prices, as well as long positions that benefit from rising valuations. They also can use borrowed money, or leverage, to magnify returns. They usually lock investor money up for a quarter or more, and some are free to trade any securities or derivatives anywhere in the world.

    The goal is to generate positive returns, irrespective of the direction of the overall market. This is usually all wrapped up in a limited-partnership structure in which the manager charges an annual fee of 2% or so and takes about 20% of profits each year.

    Traditional mutual funds typically take long-only positions and try to beat benchmarks, such as the S&P 500-stock index. The average net expense ratio of mutual funds is about 1.3%, according to Morningstar. Mutual funds don't take any cuts of profits. In contrast, the Flexible Fund's net expense ratio is 3%, according to Morningstar.

    Hedged mutual funds use some of the tools and strategies common to hedge funds, such as short selling and some leverage. But they also offer the benefits of mutual funds, such as daily liquidity and lower fees.

    Investment bank Goldman Sachs Group Inc., one of the largest hedge-fund managers in the world, advised investors to add this new breed of mutual fund to their portfolios in a September report. The 2008 financial crisis left many uncertain about whether a traditional mix of stocks and bonds can generate enough return, the bank said.

    Brad Alford, who invested in hedge funds for more than two decades for institutions, including Duke University's endowment, is a convert to hedged mutual funds.

    Mr. Alford is chief investment officer of Alpha Capital Management, which offers managed accounts that invest in several large hedged mutual funds. His picks include BlackRock Global Allocation fund (MALOX), Pimco All Asset All Authority fund (PAUIX) and Ivy Asset Strategy (IVAEX).

    "There are so many great mutual funds that look like hedge funds now," Mr. Alford said
     
    Last edited: Jan 18, 2014
  5. idfnl

    idfnl Well-Known Member

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    The only thing that sucks about a holiday is that there is no market.
     
  6. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    Waiting for Royal Dutch Shell to pull its head out of its ass and start performing again.
     
  7. idfnl

    idfnl Well-Known Member

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    Backstory?
     
  8. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    profit warning on friday. Xom, cvx, ect are having no problems performing,
     
  9. idfnl

    idfnl Well-Known Member

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    So why are you waiting for a turn around? There are better options out there.
     
  10. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    I like the dividend and it's priced cheaply. They changed CEOs so they should be moving in the right direction soon enough.
     
  11. GreenFrog

    GreenFrog Well-Known Member

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    Anyone investing in PE firms, specifically KKR or BX?

    I'm going to initiate a position in BAC soon.
     
  12. idfnl

    idfnl Well-Known Member

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    I doubled mine yesterday at 17. Why wait?

    XLNX hit a 52 wk high after earnings. Highest level since the 2000 bubble.

    MA split, and the bump I was expecting happened!

    Lastly, RL is turning into a real dog.
     
    Last edited: Jan 22, 2014
  13. seeldoger47

    seeldoger47 Well-Known Member

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    What is your time frame?
     
  14. GreenFrog

    GreenFrog Well-Known Member

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    1 year, which is probably too short, given that the investments PE firms make are made with a 4-5 year time horizon.
     
  15. idfnl

    idfnl Well-Known Member

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    So then why are you considering it?

    IBM... sack of shit.
     
  16. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    I feel crazy considering buying more bac at $17, but it's probably a good bet considering they seem to have gotten it together and next up would be a dividend hike. Being literally the only stock I own that does not pay a significant dividend, I'm excited at the prospect of changing that.
     
  17. GreenFrog

    GreenFrog Well-Known Member

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    Because PE firms have made investments years ago that are paying off now, which should be reflected in their earnings.
     
  18. GreenFrog

    GreenFrog Well-Known Member

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    Just bought BAC @ 17.08.
     
  19. stevent

    stevent Well-Known Member

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  20. GreenFrog

    GreenFrog Well-Known Member

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    I've decided against other financials, so no PE firms. I have an ETF for broker dealers and BAC for their retail, M&A, and cap markets exposure.

    I have enough cash for one more sizable position. Then I will hold my positions for one year.

    NFLX.. Wowza
     
    Last edited: Jan 22, 2014

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