Discussion in 'Business, Careers & Education' started by mikeman, Feb 2, 2011.
Yup - my biotechs were up nicely today...
Only BIIB was down.
Dude, you need some EPZM in your life
That was me. My timing on TAN was piss poor. I bought in at 41.12 a couple months back and the initial ride was a bit bumpy and I couldn't stomach the massive volatility, so I sold it off at 41.30 or so. Made a tiny profit.
Since then it's dropped significantly and now it's recovered quite well. Totally missed that boat.
I'm considering buying in again, but cautious.
Anyway, I picked up shares of IAI -- an ETF comprised of broker-dealers. Considering picking up IYG as well, though it has some overlap with GS and a couple other holdings. IAI unfortunately doesn't have any exposure to the other big investment banks with cap markets, hence the interest in IYG as well.
TWTR up 6% today.
XLNX reports after the bell. Its been running very nicely since I bought it. I'm up 8% in less than 2 weeks.
PCYC - another all time high!
143.50 +8.31 (6.15%)
XLS up 20% since purchase. *pops a bottle* l You should all get together and start a "fund" thread.
Firm's profit sharing kicked in yesterday and couple that with my market gains and frugal habits and I've surpassed a milestone figure in terms of my total net worth.
Feels good, man.
Congrats! Keep going!
By the way, I've been meaning to ask this since you play around with some not-so-insignificant figures with your trades -- do you mind telling me your age?
I really need to figure out how to play with options. I don't like the idea of adding the dimension of explicit dates / times to my investments, but they're such great hedging strategies..
^^^ 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
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.
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.
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):
(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
The only thing that sucks about a holiday is that there is no market.
Separate names with a comma.