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How to always beat the S&P 500

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Apr 6, 2009 9:05 pm

[quote=Gaddock][quote=Ron 14]

Yes, I am counting on managers to run the investments in my book. I will manage changes in client situations and their emotions.

[/quote]   And that takes all of 20 minutes a week? WOW maybe that's the reason you do it. I would be board to tears.   Side thought, I've found the best way to manage a clients emotion is to make money for them.[/quote]   It takes a tad longer, but the rest of the time is spent prospecting
Apr 7, 2009 2:57 am

[quote=Ron 14]Yes, I am counting on managers to run the investments in my book. I will manage changes in client situations and their emotions. [/quote]

Just curious, and not to pick on you personally, but do you consider yourself a financial advisor? or a Psychotherapist?: “often includes techniques to increase awareness, for
example, or to enable other choices of thought, feeling or action; to
increase the sense of well-being and to better manage subjective
discomfort or distress.”


Apr 7, 2009 3:05 am

You think the average investor makes correct decisions during volatile markets ? Take one look at equity fund inflows and outflows over the last 10 years, it proves my point.

Apr 7, 2009 3:19 am

Have you looked into Behavioral Finance and Investing? Sound likes it’s right up your alley!

Peter Bernstein in “Against the Gods” states that the evidence “reveals
repeated patterns of irrationality, inconsistency, and incompetence in the
ways human beings arrive at decisions and choices when faced with
uncertainty.”

Behavioral finance attempts to explain how and why emotions and
cognitive errors influence investors and create stock market anomalies
such as bubbles and crashes.

But are human flaws consistent and predictable such that they can be: a)
avoided and b) exploited for profit?

Apr 7, 2009 4:06 am

Lately, I have seen more “money in motion” than I can remember (I’ve
been at this since 1991). I have signed up a couple of really big
accounts and have several more in the pipeline.



If I had to choose between placing my money between you and Gaddock, I
would go with Gaddock. His c***iness/self-confidence would be a big
factor in my decision. Your story is a stale one.



Managed money/hand holding business model is a story that has been
around since 1982. On the other hand, if you could develop your
behavioral finance approach and show us how you interpret triggers or
directional changes in the market(s), I would be interested in
listening.

Good Luck

Apr 7, 2009 2:10 pm
skeedaddy2:

Lately, I have seen more “money in motion” than I can remember (I’ve been at this since 1991). I have signed up a couple of really big accounts and have several more in the pipeline.

If I had to choose between placing my money between you and Gaddock, I would go with Gaddock. His c***iness/self-confidence would be a big factor in my decision. Your story is a stale one.

Managed money/hand holding business model is a story that has been around since 1982. On the other hand, if you could develop your behavioral finance approach and show us how you interpret triggers or directional changes in the market(s), I would be interested in listening.

Good Luck

  Good for you. Im not interested in convincing people to do business with me because my "story" is more interesting. Buy and hold and hand holding works over time. I dont give too sh**s that it hasn't worked well over the last 10 years, that makes me even more confident moving forward. I am going to go with what I am most confident in and you feel free to do the same.
Apr 7, 2009 9:18 pm

[quote=iceco1d][quote=Gaddock]

Sam, more than one way to skin a cat!!   Ice, It's in a wrap account, no transaction fees.[/quote]  (i.e. why it's a "suckers bet" to be long the trade - not my words)   [/quote] If you are buying an option as a vehicle to leverage a position on a expected move on the underlying security your probabilities of getting to the strike price, exceeding it to the point you're even on the credit you paid, transaction fees and taxes...   Your probability of success is at the very best 50/50, a coin toss.   If you're using it in the context of some sort of arb that's a diff story all together.   SELLING and option can give you a 0 or -0 Delta giving you odds of failing literally in basis points. My rule of thumb is to take no trade with less than an 85% probability of success. Most are well into the 90%. And yes, probabilities on any one trade are meaningless but over the large sample they are spot on and give me 9 out of 10, actually better than that, that are successful. NOW THAT's an EDGE.   Who would take a trade with a 5% probability of success?   That's the question my clients ask when my strategy makes sense to them.   Answer: F if I know I call it 'stupidity liquidity' and there is plenty to go around.
Apr 7, 2009 11:52 pm
Ron 14:

You think the average investor makes correct decisions during volatile markets ? Take one look at equity fund inflows and outflows over the last 10 years, it proves my point.

  =   Hang in there champ, look at this cool chart, this strategy hasn't lost money in any decade, see here is the great depression, WW2, the 70's, S&L's the tech bubble and now ...   DOHHHHHH!!!!!!!!!!!!!   Well, that's only one ... ummm this one, BUT SINCE THIS IS THE ONLY DECADE, this one here, you know the one you want to retire in, It's just got to get better. I'm very comfortable things will come back ... some day. You see the smartest people in the world are managing your $$, like the guys at Bear Sterns, ML, WashMut, Wachovia, Lehman Bros.   They'll get it right this time.   What's that Mr. Client? A short sale? not sure what that is.   Ever heard of a reverse mortgage?   He he he   Just kidding dude, I have a very cheap sense of humor.
Apr 8, 2009 2:51 am

You are so far gone it is unbelievable.

Apr 8, 2009 7:26 am
YHWY:

Are New Broker training programs these days teaching kids to be asset gatherers or fund managers? Or are those six months enough time to master both now?

  I find it ironic that somehow "practitioners" in this industry asume time-in-the-seat equals knowledge/skill. reality proves otherwise. Just last week had a "veteran" (not like VFW) ask what the different classes of mutual funds were for.   I've talked to Gaddock several  times on the phone about his strategies---he aint no kid... He certainly seems to have a better grasp of these trades and how to structure them than the folks in home office.  The dude ought to write a damn book.  I still dont fully understand what he spent over an hour explaining....of course, I've only been here a few months longer than him so thats no real surprise to seasoned old-timers.   BTW, Gaddock-- werent you some sort of  trader before you came to AGE?   no one else had a life before they started in this business.....    
Apr 8, 2009 7:38 am

[quote=Gaddock]

Point taken. Safe to say I'm not a spring chicken.

They say that a person can be an expert on any subject after 5000 hours of study. If you consider insurance sales (employee benefits) a financial product and prop trading for 2.5 years after being trained to work arbitrage models pertinent, I've been dealing with such products for 20 years. I'm not claiming to be an expert but I am professional. I've put in far more than 5000 hours of study as well.  [/quote]   Sorry, dude--I guess I shouldve finished reading..its not like you needed someone to defend you.   BTW--would you want to share that program--the one from india?
Apr 8, 2009 9:21 pm
Ron 14:

You are so far gone it is unbelievable.

  Cmon Ron I was just teasing you. I was being an ass my apologies.
Apr 8, 2009 9:23 pm

Not a prob

Apr 8, 2009 9:33 pm

[quote=stocksandblondes] 

BTW--would you want to share that program--the one from india?[/quote]     Hey Bud, I'll always appreciate kind words wherever I can get them, thanks.   I would be happy to share some of it's output with you. Was able to get 10,000 shares of GM to short today. Considering there are more shares short than the float that was a lucky break. RevCon city!! If you have an account that has a margin and options agreement call the short desk see if you can get a few thousand shares and give me a call. You'll be their hero. Call me anytime.
Apr 9, 2009 1:07 am

This morning Gabelli told Mohamed (to his face) that the U.S. has “chosen” PIMCO to lead us out of the darkness. Mohamed, who I like, bristled at the comment (Mario hit a nerve). CNBC pulled the video and I can’t find it.

GM stock is definitely on the endagered species list. Gaddock, I will wish you luck. Don’t listen to the kool-aid drinkers.

The US automakers cannot be profitable while they have enormous legacy costs. I met with a lady who was a GM retiree. She has been retired for 28 years, and still had dental benefits. I don’t know if it was the open bar at the event, but she showed me her her new dentures which cost $18,000, paid by the GM pension.

Apr 9, 2009 3:01 am

She was probably your date!

Apr 9, 2009 3:55 am
stocksandblondes:

[quote=YHWY]Are New Broker training programs these days teaching kids to be asset gatherers or fund managers? Or are those six months enough time to master both now?

  I find it ironic that somehow "practitioners" in this industry asume time-in-the-seat equals knowledge/skill. reality proves otherwise. Just last week had a "veteran" (not like VFW) ask what the different classes of mutual funds were for.   I've talked to Gaddock several  times on the phone about his strategies---he aint no kid... He certainly seems to have a better grasp of these trades and how to structure them than the folks in home office.  The dude ought to write a damn book.  I still dont fully understand what he spent over an hour explaining....of course, I've only been here a few months longer than him so thats no real surprise to seasoned old-timers.   BTW, Gaddock-- werent you some sort of  trader before you came to AGE?   no one else had a life before they started in this business.....    [/quote]

+1  Gad is the real deal.
Apr 9, 2009 2:02 pm

In terms of......?

Apr 9, 2009 6:54 pm
For theoretical conversation only, don't do this at home kids   OK ladies ... another broker extraordinaire IMHO, who also occasions this BBS, told me one hell of a trade. There's around a 20% premium on what city is going to convert their preferred to. If you can get any C short, buy as many shares required of the preferred needed to cover the short on the conversion. The dilution is sure to crush C not to mention all those that have the preferred beyond this arb are going to want to sell the converted shares asap. You should kill it on the arb and the short. IF I could get enough shares of C short I would go as high as 10% of a clients account value. Is this a once in a decade trade?   Anybody care to shoot holes in it?   CHA CHING!!!!!!!!!!!!???!!!!!!!!!!!
Apr 10, 2009 1:03 am

[quote=Gaddock]

  I can beat the S&P all the time without exception. I'll bet many of you probably just had a negative response to that statement.  [/quote]

I have a negative response to that statement. While I think you are smart, engaging and have had a nice run the past 18 months, I'd be very nervous as a prospect if anybody spoke to me with that kind of certainty. I suspect there are risks and traps out there that you will surprise you someday. We've seen a lot of smart guys go bust in the last 10 years when things happened outside their systems.