20% per year with as little risk/work as possible?

Discussion in 'Trading' started by michaelday, Jun 9, 2002.

  1. This may be a little bit off topic, however I would like to start a discussion in which we would provide ideas/opinions about investing for a longer term, the part of capital that is not used for daytrading. For example if one uses $100,000 as his working daytrading capital, but also has a few hundred K's on a side what would be the best strategies to invest it with the goal of gaining 20% per year and then compounding it? For example 40% bonds,
    40% S&P 500, 20% high growth high risk mutual fund, etc...
  2. since daytrading/swing trading/position trading are all high risk, the rest of the money should not be put at enough risk to return 20% in my opinion. Beating the current 30 yr. treasury every year with lowest possible risk ( the strategy of many hedge funds ) would be more appropriate.
  3. 20% without a bull market?

    Only if you find some great hedge funds.
  4. tntneo

    tntneo Moderator

    Certainly not the way to go.
    Only a good hedge fund indeed or you manage your fund yourself Otherwise, don't put this money at risk.
  5. Why not just trade it long term. Take multimonth positions in companies that have had short term stumbles. Why shoot for 20% anyway. Shoot much higher. It's not that hard.
  6. "Put it aside, don't risk it, save it for a rainy day, buy gold etc" are all decent bits of advice, and I can see the merit in them. My preference, though, is to trade it on a longer term (I'm a daytrader).
    If you just want to take a no-thinking-required buy and hold mutual fund approach, like someone said, 20%pa would be hard without a bull market. (And if we're to listen to some of our esteemed ET economists, we aren't gonna get one any time soon.)
    As you may have guessed, there isn't really any "easy way" to get yourself 20%. To traders, 20%pa is laughable, but how many fund managers would give their right arm to be able to get 20%pa consistently? (Of course, once your trading account reaches a certain size, you'll be very happy getting 20% on it.)
  7. lundy


    Invest half of it in stocks.... some long term stuff you like. And every month, sell out of the money calls. Your guaranteed to make the premiums every month. Then when an option almost closes at the money, don't sell any more calls for that stock, because it is likely to keep going up.

    The other half is best kept in safe havens like realestate, gold, and other currencies.

    Like Praetorian2 said, shoot for higher than 20%... hell, if all you want is 20%, you can make it in one day on NQ. Then you don't have to trade for the rest of the year. :D just make sure u don't lose that day.

    edit: if you do put it in a hedge fund, I would put it in one that strictly does arbitrage. Which is considered very low risk.
  8. Babak


    oh you mean like LTCM? :p
  9. ChrisRT


    lol Babak..

    That way if you take huge risk and lose big..you have congress to bail you out..no worries <cough>

    Moral hazard is a wonderful thing I guess <sigh>

  10. why does short term trading have to be high risk, that is purely correlated w/ risk per trade.

    if you risk small enough amounts per trade and consistently maintain your edge, you can keep drawdowns teeny tiny and take enough shots to stay in the black 70 or 80% of all months.

    risk free & work free = treasury bonds. finding anything better requires risk, work, or both. I don't see the point of trying to beat tbonds by even a small margin, because then you instantly have to start sweating whether the hedgie is a closet rogue or idiot in disguise, not worth it for a few extra sprinkles of yield.

    (and yes i know tbonds could theoretically go under but if that happens the gold & gun nuts will be calling the shots and we will all be hiding in the hills.)
    #10     Jun 10, 2002