Anti-trading. Dollar Cost Averaging

Discussion in 'Trading' started by dozu888, May 15, 2018.

  1. Idk maybe you missed the part about not recommending systematically investing in those, especially this far into a bull market But yes in a severe economic downturn I wouldn’t personally hesitate to put a smaller percentage of my account in those(NOT all of it or the majority of it since some people need expanded explanations), for example a systematic investor could increase their contributions during a downturn and put the extra contribution amount in leveraged products. Of course not on a permanent basis, but yes for longer time(even years)to boost results.

    Hypothetically it would take a one day move of 33% to wipe out TQQQ since it rebalances every day. Nasdaq corrected over 50%, I believe nearly 60% in the last economic downturn so under your theory QLD should have been wiped in 09. Go look at a chart it didn’t wipe in fact anyone that bought it in 07-08 and weathered that downturn(but Incase someone has something to say, yes I also realized QLD had a bigger drawdown) are still in better shape than those who bought QQQ in 07-08. AGAIN I REPEAT NOT A RECCOMENDATION TO INVEST 100% in a leveraged ETF. But yup it’s the fear driven, nailed home you can’t invest in leveraged products that prevented people from investing in those at all. There’s several leveraged mutual funds, ETFs that should have been wiped under your simplified theories too. I don’t see any reason why someone couldn’t boost returns with a little extra capital using leveraged markets.

    Perhaps there are other strategies one could use leveraged ETFs for like creating deltas of 1 without having to use all their capital or even less than half of it. Of course you’d have to actually read the prospectus, and see how volatility(since volatility can effect leveraged correlation), rebalancing and other stuff would effect performance. If you’re able to understand that stuff and exploit the short falls then maybe you can use it to your advantage.

    But then again I also speak from the position I’m in, not everyone else is in, based on my research, history l, etc. I notice the reoccurring theme on ET is it that everyone is a “know it all in all markets and time frames” and everyone that has different perspectives or different styles than those posting is a “dumb ass”. Perhaps in 10 years of watching the markets and learning about them, I’ve never found it fit to join a forum, until recently. I only joined to ask a question about a specific product. Specifically inquiring on daily time frame on the product, but of course those that trade on 250x shorter time frame and have no experience on the product all had something to say.
     
    #21     May 16, 2018
  2. dozu888

    dozu888

    long term SP is 8% or so.... but QQQ's track record is enough to hope for the 12.75% to continue.. the market cap weighted method guarantees that up and coming companies gradually dominating the industries and float to the top holdings. right now you see the top holdings AAPL FB AMZN GOOGL MSFT as a whole are growing well above 12.75%... some day they will slow down, but newer stronger companies will float to the top to lead the index.

    Someone also mentioned China/Russia... not comparable.. different political systems... non reserve currency vs. reserve currency... the incentive for innovation.... this is like arguing the USD will be printed into collapse because we have seen the Russian/Brazil/Argentine/Venezuela currencies have been printed into collapse.

    There are markets and currencies. But there is THE market and THE currency.
     
    #22     May 16, 2018
  3. You’re truly an idiot and have no clue of margin requirements.
     
    #23     May 16, 2018
  4. qxr1011

    qxr1011

    implementation is not simple only because it is not simple for one to admit that he is a mediocrity

    that is why people will continue to try active trading / investing
     
    #24     May 16, 2018
    NeoTrader likes this.
  5. In the long run, Dollar Cost Averaging is just buy-and-hold.

    With my background in "market timing mutual funds", a "minimal" TA approach would increase results by a HUGE amount while providing a much greater margin of safety.

    We know how "persistent" bull and bear markets can be. To take advantage, I'd recommend

    A. Buy/Sell on the 50-day MA Cross

    B. Practice "Relative Strength" and "Sector Rotation" of a sort.

    Investing over a lifetime, this is something that an investor should learn or should pay someone to do for him.

    Yes, not a perfect system... and there will be some whipsaws. But such a system is relatively simple and will have the investor on the right side of the market most of the time... especially for the big moves... both directions. Regardless, waaaay better than B&H.

    (Of course if you screw up the results could be worse than B&H, but that's a different issue.)
     
    Last edited: May 16, 2018
    #25     May 16, 2018
    treeman likes this.
  6. lindq

    lindq

    You may like to think your math is simple, but it is not. You've ignored the effects of inflation in your calculations.

    A common error in long-term planning.
     
    #26     May 16, 2018
  7. JackRab

    JackRab

    I see sarcasm is lost on you...
     
    #27     May 16, 2018
  8. vanzandt

    vanzandt

    I'm gonna try this tomorrow.
     
    #28     May 16, 2018
  9. JackRab

    JackRab

    You will love it... except when it drops... then you won't. (that's my disclaimer)
     
    #29     May 16, 2018
  10. JackRab

    JackRab

    I didn't miss that... but OP is pretty much deadset on investing in QQQ for retirement... which means he would be inclined to systematically go for something like a 3x ETF, since that would mean he could maybe retire even earlier. And there are plenty of people on ET who are truly idiots, and would definitely dump everything they have in this.... regardless of how far we are in this bull-market.

    That's why some open communications on a public forum like this is a good thing. You get different angles. I agree, put some smaller portion in it if you want, depending where you sit on the retirement age bracket (like I said in my earlier post).

    My point is mainly to show that shit can hit the fan. And if you are investing for retirement, you should be a bit more prudent... That doesn't mean put all in a savings account... but definitely not a 3x ETF. If you would have started somewhere in the 3 years before the GFC, at one point you would be down 90-95%... now, maybe at that point you would think, what the heck I'm down so much I don't care anymore we are all going to die in armageddon soon... but at one point during that shock down turn, you would probably panic sell, because it's supposed to be your retirement money.

    You don't need to go to zero to lose your shirt... you just need to panic sell near the low and miss the bull run afterwards, let inflation do the rest... plenty of people out there.
     
    #30     May 16, 2018