Doug, I'm still working but have been doing much the same (i.e. shifting my portfolio into income producing assets) and doing some swing trading and the like on margin. Mentally I'm a bit hung up on the fact that a rise in interest rates will decrease the value of my portfolio but not significantly decrease the cash flow stream. It's one thing to hold a bond for 5 years but with preferreds, bond funds, etc., there's no such thing as recovering your principle by holding to maturity. Have you done some things to offset this risk (e.g. by investing a portion of your portfolio in asset classes that will benefit from rising rates) or learned to live with it?
It's a good thing Tampa isnt around right now or we would have a slew of gratuitious "40 yo trader references"...
I don't worry about the bonds, as I have a "ladder" arrangement and most of the ones I have have decent yields (6+%). Nor do I worry much about the utility stocks as I intend to hold them long term. The royalty trusts have done extremely well but there best days are likely behind them. When interest rates rise, I will shift more into cash.
I don't believe you can succeed WITHOUT "extreme discipline for MANY years". If you were going to be one of the gifted or lucky, you'd already know that by now. Otherwise, it's dicey work... however, it CAN be done. I've been at the markets for more than 20 years, and I don't think it's any easier in spite of the long experience. My history has been mostly a struggle with some spurts of big profits.... And while I'll humbly(?) admit to perhaps having made more than 99.9% of ETers, I've never thought trading to be "comfortably doable". It IS doable even now, but difficult. Think about it this way... There's $$GAZILLION to be won and lost in the market place. For you to win, you mostly have to take it from someone else... Considering how much money, effort, brains, and talent "da Boyz" put into their play... you gotta be pretty sharp to harvest money consistently. And as compounding is exponential... you'll likely have to demonstrate significant prowess over several/many years before you cash in BIG. Trading is the antithesis of a "part time" activity.
Just registered with Elite Trader and saw your post. I always had an interest in the markets, TA, etc. I started trading more frequently back in 1995 while working full time and by April 1996 I had left my corporate job. I've been at it for 7 years now and wouldn't trade these experiences for anything. I report to no one other than myself. I have no one to blame for my bad trades. Years ago I read Elder's book and was taken by his intro "You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody. This is the life of a successful trader." So very true are the above words. I live where I want to, not where some job is located. I trade when I want to. I learned many lessons along the way and the biggest was early on when I wouldn't take small losses. First year of full time trading I had 76% winners but made very little money. The reason was I let a few trades go badly against me which wiped out substantial profits. Over time, and especially the past few years, I've learned to take smaller profits and take them quickly. As far as getting to a point of where you feel you can make it (trading) work I'd suggest that you have no debt (or as little as possible). I found having no mortgage payment, no car payments, etc. made for a less stressful time when things weren't going as well as I expected. Stay focused, persevere and be disciplined and you'll likely make it.
************************************************ "You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody. This is the life of a successful trader." ************************************************ Thx for the post. That quote is awesome - it's how I think. I can't imagine that feeling. Congrats on finally reaching it. And I guess I've got step one down: I have no car payment, no mortgage, no loans and very little credit card debt. I noticed that you got there pretty quickly all things considered! If you don't mind me asking, how did you build up your capital so rapidly? Was it through saving a large amount of your salary, margin, stellar returns, second jobs (or all of the above)? So you're saying tighten the bands (which usually leads to a decreased win ratio) and sell south or north more quickly? (If that's what you're saying, I just recently started that and it seems to have helped.) Also, if sounds like you got your start with position/swing trading? Was that and is that your core trading style? Thx for any and all advice, stories, etc.
He's a dream selling BS artist, that's what he is. Maybe about 3-5% of the population could benefit from what he writes about, for the rest it is downright dangerous.
No he simplifies complex free cash flow calculations to the point any one with at least the GE out of a GED could understand. If you have a finance degree like me its not much help, but it sure gives you an idea how the rest of the world views asset management. Pick up the book rich dad/poor dad . Its not a bad read.
It's not the "free cash flow" calculations I have a problem with. I called it "dangerous" for other reasons. I'll explain later. (I have read it. And his "Cashflow Quadrant". And his "If you want to be rich and happy, don't go to school?" (!) And browsed his thousand other offerings from the only business he's ever been successful in (teaching others how to be successful in business.)
Sorry I missed your followup questions ... but to answer the above. I built up my capital mainly through having a decent corporate job, saving a pretty good amount of my income and avoiding debt as much as I could. I paid off the mortgage in less than 10 years and never financed a vehicle. I'm not a terribly materialistic person so I guess you could say I lived below my means. Never had a 2nd job. My returns were pretty good also and I invested in a 2nd home (rental) that basically paid for itself through the rental income. So I had some real estate diversification to complement the stock market. And real estate has appreciated nicely so all of the above allowed me to bail out of my job in April 1996. As far as trading style .. the swing/position was while I was working full time. After I started trading to support myself I did a lot more daytrading. As far as style I've tried to adapt to what felt right given the market behavior. My background is highly quantitative so I've used a lot of TA over the years but been doing less and less of that in the past couple years. Lately my daytrades tend to be the SPY or QQQ and I tend to take fairly quick profits. I also put on position trades (both short & long) to complement the daytrading.