Market pros who do not invest in the instruments in which they trade?

Discussion in 'Professional Trading' started by Crispy, Feb 1, 2011.

  1. Crispy


    For my thread title I define "trade" as short term market activities in which the player hopes to realize maximum profits with minimal time exposed to the markets. And "invest" as buying paper assets with potential future growth and or yield possibilities with a long term time frame

    I typically take my income garnered from financial market activities and buy hard assets such as physical gold. Or I buy long dated CD`s which are close in yield to the 10 year treasuries. And eventually I hope to buy some land and a cabin when my mortgage is paid off.

    I have found that it keeps me completely objective and open minded when I have no positions to monitor or concern myself with outside of what my model is telling me to do.

    My way is neither right, wrong or perfect is just makes me feel comfortable.

    I am just curious if there are any other people who think as I do?

    Just for fun, below is one months allocation in physical gold.

  2. drp7804


    I've thought about that, as well. It probably all boils down to how you want to spend your time, priorities, etc. In my case, I've focused probably 99% of my "money management" energy on trading for the past few years and left the rest of my money in either cash or fairly passive investments (an assortment of high and lower -yielding bond funds). This was more of a "risk averse" approach, but, like you, I wanted to have as much focus as possible on trading.

    Having said that, my long-term plan is to have a more all-encompasing money management scheme which incorporates all of my liquid net worth and gets steady, regular attention. At some point (ideally) the non-trading money begins to dwarf the actively traded money... and starts to hold more and more influence over my financial future (a good problem to have?).

    I've recently been talking w/ some friends and co-workers about putting together an invesment club. Each of us has different ideas of what we want to get out of it... For me, I think the main benefit is just having that steady once-a-month meeting to keep some level of focus on the longer-term investing picture.
  3. olias


    how do you purchase your Gold?
  4. Crispy


    Yes. Being in the markets tends to push my reserves into risk averse status. If you have worked as hard as you sound like you have losing money because you changed that digital money from one hand to another is just aggrivating.

    Also agree. If I get to the point where passive investments outgrow trading profits..etc. I will be implementing this plan - 25% SPY-25% 30 year treasuries-25%Cash- and 25%physical gold. This portfolio allocation requires minimal partcipation and the returns are decent over a 20-30 year period...always outpacing inflation by 100-200 bps.
  5. Crispy


    Always I have been a customer since late 2007 and have never had any issues at all with product, delivery or cash payments. I prefer anonymity and the best prices...they cannot be beat. Mostly I use the nucleo exchange to bid/offer with other anons with the occasional catalog purchase.

    I compare prices daily with apmex, kitco, fleabay, monex and its maybe 1 out of 100 days where they do not have the best prices in silver and NEVER beat in gold. I know I sound like a freaking shill but its only because im jealous I didnt come up with the idea.
  6. rew


    I'm pretty sure that successful futures or options traders don't invest in the instruments in which they trade, because there's no such thing as "investing" in a finite lifetime derivative like a future or option.
  7. Crispy


    Rolling forward is most certainly an investment strategy. But I understand your thought process.
  8. You do realize that you're paying a 3% premium buying physical gold?

    I don't understand why you aren't simply buying the nearest futures contract and waiting for settlement. It is physically settled.
  9. Crispy


    Yes, of course I see the prems.

    Simple - I am not big enough yet. :)

    Trust me when I say that if the day comes when I can take delivery of even the small contract I will post a picture and a thread documenting the experience.
  10. LOL, sorry I'm an idiot. I don't trade GC and didn't realize that it trades 100 troy ounces contracts.

    Also, you won't be able to do it via the mini. It is cash settled. But it would work if you didn't want physical possession of the metal.
    #10     Feb 2, 2011