Beating Buy and Hold (thru disciplined speculation)

[drbubb]

Once again. Pixel has had a go at me for listening to experienced traders, rather than his favorite Buy and Hold Wizards - who say things like...

 

"Never ever ever sell your Gold."

 

This may come as a shock to you but the thing is I actually don't give a stuff.

 

The difference is that you see this as a trading competition and I don't. I am purely trying to protect my hard worked for capital while we go through this financial crisis, which has been bought about by your banking buddies and their reckless gambling addicted lifestyles. As far as I am concerned, the sooner I can turn my back on all this and concentrate more on my productive work promoting businesses the better.

LOL.

I point out that you are not managing the price risk as well as you could, and you say:

"I don't give a stuff."

 

Well perhaps, I should put it the same way, "I don't give a stuff" about your theoretical risks inherent in owning Etf's rather than physical (at this stage.) So far, they have been totally theoretical, and the Options on GLD, SLV, UGL, and ZSL have proven to be great tools in managing the very real price risk inherent in Precious metals.

 

By the time I see some loss from "etf risk", I am likely to have parked enough of my investments into physicals that it will not matter, because I will be miles better off.

 

It isn't a "trading competition" (there is no prize!) It is just a well-documentated illustration that Buy & Hold can be beaten by a disciplined options trading approach. I would appreciated it that you would acknowledge that this is the case. You are worrying about theoretical risks while I am managing real price risks.

 

"Gold will protect you from the coming hyperinflation!"

 

"...your trading buddies..."

You are listening to people ("Your Buy and hold buddies"?) who have vested interests in getting people to hold onto their gold, while I am using the ideas of experienced and successful traders to sidestep or minimize opportunity losses on the big price swings. Their knowledge has proven useful. I do not expect all their ideas to work - but I can use them in my own way to help protect against price moves.

[drbubb]

DEFUSING "THE BATTLE" (on the Silver thread today):

 

... My belief is that it is wise to hold both cash and precious metals to hedge against dual outcomes. Interestingly I have adopted a balanced approach, typically holding dollars and metal, and aside from Roman's Holiday, that is rarely presented here.

I have no problem with that. So you are saying, "there should be no battle."

 

Actually, I agree with that. I am merely presenting a demonstration that there exist tools (options and TA) which can enable one to produce returns which beat buy and hold, without gambling - merely by understanding the tools, and deploying them in a disciplined fashion.

 

I think Pixel could defuse the whole "Battle" by saying:

 

+ Some do not have the time, or the interest in learning the "disciplines"

+ You are taking a risk, that while you use options on etfs, that they may blow up in your face if the etf fails

 

Had he made such an argument, then I would have to agree with the second point, and say:

"Yes, I know that, but look at this: I am generating excess returns so quickly that once I have parked 10,000 ounces in physicals, I can use the excess profits that I have generated to carry on with the TA-&-Options games."

[Perishabull]

As an objective outsider It's frustrating to see a lack of development in the argument, there are merits to both sides. I've learned a lot from the generosity of others here, you know who you are. Why the **** can't people look in the third perspective?

 

I'm not a genius, surely this isn't some magical gift I'm blessed with?

[drbubb]

How can we progress this discussion ?

As an objective outsider It's frustrating to see a lack of development in the argument, there are merits to both sides. I've learned a lot from the generosity of others here, you know who you are. Why the **** can't people look in the third perspective?

 

I'm not a genius, surely this isn't some magical gift I'm blessed with?

Okay. I'll bite - Let's make progress together...

 

 

Maybe you can put forward some ideas (on how to get past a black and white argument we seem stuck in) with some detail. I am genuinely interested, and am also frustrated that many on GEI do not want to move past the "Options & TA are dangerous" phase of the discussion.

 

(Please keep in mind):

When I started the Beating B&H thread, there were many people posting here comments something like this:

"You cannot beat Buy and Hold in the long term - Trading Silver or Gold is like gambling: Don't do it."

(I believe they posted these comments because they had read on sites like FS, Goldseek, and JSMineset, that B&H was best, and no one could do better than that in the long term):

Frankly, I thought that argument was garbage, and believed that there were sensible and disciplined approaches to trading and investing that would handily beat buy and hold over the long term. So I set up the thread to demonstrate through my own actual trading that it could be done.

 

I think the thread HAS advanced the argument, by showing that a better result was possible over the long term, and not a mere one-off fluke. I am not recommending that everyone else use all the same techniques that are employed here, just asking them to acknowledge that it is possible.

 

STAGE OF LEARNING & PARTICIPATION:

===

+1: Acknowledge that there exist disciplined techniques which can consistently beat B&H:

 

...And then, maybe dig a bit deeper and...

+2: Use one or two of my techniques, that might appeal to them, and maybe:

+3: Comment critically on what I am doing (without rubbishing it, but through understanding), and

+4: Help to refine the techniques, learning from each other as we go

 

I am disappointed that few (so far) seem to have made it past stage one, and several folks are not even at the "acknowledging" stage yet.

[drbubb]

Spreadsheet: https://spreadsheets1.google.com/spreadsheet/pub?hl=en_US&hl=en_US&key=0Am5S2YdB2ZxYdC1KcWgxVVpqamJhQl9zRmt2aEhPaUE&single=true&gid=0&output=html

 

PRICE: 9/30/11 9/23/11 9/16/11 9/09/11 : 9/02/11 8/26/11 8/19/11 8/12/11

PRICE: 9/30/11 9/23/11 9/16/11 9/09/11 : 9/02/11 8/26/11 8/19/11 8/12/11

SLV--: $28.91 : $29.98 : $39.39 : $40.52 : $42.18 : $40.41 : $41.68 : $38.12 :

Change: -$1.07 : -$9.41 : - $1.13 : - $1.66 : +$1.77 : -$1.27 : +$3.56 : +$0.51 :

Silver : $29.98 : $31.08 : $40.67 : $41.43 : $43.26 : $41.72 : $42.93 : $39.07 :

Prem. : +$1.07 : +$1.10 : +$1.38 : +$0.91 : +$1.08 : +$1.31 : +$1.25 : +$0.95 :

ZSL-- : $17.11 : $19.34 : $12.11 : $11.51 : $10.70 : $11.68 : $11.33 : $13.62 :

$42-X : $22.89 : $22.66 : $29.89 : $30.49 : $31.30 : $30.32 : $30.67 : $28.38 :

ZX/slv : 76.35% : 75.58%: 75.88%: 75.25% : 74.21%: 75.03% : 73.58%: 74.45%:

====

DXY--- : 78.796 : $78.30 : $76.54 : $77.20 : $75.25 : $73.81 : $74.24 : $74.56 :

UUP---: 22.305 : $22.20 : $21.74 : $21.91 : $21.22 : $20.96 : $21.03 : $21.11 :

CRB--- : 298.15 : 301.87 : 329.55 : 334.24 : 338.06 : 335.25 : 329.47 : 326.53 :

DBA---: 29.665 : $30.13 :

Rsilver : : 7.640 : : 7.776 : : 9.161 : : 9.019 : : 9.389 : : 8.897 : : 9.392 : : 8.704 : :

===

Ja.$35c: $1.66 : $2.11 / $5.60 /

Ja.$25c: $5.97 : $6.72 / $7.95 /

Ja.$27c: $4.75 : $5.50 : 12.77 : 13.97 : 15.45 : 13.97 : 15.20 : 11.87 : 11.20 :

Oc.$30c: $1.51 : $2.30 : $9.50 : 10.72 : 12.27 : 10.70 : 11.95 : $8.62 : $8.00 :

Oc.$34c: $0.44 : $0.97 : $5.75 : $7.02 : $8.52 : $7.15 : $8.35 : $5.45 /$4.75 /

Oc.$38c: $0.11 : $0.41 : $2.70 : $3.95 / $3.98 /

Ja.$36c: $1.46 : $1.87 : $5.70 :

ATX.v--: $0.61 : $0.75 : $0.85 : $0.80 : $0.79 : $0.90 : $0.91 : $0.90 : $0.93 :

ZSL$11c: $6.10 : $8.50 / $1.73 /

DBA$30c $1.42 : $1.67 / $2.90 /

==== =====

 

Trades this week:

======

BOT : Phys. Silver at $27 x 1,000 (- $27,000 : AP#1)

BOT : Phys. Silver at $27 x 1,000 (- $27,000 : AP#2)

SOLD: SLV-Oct.$34c at $1.15 x 2,000 ( +$2,300 : AltP#1)

SOLD: SLV-Oct.$34c at $1.15 x 2,000 ( +$2,300 : AltP#2)

SOLD: SLV-Oct.$38c at $0.37 x 3,000 ( +$1,110 : AltP#1)

BOT : SLV Jan.$25c at $6.85 x 1,000 ( - $6,850 : AltP#

[Pixel8r]

BOT: Physical Silver at $34.80 x 1,000 (= -$34,800 : AP#2)

What is this 'physical' silver that you have said you have bought, is it actual physical silver or is it in an ETF?

 

Have you actually bought this or is it a fantasy position like some of this portfolio you have been explaining?

 

 

[drbubb]

What is this 'physical' silver that you have said you have bought, is it actual physical silver or is it in an ETF?

Have you actually bought this or is it a fantasy position like some of this portfolio you have been explaining?

Physical Silver ("Phys.AG") is a key part of these portfolios

 

CORE SILVER

====== PhysAG : SLV* - :: Combined

AP#1 : 4,000 oz : 2,000 :: 6,000 Oz or shares

AP#2 : 5,000 oz : 2,000 :: 7,000 Oz or shares

 

Whether I buy it or not for my own personal portfolio is completely against the point of what I am doing with this exercise, which is a demonstration of how a professional investor with options expertise trades in a low risk fashion.

 

It has been my intention all along (and I think I mentioned it before) to add Physical Silver positions if AG hit my long standing target of $27. I do still expect a retest of that level, and on the retest (or lower), I want to take my "CORE Silver position (Physical Silver or SLV) to 10,000 in each portfolio. That will be equivalent to what is in the B&H portfolio, and will insure that I have established a permanent advantage to the Buy & Hold portfolio. I would have done it sooner, but I always expected the May lows to be tested, and probably exceeded. By being patient, and trading around using options, I have also built up a nice wad of cash on top of that Silver CORE.

==== ====

 

*SLV shs:

I plan to switch these into Physical Silver when I can do so at a low premium.

(On Friday, the premium for Physical silver was $1.07, lowest in weeks. It was $1.38 two weeks ago. If I saw a difference of $0.90 or less, I would probably switch right away.)

 

I have learned plenty about trading between Physical silver and the SLV etf by managing the trading of this demonstration portfolio alongside my actual SLV options trading. In my own genuine portfolio, I made big percentage gains by loading up near $30, and then selling everything and taking some small shorts over $40. In the real portfolio my percentage gains have been much bigger, but I have traded more aggressively.

[Pixel8r]

It has been my intention all along (and I think I mentioned it before) to add Physical Silver positions if AG hit my long standing target of $27. I do still expect a retest of that level, and on the retest (or lower), I want to take my "CORE Silver position (Physical Silver or SLV) to 10,000 in each portfolio. That will be equivalent to what is in the B&H portfolio, and will insure that I have established a permanent advantage to the Buy & Hold portfolio. I would have done it sooner, but I always expected the May lows to be tested, and probably exceeded. By being patient, and trading around using options, I have also built up a nice wad of cash on top of that Silver CORE.

We hit $26 last week and used that opportunity to swap some gold to silver. The possible problem I can foresee in your approach could be that by the time you feel ready to buy physical that the paper and physical price could of detached.

 

Currently there is massive demand for physical silver, premiums on bars and coins are increasing. If paper trades keep the prices down for longer I expect the price of buying actual physical to move further away from spot.

 

 

[Pixel8r]

BOT: Physical Silver at $34.80 x 1,000 (= -$34,800 : AP#2)

The thing with having a fantasy portfolio is that it isn't very believable as 'trades' can be created at any price. I noticed that you have changed the above after I had replied to it, which kind of proves my point.

[drbubb]

The thing with having a fantasy portfolio is that it isn't very believable as 'trades' can be created at any price. I noticed that you have changed the above after I had replied to it, which kind of proves my point.

I think if you look more closely, you will find that was a trade FROM THE WEEK ended 23 Sep.

 

I started out using the previosu week's format and then later modified my posts from "Last weeks" trades (using Sept 23) to "Last weeks trades" (using Sept 30). That was done not to try to hide or mislead, but rather to keep the same format from one week to another.

 

This updating exercise takes over one hour every Sunday, and there are times where last week's trades have been be written over with the new trades. You must have seen the post before it was over-written.

 

I have been VERY METICULOUS in recording these trades. Anyone who follows them closely will find that 80-90% of the time or more, you could have traded at a better price than I have recorded after I have posted it here.

 

Where possible, I use the real trading that I have done in my own portfolio.

 

I am impressed and amazed that you were able to buy Physical Silver at $26. That was very close to the low, and you must have been watching the market at an early hour.

==== ====

 

(in edit):

It was just as I said, I had temporarily picked up the prior week's trades, and later overwrote them with the most recent week's trades.

 

Here is the data from the prior week, as originally reported

===

Trades this week:

BOT : SLV Jan.$35c at $5.60 x 2,000 (= - $11,200 : AP#1)

BOT: DBA.Jan.$30c : $2.90 x 2,000 (- $5,800 : AP#1)

BOT: ZSL. Oct.$11c : $1.73 x 3,000 (- $5,490 : AP#1)

SOLD: ZSL. Oct.$11c : $3.50 x 1,000 (+ $3,500 : AP#1)

BOT: SLV at $34.74 x 1,000 shares = (= -$34,740 : AP#1)

SOLD: ZSL. Oct.$11c : $3.90 x 1,000 (+ $3,900 : AP#1)

BOT: Physical Silver at $34.80 x 1,000 (= -$34,800 : AP#2)

BOT: SLV - Silver etf at $31.90 x 1,000 (= -$31,900 : AP#1)

SOLD: ZSL. Oct.$11c : $6.50 x 1,000 ( + $6,500 : AP#1)

BOT: SLV-Jan.$25c at $7.95 x 1,000 ( -$7,950 : AltP#1)

I have BOLDED the trade you captured

 

Here's when and where I originally reported the $27 Physical trades:

Amazingly...

Orders to Buy 1,000 oz. of Silver at $27 for each Alternative Portfolio have been filled.

I would have reported them earlier in the day, but as you know, there are times when the site runs slowly, and it is difficult to post here.

[Pixel8r]

I am impressed and amazed that you were able to buy Physical Silver at $26. That was very close to the low, and you must have been watching the market at an early hour.

I didn't buy at exactly $26, what I actually did is swap gold to silver via goldmoney the actual trade was done at £18.44 per oz. I actually missed the high on the GSR of around 61 (because I was busy getting to work), but swapped at a ratio of 57:1.

[drbubb]

I didn't buy at exactly $26, what I actually did is swap gold to silver via goldmoney the actual trade was done at £18.44 per oz. I actually missed the high on the GSR of around 61 (because I was busy getting to work), but swapped at a ratio of 57:1.

A Gold to Silver swap sounds like a good move. Here's another:

I had an order in on a call on a Platinum etf, and would have put it into the portfolio, had it filled.

[Perishabull]

(Please keep in mind):

When I started the Beating B&H thread, there were many people posting here comments something like this:

"You cannot beat Buy and Hold in the long term - Trading Silver or Gold is like gambling: Don't do it."

(I believe they posted these comments because they had read on sites like FS, Goldseek, and JSMineset, that B&H was best, and no one could do better than that in the long term):

 

I regularly see people obtain ideas from other websites, post them and/or defend them with the fervour of a religious cult, without any questioning. I find it quite surprising. Someone posted a link to an article believing that it was a prediction that silver would go to $83 in 2011 (I think it was). They hadn't even read the article before posting it! It stated nothing of the sort.

 

Also, Jim Sinclair, obviously traded the 80's peak in Gold to perfection, and therefore it's presumably comforting for those that follow him as by and large he seems to have been right. I have no reason to question Jim Sinclair, I'm sure he truly believes that gold will form part of the monetary system once again and that "Gold will go up and stay up". If you look into his background he has at times done things to extremes, like drinking so much carrot juice weekly that his skin turned a shade of orange. Also if he read when he talks of his father, his father sacked him about nine times from his firm, my take of this is that it was done purposefully to engender insecurity and therefore create extreme motivation for out performance. Perhaps he has to do something amazing to live up to expectations....

 

I am disappointed that few (so far) seem to have made it past stage one, and several folks are not even at the "acknowledging" stage yet.

 

Perhaps that is because people generally like to be told things they like to hear that confirm existing beliefs, whether false or not, it makes them feel warm and fuzzy inside.

[drbubb]

Interesting comments, PD.

...Jim Sinclair... he has at times done things to extremes, like drinking so much carrot juice weekly that his skin turned a shade of orange... he has to do something amazing to live up to expectations....

 

Perhaps that is because people generally like to be told things they like to hear that confirm existing beliefs, whether false or not, it makes them feel warm and fuzzy inside.

I think you are right about that - People do like to rely on experts.

 

And some here would like me to post trading signals that they can follow. But this thread is really not about that - That is not what I have in mind. If I took over people's trading decisions, I would expect to be paid for it, and do so within a different trading structure than a free website.

 

I want this to be about using options, TA, and other trading-investing strategies that can enhance returns for those who can pick up and use the techniques intelligently.

 

Doing so is not easy, especially for folks that are accustomed to Buy and Hold. Maybe that is why most Gold-and-Silver-oriented websites stick to the Buy&Hold theme: They reckon they will be right in the long term, and if they start trading in and out, they will very quickly make some timing mistakes, which people will criticise. Discussing in a public forum a trading approach as complex as the one I am using on this thread is not an easy trick.

 

Just remember: You are not expected to copy me! Just try and follow a trading technique or two, and get a gradual appreciation of the bigger picture that I am using in the approach. And please, ask some questions about specific details, then I will understand what puzzles people.

[drbubb]

OUTPERFORMANCE MOVED a bit higher, and the Ratio improved too.

 

RECORD

(B&H Silver 10,000 oz.)

Record :: B&H Portf : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

 

01 July: --- $337.0 K : - $479.2K : - $465.2 K : $472.2K : 140.1% : $33.00 x74.36 / 3.3671 =# 7.288

08 July: --- $365.4 K : - $508.5K : - $498.1 K : $503.3K : 137.8% : $35.75 x75.08 / 3.4355 =# 7.813

15 July: --- $390.7 K : - $535.8K : - $532.8 K : $534.3K : 136.8% : $38.24 x75.13 / 3.4650 =# 8.291

22 July: --- $401.0 K : - $541.4K : - $539.8 K : $540.6K : 134.8% : $39.07 x74.14 / 3.4793 =# 8.325

29 July: --- $398.9 K : - $539.7K : - $537.1 K : $538.4K : 135.0% : $38.83 x73.75 / 3.4208 =# 8.371

05 Aug: --- $383.3 K : - $534.4K : - $538.9 K : $536.6K : 140.1% : $37.61 x74.54 / 3.2608 =# 8.597

12 Aug: --- $390.7 K : - $536.7K : - $541.9 K : $539.3K : 138.0% : $38.12 x74.56 / 3.2653 =# 8.704

19 Aug: --- $429.3 K : - $558.6K : - $570.4 K : $564.5K : 131.5% : $41.68 x74.24 / 3.2947 =# 9.392

26 Aug: --- $417.2 K : - $546.5K : - $558.1 K : $552.3K : 132.4% : $40.41 x73.81 / 3.3525 =# 8.897

02 Sep: --- $432.6 K : - $560.6K : - $572.8 K : $566.7K : 131.0% : $42.18 x75.25 / 3.3806 =# 9.389

09 Sep: --- $414.3 K : - $544.9K : - $557.2 K : $551.1K : 133.0% : $40.52 x77.20 / 3.3424 =# 9.019

16 Sep: --- $406.7 K : - $539.8K : - $552.5 K : $546.2K : 134.3% : $39.39 x76.64 / 3.2955 =# 9.161

23 Sep: --- $310.8 K : - $485.2K : - $479.3 K : $482.3K : 155.2% : $29.98 x78.30 / 3.0187 =# 7.776

30 Sep: --- $299.8 K : - $478.6K : - $473.4 K : $476.0K : 158.8% : $28.91 x78.80 / 2.9815 =# 7.640=(

Vs B&H: -- 100.0% - : - 159.65% : - 157.89% : +158.77%

 

At 30 Sept., the average of the two Alt. Portfolios was $176,193 (prev.$171,458) ahead of Buy&Hold.

 

Versus $153,343 ahead at 5 Aug., when Silver had fallen to $38.33.

 

You may notice / see spreadsheet : http://tinyurl.com/beatingBH

 

I can now summarise my Silver holdings this way:

CORE+

==== PhysAG : SLV- : CORE : InThe$ : OutOf$ : Total

AP#1 : 4,000 : 2,000 :: 6,000 :: 2,000 : 2,000 : 10,000

AP#2 : 5,000 : 2,000 :: 7,000 :: 0,000 : 3,000 : 10,000

 

Notes:

CORE is Physical Silver plus SLV shares

InThe$ : In the money SLV calls, with strikes below Friday's SLV closing

OutOf$ : SLV calls with strikes above the SLV closing price

= = = = = = = = = = = = =

 

If SLV hits my target of $27, then I shall add to the CORE Silver longs position, so if Silver moves back up, I can stay ahead of the B&H portfolio. The continued strong cash position gives me the flexibility to add more Silver or SLV calls whenever I like. Adding to Core or InThe$ holdings of the AP#2 is a matter of some urgency, and I should add some positions early in the week on any dip in Silver prices

[drbubb]

What I see is two people with diametrically opposing viewpoints each trying to convince the other and believing that it is possible hence the title of my skit. Pixel8r has what I think is a false belief that traders are part of the problem and since you are a trader he is never going to lend credence to what are some of your valid arguments. You seem to have a false belief that you can convince Pixel8r of your position.

 

If Pixel8r is unable to see the validity of using a more nuanced approach in the markets after having seen what is possible from the evidence in the "$50-ish peak in silver" and "Gold like Silver - Coming off the top" threads then despite being an optimist I see futility in arguing the point with Pixel8r, so I don't.

PD,

You are probably right, and so maybe I should ignore Pixel and aim my comments elsewhere.

(Sometimes it is hard to know how many folks agree with Pixel, and want to demonize all traders, and any sort of trading technique at all. But I really haven't designed GEI for that sort of dogmatic buy-only-to-hold thinking. I want to empower people to use other techniques too, and to use them wisely, not haphazardly.)

[drbubb]

If SLV hits my target of $27, then I shall add to the CORE Silver longs position, so if Silver moves back up, I can stay ahead of the B&H portfolio. The continued strong cash position gives me the flexibility to add more Silver or SLV calls whenever I like. Adding to Core or InThe$ holdings of the AP#2 is a matter of some urgency, and I should add some positions early in the week on any dip in Silver prices

"Some Urgency" for buying Silver upside for Alt.Portfolio#2, and this dip gives me a chance.

Okay.

We are getting a dip today, so I will start with this:

 

BOT: Phys.Silver : 1,000 oz. at $30.22/ oz., (- $30,220 : AP#2)

 

More is needed to get over 10,000 oz. in Alt.Port.#2 (now up to XX,XXX)

=== ===

 

(in edit, added):

BOT: SLV Calls: Apr.$23c : 1,000 x $8.35 : (- $8,350 : AP#2)

 

At the time:

Was Bid-8.25 / Offer-8.40, with SLV at $28.78

 

(in edit, added - Buy Order left in was filled):

BOT: SLV etf : 1,000 x $28.00 : (- $28,000 : AP#2)

 

CORE and ITM options in Alt.Port.#2 (now up to 10,000)

[drbubb]

PRICE: 10/7/11 9/30/11 9/23/11 9/16/11 9/09/11 : 9/02/11 8/26/11 8/19/11

SLV--: $30.23 : $28.91 : $29.98 : $39.39 : $40.52 : $42.18 : $40.41 : $41.68 :

Change: +$1.32 : -$1.07 : -$9.41 : - $1.13 : - $1.66 : +$1.77 : -$1.27 : +$3.56 :

Silver : $31.23 : $29.98 : $31.08 : $40.67 : $41.43 : $43.26 : $41.72 : $42.93 :

Prem. : +$1.00 : +$1.07 : +$1.10 : +$1.38 : +$0.91 : +$1.08 : +$1.31 : +$1.25 :

ZSL-- : $14.83 : $17.11 : $19.34 : $12.11 : $11.51 : $10.70 : $11.68 : $11.33 :

$42-X : $27.17 : $24.89 : $22.66 : $29.89 : $30.49 : $31.30 : $30.32 : $30.67 :

ZX/slv : 89.88%: 86.09%: 75.58%: 75.88%: 75.25%: 74.21%: 75.03%: 73.58%:

====

DXY--- : 78.753 :78.796 : $78.30 : $76.54 : $77.20 : $75.25 : $73.81 : $74.24 :

UUP---: 22.270 : 22.305 : $22.20 : $21.74 : $21.91 : $21.22 : $20.96 : $21.03 :

CRB--- : 303.52 : 298.15 : 301.87 : 329.55 : 334.24 : 338.06 : 335.25 : 329.47 :

DBA---: $29.89 : 29.665 : $30.13 :

Rsilver : : 7.000 : 7.640 : : 7.776 : : 9.161 : : 9.019 : : 9.389 : : 8.897 : : 9.392 : :

===

Ap$23c: $8.97 / $8.35 /

Ja.$25c: $6.77 : $5.97 : $6.72 / $7.95 /

Ja.$35c: $1.89 : $1.66 : $2.11 / $5.60 /

Oc.$34c: $0.30 : $0.44 : $0.97 : $5.75 : $7.02 : $8.52 : $7.15 : $8.35 : $5.45

Oc.$38c: $0.06 : $0.11 : $0.41 : $2.70 : $3.95 / $3.98 /

ATX.v--: $0.68 : $0.61 : $0.75 : $0.85 : $0.80 : $0.79 : $0.90 : $0.91 : $0.90 :

DBA$30c $1.52 : $1.42 : $1.67 / $2.90 /

==== ====

 

Trades This Week:

BOT: Phys.Silver : 1,000 oz. at $30.22/ oz., (- $30,220 : AP#2)

BOT: SLV Calls: Apr.$23c : 1,000 x $8.35 : (- $8,350 : AP#2)

BOT: SLV etf : 1,000 x $28.00 : (- $28,000 : AP#2)

==== ====

Cash: startWk / EndofWk

AP1: 276,610 / $276,610

AP2: 258,545 / $191,975

[drbubb]

REDESIGN of BeatingBH SS

 

 

I am continually redesigning the Spreadsheet.

If you haven't seen it for a while, What do you think ?

 

WEEKLY Spreadsheet : http://tinyurl.com/beatingBH

 

Is it easier to understand what I am doing ?

 

BTW, to examine each portfolio in the spreadsheet:

+ Buy&Hld :: Buy and Hold portfolio of 10,000 Silver oz., a benchmark

+ Alt.Port#1 : Alternative Portfolio 1 - "more aggressive"

+ Alt.Port#2 : Alternative Portfolio 2 - "less aggressive"

+ Average - : The Average of #1&2

= you need to read the spreadsheet figures in Columns ====

 

My objective in managing these portfolios is two-fold:

1/ To increase the Out-performance in absolute dollars

2/ To show a growing "Ratio to B&H" - ie Average NAV-to-B&H NAV

3/ To gradually move into a Core position held in Physical Silver*

 

*At what I think are possible peak ranges, I may shift parts of that Core position back into Cash + ITM SLV Calls, to limit the exposure to sharp pullbacks. But normally, I would only do that after a parabolic move up.

[drbubb]

RESEARCH CONFIRMS the strategy used here....

 

Beating Buy and Hold

Or... Why Active Management Doesn't Have to Be Perfect

 

A 1994 study conducted by the University of Michigan1 on the effect of daily and monthly market swings on a portfolio's performance came up with an interesting statistic on using active management to invest only in the positive days of the market.

 

Based on monthly data..."the perfect timer would have turned a $1 investment in January 1926 into $690 million in December 1993....In comparison, a $1 investment in the market index would have grown by $637.30, while a $1 invested in Treasury bills would have grown by $9.20."

 

Why the dramatic different in returns? It comes down to the mathematics of gains and losses. It is far easier to lose money in the markets than it is to make money. It doesn't take a 25% gain to make up a 25% loss, it takes 33%. A 50% loss requires a

100% gain to return to breakeven.

 

The same study went on to look at the impact of missing the best and worst months of the market between January 1926 and December 1993. It's no surprise to find out the study concludes if one does nothing but miss the best months of the market,

returns decline dramatically. Missing the worst months results in a dramatic improvement in returns, while missing both the worst and the best resulted in outperforming a buy-and-hold position.

 

/source: http://investspectrum.com/images/PDFs/BeatingBuy&Hold.pdf

==== ====

 

COMPARE that concept, with my comments here (post # 327):

 

(In response to a comment on 11 Aug. 2011, when GLD was $172, and in a parabolic move up to GLD-$185 and Gold-$1,920+. Meantime, SLV went from $38, to over $42:

"Doesn't matter really, you'd have to be insane to sell PMs now."- Unquote, M.):

 

Look at my "beating Buy and Hold" portfolio :

It does "what it says on the can" and it does it by REDUCING THE PRICE RISK of holding silver risk, by:

 

+ Retaining the "upside" in the Silver price thru calls on silver (silver etf, and silver shares), and

+ Limiting "downside" through a careful and disciplined use of options

 

A key element of this is:

 

: Cash + and in-the-money call gives you the same upside as owning silver

: But if the price falls, you can LOSE ONLY the Call's option premium

 

I would say: "Never say never...

And be flexible enough to see that (at times*) there are better ways to own the upside in precious metals than outright long positions"

 

*One of the best times to seek alternatives, is when you are in a parabolic price move (as gold is now.)

[drbubb]

New Position: (will also add to BeatB&H portfolio, in larger size)

 

Gold could be peaking here - and Gold shares too - the volume is light on this news-driven gap up. Perhaps there is too much optimism flooding in here

 

Buy to Open Put : GDXJ- Nov.$32 Puts at $3.30

10 Contracts of -GDXJ111119P32

Details Filled at $3.30

Okay. For BB&H:

BOT : GDXJ- Nov.$32 Puts at $3.30 x 2,000 = (-$6,000 : AP#1)

 

Plus these:

 

Buy to Open Call

Contracts of -ZSL111022C12 / Details Filled at $2.25

 

BOT: ZSL-Oct.$12 Call : $2.25 x 2,000 =(-$4,500 : AP#1)

[drbubb]

SLV / USDISHARES SILVER TRUST

Last [Tick] $31.62[-]

Change $0.2400 / % Change 0.76%

Bid $31.61 - Ask $31.62

 

SOLD : SLV at $31.61 x 1,000 shares ($31,610 : -AP#2)

 

Rising on very little volume, I see resistance at/near $32,

and can "lean on the Oct.$34 call" in my sale of these shares.

(ie I had 10,000 Core AG/SLV, and this sale will take me below that

key level, but I can use the Oct.$34 calls, to buy back in, if the

price jumps in the next few days.)

 

I will have about one week to replace the $34c with in-the-money calls

or SLV or AG physicals.

[Manual labourer]

Trading in and out of markets is a mugs game.

 

90% of people lose their accounts!

 

Buy and hold is for the masses.

 

No doubt DB is very skilled at this activity, and he enjoys his ability to the full.

 

In much the same way most of us on here could drive a car but very few could ever learn to drive a F1 car.

 

Most on here could/can learn to seek out and buy and hold undervalued assets, but very few could learn to trade in and out within the day

 

and make money/ a daily living from trading.

 

I don't think DB, understands how special his trading abilities are and the fact the greater masses will never be able to follow him.

 

 

Regards

 

ML.

[Kapouillax]

I don't think DB, understands how special his trading abilities are and the fact the greater masses will never be able to follow him.

 

I think you're right ML.

 

I am only now just starting to understand what's the intent behind Dr B's moves...

 

But, I'm just reading what he has done after the fact, I wouldn't be able to predict silver's moves reliably enough not to lose large amounts of money (what if I predict the moves wrongly and indeed call instead of putting - or vice versa? I'll suffer the double whammy of losing physical value AND wrong trades).

[drbubb]

Trading in and out of markets is a mugs game.

90% of people lose their accounts!

Buy and hold is for the masses.

No doubt DB is very skilled at this activity, and he enjoys his ability to the full.

In much the same way most of us on here could drive a car but very few could ever learn to drive a F1 car.

("I don't think DB, understands how special his trading abilities are"):

 

The "trading" I am doing here is mostly substituting a Call and Cash for Silver after a parabolic move, or when the Silver price looks vulnerable. This is miles different from far-riskier swing trading that I have done on the GEI Trading team thread.

 

I really hope people understand the important difference.

 

When you sell physicals and buy a call, you still have upside, but with less price exposure, even Die-Hard B&Holders should see some merits in that ! (We have see 2-3 times here how dangerous it is to hold after parabolic moves. So if you get anything here, try to understand that simple technique.)

 

"90% of people lose their accounts!"

There is absolutely no way that can happen using the conservative technique I am championing in this thread. Why not try to get your mind around it, but paying particular attention to how I manage my CORE position, and supplement it with a few options.