Beating Buy and Hold (thru disciplined speculation)

[drbubb]

PRICE: 10/14'1 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--: $31.34 : $30.23 : $28.91 : $29.98 : $39.39 : $40.52 : $42.18 : $40.41 : $41.68 :

Change: +$1.11 : +$1.32 : -$1.07 : -$9.41 : - $1.13 : - $1.66 : +$1.77 : -$1.27 : +$3.56 :

Silver : $32.17 : $31.23 : $29.98 : $31.08 : $40.67 : $41.43 : $43.26 : $41.72 : $42.93 :

Prem. : +$0.83 : +$1.00 : +$1.07 : +$1.10 : +$1.38 : +$0.91 : +$1.08 : +$1.31 : +$1.25 :

ZSL-- : $13.66 : $14.83 : $17.11 : $19.34 : $12.11 : $11.51 : $10.70 : $11.68 : $11.33 :

$42-X : $18.34 : $27.17 : $24.89 : $22.66 : $29.89 : $30.49 : $31.30 : $30.32 : $30.67 :

ZX/slv : 10.00% : 89.88%: 86.09%: 75.58%: 75.88%: 75.25%: 74.21%: 75.03%: 73.58%:

====

DXY--- : 76.607 : 78.753: 78.796 : $78.30 : $76.54 : $77.20 : $75.25 : $73.81 : $74.24 :

UUP---: $21.65 : 22.270 : 22.305 : $22.20 : $21.74 : $21.91 : $21.22 : $20.96 : $21.03 :

CRB--- : 317.18 : 303.52 : 298.15 : 301.87 : 329.55 : 334.24 : 338.06 : 335.25 : 329.47 :

DBA---: $31.18 : $29.89 : 29.665 : $30.13 :

Rsilver : : 1.000 : 7.848 : 7.640 : : 7.776 : : 9.161 : : 9.019 : : 9.389 : : 8.897 : : 9.392 : :

===

Ap$23c: $9.62 : $8.97 / $8.35 /

Ja.$25c: $7.27 : $6.77 : $5.97 : $6.72 / $7.95 /

Ja.$35c: $1.77 : $1.89 : $1.66 : $2.11 / $5.60 /

Oc.$34c: $0.08 : $0.30 : $0.44 : $0.97 : $5.75 : $7.02 : $8.52 : $7.15 : $8.35 : $5.45

Oc.$38c: $0.01 : $0.06 : $0.11 : $0.41 : $2.70 : $3.95 / $3.98 /

ATX.v--: $0.67 : $0.68 : $0.61 : $0.75 : $0.85 : $0.80 : $0.79 : $0.90 : $0.91 : $0.90 :

DBA$30c $2.17 : $1.52 : $1.42 : $1.67 / $2.90 /

ZSL$12c : $1.75 / $2.25 /oct$12

GDXJ$32p $2.75 / $3.30 /nov$32

==== ====

 

Trades This Week:

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

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

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

Trades Last 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== / Core-start / End /

AP1: 276,610 / $266,110 // 6,000 / 6,000 /

AP2: 191,975 / $223,585 // 9,000 / 8,000 /

[drbubb]

SOME GOOD POINTS here - but watch out, Warrants can be very expensive

(and if you do not understand pricing dynamics, it may be best to stay out entirely)

 

Warrants: An Under Appreciated Investment in the Precious Metals Market

 

By Mo Dawoud .. 10/14/2011

 

 

A few of the best ways to invest in the precious metals market using leverage is to buy silver and gold mining stocks, futures and options. These investments provide leverage to a rising gold and silver price. Investors with higher risk tolerance would look to take more risk for higher rewards in the future, so they are likely to lean toward using futures and options for the most bang for their buck. However, there is another vehicle that provides leverage that most investors know little about, warrants.

What is a warrant?

 

If you know options, then the concept behind a warrant is not hard to understand. A warrant gives the buyer a right, but not an obligation, to purchase the securities at a specific price from the issuer (such as a mining company) during a certain duration of time. It sounds exactly like options except you buy the warrants directly from the company. Also, the time frame to expiration on a warrant is longer than options. Most warrants are 2 to 4 years from expiration when the mining company issues them.

Why should precious metals investors consider investing in warrants?

 

One of the main advantages with investing in warrants over options is the longer time frame. You can purchase LEAP options, which expire 6 months or longer, but most only stretch out from 12 to 18 months. On the other hand, investors can find warrants than expire 2 to 4 years from now.

 

The longer the duration, the more likely the investment will be in the money and make a profit. If you invest in options, the window of opportunity to make a profit is smaller since the duration is shorter.

 

Another reason to invest in warrants is the cheaper price compared to owning the stock. Some precious metals stocks that carry a hefty price-tag can be found selling warrants at half the price in some cases. If investors have a strong conviction over a particular company, then why not take more risk and buy the warrants for a higher return? The worse that could happen is that investors lose the money they put into the warrants.

 

Finally, by doing some research, an arbitrage could present itself since warrants are one of the most underappreciated and unknown investment vehicles in the market. This is because U.S. investors don’t pay much attention to warrants like Canadian investors. Consequently, there are a few warrants right now that are mispriced because of this lack of awareness.

 

Recommendation

 

For beginners that have never invested in warrants, I would recommend focusing on risk management. One can increase their chance for profit by focusing on warrants with expiration that are 4 years out*. Remember, the longer the time frame, the better the odds for making a profit.

 

I would also focus on precious metals stocks with strong fundamentals and a good growth profile in reserves (which are mostly junior mining and royalty stocks). These type of stocks usually have an increase in cash, revenue and profit margin. This translates into a higher stock price and a rise in the value of the warrant.

Conclusion

 

Investing in warrants should not be a major component in a portfolio unless willing to accept a high degree of risk proportional to the reward. However, they can be utilized for higher leverage as a minor component in a portfolio for some. Most importantly, due to their general lack of awareness by the wider investment community, the chances for gross mispricing in warrants' value could be likely, especially for some key companies.

 

/see: http://www.financialsense.com/contributors/mo-dawoud/2011/10/14/warrants-precious-metals

==== ====

 

*Huh?

That is only true if prices rise in the long term, and they are not over-priced when you buy them

[drbubb]

"LEANING ON" a short-dated Call option

(the Oct.$34 call was valued at only $0.08 last Friday !)

 

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.

. . .

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

or SLV or AG physicals.

Looks like my little gamble has worked out.

 

I "leaned on the $34 calls" - meaning I sold SLV at $31.61, hoping for a drop in the Silver price and an chance to "replace the position" at a lower cost. The technical situation looked right for that - it wasn't just a "random coin flip."

 

If I had been wrong, then the worst thing that could have happened was that the price could have shot up, and I could have been forced to replace the SLV sold at $31.61, with SLV acquired through the exercise of my Oct.$34 call, which expires this Friday. That's why I said: I have a week to replace it.

 

Right now, I could replace the SLV-$31.61 sale by:

 

+ Purchasing Physical Silver at $30.70 or so, or

+ Buying SLV shares in pre-market trading at about $29.88

 

Instead of either of these, I think I shall buy a January Call (on 1,000 SLV shs)

 

Maybe:

+ Jan.$25. call at about $6.00, or

+ Jan.$28. call at about $4.00, or

+ Apr.$23. call at about $8.40,

 

This will add flexibility to the portfolio, and allow me to benefit from further downside in Silver, if we see that.

 

This is typical of the sort of low-risk, bases-covered trading that I am doing on this thread.

[Kapouillax]

This is typical of the sort of low-risk, bases-covered trading that I am doing on this thread.

 

Thank you Dr B for this detailed description of what you have done and why. And where you expect things to go.

You are not only feeding me fish there, but also teaching me how to fish

[drbubb]

Thank you Dr B for this detailed description of what you have done and why. And where you expect things to go.

You are not only feeding me fish there, but also teaching me how to fish

I am glad to hear that.

 

The latest trade was a nice opportunity.

Silver (and Gold) looked vulnerable to a sharp drop, and I wanted to take advantage without losing sight of my strong intention to hold a 10,000 oz/sh Long Position (thru Core Silver or options.)

 

So I did this by:

 

+ Purchasing SLV calls (that's a down bet on Silver) and GDXJ Puts for AP#1, the more-aggressive portfolio,

 

+ Leaning on the $34call, so I could sell SLV in AP#2, the less-aggressive portfolio

 

With these moves, I can benefit from a Silver (and GDXJ) price drop without straying significantly from my desire to retain a 10,000 oz/sh Long position. "Creativity at work," you could say !

[drbubb]

... I think I shall buy a January Call (on 1,000 SLV shs)

Maybe:

+ Jan.$25. call at about $6.00, or

+ Jan.$28. call at about $4.00, or

+ Apr.$23. call at about $8.40,

This will add flexibility to the portfolio, and allow me to benefit from further downside in Silver, if we see that.

FOCUSED here:

With SLV now at $29.90 -1.14 :

 

SLV JAN 21 2012 28.00 CALL

Last: 4.27 -0.63 (-12.86%)

Bid: 4.05 x 1142

Ask: 4.20 x 924

 

I BUY at $4.15 :

BOT SLV -Jan.$28 call x 1,000 : (-$ 4,150 : AP#2)

 

Note:

For another acct I have been buying GLD today : GLD-chart

The chart suggests we could be near an important low (144d-MA)

 

 

I also:

SOLD : ZSL $12-Calls at $3.00 - half the position

[drbubb]

SOLD:

Sell to Close Put

5 Contracts of -GDXJ111119P32 (half sold)

Details Filled at $4.20

 

 

I may be getting close to a big buying spree here:

A touch of SLV's 377d MA would trigger some buying

 

MAJOR BUYS may be coming up this week in Gold and Silver*

 

Charts to look very compelling

 

SLV / Silver-etf ... 5yrs : 2yrs : 6mos : 6mos-400d

A key moving average for silver is 377d (400d is even better recently.) We could see that touched this week.

 

GLD / Gold-etf ... 5yrs : 2yrs : 6mos

 

*(when was the last time you heard me say that?)

 

If the 377d/400d MA support is broken convincingly, we could see Silver slide all the way back to near $27/28, and then even near $20. But that risk won't stop me from buying some.

[Van]

I have not had time to read the whole thread, but this article should put a stake through the heart anyone who defends "Buy & Hold" unreservedly.

 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1908469

http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1908469_code649342.pdf?abstractid=1908469&mirid=1

 

 

"Buy & Hold" proponents use half truths to peddle the strategy of staying fully invested, but this paper comprehensively debunks it.

[50sQuiff]

I have not had time to read the whole thread, but this article should put a stake through the heart anyone who defends "Buy & Hold" unreservedly.

 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1908469

http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1908469_code649342.pdf?abstractid=1908469&mirid=1

 

 

"Buy & Hold" proponents use half truths to peddle the strategy of staying fully invested, but this paper comprehensively debunks it.

 

Read this article by Dan Norcini about unprecedented volatility: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/20_Norcini_-_Central_Banks_Collapsing_the_Financial_System.html

 

Do you still - in all good conscience - advocate that non-professionals attempt to trade these markets? I find it mind-boggling that you think folks should be doing this instead of focusing on their own livelihoods.

 

And what is this about "staying full invested". Slay straw men much? You completely misrepresent the "buy and holders". We didn't panic-buy into the mini parabola, but we accumulated cash from our jobs and businesses, then backed up the truck on the day of the lows. Just the opportunity we were waiting patiently for.

 

One day - in the midst of a major financial crisis - you may log in to your brokerage account only to see "404 - Page Not Found". I wonder how you would feel as an owner of mere derivatives at that point?

 

We're going round in circles so this is the last I'll post on the matter. But I think asking people to trade gold is downright dangerous. You're encouraging people to gamble for high stakes when circumstanes call for people to protect themselves.

[drbubb]

Do you still - in all good conscience - advocate that non-professionals attempt to trade these markets? I find it mind-boggling that you think folks should be doing this instead of focusing on their own livelihoods.

ABSOLUTELY.

But the investors need to build understanding, and use the sort of very low risk strategies that I am employing on this thread.

 

Trading "willy-nilly" without understanding is very dangerous indeed. I am truly disappointed that Norcini, Sinclair, and the GATA folk have done so very little to build a deeper understanding of these instruments. Buy, hey, they've got an agenda to sell.

 

 

Today, I am zeroeing in on a buying window that I have been awaiting for a long time:

GDX should open lower. I am holding both GDX and GDXJ puts in the GEIT portfolio.

 

I won't put it into the GEIT portfolio, but I have just bought GLD in the premarket session:

 

Buy 100 Shares of GLD - Details: Filled at $157.76 ! (x 10.29 = Gold-$1623) $1622?

/ :: That compares with yesterday's close of $159.87. .(x 10.29 = Gold-$1645)

 

Moving Averages

========

144d MA: GLD-$156.56 / Gold-$1608.42 / HK2840-HK$1221

377d MA: SLV-$28.680 / Silver-$29.38

400d MA: SLV-$28.030 / Silver-$28.71

[drbubb]

GOLD / or GLD calls and money left for a Farm ?

 

And what is this about "staying full invested". Slay straw men much? You completely misrepresent the "buy and holders". We didn't panic-buy into the mini parabola, but we accumulated cash from our jobs and businesses, then backed up the truck on the day of the lows. Just the opportunity we were waiting patiently for.

 

One day - in the midst of a major financial crisis - you may log in to your brokerage account only to see "404 - Page Not Found". I wonder how you would feel as an owner of mere derivatives at that point?

 

We're going round in circles so this is the last I'll post on the matter. But I think asking people to trade gold is downright dangerous. You're encouraging people to gamble for high stakes when circumstanes call for people to protect themselves.

Haha.

"Backed up the truck on the day of the low"?

Sure. Using WHAT for cash?

 

My two Alternative Portfolios are loaded with cash now, so I have no difficulty buying plenty of Gold or Silver.

 

Cash: startWk / EndofWk== / Core-start / End / ==Chg.Cash

AP1: 266,110 / $276,910 // 6,000 / 6,000 / ==: +9,000 + 6,300 - 5,500 = +9,800

AP2: 223,585 / $219,435 // 8,000 / 8,000 / ==: - $4,150

 

And don't forget:

If you need Gold or Silver (when "Page not found" happens), you need lead more/.

I'd rather have some extra cash from smart trading to buy the bunker, and maybe some extra food to share with the neighbors.

[klogger]

ABSOLUTELY.

But the investors need to build understanding, and use the sort of very low risk strategies that I am employing on this thread.

 

I had spent a bit of time preparing a post for this thread, but decided to drop it as I thought that I would be adding to much 'novice noise'. I am glad that you have posted the above comment, as I tend to agree with you. I am a novice and I am very interested in learning, I believe that I know when I am biting off more than I can chew. Hence at the moment, I am reading from the perspective of learning only. It seems that some people posting on here (myself included) don't understand terms such as 'in the money calls' etc. People who do not understand such terms are not going to be able to follow what you are doing. This thread seems rare in forums, in that you are describing your actions and showing the results. It seems like a great opportunity to learn, but the way it is presented is just too complicated for novices like me (that is not a complaint, just an observation).

 

Is there any chance that you would ever put together a novice’s version of your strategy that defines the terminology that is required to understand how to go about following your technique? It you don't have the time for that, then maybe it is better to be clear about your target audience. That way 'novice noise' could be reduced.

 

I hope you continue posting on this thread as it encourages me to go and look up terms - becoming fluent with them takes a lot longer though!

[drbubb]

I had spent a bit of time preparing a post for this thread, but decided to drop it as I thought that I would be adding to much 'novice noise'. I am glad that you have posted the above comment, as I tend to agree with you. I am a novice and I am very interested in learning, I believe that I know when I am biting off more than I can chew. Hence at the moment, I am reading from the perspective of learning only. It seems that some people posting on here (myself included) don't understand terms such as 'in the money calls' etc. People who do not understand such terms are not going to be able to follow what you are doing. This thread seems rare in forums, in that you are describing your actions and showing the results. It seems like a great opportunity to learn, but the way it is presented is just too complicated for novices like me (that is not a complaint, just an observation).

 

Is there any chance that you would ever put together a novice’s version of your strategy that defines the terminology that is required to understand how to go about following your technique? It you don't have the time for that, then maybe it is better to be clear about your target audience. That way 'novice noise' could be reduced.

 

I hope you continue posting on this thread as it encourages me to go and look up terms - becoming fluent with them takes a lot longer though!

I have tried that before - but everyone comes here with different levels of knowledge.

 

If you are still confused about what an "in the money call" might be, then put it into a Google search engine, and you will find plenty of explanations, or buy, or borrow a good basic book on Options. That will be the best way to earn the basic stuff.

 

Get a grip on the Options basics, and then what I am talking about will make much more sense.

 

MY SUGGESTION:

Sorry, I really cannot provide an education for every level of investor coming in here. What you might do, is collect 3-5 basic questions. Then start a thread with those. If no one posts answers within 1-2 days, find the answers thru Google, and then post the explanations for other novices.

 

If you are unwilling to do that much work, how can you expect me to do it, on top of everything else I do here for free?

 

I am not trying to be dismissive of your genuine query. But if you look at it from my point of view, I am pretty certain you will agree that I am giving good advice in this.

[klogger]

If you are still confused about what an "in the money call" might be, then put it into a Google search engine.

 

That is exactly how I go about it.

 

If you are unwilling to do that much work, how can you expect me to do it, on top of everything else I do here for free?

 

I don't expect you to do any work at all, I am glad that you are doing the work that you are doing here and I appreciate the effort that you are putting in.

[drbubb]

That is exactly how I go about it.

I don't expect you to do any work at all, I am glad that you are doing the work that you are doing here and I appreciate the effort that you are putting in.

Thanks.

I want to encourage you to continue learning.

And maybe doing some "paper trades" without using real money.

(Why not describe one here - and ask for comments.)

 

My partner just took a course on Options, and only now is she beginning to understand me when I talk about options strategies. And after paper trading for a few days, she seems to be much more appreciative of how difficult it is (and exhilarating too) to do what I have been doing for a living.

[drbubb]

The Doctor is going Gold-crazy today.

MAJOR BUYS may be coming up this week in Gold and Silver*

Charts to look very compelling

...

*(when was the last time you heard me say that?)

I am backing up the truck here, friends.

 

 

Valuing the GLD Options and Gold etfs at face, I have bought over $300,000 of Gold today.

(And I am not done.)

 

Note that I have bought at something like $320 below Gold's high, and also below Jim Sinclair's $1650 - very near to $1600. And some of the Buying was done with some nice profits I made since I exited my last big Gold-related trades.

 

I have plenty of firepower still left, and plan to buy more if Gold breaks the support near 144d MA.

 

Silver/SLV buys may soon be coming up - Orders are alresdy in on SLV calls/

 

(Here's a KEY POINT for the B&H purists !

You need to have Cash to buy when the opportunities roll along.)

[drbubb]

I focussed mostly on Gold yesterday, but I got these:

 

(B/) Might add to this for Beat B&H portfolio:

Buy to Open Call

5 Contracts of -SLW120121C25

Details Filled at $5.55

 

BOT: Silver Wheaton / SLW-Jan.$25c at $5.50 x 1,000 (-$5,500 : -AP#1)

 

I had Buy orders in on SLV calls, but they did not get hit.

I hope to have another chance in the next few days, to buy Silver cheaper.

 

I Sold the GDXJ Puts, and the ZSL Calls

 

(Levels sold this week):

GDXJ.puts-Half sold at $4.20

GDXJ.puts-Half sold at $4.80

ZSL.calls-Half sold at $3.00

ZSL.calls-Half sold at $3.30

[drbubb]

PRICE: 10/21'1 10/14'1 10/7/11 9/30/11 9/23/11 9/16/11 9/09/11 : 9/02/11 8/26/11

SLV--: $30.48 : $31.34 : $30.23 : $28.91 : $29.98 : $39.39 : $40.52 : $42.18 : $40.41 :

Change: -$0.86 : +$1.11 : +$1.32 : -$1.07 : -$9.41 : - $1.13 : - $1.66 : +$1.77 : -$1.27 :

Silver : $31.36 : $32.17 : $31.23 : $29.98 : $31.08 : $40.67 : $41.43 : $43.26 : $41.72 :

Prem. : +$0.88 : +$0.83 : +$1.00 : +$1.07 : +$1.10 : +$1.38 : +$0.91 : +$1.08 : +$1.31 :

ZSL-- : $14.24 : $13.66 : $14.83 : $17.11 : $19.34 : $12.11 : $11.51 : $10.70 : $11.68 :

$42-X : $27.76 : $28.34 : $27.17 : $24.89 : $22.66 : $29.89 : $30.49 : $31.30 : $30.32 :

ZX/slv : 91.08% : 90.42% : 89.88%: 86.09%: 75.58%: 75.88%: 75.25%: 74.21%: 75.03%:

====

DXY--- : 76.276 : 76.607 : 78.753: 78.796 : $78.30 : $76.54 : $77.20 : $75.25 : $73.81 :

UUP---: $21.54 : $21.65 : 22.270 : 22.305 : $22.20 : $21.74 : $21.91 : $21.22 : $20.96 :

CRB--- : 311.08 : 317.18 : 303.52 : 298.15 : 301.87 : 329.55 : 334.24 : 338.06 : 335.25 :

DBA---: $30.76 : $31.18 : $29.89 : 29.665 : $30.13 :

Rsilver : : 7.474 : 7.569 : 7.848 : 7.640 : : 7.776 : : 9.161 : : 9.019 : : 9.389 : : 8.897 : :

===

Ap$23c: $8.97 : $9.62 : $8.97 / $8.35 /

Ja.$25c: $6.65 : $7.27 : $6.77 : $5.97 : $6.72 / $7.95 /

Ja.$28c: $4.52 : $4.15 :

Ja.$35c: $1.46 : $1.77 : $1.89 : $1.66 : $2.11 / $5.60 /

Oc.$34c: -nil - : $0.08 : $0.30 : $0.44 : $0.97 : $5.75 : $7.02 : $8.52 : $7.15 : $8.35 :

Oc.$38c: -nil - : $0.01 : $0.06 : $0.11 : $0.41 : $2.70 : $3.95 / $3.98 /

ATX.v--: $0.61 : $0.67 : $0.68 : $0.61 : $0.75 : $0.85 : $0.80 : $0.79 : $0.90 : $0.91 :

DBA$30c $1.80 : $2.17 : $1.52 : $1.42 : $1.67 / $2.90 /

SlwJ$25c $6.37 / $5.50 /

==== ====

 

Trades This Week:

BOT SLV -Jan.$28 call at $4.15 x 1,000 : (-$ 4,150 : AP#2)

=(I Sold the GDXJ Puts, and the ZSL Calls):

SOLD GDXJ -Nov.$32 Put at $4.20 x 1,000 : (+$ 4,200 : AP#1)

SOLD GDXJ -Nov.$32 Put at $4.80 x 1,000 : (+$ 4,800 : AP#1)

SOLD ZSL -Oct.$12 Call at $3.00 x 1,000 : (+$ 3,000 : AP#1)

SOLD ZSL -Oct.$12 Call at $3.30 x 1,000 : (+$ 3,300 : AP#1)

BOT: Silver Wheaton / SLW-Jan.$25c at $5.50 x 1,000 (-$5,500 : -AP#1)

Expired : SLV.Oct.$34c & SLV.Oct.$38c : Both worthless : AP#2

 

Trades Last Week:

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

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

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

==== ====

Cash: startWk / EndofWk== / Core-start / End / ==Chg.Cash

AP1: 266,110 / $275,910 // 6,000 / 6,000 / ==: +9,000 + 6,300 - 5,500 = +9,800

AP2: 223,585 / $219,435 // 8,000 / 8,000 / ==: - $4,150

 

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

[drbubb]

OUTPERFORMANCE MOVED a higher (+$3,700), and the Ratio improved a bit too (+2.6%).

 

RECORD vs Buy&Hold Portfolio, in Col.#1

(B&H= Silver 10,000 oz.)

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

 

05 Aug: -- $383.3 K : - $534.4K : - $538.9 K : $536.6K : 140.1% : $153.3K: $37.61 x74.54 / 3.2608 =# 8.597

12 Aug: -- $390.7 K : - $536.7K : - $541.9 K : $539.3K : 138.0% : $148.6K: $38.12 x74.56 / 3.2653 =# 8.704

19 Aug: -- $429.3 K : - $558.6K : - $570.4 K : $564.5K : 131.5% : $135.2K: $41.68 x74.24 / 3.2947 =# 9.392

26 Aug: -- $417.2 K : - $546.5K : - $558.1 K : $552.3K : 132.4% : $135.1K: $40.41 x73.81 / 3.3525 =# 8.897

02 Sep: -- $432.6 K : - $560.6K : - $572.8 K : $566.7K : 131.0% : $134.0K: $42.18 x75.25 / 3.3806 =# 9.389

09 Sep: -- $414.3 K : - $544.9K : - $557.2 K : $551.1K : 133.0% : $136.8K: $40.52 x77.20 / 3.3424 =# 9.019

16 Sep: -- $406.7 K : - $539.8K : - $552.5 K : $546.2K : 134.3% : $139.5K: $39.39 x76.64 / 3.2955 =# 9.161

23 Sep: -- $310.8 K : - $485.2K : - $479.3 K : $482.3K : 155.2% : $171.5K: $29.98 x78.30 / 3.0187 =# 7.776

30 Sep: -- $299.8 K : - $478.6K : - $473.4 K : $476.0K : 158.8% : $176.2K: $28.91 x78.80 / 2.9815 =# 7.640

07 Oct: -- $312.3 K : - $489.2K : - $486.4 K : $487.8K : 156.2% : $175.5K: $30.23 x78.75 / 3.0352 =# 7.989

14 Oct: -- $321.7 K : - $495.7K : - $495.9 K : $495.8K : 154.1% : $174.1K: $31.34 x76.61 / 3.1718 =# 7.569

21 Oct: -- $313.6 K : - $494.6K : - $488.2 K : $491.4K : 156.7% : $177.8K: $30.48 x76.28 / 3.1108 =# 7.474

Vs B&H -- 100.0% - :- 157.72% :- 155.66% : +156.69%

 

At 21 Oct., the average of the two Alt. Portfolios was $177,773 (prev.$174,083) ahead of Buy&Hold.

 

Versus $153,343 ahead at 5 Aug., when Silver was trading at $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 : 6,000 : 2,000 :: 8,000 :: 2,000 : 0,000 : 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 new target of $28 (400d-MA), 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. If we see the target price, I am prepared to push the Core Silver up to 14,000 or even 15,000 - but I will not go so high if I add more in-the-money calls.

 

Meantime, GLD hit my 144d-MA target, and I added GLD reasonably aggressively in my other portfolios. I thought of including some GLD calls in these portfolios, such as:

 

GLD-Dec.$134 calls, which I bought at around $24.00 this week.

In fact, I shall hold these in the AP#1 portfolio until I can buy at least 2,000 oz/sh. Silver/SLV

[drbubb]

... From the Gold thread / What good are Traders ? ...

 

Hi Ml,

 

What good does a trade bring to the world? It is said that it brings liquidity to a market and helps with price discovery. In the world of high frequency trading that the big investment banks are advancing further all the time, they front run real investors by seeing orders milliseconds before everyone else. So in effect this process distorts the price discovery mechanism and leads to more money being removed from real investors capital to line the pockets of bankers, so rather than bring liquidity and price discovery it actually removes both from the system.

There's some truth in that.

 

The High Frequency guys are trying to create an advantage for themselves, by having quicker trigger fingers and more elaborate computer-driven trading. Is that fair? I think they add little to the market, and try to extract something unfairly. I would force them to trade differently, and maybe offer something, like holding firm on their prices or paying something to cancel trades, to help "level the playing field." This is a matter of some urgency, else these sorts of traders will force out the old fashioned traders and investors, and start feeding on themselves. I am obviously playing a very different game, and trying to "earn my edge" through better research and/or better reading of technical signals, while sharing some of my own perceptions with others interested enough to visit this website.

 

Here's someone I admire, and I like the way he looks at markets:

 

“Making money is a zero-sum game, so to be successful you have to be willing to stand apart from the crowd,” Dalio says. “And you have to be right.”

 

The founder was right often enough during and after the worst financial crisis in decades starting in 2008, helping to cement his reputation as a leader in his industry. Three Bridgewater hedge funds placed among the 100 top-performing large funds in Bloomberg Markets’ annual ranking in February, including its flagship, Pure Alpha II. The No. 3 fund posted a 38 percent return for the 10-month period through October 2010.

 

INTERVIEW: http://www.charlierose.com/view/interview/11957

 

Dalio’s influence spreads beyond his elite industry. He and his colleagues regularly brief central bankers, as well as pensions and sovereign-wealth funds, on their outlook. The firm’s newsletter -- Bridgewater Daily Observations -- is required reading for macroeconomic thinkers for its prescient analysis.

 

Economic Power

In August 2007, as credit markets were tightening, the newsletter warned, “Hedge funds in general are unlikely to provide much diversification to help protect against poor performance of traditional markets.”

The next year, funds lost an average of 19 percent.

 

“You find insights that are different from what you were thinking,” says Hilda Ochoa-Brillembourg, founding president of Strategic Investment Group in Arlington, Virginia, which invests in hedge funds.

At its bucolic headquarters in Westport, Connecticut, Bridgewater devotes a great deal of resources to research. The firm’s 1,200 employees -- more than at many midsize investment banks -- help generate the data and analysis that inform bets on macroeconomic trends. In June, researchers tracked the percentage of world gross domestic product generated by Western Europe, the U.S., Africa, China and other markets to the 16th century to show long-term shifts in economic power.

 

44.8 Percent Return

“No one pursues market-based truth more aggressively than Ray,” says Britt Harris, chief investment officer of the Teacher Retirement System of Texas.

 

/more: http://www.bloomberg.com/news/2011-09-07/dalio-returns-25-on-diversified-bets-as-markets-convulse-influential-50.html

 

 

"What good does trading bring?"

 

What I am doing is not much different that what you as an investor do. Like you, I want to buy at a low price and sell at a high price, and generate a profit. I simply do it over a different time horizon, and rather than "mining excesses" in fundamental valuations, I am mining shifts in psychology when markets shift from excessive pessimism, to excessive optimism - that's something that I believe can be read from charts, once you learn how.

 

"The Service" that I am providing is allowing those who are frightened and want out, to get out at a slightly higher price than if I was not there. And at the high: I am a seller allowing those who feel they should buy, a chance to buy at a lower-than-otherwise price. I provide that price advantage to those who I trade with, whether I am right about the market or not.

 

Is this really very different than the "service" that an investor might provide to the market? But by focusing on psychology-driven swings, I see more opportunities.

[drbubb]

TRADING: WHAT VALUE ? / New thread:

http://www.greenenergyinvestors.com/index.php?showtopic=15485

 

(6)

Hi Pix,

...

Re Trading v investing debate, successfull short term traders are a rarity and should be valued,DB Imvho hasn't grasped the fact that he is such a rarity a by encouraging people to speculate via T/A he is taking people down a very dangerous route, on the basis a little knwoledge can be a very dangerous thing, and that by trading in and out at the wrong times some people on here could actually lose money in this potentially once in a life time metal bull run. From what I have read and understood Gold is the place to be over the coming years a a haven of safety?

 

Without doubt he is right in th fact that he has the ability to trade in and out at the right moments and therefore out perform buy and hold, however he is the exception to the rule!

Maybe you misunderstand me?

 

First, I do WARN people at the start of my "Beating B&H thread":

 

UPFRONT WARNING : This thread is not for everyone.

Implementing these strategies & getting the timing right requires more than skill. You need the right mental and emotional attitude (and a some real luck) to buy at the right time. And you also have to be willing to be wrong sometimes, and live with the implications of being wrong. That may mean entering trades and exiting at uncomfortable moments. If this does not sound like your "cup of tea", then stick to simpler strategies. You will sleep better.

 

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

 

Second, I think you have not yet taken on board the VERY LOW RISK nature of most of the trades that I am using on the Beating B&H thread. Essentially they are of two main types:

 

+ 1/ "Swapping out" of Silver or SLV after a run-up (and best of all, after a parabolic move up) into a similar sized position consisting of in-the-money Calls plus Cash.

 

+ 2/ "Buying insurance", by purchasing SLV puts, or calls on ZLV, in a size only to protect profits they have already made.

 

What I am NOT DOING is using options to take highly geared bets - When I Buy Calls, I generally have sufficient Cash in the account to exercise the option, so the main purpose is the LIMIT PRICE RISK so if the Silver price drops then I have less exposure to the downside.

 

If less-experienced traders get their minds around these techniques, and use them in a careful and disciplined way, ONLY TO PROTECT PROFITS that they have already made, then they will NEVER BLOW UP. At worst, they will give away some of their profits.

 

Like Nassim Nicholas Taleb says:

"Just by avoiding blow-ups, You can survive."

I also want to avoid the big drawdowns, and so move from Survive to Thrive.

[drbubb]

(I am going to add these links to the Header of this thread):

 

Gold ... update : 46p-MA : 17p-MA

[drbubb]

I am thinking of experimenting with a little arbitrage here.

The idea is to arb SLV Calls against SLW Calls

Jan. : SLW@$32.55 : SLV@$31.58

$30c : (=.== = =.==) : ($3.85-$3.90)

$32c : (3.70-3.80) : ($2.77-$2.80)

$33c : (3.20-3.30) : ($2.33-$2.35)

$34c : (2.79-2.84) : ($1.94-$1.96)

$35c : (2.38-2.41) : ($1.61-$1.63)

====

Since I am now long the SLW-Jan.$25 calls, I can run a little low risk experiment, which would involve:

 

+ Selling SLW-Jan.$32calls (at say $3.75), and

+ Buying SLV-Jan.$30calls (at say $3.87)

 

This is nearly the same price, and I pick up $2 on the lower

SLV call price. If SLW continues to run up, I can make as much

as $7 on the spread between the $25 strike and $32 strike.

And by purchasing the SLV.$30call, I have a nice building block

in my portfolio, even though I missed the nice buy last week.

 

BOT- : SLV- Jan.$30calls at $3.87 x 1,000 = (-$3,870 : -AP#1)

SOLD: SLW-Jan.$32calls at $3.75 x 1,000 = (+$3,750 : +AP#1)

[drbubb]

...by purchasing the SLV.$30call, I have a nice building block

in my portfolio, even though I missed the nice buy last week.

 

BOT- : SLV- Jan.$30calls at $3.87 x 1,000 = (-$3,870 : -AP#1)

SOLD: SLW-Jan.$32calls at $3.75 x 1,000 = (+$3,750 : +AP#1)

Great. SLV has moved up (more than SLW), and I am going to make use of these Calls by:

Maybe Selling SLV. Latest is:

SLV $32.56 + $0.13

compare:

SLW $33.16 + $0.95

 

These prices are not quite what they were a few minutes ago, so I shall wait.

I would like to sell SLV closer to $33, and keep the SLV.Jan.$30 calls

 

(in edit)

I'll accept this price:

SLV+ $32.80 + $0.37 / + 1.14%

Bid $32.7900 = Ask $32.8000

 

SOLD: SLV-Silver etf : at $32.79 x 1,000 = (+$32,790 : -AP#1)

 

(in edit):

 

Buy to Open Call

Contracts of -ZSL111119C11

Details Filled at $1.90

 

BOT: ZSL - Silver-2xNeg. $1.90 x 2,000 = (-$3,800 : -AP#1)

[drbubb]

Complicated? Maybe...

But it does show how I can use Options and Arbitrage to improve my position while taking on little risk:

 

The "Wheaton Maneuver" -

A neat options-and-arbitrage trick, look how this works !

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

 

This trading "maneuver" works off an interesting arbitrage relationship: I noticed that SLV (the Silver etf) and SLW (Silver Wheaton) have similar prices and tend to move together. The idea is that I can use SLW (or SLW calls) as a substitute for SLV, and maybe also pick up some dividends other time (since at $32, SLW has a dividend of about 0.40%, which looks set to rise. If I own SLV, over time I lose "storage costs", so the net benefit in holding SLW over SLV, might be about 1% per annum.)

 

Chart : SLW-vs-SLV-from-Aug-2010 : 1yr-SLW-vs-SLV :

 

I started off, holding 10,000 "longs", consisting of 4,000 oz. Physical Silver, 2,000 shares of SLV, 2,000 $25-SLV calls, and 2,000 $35-SLV calls. I was not entirely comfortable with that since the $3X calls were out of the money. I wanted to add more, but I missed the chance to buy SLV when it dipped below $29.

 

So, with both SLV and SLW trading slightly below $30:

 

1/ I bought, SLW-Jan.$25-Calls, paying $5.50 x 1,000 shs = $5,500

(This was only a few cents more than I would have paid for SLV-Jan.$25.calls. I was betting that the SLW calls would increase faster than SLV calls if silver prices rose. This position would help me to "bridge the gap" up to the $35 strike price on my SLV calls. In hindsight, I should have bought options on 2,000 shares instead of only 1,000.)

 

2/ I swapped higher strike SLW Calls for SLV Calls. SLV did rise, and fortunately, SLW rose slightly faster, with the SLW options gaining value faster than the SLV calls. So with SLV at $31.58 and SLW at $32.55, I was able to:

 

+ Sell SLW-Jan.$32calls (at $3.75), and

+ Buy SLV-Jan.$30calls (at $3.87)

 

For swapping Calls for almost the same money, I picked up a $2.00 discount on the SLV strike price. I also stand to make $7.00 per share if SLW closes at $32 or higher in January. That more than covers the original $5.50 cost of the SLW-Jan.$25-Calls. On top of that, I am long SLV above $30, through the Jan.$30 calls

 

3/ I was ready to sell SLV shares, taking some profits. Both SLV and SLW kept rising, and pushed up to expected resistance near $33. I thought: this could be an important resistance level, and above $35, I am protected by the $35calls. So I can "lean" on those and sell some SLV. So I sold: 1,000 SLV shares at $32.79.

 

Now, I can "cover" my target 10,000 shares as follows:

 

Silver: 4,000 oz. : Physical

SLV-: 1,000 sh. : etf

ITM-: 3,000 ops : SLV-$25 calls (x2,000) + $30calls (x1,000)

OTM: 2,000 ops : SLV-$35 calls (x2,000)

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

TTL: 10,000 longs

 

Plus, I took $32,790 into cash from selling the SLV shares. That's $27,290 after taking into consideration the cost of the SLW-Calls. And I can still make $7,000 on the SLW Bull spread ($32-$25 strikes). That $7,000 when added onto the $27,290 nearly takes me up to the $35 strike price, but only on 1,000 shares.

 

As I said earlier, I should have bought 2,000 SLW-Calls (!)