100-100-100 - possible?

100-100-100 - possible?

Postby blid2def » Wed May 21, 2008 12:35 am

Is it possible to be... almost 100% vested, almost 100% profitable*, almost 100% of the time, in the "extended" equities market?

Often, we read a lot about folks advising people to cash out and get out of the (equities) market when it turns down, with the notion of protecting capital and biding the time to raid again at/near the bottom.

I can understand the logic of this in the past when: (1) the markets were neatly distributed - you trade commodities on one market, equities on another, currencies on another, etc. and one was not inclined to trade on different markets, (2) one was not-inclined to trade equities derivatives like options and futures (due to the higher risks).

Now, since last year, we've seen quite a number of new ETFs/ETNs spring up, some of which track commodities indexes (through futures contracts), currencies, etc. Since these ETFs/ETNs trade like equities on the equities market, it is now possible to rotate to the other asset classes without leaving the equities market itself (hence my use of the term "extended" equities market). Examples of such ETFs include: RJA, DBA (agriculture), GLD (gold), DBP (precious metals), DBC (commodities, heavily weighted towards oils/gases), UUP and UDN (US$ directions), one ETF/ETN which tracks US/Swiss Francs rates (can't remember the symbol), etc.

So, in view of these new products, does it make sense to argue that one could now more safely stay almost 100% vested in this "extended" equities market, almost 100% of the time and still be almost 100% profitable, assuming one can pick the right ETFs/ETNs to rotate in and out of? My primary assumption here is that all markets don't tank at the same time (they're inter-related and interdependent, but not necessarily all +vely/-ve correlated). Is this a sound conclusion?

Paiseh for asking this goondu question. :lol:
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Re: 100-100-100 - possible?

Postby kennynah » Wed May 21, 2008 12:44 am

my simple take is ....

RISKs assumption and aversion...

when someone cashes out and stays heavily in cash...it is making a cardinal sin....erosion of money by inflation...

we invest or trade for profits and those more conservative, to mitigate inflation... by staying in cash, how can any of these be achieved.

those who stay in cash...either do it, becos, they have no idea where to trade or simply do not wish to assume risks associated with ignorant investing/trading

but with a lot of planning and knowledge, one can stay fully invested almost all of the time....as pointed by you, by switching between classes of asset investing/trading...

i am one who believe in staying fully vested in one or more markets... one exception is when i decide to take a breather...then i may unwind or at lest hedge all positions...

but that's me...

what did u have in mind GR ?
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Re: 100-100-100 - possible?

Postby iam802 » Wed May 21, 2008 12:54 am

I am fully invested. No spare cash.

As and when I got spare cash, it goes into my investments in various forms.

And from there, it is just about switching from one asset class to another.

Maybe, I am just not rich enough to have spare cash. :)

And I am trying to understand about '100% profitable'?

What does it mean?
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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Re: 100-100-100 - possible?

Postby blid2def » Wed May 21, 2008 1:04 am

kennynah wrote:what did u have in mind GR ?


You mean like, besides Maria Sharapova *drool* (thanks to Lena bringing her up in the Russia thread)?

Actually, nothing specific in mind. Haha, one of my random musings while doing some watchlist cleanup. :D

Okay, there's something - I'm just thinking aloud - since I (and whoever is like me) don't directly trade derivatives or any other markets, then cashing out is the "current" de facto option when the equity markets slump. However, these ETFs/ETNs seem to offer a viable means to stay vested and seek profits in the same market, through their exposure to different instruments / asset classes.

So, while cashing out is a good means of capital protection, is it really necessarily the best option anymore (for those like me) in the face of these new products? Of course, the usual caveats like right timing, right product, and volume support apply.

iam802 wrote:And I am trying to understand about '100% profitable'?


By that, I'm pondering the notion that given the various asset classes represented by the ETFs/ETNs, there's bound to be one that is not in a slump when one or more of the others are. If that's correct, then rotating into the appropriate ETF would ensure you stay profitable (hence, we're always staying vested in the "extended" equities market, and are always profitable).
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Re: 100-100-100 - possible?

Postby kennynah » Wed May 21, 2008 1:08 am

ETF moves like a snail...it usually takes quite some time for any ETF to double its value...

even within one class....equities, there is still profit potential during tankings...
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Re: 100-100-100 - possible?

Postby HengHeng » Wed May 21, 2008 2:04 am

wah like that chak me liaoz.. i always with a horde of cash one leh .. sobs .. tio suan .. recently waiting for correction .. lol hope this one tiam tiam one ..
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Re: 100-100-100 - possible?

Postby kennynah » Wed May 21, 2008 2:11 am

oh you....different... zwa di so plentiful... sit on it can give intangible pleasure that literally money cannot buy... :lol: gold hitting a small resistance....shoot it lah
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Re: 100-100-100 - possible?

Postby winston » Wed May 21, 2008 9:50 pm

Hi grandrake,

I think it is indeed theoretically possible, to follow your "100x3 " rule as long as you have the proper instruments to do it.

Example: one could long & short stocks in the same industry.

However in my case, due to various reasons, I'm not able to have all the necessary investment vehicles at my disposal.

Example:-
I cannot short stocks in certain countries due to residency requirements. Thus, I can only buy puts on the indices or put warrants on selected counters only as not all counters have put warrants.

Also, I like to have a lot of cash handy, in case I'm able to buy into the non-retail portion of any good IPO or into any placements before the IPO.

Take care,
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Re: 100-100-100 - possible?

Postby HengHeng » Thu May 22, 2008 5:18 pm

no lah i where got zwa zi ... i still owe bank alot of money in loans leh .. sobs .. need to beg the market to give me money leh .. look at my avatar
Last edited by HengHeng on Thu May 22, 2008 5:43 pm, edited 1 time in total.
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Re: 100-100-100 - possible?

Postby littlecupid » Thu May 22, 2008 5:33 pm

In a uptrend no problem.
In a downtrend, I think is very difficult.
I think at the end of the day is how comfortable on the investments you are holding.

For eg, I was vested almost 100% from 2003-2006. And ard 60% vested in 2007, and almost cash since Aug 2007 till ard March 2008.
Right now I am abt 80% invested. Although I know a downtrend is coming, I loath to sell my investments because I feel it can ride the downtrend and still come out better.
To counter rect this, I am "living with the enemy" and buying some insurance with puts on some counters and futures. ard 5% ( leverage 3-5 x).
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