HEDGEFUNDIE's portfolio: How to create it?

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get_g0ing
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HEDGEFUNDIE's portfolio: How to create it?

Post by get_g0ing » Thu Oct 03, 2019 3:48 pm

Hi,

I saw this thread called "HEDGEFUNDIE's excellent adventure":
viewtopic.php?f=10&t=272007
(also Part II: viewtopic.php?f=10&t=288192)

Can someone please tell, how does one create this in Vanguard/Fidelity, or another brokerage?

Thanks.
Last edited by get_g0ing on Thu Oct 03, 2019 4:19 pm, edited 2 times in total.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by HawkeyePierce » Thu Oct 03, 2019 4:00 pm

Vanguard no longer allows trades in leveraged ETFs on their platform, so the Excellent Adventure portfolio can't be held there.

https://investor.vanguard.com/investing ... se-etf-etn

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Tyler Aspect
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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by Tyler Aspect » Thu Oct 03, 2019 4:07 pm

Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

caklim00
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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by caklim00 » Thu Oct 03, 2019 4:09 pm

Wells Fargo woudln't let me buy TMF so I ended up just moving to M1. Of course, I don't even hold TMF anymore (using EDV now)

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by frcabot » Thu Oct 03, 2019 4:27 pm

Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by aristotelian » Thu Oct 03, 2019 4:50 pm

I believe he uses M1 Finance.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by ThereAreNoGurus » Thu Oct 03, 2019 5:07 pm

get_g0ing wrote:
Thu Oct 03, 2019 3:48 pm
Hi,

I saw this thread called "HEDGEFUNDIE's excellent adventure":
viewtopic.php?f=10&t=272007
(also Part II: viewtopic.php?f=10&t=288192)

Can someone please tell, how does one create this in Vanguard/Fidelity, or another brokerage?

Thanks.
Schwab allows you to purchase leveraged ETFs. They also allow it in their IRA's.
Trade the news and you will lose.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by HEDGEFUNDIE » Thu Oct 03, 2019 5:14 pm

frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
It's even more unlikely than that. For my Excellent Adventure to be total loss, both the S&P and long duration Treasuries must drop 34% on the same day.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by targetconfusion » Thu Oct 03, 2019 5:24 pm

HEDGEFUNDIE wrote:
Thu Oct 03, 2019 5:14 pm
It's even more unlikely than that. For my Excellent Adventure to be total loss, both the S&P and long duration Treasuries must drop 34% on the same day.
Moreover, nobody is really suggesting someone deploy their entire investable assets into this. So even if both S&P and treasury bonds dropped 34% in a day there is still, hopefully, the majority of a portfolio left.

Kind of surprising Vanguard does not allow leveraged ETFs. Apart from M1, at least Schwab and Fidelity, and probably many others do.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by Tyler Aspect » Thu Oct 03, 2019 5:55 pm

frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
Currently there is a level 3 trading halt rule that limits a single day S&P 500 loss to 20%. That limits your daily S&P 500 loss to 20%. UPRO's daily maximum loss would be around 60%. As far as I know there are no rules governing how fast Treasury security pricing can change. There could be counter-party risks in extreme situations.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by frcabot » Thu Oct 03, 2019 6:37 pm

Tyler Aspect wrote:
Thu Oct 03, 2019 5:55 pm
frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
Currently there is a level 3 trading halt rule that limits a single day S&P 500 loss to 20%. That limits your daily S&P 500 loss to 20%. UPRO's daily maximum loss would be around 60%. As far as I know there are no rules governing how fast Treasury security pricing can change. There could be counter-party risks in extreme situations.
As Hedgefundie points out, UPRO and TMF would likely move in opposite directions in the event of a significant stock market event, so I'll reassert that this is a very-low-probability event. Yeah, a highly leveraged portfolio is not a great idea for 100% of assets. But if TMF and UPRO both go to $0 in a day, then there are bigger problems (like, the US government being overthrown in a violent revolution or being nuked out of existence or something).

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by Tyler Aspect » Thu Oct 03, 2019 7:16 pm

frcabot wrote:
Thu Oct 03, 2019 6:37 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 5:55 pm
frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
Currently there is a level 3 trading halt rule that limits a single day S&P 500 loss to 20%. That limits your daily S&P 500 loss to 20%. UPRO's daily maximum loss would be around 60%. As far as I know there are no rules governing how fast Treasury security pricing can change. There could be counter-party risks in extreme situations.
As Hedgefundie points out, UPRO and TMF would likely move in opposite directions in the event of a significant stock market event, so I'll reassert that this is a very-low-probability event. Yeah, a highly leveraged portfolio is not a great idea for 100% of assets. But if TMF and UPRO both go to $0 in a day, then there are bigger problems (like, the US government being overthrown in a violent revolution or being nuked out of existence or something).
The details of financial distress that triggers a market crash could be different each time. You cannot say in all cases that the stock market and the Treasury market must move in opposite directions. Merely mundane events could cause lock step movements. If a bailout bill were to fail in Congress, then that event could hit the stock market and the Treasury market in the same direction.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by frcabot » Thu Oct 03, 2019 7:21 pm

Tyler Aspect wrote:
Thu Oct 03, 2019 7:16 pm
frcabot wrote:
Thu Oct 03, 2019 6:37 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 5:55 pm
frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
Currently there is a level 3 trading halt rule that limits a single day S&P 500 loss to 20%. That limits your daily S&P 500 loss to 20%. UPRO's daily maximum loss would be around 60%. As far as I know there are no rules governing how fast Treasury security pricing can change. There could be counter-party risks in extreme situations.
As Hedgefundie points out, UPRO and TMF would likely move in opposite directions in the event of a significant stock market event, so I'll reassert that this is a very-low-probability event. Yeah, a highly leveraged portfolio is not a great idea for 100% of assets. But if TMF and UPRO both go to $0 in a day, then there are bigger problems (like, the US government being overthrown in a violent revolution or being nuked out of existence or something).
The details of financial distress that triggers a market crash could be different each time. You cannot say in all cases that the stock market and the Treasury market must move in opposite directions. Merely mundane events could cause lock step movements. If a bailout bill were to fail in Congress, then that event could hit the stock market and the Treasury market in the same direction.
To be clear, I never said that TMF and UPRO must move in opposite directions in all cases (your language bolded), but merely that they would "likely move in opposite directions" for most significant stock market events. And as to your specific example, I'm not sure what you're referring to. If a bailout bill was being envisioned and Congress refused to pass one, my assumption is that stocks would drop and investors would flock to the relative safety of treasuries, pushing TMF up.

An example I can think of where TMF and UPRO move significantly lower? Congress refuses to raise the debt ceiling for so long that the US eventually does default on its debt, which would trigger both a significant stock market event and a significant reduction in the price of treasuries. I'm not talking here about the "routine" delay in increasing the debt ceiling and ensuing government shutdown, but rather a delay that goes on so long that the US Treasury is unable to service its debt--something that has never happened AFAIK. Even such a low-probability event doesn't seem like the type of thing that would cause a 100% loss in UPRO and TMF in a single day (assuming arguendo that such an outcome is even possible and wouldn't be prohibited by trading restrictions).

I can certainly think of scenarios where TMF and UPRO trend downwards together over time. For example, a period of prolonged inflation would both hurt the economy and result in higher interest rates, which would push treasury prices lower. But short of the most catastrophic scenarios (nuclear armageddon), it's hard for me to envision a scenario where a UPRO/TMF holding is entirely wiped out overnight.
Last edited by frcabot on Thu Oct 03, 2019 7:31 pm, edited 1 time in total.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by frcabot » Thu Oct 03, 2019 7:27 pm

Actually, I'm wrong. The US defaulted once on its debt, in 1979, which resulted in a 0.6% yield increase on T-bills, which was mostly corrected by the next day it appears. https://www.theatlantic.com/business/ar ... bt/267205/

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by whodidntante » Thu Oct 03, 2019 7:32 pm

Tyler Aspect wrote:
Thu Oct 03, 2019 5:55 pm
frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
Currently there is a level 3 trading halt rule that limits a single day S&P 500 loss to 20%. That limits your daily S&P 500 loss to 20%. UPRO's daily maximum loss would be around 60%. As far as I know there are no rules governing how fast Treasury security pricing can change. There could be counter-party risks in extreme situations.
Some dude was saying upthread that you could lose your whole investment in a single day. Are you saying he is wrong? :happy

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by whodidntante » Thu Oct 03, 2019 7:40 pm

HEDGEFUNDIE wrote:
Thu Oct 03, 2019 5:14 pm
frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
It's even more unlikely than that. For my Excellent Adventure to be total loss, both the S&P and long duration Treasuries must drop 34% on the same day.
I hope that our nukes also worked. :shock:

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by Tyler Aspect » Thu Oct 03, 2019 8:02 pm

whodidntante wrote:
Thu Oct 03, 2019 7:32 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 5:55 pm
frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
Currently there is a level 3 trading halt rule that limits a single day S&P 500 loss to 20%. That limits your daily S&P 500 loss to 20%. UPRO's daily maximum loss would be around 60%. As far as I know there are no rules governing how fast Treasury security pricing can change. There could be counter-party risks in extreme situations.
Some dude was saying upthread that you could lose your whole investment in a single day. Are you saying he is wrong? :happy
No. It is just that ProShares knows more about their funds and risks than what a level 3 trading halt rule would reveal. If a statement appeared in a prospectus, don't try to treat it as a meaningless disclaimer. Read the full prospectus very carefully.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by MotoTrojan » Thu Oct 03, 2019 8:16 pm

As to trading halts, how does that work for the percent drop from the daily open? Can the S&P500 not open more than 20% below the previous day's close?

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by HEDGEFUNDIE » Thu Oct 03, 2019 8:23 pm

Tyler Aspect wrote:
Thu Oct 03, 2019 8:02 pm
whodidntante wrote:
Thu Oct 03, 2019 7:32 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 5:55 pm
frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
Currently there is a level 3 trading halt rule that limits a single day S&P 500 loss to 20%. That limits your daily S&P 500 loss to 20%. UPRO's daily maximum loss would be around 60%. As far as I know there are no rules governing how fast Treasury security pricing can change. There could be counter-party risks in extreme situations.
Some dude was saying upthread that you could lose your whole investment in a single day. Are you saying he is wrong? :happy
No. It is just that ProShares knows more about their funds and risks than what a level 3 trading halt rule would reveal. If a statement appeared in a prospectus, don't try to treat it as a meaningless disclaimer. Read the full prospectus very carefully.
It is more likely that the prospectus was written by lawyers who are paid to be overly cautious.

Read the prospectus for VTSAX. How many BHs would still invest in it if they took those disclaimers seriously?

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by JBeck » Thu Oct 03, 2019 8:24 pm

get_g0ing wrote:
Thu Oct 03, 2019 3:48 pm
Hi,

I saw this thread called "HEDGEFUNDIE's excellent adventure":
viewtopic.php?f=10&t=272007
(also Part II: viewtopic.php?f=10&t=288192)

Can someone please tell, how does one create this in Vanguard/Fidelity, or another brokerage?

Thanks.
Brokerage: M1 finance
Allocation: 55 UPRO & 45 TMF
Rebalance: Quarterly (one click with M1)

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by whodidntante » Thu Oct 03, 2019 8:27 pm

MotoTrojan wrote:
Thu Oct 03, 2019 8:16 pm
As to trading halts, how does that work for the percent drop from the daily open? Can the S&P500 not open more than 20% below the previous day's close?
I'm not up on my doomsday limits, but equity index futures have gone through trading halts before. It happened in Dec 2018 I believe. Opening prices are strongly influenced by futures.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by MotoTrojan » Thu Oct 03, 2019 8:38 pm

whodidntante wrote:
Thu Oct 03, 2019 8:27 pm
MotoTrojan wrote:
Thu Oct 03, 2019 8:16 pm
As to trading halts, how does that work for the percent drop from the daily open? Can the S&P500 not open more than 20% below the previous day's close?
I'm not up on my doomsday limits, but equity index futures have gone through trading halts before. It happened in Dec 2018 I believe. Opening prices are strongly influenced by futures.
Really? I assume future's halt before 20% if that occurred in Dec 2018? Interesting stuff! In that case, I would argue that it is just as likely for UPRO to go to $0 as SPY.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by nisiprius » Thu Oct 03, 2019 8:40 pm

With regard to low probability events, one of Larry Swedroe's Rules of Prudent Investing is:
Don’t treat the highly improbable as impossible, nor the highly likely as certain.
The history of investing is spotted with fairly frequent disasters--usually involving high leveraged complicated structures that depends on many moving parts behaving predictably as expected relative to each other--always followed by the claim, by those who built the structure, that it shouldn't count against them, because nobody could have possibly foreseen the unbelievably rare sequence of events that happened. The collapse of Long-Term Capital Management, which nearly brought down the US financial system, was followed by a fatuous idiot, I forget his name, asserting that it had been "a ten-sigma event." That's an event so rare that it ought to occur once in something like 10^23 years, or maybe 10^23 times the lifetime of the universe, I forget which. Stuff happens. And the LTCM collapse didn't involve nuclear war or an asteroid hit or even lightning striking twice in the same place.

Far more likely that the LTCM people were overconfident and didn't actually understand the complex systems they were certain they understood, than that they really encountered luck so bad it would only happen once in a vigintillion years.

Story in the Washington Post a few days ago: "He took a date to the park where he was gored by a bison, figuring it wouldn’t happen again. He was wrong."
Last edited by nisiprius on Thu Oct 03, 2019 8:50 pm, edited 2 times in total.
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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by EddyB » Thu Oct 03, 2019 8:41 pm

Tyler Aspect wrote:
Thu Oct 03, 2019 8:02 pm
whodidntante wrote:
Thu Oct 03, 2019 7:32 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 5:55 pm
frcabot wrote:
Thu Oct 03, 2019 4:27 pm
Tyler Aspect wrote:
Thu Oct 03, 2019 4:07 pm
Well intentioned limitations do not stop people's will to lose money. In fact the prospectus of a leveraged fund warns that an investor in the leveraged fund could potentially lose the full principal value of his/her investment within a single day. Does the possibility of total loss stop your appetite for gains?
Do you expect the SP500 to drop by 34% in a single day? If so, what prevents the SP500 from dropping 99% in a day and wiping out your non-leveraged positions? There was a 20% drop in 1987 but a 34% drop seems like a very-low-probability event.
Currently there is a level 3 trading halt rule that limits a single day S&P 500 loss to 20%. That limits your daily S&P 500 loss to 20%. UPRO's daily maximum loss would be around 60%. As far as I know there are no rules governing how fast Treasury security pricing can change. There could be counter-party risks in extreme situations.
Some dude was saying upthread that you could lose your whole investment in a single day. Are you saying he is wrong? :happy
No. It is just that ProShares knows more about their funds and risks than what a level 3 trading halt rule would reveal. If a statement appeared in a prospectus, don't try to treat it as a meaningless disclaimer. Read the full prospectus very carefully.
If you want your warnings to have any credibility, I think you should address the strategy, not one component of the strategy in isolation, knowing that a core concept of the strategy relies on the pairing.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by get_g0ing » Thu Oct 03, 2019 8:47 pm

JBeck wrote:
Thu Oct 03, 2019 8:24 pm
get_g0ing wrote:
Thu Oct 03, 2019 3:48 pm
Hi,

I saw this thread called "HEDGEFUNDIE's excellent adventure":
viewtopic.php?f=10&t=272007
(also Part II: viewtopic.php?f=10&t=288192)

Can someone please tell, how does one create this in Vanguard/Fidelity, or another brokerage?

Thanks.
Brokerage: M1 finance
Allocation: 55 UPRO & 45 TMF
Rebalance: Quarterly (one click with M1)
Finally, thanks :D

Can we do this with mutual funds also? (Actually that's what I meant to ask, but didn't word it clearly).

Does 6 month or yearly rebalance make a huge difference?

And how does this affect the broad AA between stock and bonds. I mean if you are 80/20 stock/bond (e.g. 80% Total Stock + 20% Total Bond), is UPRO = stocks and TMF = bond?

Thanks.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by HEDGEFUNDIE » Thu Oct 03, 2019 8:47 pm

nisiprius wrote:
Thu Oct 03, 2019 8:40 pm
With regard to low probability events, one of Larry Swedroe's Rules of Prudent Investing is:
Don’t treat the highly improbable as impossible, nor the highly likely as certain.
The history of investing is spotted with fairly frequent disasters--usually involving high leveraged complicated structures that depends on many moving parts behaving predictably as expected relative to each other--always followed by the claim that it shouldn't count against them because nobody could have possibly foreseen the unbelievably rare sequence of events that happened. The collapse of Long-Term Capital Management, which nearly brought down the US financial system, was followed by a fatuous idiot, I forget his name, asserting that it had been "a ten-sigma event." That's an event so rare that it ought to occur once in something like 10^23 years, or maybe 10^23 times the lifetime of the universe, I forget which. Stuff happens.
I have never said that the highly improbable is impossible.

Should we structure our lives around avoiding highly improbable events? I could get hit by a bus tomorrow, does that mean I shouldn’t go outside?

Stocks and bonds could both go to zero. What does that mean for your AA?

The correct answer is: absolutely nothing.

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Re: HEDGEFUNDIE's portfolio: How to create it?

Post by JBeck » Thu Oct 03, 2019 8:54 pm

get_g0ing wrote:
Thu Oct 03, 2019 8:47 pm
JBeck wrote:
Thu Oct 03, 2019 8:24 pm
get_g0ing wrote:
Thu Oct 03, 2019 3:48 pm
Hi,

I saw this thread called "HEDGEFUNDIE's excellent adventure":
viewtopic.php?f=10&t=272007
(also Part II: viewtopic.php?f=10&t=288192)

Can someone please tell, how does one create this in Vanguard/Fidelity, or another brokerage?

Thanks.
Brokerage: M1 finance
Allocation: 55 UPRO & 45 TMF
Rebalance: Quarterly (one click with M1)
Finally, thanks :D

Can we do this with mutual funds also? (Actually that's what I meant to ask, but didn't word it clearly).

Does 6 month or yearly rebalance make a huge difference?

And how does this affect the broad AA between stock and bonds. I mean if you are 80/20 stock/bond (e.g. 80% Total Stock + 20% Total Bond), is UPRO = stocks and TMF = bond?

Thanks.
ETF's were recommended and those particular funds

Quarterly had the highest historical return, not sure what the difference between quarterly and yearly is

Many are doing this with a small portion of their portfolio as a "side bet" and excluding it from their normal asset allocation

Prettyfrtnt
Posts: 136
Joined: Fri Aug 23, 2019 6:28 pm

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by Prettyfrtnt » Thu Oct 03, 2019 9:08 pm

What accounts do you guys have at M1? Does it always need to be Roth money. Or can this be done with aftertax or trad IRA or a trad 401k??

frcabot
Posts: 211
Joined: Mon Mar 26, 2018 12:59 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by frcabot » Thu Oct 03, 2019 9:25 pm

Prettyfrtnt wrote:
Thu Oct 03, 2019 9:08 pm
What accounts do you guys have at M1? Does it always need to be Roth money. Or can this be done with aftertax or trad IRA or a trad 401k??
It can be done with anything you want but tax-advantaged is obviously better if you’re going to be incurring short-term capital gains.

Topic Author
get_g0ing
Posts: 581
Joined: Sat Dec 09, 2017 11:09 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by get_g0ing » Fri Oct 04, 2019 9:49 am

JBeck wrote:
Thu Oct 03, 2019 8:54 pm
get_g0ing wrote:
Thu Oct 03, 2019 8:47 pm
JBeck wrote:
Thu Oct 03, 2019 8:24 pm
get_g0ing wrote:
Thu Oct 03, 2019 3:48 pm
Hi,

I saw this thread called "HEDGEFUNDIE's excellent adventure":
viewtopic.php?f=10&t=272007
(also Part II: viewtopic.php?f=10&t=288192)

Can someone please tell, how does one create this in Vanguard/Fidelity, or another brokerage?

Thanks.
Brokerage: M1 finance
Allocation: 55 UPRO & 45 TMF
Rebalance: Quarterly (one click with M1)
Finally, thanks :D

Can we do this with mutual funds also? (Actually that's what I meant to ask, but didn't word it clearly).

Does 6 month or yearly rebalance make a huge difference?

And how does this affect the broad AA between stock and bonds. I mean if you are 80/20 stock/bond (e.g. 80% Total Stock + 20% Total Bond), is UPRO = stocks and TMF = bond?

Thanks.
ETF's were recommended and those particular funds

Quarterly had the highest historical return, not sure what the difference between quarterly and yearly is

Many are doing this with a small portion of their portfolio as a "side bet" and excluding it from their normal asset allocation
Thanks for the answers. Looks like the same can be done on Robinhood as well.

frcabot
Posts: 211
Joined: Mon Mar 26, 2018 12:59 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by frcabot » Fri Oct 04, 2019 10:25 am

get_g0ing wrote:
Fri Oct 04, 2019 9:49 am
JBeck wrote:
Thu Oct 03, 2019 8:54 pm
get_g0ing wrote:
Thu Oct 03, 2019 8:47 pm
JBeck wrote:
Thu Oct 03, 2019 8:24 pm
get_g0ing wrote:
Thu Oct 03, 2019 3:48 pm
Hi,

I saw this thread called "HEDGEFUNDIE's excellent adventure":
viewtopic.php?f=10&t=272007
(also Part II: viewtopic.php?f=10&t=288192)

Can someone please tell, how does one create this in Vanguard/Fidelity, or another brokerage?

Thanks.
Brokerage: M1 finance
Allocation: 55 UPRO & 45 TMF
Rebalance: Quarterly (one click with M1)
Finally, thanks :D

Can we do this with mutual funds also? (Actually that's what I meant to ask, but didn't word it clearly).

Does 6 month or yearly rebalance make a huge difference?

And how does this affect the broad AA between stock and bonds. I mean if you are 80/20 stock/bond (e.g. 80% Total Stock + 20% Total Bond), is UPRO = stocks and TMF = bond?

Thanks.
ETF's were recommended and those particular funds

Quarterly had the highest historical return, not sure what the difference between quarterly and yearly is

Many are doing this with a small portion of their portfolio as a "side bet" and excluding it from their normal asset allocation
Thanks for the answers. Looks like the same can be done on Robinhood as well.
AFAIK Robinhood does not have automatic rebalancing.

Topic Author
get_g0ing
Posts: 581
Joined: Sat Dec 09, 2017 11:09 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by get_g0ing » Fri Oct 04, 2019 10:32 am

So I have VTSAX (Total Stock Index Fund) in Vanguard taxable and Roth IRA.
What's the recommended way to move these two accounts to M1 Finance?

Appreciate any guidance. Thanks

seek1227
Posts: 25
Joined: Sat Oct 17, 2015 4:29 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by seek1227 » Fri Oct 04, 2019 10:36 am

I understand the recommendation is to use ETF's but how to replicate this using mutual funds only?

Thanks.

chrisdds98
Posts: 105
Joined: Tue May 19, 2015 9:55 pm
Location: Austin, TX

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by chrisdds98 » Fri Oct 04, 2019 3:22 pm

get_g0ing wrote:
Fri Oct 04, 2019 10:32 am
So I have VTSAX (Total Stock Index Fund) in Vanguard taxable and Roth IRA.
What's the recommended way to move these two accounts to M1 Finance?

Appreciate any guidance. Thanks
open an m1 account. request a transfer. you will need to send statments for your roth and taxable account. they will transfer in kind and then auto-invest into the funds you choose.

chrisdds98
Posts: 105
Joined: Tue May 19, 2015 9:55 pm
Location: Austin, TX

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by chrisdds98 » Fri Oct 04, 2019 3:24 pm

seek1227 wrote:
Fri Oct 04, 2019 10:36 am
I understand the recommendation is to use ETF's but how to replicate this using mutual funds only?

Thanks.
I don't know that there are equivalent leveraged mutual funds

Topic Author
get_g0ing
Posts: 581
Joined: Sat Dec 09, 2017 11:09 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by get_g0ing » Fri Oct 04, 2019 3:28 pm

chrisdds98 wrote:
Fri Oct 04, 2019 3:22 pm
get_g0ing wrote:
Fri Oct 04, 2019 10:32 am
So I have VTSAX (Total Stock Index Fund) in Vanguard taxable and Roth IRA.
What's the recommended way to move these two accounts to M1 Finance?

Appreciate any guidance. Thanks
open an m1 account. request a transfer. you will need to send statments for your roth and taxable account. they will transfer in kind and then auto-invest into the funds you choose.
Hey, thanks so much. Yes, sounds like they'll liquidate VTSAX because M1 doesn't support MFs.
A little nervous about this M1, don't seem as solid as Vanguard/Fidelity

ARoseByAnyOtherName
Posts: 315
Joined: Wed Apr 26, 2017 12:03 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by ARoseByAnyOtherName » Fri Oct 04, 2019 3:47 pm

get_g0ing wrote:
Fri Oct 04, 2019 3:28 pm
chrisdds98 wrote:
Fri Oct 04, 2019 3:22 pm
get_g0ing wrote:
Fri Oct 04, 2019 10:32 am
So I have VTSAX (Total Stock Index Fund) in Vanguard taxable and Roth IRA.
What's the recommended way to move these two accounts to M1 Finance?

Appreciate any guidance. Thanks
open an m1 account. request a transfer. you will need to send statments for your roth and taxable account. they will transfer in kind and then auto-invest into the funds you choose.
Hey, thanks so much. Yes, sounds like they'll liquidate VTSAX because M1 doesn't support MFs.
A little nervous about this M1, don't seem as solid as Vanguard/Fidelity
Maybe open an M1 account and try it out before dedicating any serious money to it.

Topic Author
get_g0ing
Posts: 581
Joined: Sat Dec 09, 2017 11:09 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by get_g0ing » Sat Oct 05, 2019 7:05 am

ARoseByAnyOtherName wrote:
Fri Oct 04, 2019 3:47 pm
get_g0ing wrote:
Fri Oct 04, 2019 3:28 pm
chrisdds98 wrote:
Fri Oct 04, 2019 3:22 pm
get_g0ing wrote:
Fri Oct 04, 2019 10:32 am
So I have VTSAX (Total Stock Index Fund) in Vanguard taxable and Roth IRA.
What's the recommended way to move these two accounts to M1 Finance?

Appreciate any guidance. Thanks
open an m1 account. request a transfer. you will need to send statments for your roth and taxable account. they will transfer in kind and then auto-invest into the funds you choose.
Hey, thanks so much. Yes, sounds like they'll liquidate VTSAX because M1 doesn't support MFs.
A little nervous about this M1, don't seem as solid as Vanguard/Fidelity
Maybe open an M1 account and try it out before dedicating any serious money to it.
Not a bad idea :) Thanks.

ActionJackson
Posts: 51
Joined: Fri Dec 13, 2013 9:25 pm

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by ActionJackson » Sat Oct 05, 2019 8:28 am

HEDGEFUNDIE wrote:
Thu Oct 03, 2019 8:47 pm
nisiprius wrote:
Thu Oct 03, 2019 8:40 pm
With regard to low probability events, one of Larry Swedroe's Rules of Prudent Investing is:
Don’t treat the highly improbable as impossible, nor the highly likely as certain.
The history of investing is spotted with fairly frequent disasters--usually involving high leveraged complicated structures that depends on many moving parts behaving predictably as expected relative to each other--always followed by the claim that it shouldn't count against them because nobody could have possibly foreseen the unbelievably rare sequence of events that happened. The collapse of Long-Term Capital Management, which nearly brought down the US financial system, was followed by a fatuous idiot, I forget his name, asserting that it had been "a ten-sigma event." That's an event so rare that it ought to occur once in something like 10^23 years, or maybe 10^23 times the lifetime of the universe, I forget which. Stuff happens.
I have never said that the highly improbable is impossible.

Should we structure our lives around avoiding highly improbable events? I could get hit by a bus tomorrow, does that mean I shouldn’t go outside?

Stocks and bonds could both go to zero. What does that mean for your AA?

The correct answer is: absolutely nothing.
Seriously, this is a great answer. Made my morning.

Topic Author
get_g0ing
Posts: 581
Joined: Sat Dec 09, 2017 11:09 am

Re: HEDGEFUNDIE's portfolio: How to create it?

Post by get_g0ing » Sun Oct 06, 2019 9:18 am

I'm still going through the original thread, on page 61 of Part I.

Is UPRO/TMF (or EDV) still the best way to do this in taxable account??

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