swing trading

[kikie]

i have a friend on Maui, who is retired, and has a business that runs itself.

he tells me he does swing trading and makes 30-100% / year and in the last 5 years only lost in 2008.

tells me he uses all his investments to do this, no "mad money" firewall.
and only trades when conditions are right, i suppose he means when it is 'trending' not 'trading'

just curious what BH would say about this situation.

he says he doesn't need to make the 30% + , but does it as a hobby and for fun .....

i'd 1/2 like to talk him into BH'ing

[john94549]

I'd take his comment with a healthy dash of salt. Have him print out a copy of his trades (in and out) for the past five years. Ask him to send it to you, so you can benefit from his "system." Then don't hold your breath until you turn blue. In the off chance you do get a copy of his trades, and they match his statement, then your friend is a remarkable trader.

[livesoft]

Why do you want to mess him up? If he is making 30% (that's about what stocks did last year) and having fun, let him be. Maybe you can post some of his trades as they happen.

For myself, I always buy on those ReallyBadDays which one could consider a form of swing-trading or market-timing or rebalancing depending on who you are talking to.

[MWCA]

Let a sleeping dog lie.

[SP-diceman]

Poker players can make livings/money placing bets too.

Nothing unusual.





Thanks
SP-diceman

[FredPeterson]

Is that a 30%+ on a static sum of money or has he really compounded 30%+ over the last 5 years?

Quite a few people can develop a system that is hugely successful. Until they need to start doing tens or hundreds of thousands of dollars at a time and the scalability of their system gets wiped out or their profits due to a move against them.

If he keeps using the same $25,000/year or whatever and churns 30% out of it, I can see that far easier then $25k 1st year, $32.5k 2nd, $42.25 3rd etc


If the guy is financially set otherwise, can play around with some cash and make even more and he enjoys it leave him be. Don't try to start blabbing at him about "The Boglehead Way"

[freebeer]

...
Quite a few people can develop a system that is hugely successful. Until they need to start doing tens or hundreds of thousands of dollars at a time ...

Can you cite any evidence or studies that support your contention that systematic market-beating returns are gained by "quite a few people", even on a smaller scale?

[xerty24]

Ask him to teach you, if he's willing, and then try it out with 5% of your "play" money.

[FredPeterson]

Can you cite any evidence or studies that support your contention that systematic market-beating returns are gained by "quite a few people", even on a smaller scale?

Nope, and I don't mean to imply a lot of people. Quite a few is more then a handful, but less then a number anyone would actually care to investigate.

[Wagnerjb]

Ask him to teach you, if he's willing, and then try it out with 5% of your "play" money.

Better yet, give him some of your "play money" and tell him you will be satisfied with a guaranteed 20% return. Tell him he can keep all of the excess profits, even if he earns 100%.

[nisiprius]

"If we are to suppose a miracle to be something so entirely out of the course of what is called nature, that she must go out of that course to accomplish it, and we see an account given of such miracle by the person who said he saw it, it raises a question in the mind very easily decided, which is, is it more probable that nature should go out of her course, or that a man should tell a lie? We have never seen, in our time, nature go out of her course; but we have good reason to believe that millions of lies have been told in the same time; it is therefore, at least millions to one, that the reporter of a miracle tells a lie."--Thomas Paine

[rwwoods]

Don't believe the hype that trading doesn't work, Its not unusual for good traders to make 20% or more most years and have little or no losses in down years. If he has a system that works for him, why would you want him to change?

[floydtime]

Let a lying dog sleep.

lol, my thoughts exactly. But sadly I can never help poking them.

[nisiprius]

Don't believe the hype that trading doesn't work, Its not unusual for good traders to make 20% or more most years and have little or no losses in down years.

It's not unusual for people to win the lottery, either. Why do you believe this is not just luck?

[SP-diceman]

Don't believe the hype that trading doesn't work, Its not unusual for good traders to make 20% or more most years and have little or no losses in down years.

It's not unusual for people to win the lottery, either. Why do you believe this is not just luck?

Because with probability mankind has a tragic lust for faith.

Probably.

[kikie]

actually, i don't care what he does. he tells me the usual rule is 'not to lose capital' ; i do wonder if it is real; as i thought market timing doesn't work, and so, are there exceptions for skillful people, or are they lucky or delusional, 5 years without loses, makes it seem like market timing can work.....

[yobria]

I think he's a liar, but he could prove me wrong by posting his next 20 trades to this thread.

Feel free to send him the link.

Nick

[Random Musings]

Swingers do trade, and it's sometimes more than just money.

RM

[White Coat Investor]

I've been surprised what a small percentage of investors actually know how to calculate their return, especially after expenses, taxes, and inflation. Not saying he doesn't, but if he didn't, it wouldn't surprise me.

[marco100]

i have a friend on Maui, who is retired, and has a business that runs itself.

he tells me he does swing trading and makes 30-100% / year and in the last 5 years only lost in 2008.

tells me he uses all his investments to do this, no "mad money" firewall.
and only trades when conditions are right, i suppose he means when it is 'trending' not 'trading'

just curious what BH would say about this situation.

he says he doesn't need to make the 30% + , but does it as a hobby and for fun .....

i'd 1/2 like to talk him into BH'ing

"30-100%/year" is not a CAGR.

Ask him what is 1, 3, 5, and 10 year CAGR is.

You don't need to ask him specific trading methods as if he actually has any effective ones, I wouldn't expect him to tell you. Nor do you need to ask for a list of trades.

Just ask him what his CAGR is.

[FredPeterson]

Just ask him what his CAGR is.

If he even has one. Which is exactly what I was aluding to above.

[Joe S.]

Don't believe the hype that trading doesn't work, It's not unusual for good traders to make 20% or more most years and have little or no losses in down years.

Do you have any proof of this? Otherwise, I will say "Don't believe the hype that good traders make 20% or more most years and have little or no losses in down years."

[kikie]

is this something an average trader would know ?

or his trading firm would give him, otherwise i don't think he can do the math, nor could i

i just let VG tell me what my annualized return is, even with my super-simplified allocations, too bloody time consuming to track it all

http://en.wikipedia.org/wiki/Compound_a ... rowth_rate

i have a friend on Maui, who is retired, and has a business that runs itself.

he tells me he does swing trading and makes 30-100% / year and in the last 5 years only lost in 2008.

tells me he uses all his investments to do this, no "mad money" firewall.
and only trades when conditions are right, i suppose he means when it is 'trending' not 'trading'

just curious what BH would say about this situation.

he says he doesn't need to make the 30% + , but does it as a hobby and for fun .....

i'd 1/2 like to talk him into BH'ing

"30-100%/year" is not a CAGR.

Ask him what is 1, 3, 5, and 10 year CAGR is.

You don't need to ask him specific trading methods as if he actually has any effective ones, I wouldn't expect him to tell you. Nor do you need to ask for a list of trades.

Just ask him what his CAGR is.

[CaliJim]

don't swing trade enron, or gm when it was going bankrupt!that would be bad for net worth. diversity is the only free lunch. great results are flukes. not reliably reproducable. read the literature about actively trade stock mutual funds vs index funds over long periods. last year's hot active fund will likely underperform it's index next year. They warn"prior performance is no guaranty of future performance" for good reason. nobody can predict the future, too many causes and conditions and the impact of random events outside of anyone's control is HUGE and chaotic.

[bluquark]

While we’re going back in time to 2011 to help posters from the past not swing trade, I would throw in a recommendation not to swing trade General Electric either

[rh00p]

only trades when conditions are right

I'd say implementing any type of trading strategy during the longest bull market in history constitutes the right conditions

This includes chimpanzees throwing darts.

[Jimmie]

Out of curiosity, the first time I heard of "swing trading", I did some research on the subject. After reading up on it, there appears to be some merit in making money with the method.

In my opinion, this requires plenty of time to perform research on each stock pick and patience to wait out your returns. It is not "day trading". I was fascinated that there is a site "finviz" (financial visualization) that displays a lot of information to help pursue different theories. (Not my endorsement)

For example, many stocks that are "oversold" tend to rebound without tanking worse. The site lists companies that have high amounts of insider buying and selling which can tip off which way the stock price may go. Many of the stocks I looked at had graphs that looked like the company was in a downward spiral regardless of other factors.

My conclusion was that it was not for me. Not even with play money.

[Davinci]

he tells me he does swing trading and makes 30-100% / year and in the last 5 years only lost in 2008.

tells me he uses all his investments to do this, no "mad money" firewall.
and only trades when conditions are right, i suppose he means when it is 'trending' not 'trading'

just curious what BH would say about this situation.

he says he doesn't need to make the 30% + , but does it as a hobby and for fun .....

Have you actually looked at his bank account and return statements? Does has money to burn as a hobby and fun? Sounds like gambling to me

Makes 30-100%, really? He always makes 30 to 100% returns and never looses any money.

Ask him to academically prove this:

only trades when conditions are right

[nisiprius]

Never forget the possibility of people lying. Tom Paine wrote:

If we are to suppose a miracle to be something so entirely out of the course of what is called nature, that she must go out of that course to accomplish it, and we see an account given of such a miracle by the person who said he saw it, it raises a question in the mind very easily decided, which is,—Is it more probable that nature should go out of her course, or that a man should tell a lie? We have never seen, in our time, nature go out of her course; but we have good reason to believe that millions of lies have been told in the same time; it is, therefore, at least millions to one, that the reporter of a miracle tells a lie.

They may not even know that they are not telling the truth, though. A friend of mine mentioned to me that she'd spent the weekend in Atlantic City gambling on a casino, and that she had won. It transpired (just chatting, I did not cross-examiner her) that she had won. On Saturday.

Also, she had lost on Sunday.

Also, she had lost more on Sunday than she had won on Saturday. However, she felt that Sunday didn't count because "I stuck to my system on Saturday. On Sunday I didn't stick to my system and I outsmarted myself."