<p>I thought I could improve on it by using technical indicators etc. Part of the problem is that I can’t believe it is so simple and mechanical.</p>
<p>There are a lot of different approaches to stock picking. The guy that I use has had a pretty good track record on the indexes and on stock picking. There are long periods of time this year, though, when he has mostly advised being on the sidelines.</p>
<p>Some charts to look at on a Sunday morning:</p>
<p>[David</a> J. Kneupper (10 Per Page) - Public ChartList - Free Charts - StockCharts.com](<a href=“http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2287993]David”>StockCharts.com)</p>
<p>A very timely cross-post.</p>
<p>Doct…simple can be better…just do what works…</p>
<p>Outside of the successful methodology, I would tend to stay in index or sector etfs - maybe in general, long term calls in spy and short term puts in xlf.</p>
<p>Whatever works for you…You should do…</p>
<p>Check out NLY,high yield, has been a constant performer for me for 12 years…smart management team, that said past performance is no guarantee of future performance</p>
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<p>In my experience, this is true. I once thought since I am in commercial real estate, I have an idea of low voatility, but it does not seem so, given the current market conditions.</p>
<p>I owned many NLY shares - unfortunately over the past few months, it has become volatile and has been treated as a trading tool. Also they’re cutting the yield.</p>
<p>NLY
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<p>The underline assets for this REIT is going through a volatile period, so should the stock price and yeild. You cannot avoid that.</p>
<p>What is the yield going to be?</p>
<p>The Eye of Sauron is on ETF’s:</p>
<p>[Exchange-traded</a> funds are facing new scrutiny - Los Angeles Times](<a href=“http://articles.latimes.com/2011/oct/22/business/la-fi-petruno-markets-20111022]Exchange-traded”>Exchange-traded funds are facing new scrutiny)</p>
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<p>The CMBS market is no longer there. Home loan obligation is in the tanks, BOA is in trouble because they bought countrywide… I am suprised that NLY still holds a yeild like that, if there are stories that have not surfaced, I will be darned.</p>
<p>In straight out investing, there is no such think as a high yield, low risk investment, it doesn’t exist (more on that in a second).In markets, pricing is based on risk, it is the fundamental basis for scholes-black and other pricing formulas. Corporate bonds with lower ratings get more interest because the risk is higher; go in with a bad credit score and your rate is higher, and it is the same fundamental principle. </p>
<p>Yes, there are ways to hedge risk,something I know more then a bit about, working in a sector of trading where traders do this (OTC derivatives and options), and what I can tell you is as sophisticated as their models are, where they trade not just on price but on for example the delta (basically a measure of how fast options and derivatives prices move relative to the underlying real value, of a stock for example versus options and derivatives; they hedge the option/derivative with a future/swap that tracks the underlying price), and they all have their magic models, they get burned as often as they make it. These are people using sophisticated models to determine the characteristics of a strategy, they have high powered quants deriving more and more sophisticated models, and it doesn’t always work. </p>
<p>Yes, hedging with inverse ETF’s, or hedging stocks that trade independently of index trends with index trackers can help hedge risk and get some returns, but the problem is the way the markets operate today, with flash trading and all the sophisticated algo systems out there, unless you want to monitor your portfolioes constantly and act quickly, IMO you are going to get burned. The SEC loves to talk about the individual investor, but the days of when they were king is long gone, I don’t care what E-Trade and the rest try to sell you.Even trading stocks on fundamentals, of what they are producing, their intellectual property, doesn’t help much when the stock can get hammered by hedge funds and proprietary trading system that are pulling in and out of stocks literally in a blink of an eye, and trade portfolios of stocks, currency futures and options, commodities/commodities indices against each other, shifting and rebalancing constantly. </p>
<p>When I started in the financial industry, trades were still mostly being done manually by specialists on the floor of exchanges with some smattering of off exchange trading. NASD was electronic to a certain extent, and to hit a marketmaker quote took as much as 5 seconds. I worked for a pioneering off exchange electronic system, and execution times were around 1 second. By the time I left that industry in the mid 2000’s, it was roughly 100 milliseconds (.1 seconds). Today, they are talking about sub milisecond trading, literally <1/1000th of a second. Given the kind of volatility that can generate, especially when you have flash trading where someone routes out an order to exchanges/ATF’s and then sends a cancel a milisecond or two behind it, IMO it is near impossible for an individual investor to maintain a strategy like your describe (just my opinion, mind you, not claiming to know all).</p>
<p>Even the people at institutions like Fidelity and TIAA/CREFF are upset about the way trading is going, as sophisticated as their systems and managers are, it is hard for them because they do tend to invest in the long term, and the trading of hedge funds and proprietary bank systems work against that. They are already talking about banning flash trading in Europe and the US could be next, and there is a lot of talk about regulating proprietary trading and hedge fund trading because of the risks their kind of trading can cause (just look at the CDO mess, pretty good example of the damage, or long term capital in the late 90’s). </p>
<p>Okay, so what do I recommend? If you are getting near retirement, I agree with what someone else said, do it on a funds basis rather then trying to do it yourself. Take a look at funds with results in your timeframe, and created a balanced approach, put some of your nest egg into the ones that appear to offer higher yields (but know they could have their ups and downs,don’t try to get into them/out of them like stocks), another part slow and steady, and if you want to keep your own hand in it, set aside a percentage for you to invest directly, playing with ETF’s or whatever.</p>
<p>BOA is in trouble for a lot more reasons then buying countrywide. BOA holds, not just a mortgage portfolio of bad loans, but they hold a lot of pretty much worthless CDO’s that their proprietary trading arm was heavily into. Not to mention they face billions in lawsuits, for originating and selling CDO’s based on their mortgage portfolio that the plaintiffs are saying was fraudulent conveyance, that they basically sold these instruments knowing they were junk.</p>
<p>I’ve over simplified to list the problems of BOA, but the point is “HOW can NLY to keep a yeild like that with such turbulance in the mortgage market per se”?</p>
<p>Musicprnt, do you think short term gyrations in the markets are affecting long term fundamentals of companies?</p>
<p>You are pretty old…so I know you remember 1987…1987 was a lot worse than what we have today…you couldn’t get an accurate quote…stocks were trading nowhere near the screen quotes…nsdq market makers were pleading traders not to put in sell orders…</p>
<p>Yet…1987 is a blip on a stock market chart… And the technology in 1987 can’t compare to now.</p>
<p>I think the blaming of technology for the stock markets woes are not
accurate.</p>
<p>It is true that investors can’t compete equally with hft firms…but investors couldn’t compete equally with specialists either. The tighter
markets with hft helps investors,</p>
<p>It was easier for traders to compete in a specialist world with large bid
offer spreads than in the hft world with tight spreads. Maybe we should just get rid of trading in pennies and sub pennies…I would bet traders would do better if we traded in dimes.</p>
<p>As far as flash trading goes…flash orders that are fake…the orders are never meant to trade…are illegal…and should be stopped. And fake orders have always existed.</p>
<p>“It is true that investors can’t compete equally with hft firms…but investors couldn’t compete equally with specialists either. The tighter markets with hft helps investors,”</p>
<p>Investors cannot compete on their time frame but they can compete</p>
<p>Yes investors can compete…</p>
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<p>I’m not OLD yet but I do remember 1987 eventhough I was right about the direction of the market Friday before the Monday crash, I was not able to make a lot of money from it. I couldn’t get an accurate quote.</p>
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- Not sure if it’s doable. I rarely believe any ad in the newspaper with yield in the 10%. However, NBN did mention something about diversified utilities fund.</p>
<p>The only way that always works is: “buy low sell high”</p>