<p>“long long deltas” - does that mean delta near 1? I am never long otm options.</p>
<p>Do NOT feel guilty.</p>
<p>You are under NO obligation to do any business with them.</p>
<p>The financial people have a job to go out and get business and your job is to do what is best for You.</p>
<p>Financial advisors get turned down all the time.</p>
<p>Mine did…from me. He wanted to manage my money. I said, “No.”
We still talk. He makes sure I don’t have any problems. I think he is a pretty good advisor. We weren’t quite in sync, but we were close. His ideas were good. I should have done some of them. He was a little more agressive than I wanted to be, but he was right.</p>
<p>Maybe, when I said, “No”, the advisor went home and told his wife I am an a…
It’s possible. :)</p>
<p>My IRA was up 12.5% in 2012, which I guess is ok. I don’t see how you can set absolute performance goals when the market can be up 30% or down 30% (or 50%) in a given year. All I can do is invest and pray. If you indexed yourself to the S&P 500 then you should be up 13.5% on the year. If you mixed in some US Treasury bonds, your overall performance will be lower. The TLT (long Treasury etf) finished unchanged on the year, so I guess you earned 2.75% or 3% interest on that.</p>
<p>If you had a somewhat diversified stock portfolio, your returns could have been spiced up a lot if you were overweighted in certain issues, for example:
BAC stock was up 109% on the year, in part because it was doing so poorly right at the end of 2011.
AAPL was up 31% on the year even after a large pullback late in the year.
AIG was up 52%</p>
<p>I didn’t trade or own any AIG or AAPL in 2012, but sadly still own some BAC from much higher levels. </p>
<p>Although the S&P 500 was up 13.5% on the year, the Dow was only up 7%, so adding or subtracting a few large stocks from your portfolio can obviously affect overall performance greatly.</p>
<p>GLD was only up 6.6% in 2012 and SLV 9%.</p>
<p>I was searching old statements for a trade last week and was shocked (how quickly we forget!!) to recall how low my IRA had gotten in 2009. My balance is now at an alltime high - higher than 2007 - with no additions. I have been very critical of Bernanke for his zero interest rate policy, “war on savers” but stocks rising have helped me more than earning 5% or 6% on bonds would have.</p>
<p>I interviewed a financial adviser that many at my office use ($1-10 million). I asked him about his approach to investing. He picks the top two mutual funds in each category and recommends them. I asked him if he got his clients out of the market before the 2000 crash. He said no. I showed him a chart of a stock. He had no ability to read charts.</p>
<p>I was flabbergasted. He did know about a lot of different areas related to financial planning but his approach with investing was - I don’t have a word for it. If this is what the typical financial planner does, then I’d avoid them unless you need their other services.</p>
<p>What I mean in this case…This post is long but the content is not as difficult as it looks, doct… :)</p>
<p>To keep it simple…</p>
<p>Let’s say you are long an at the money call option with a delta of 50. And you are long 10 of them. You are long 10 of these options. You are long 500 deltas…the equivalent
of 500 shares of stock. If the stock goes up a dollar, you make 500 dollars, same as owning 500 shares of stock.</p>
<p>It doesn’t necessarily work precisely this way because when you are long options, you are affected by volatility changes, delta changes and
time decay.</p>
<p>This is why this week was amazing.</p>
<p>Let’s say a stock is 50. You are long the jan 18 expiration 60 calls. You
are long 10 calls and the calls are trading for .40. You are long deltas. Maybe 150 deltas…equivalent to 150 shares of stock. The stock rises to 53. You would think you would make at least 150 deltas times 3… $450.
Instead, the volatilty of the options dropped so much, the the 60 calls
are now trading for .30. You lost $100 bucks and the stock went your way.</p>
<p>Now to make things very easy. Look at the feb appl 600 calls. We are
just going to play with the volatility. I don’t know what the volatilty is. Let’s say is 36. Cut the volatilty 40 percent. Run a program and make the volatilty 22 on that option. Look at the difference in value of that option. Now raise the volatility to 50. Look at the difference in value.</p>
<p>The changes in volatility were dramatic this week and affected where options trade big time.</p>
<p>If you like to sell premium, that is not good. I am looking at stuff I like
to sell and I can get 60 percent now compared to what I could get a week ago. </p>
<p>Something I could sell last week for .45 is now .23.
If you sell 10 of those options, your profit potential is $220 less than a week ago.
I was enjoying the volatilty prices of the options because of the fiscal cliff.</p>
<p>I would rather make $450 than $230. ;)</p>
<p>The options market went from more volatile pricing to one of the lowest volatile pricing in years in a week.</p>
<p>13 something vix…echhh…</p>
<p>It is amazing how quiet the stock market is this week except for that big moving day. This is the beginning of the year. We should be busier…</p>
<p>“I was searching old statements for a trade last week and was shocked (how quickly we forget!!) to recall how low my IRA had gotten in 2009. My balance is now at an alltime high - higher than 2007 - with no additions. I have been very critical of Bernanke for his zero interest rate policy, “war on savers” but stocks rising have helped me more than earning 5% or 6% on bonds would have.”</p>
<p>Yeah… I have been very critical of Bernanke too. Stocks have done well.</p>
<p>I have been watching cnbc. Bloomberg is just too boring.</p>
<p>Yes CNBC is more geared to our ADD culture. I listen to bloomberg on my car radio commuting back and forth from work. They go into too much detail. I can’t focus that long.</p>
<p>Did any of post 4005 make sense?</p>
<p>If I had watched or listened to Bloomberg as a kid, I never would have gone into the financial business. </p>
<p>Bloomberg needs better on air people. I think the people on the air are too young. If you are young, and you don’t know what you are talking about, you better be really good looking. :)</p>
<p>I think during an ad for Bloomberg, one of the on air guys said one of his most exciting moments was interviewing the CEO of American Airlines. </p>
<p>That is when I reached for the remote control. CNBC…is looking pretty good. :)</p>
<p>I don’t know when I look at some of the videos at night, there are some hot looking women at bloomberg</p>
<p>I don’t watch Bloomberg at night often.</p>
<p>I do like Betty Liu.</p>
<p>I like deirdre bolton and sara eisen</p>
<p>I like Neil Cavuto on Fox . . .</p>
<p>Fidelity says I made 10.72% last year in my retirement accounts, which is in mutual funds and about 30% cash.</p>
<p>I just rolled over a 401k and now I am trying to figure out what to do with it.</p>
<p>^ I rolled over one of my 401K accounts two years ago and put it half into an age band blended account, a quarter into large cap stocks, and a quarter into fixed growth. It was a dud the first year – around 5 percent, but this year just over 12 percent.</p>
<p>How do you calculate the rate of return? Do you just take the value at the beginning of Jan 2, 2012 and compare that with the value at the close of Dec 31, 2012? What do you do if you withdraw some or deposit additional funds? We took our assets over from the management company in summer. It took a few days to complete the transfer and the market dropped about 2% in those few days. It seems a bit arbitary where you pick as the starting point.</p>
<p>Don’t your accounts automatically keep track of it? Also if you are comparing your results to a benchmark, make certain you choose the right benchmark. It doesn’t make sense to invest in all Nasdaq stocks or fixed income and compare your returns to the s&p.</p>
<p>My 401K gain for 2012 was about $17,000. Don’t know what is the % gain because some of that $17,000 is from the $$ added in the year. </p>
<p>In any case, I am pretty happy about the gain.</p>
<p>As long as your 2012 contribution was not $16,500.</p>
<p>Unfortunately, most of my accounts are not tax deferred and I owe a lot of money. Of course that’s better than losing money.</p>