Anybody else using, or familiar with, the Snider Method?

[TexasAggie]

We've been using this investment approach for several years with good results.  My hope is that it will allow us to exceed the 4% rule and reach FI sooner. 

For those who are not familiar and want more information, check out: https://www.snideradvisors.com/strategy/

[matchewed]

Well this sounds like horse shit. Sorry TA, but any website that is telling you that it will make you rich without telling you how is just trying to make money off of you. I hope you're not just a shill for the company.

[TheSimpleLife]

Feel free to elaborate on what the 'Snyder Method' is EXACTLY.  I can't find enough info without them wanting me to pay them for something...  Maybe I'm not looking in the right place on the website?  The portion you linked to didn't say much...

Let me guess, buy dividend paying stocks and some form of bonds for "cash flow?"

Sorry, just looks a little shady to me.

[warfreak2]

From the looks of it, the Snider method is to sell probably worthless information for $2000 a pop.

[warfreak2]

OK, so it's just bogus reporting. From their "owner's manual":

A Word about terminology. Published performance figures are yields and do not include
unrealized gains or losses. We focus on yield because we believe it’s the best way to measure
our cash flow. We are more concerned with the ability of our assets to generate income than
their short-term market value.

So, they put out a few graphs that show their method "beating the S&P500", but their graph doesn't actually represent the value of the stocks held. In particular, because one of the rules is never to sell at a loss, the method appears to involve holding losers all the way down and pretending that you haven't lost anything yet because you didn't sell at a loss.

It also appears they tell their clients that they aren't allowed to publish details about how to implement the method because it's patented or in the process of being patented. Ironically, patenting something requires publishing enough details for something to be implemented.

[TexasAggie]

I'll post some more info when I have some time.  I'm a pretty analytical person with a reasonable amount of education, so I think I have a pretty good set of skills for evaluating things like this.  That being said, I could have been duped.  FWIW, I know quite a few people who are generating more than 4% per year consistently using this method.

As to the patent point above, that's not always correct.  You can file in the US and keep your invention secret unless and until you get a patent if you agree to not seek a patent outside the US.  Just sayin' . . .

[matchewed]

I look forward to any information you can provide. From my experience anybody that says they have a secret method to wealth is just selling the financial equivalent of snake oil.

[warfreak2]

As to the patent point above, that's not always correct.  You can file in the US and keep your invention secret unless and until you get a patent if you agree to not seek a patent outside the US.  Just sayin' . . .

And if it isn't some simple thing that people have been doing for yonks before somebody named Snider put their name on it, then as soon as the patent application is approved, it's public information. By filing a patent application in good faith, the filer must intend for it to become public information. Patents, pending or not, don't forbid other people from sharing your idea; they grant you a monopoly on commercial use of your idea.

Anyway, the fact that they want to keep it a secret should be evidence enough that it's a sham. If somebody has good investing advice then they will make their money by implementing it, not by selling it. Warren Buffett, for example.

[MooseOutFront]

Anecdotal evidence of people "generating more than 4% per year" is irrelevant.  The 4% SWR relates to a sustainable withdrawal rate over all 30 year periods of US stock returns since about 1927.

I don't know what "the snider method is" and this thread hasn't elaborated on it one bit, but be very weary.  Sounds like BS.

[arebelspy]

FWIW, I know quite a few people who are generating more than 4% per year consistently using this method.

I have no doubt that's true.  Now look at what the S&P has generated for the last 5 years.  :)

I also know a guy who won multiple spins in a row at roulette.  Doesn't mean it's a valid wealth-building strategy.

[TexasAggie]

I found a copy of the patent application online. It is in stilted patentese and is not a perfect representation of the method, but it will give a flavor of what's involved.

[slugline]

I wouldn't be surprised if the actual method is fundamentally sound but nothing special and overpriced -- like the financial advice equivalent of imported bottled water.

[TexasAggie]

The way I look at it, it is worth analyzing objectively.  That is, with no bias for or against it.  That is what I have tried to do and what I'd like to see some of you do as well.  Thanks in advance everybody.

[AH013]

From the patent, it reads like a covered call strategy.  For those unfamiliar, you sell away the right to runaway returns on stocks you own, in exchange for a small monthly premium. If a stock goes up say 5%, you keep the stock and earn that 5% plus maybe a 1% premium. If it shoots up 20%, you're forced to sell for maybe a 6% profit instead plus your 1%, so only get 7% instead of 20%. When markets are chilled, it makes money.  When you have a 30% run up year, you get the shaft and get to look forward to those down years to average you out.

So buy a bunch of blue chips, write calls on them. Maybe buy a couple REITs (which already by themselves have 3-5% yields) & MLPs. Feel free to send me $2,000.

[brewer12345]

From the patent, it reads like a covered call strategy.  For those unfamiliar, you sell away the right to runaway returns on stocks you own, in exchange for a small monthly premium. If a stock goes up say 5%, you keep the stock and earn that 5% plus maybe a 1% premium. If it shoots up 20%, you're forced to sell for maybe a 6% profit instead plus your 1%, so only get 7% instead of 20%. When markets are chilled, it makes money.  When you have a 30% run up year, you get the shaft and get to look forward to those down years to average you out.

So buy a bunch of blue chips, write calls on them. Maybe buy a couple REITs (which already by themselves have 3-5% yields) & MLPs. Feel free to send me $2,000.

Yep, looks like an unnecessarily complicated covered call strategy possibly involving the use of significant leverage/margin.  Ick.  Not sure why this would be appealing or why you would pay someone for this "amazing" knowledge.

[matchewed]

Gotta wonder. If this makes people so much money why even sell the thing that makes the money. Why not just make the money?

Furthermore perusing through the patent, it's options and stock trading with covered calls. It's just another version of active trading like a million others out there.

Sorry but my bias probably isn't going to budge on this one. If that frustrates you I'll just step away from this thread. But remember, a very large percentage of mutual fund managers with all their intelligence, computer programs, and investment savvy can't beat the market consistently when you include their fees. How much did this method cost her customers? 1k? 2k? 3k?

I can get market returns on a 2 million dollar portfolio with a .05% expense ratio equaling that 1k annually.

Look if it works for you there is nothing I can do to stop you. Just warning that these sorts of things are everywhere and you get to choose where your money is best suited.

[warfreak2]

I wouldn't be surprised if the actual method is fundamentally sound but nothing special and overpriced -- like the financial advice equivalent of imported bottled water.

This was a likely possibility, but it doesn't look like a fundamentally sound vanilla strategy - the patent application says:

The focus of the system is to make income on the sale of options rather than on the sale of stock that has risen in price. This is not to say that no profit is made from the sale of stock only that the focus is on making profit from premiums on the sale of options.

So, you make your money by selling options. That means your risk profile could be far more complicated than simple exposure to stocks. With options, it's very easy to hide a strategy like a Martingale betting system, where the risk gets concentrated into a smaller probability but a bigger loss. You can't look at a decade of performance figures and judge a complex, unexplained options strategy to be safe. Honestly, I wouldn't even accept centuries of positive performance as evidence that a complex, unexplained options strategy is sound. Since there's also no mention of a theoretical basis with a mathematical proof for the strategy, I'm going to ignore it.

Also, benchmarking an options strategy that trades individual stocks against the S&P500 is dishonest at best. The benchmark should be something of similar exposure to similar risks. There's also no mention of a Sharpe ratio or any other risk-adjusted measure.

[TexasAggie]

Thanks all for your thoughts.  I did not expect a positive response, but I was curious.  This method is only one of several places I have some money invested.  I also some index funds and even some invested in the evil of all evils known as oil and gas exploration.  For those of you in the US, I hope you have a great holiday weekend.  For everbody else, only one more day until the weekend!

[arebelspy]

They say you shouldn't invest in things you don't understand.  Now, I'm a little slow, so it took me a few tries and I had to learn the lesson personally, but I'm fully on-board with this.

If they're refusing to disclose stuff, such that I can't understand it, I wouldn't invest, period.  I don't care if they've doubled everyone's money ten years in a row.

If they do disclose, such as with the patent filing, above, then I'd take a long, hard look at it.  Is it likely they figured out something that no one else has?  Probably not.  So, as the saying goes, extraordinary claims require extraordinary evidence.

If they can logically show their method is better, great.  If they're obfuscating things, it's a no go.

Sounds like they're just doing a complicated option strategy that is, in the long run, -EV versus the market average, due to the limited upside.

Do you feel comfortable enough understanding what's going on with your money to explain their strategy to someone, and explain why they should beat the market with that strategy?

Because I see two separate issues: it sounds like you aren't, and it sounds like they can't.  Either one of those is enough to make me stay away.

But again, I've learned this lesson.  This may be your time in the barrel.  :)

[Primm]

Gotta wonder. If this makes people so much money why even sell the thing that makes the money. Why not just make the money?

Typed out a long answer that basically said this, and then read this.

Yeah, +1.

[TomTX]

I'll post some more info when I have some time.  I'm a pretty analytical person with a reasonable amount of education, so I think I have a pretty good set of skills for evaluating things like this.  That being said, I could have been duped.  FWIW, I know quite a few people who are generating more than 4% per year consistently using this method.

A 4% annual return in the past 5 years is CRAP.

Hell, a 10% annual return over the past 5 years is CRAP.

Average return over the past 5 years should be on the order of 18-20% annually if you're in US stocks.

https://investor.vanguard.com/mutual-funds/vanguard-mutual-funds-list?assetclass=stk

A 4% SWR does NOT mean you just need to get a 4% return on your money. That's way too low. The 4% SWR requires you achieve more than 4% - enough more to account for inflation - both in you 'stache and in your withdrawal amount.

[arebelspy]

A 4% SWR does NOT mean you just need to get a 4% return on your money. That's way too low. The 4% SWR requires you achieve more than 4% - enough more to account for inflation - both in you 'stache and in your withdrawal amount.

Well, sort of.  At the very least though it does require you to full realize the upside of years like we've had recently, to compensate for the down years that are inevitable.  Capping your returns in your up years kills you.

[pom]

Well, sort of.  At the very least though it does require you to full realize the upside of years like we've had recently, to compensate for the down years that are inevitable.  Capping your returns in your up years kills you.

Totally true, that is what people that do covered call don't seem to grasp. Since once in a while you will lose 30% or 40%, then you better have many years with significant upside. I backtested covered calls (admitedly a while ago and never updated my study) and the results were subpar to the market.

http://dilbert.com/strips/comic/1992-07-10/

[EricL]

So it seems the Snider method is:
1. Advertise a secret investing strategy.
2. Sell said strategy for $2000 with legal small print.
3. Said strategy is so complicated failure will not be noted until long after the sale.
4. Said strategy's complication aids in the company's legal defense as the fault can be attributed to erroneous customer application.

So my question is, can P.T. Barnum's heirs file suit for patent infringement?

[i_am_the_slime]

I also know a guy who won multiple spins in a row at roulette.  Doesn't mean it's a valid wealth-building strategy.

How much would this guy charge to spin the wheel for me?

[arebelspy]

I also know a guy who won multiple spins in a row at roulette.  Doesn't mean it's a valid wealth-building strategy.

How much would this guy charge to spin the wheel for me?

He might be willing to tell you his secret spinning methods - strength, speed, etc.