Author Topic: Active Investors: what's your strategy for stocks, bonds, options, etc?  (Read 2231 times)

thunderball

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For active investors: excluding real estate and accounts allocated to passive funds like Vanguard, Fidelity, etc., what's your strategy, and what are your expectations for yield?

For example, while nearly all of my 'stache is dollar-cost invested in passive bond and equity funds, I keep a tiny portion (2-3%) for active investing.  Note I don't mean day trading, but rather swing trading for weeks or months.  However, I am open to years.

One area that has intrigued me lately is picking specific blue-chip Corporate bonds.  Admittedly, my knowledge here needs improvement.  I understand the inverted correlation between price and yield, but am curious as to anyone's experience investing in specific instruments as opposed to just using a bond fund.  Is it possible that, regardless of price swings, if you hold to maturity you can safely yield 8-15%+, or is that a search for the Holy Grail?

I don't mean to focus the thread on bonds necessarily.  I'd also be interested to hear any active strategies that are working for you, that are generating returns above ~10%.  Thank you!
« Last Edit: October 02, 2016, 09:31:37 AM by thunderball »

Roland of Gilead

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #1 on: October 02, 2016, 09:38:55 AM »
I have been swing trading a couple of stocks for decent returns, but I made the big money recently in copper/gold mining company bonds.   At the start of the year these bonds, paying 12.5% return, were 20% of par and some of them were recently called at 100% (500% gain for six months of time).  I don't know if that opportunity will come around again for awhile.

Captain Cactus

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #2 on: October 02, 2016, 07:09:13 PM »
BDCs are worth reading up on.  There are a good amount that yield over 10%. 

csdreaming

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #3 on: October 02, 2016, 08:29:10 PM »
I have been swing trading a couple of stocks for decent returns, but I made the big money recently in copper/gold mining company bonds.   At the start of the year these bonds, paying 12.5% return, were 20% of par and some of them were recently called at 100% (500% gain for six months of time).  I don't know if that opportunity will come around again for awhile.

Hi Roland, how do you buy bonds? The online options do not seem very transparent.

MustacheAndaHalf

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #4 on: October 03, 2016, 01:39:58 AM »
My definition of "active" is 50% or more turnover.  If you sell everything within 2 years and buy all new assets, that seems very active to me.  I haven't needed to refine it much, because Vanguard Total Stock Market tends to have under 10% turnover, while active funds tend to have near 100% turnover.

I've been running an experiment (1) where a tiny amount of money is actively invested in the sector of the market with the most momentum.  The problem isn't making money - it's done that.  The problem is beating a benchmark after taxes.  Truncating some numbers, it's raw gain is +8% or +6% after short-term capital gains taxes are figured in.  But it's S&P 500 benchmark has returned +11% before taxes.  Since most S&P 500 investors would sell at long-term capital gains rates, S&P 500 also takes a smaller tax hit, so +9% roughly, after taxes.

When you start an experiment with active funds or stock picking, make sure you also note the price of a benchmark like the S&P 500.  That way you can track how your active management compares.




(1)
http://forum.mrmoneymustache.com/investor-alley/playing-with-momentum/

Roland of Gilead

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #5 on: October 03, 2016, 06:28:50 AM »
I have been swing trading a couple of stocks for decent returns, but I made the big money recently in copper/gold mining company bonds.   At the start of the year these bonds, paying 12.5% return, were 20% of par and some of them were recently called at 100% (500% gain for six months of time).  I don't know if that opportunity will come around again for awhile.

Hi Roland, how do you buy bonds? The online options do not seem very transparent.

I have not found a good way to search and buy bonds either.   The only reason I was able to find these is because I was familiar with the company and knew the bond names.  I searched for them in Etrade, found them and was able to buy $100,000 face for about $20,000.  The commission was $10 per $10,000 face.

Vagabond76

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #6 on: October 28, 2016, 10:57:50 AM »
I recently became interested in active investing. I do not have big savings, I do not have enough to buy real estate, so I want to quickly increase the amount. I've read on the Internet about binary options. What do you think, if I use  binary option signals  it will help me in trading? I read a lot of information on the Internet, it seems to me that the signals is ideal for beginners.

Here was a thread I started on binary options:  http://forum.mrmoneymustache.com/investor-alley/binary-options-62756/msg1263051/

Your 50/50 bet wins a payout of 75% or loses 100%, meaning you have to be correct 62.5% of the time to come out ahead.

An update to my thread--my family member has been unable to get any money out of his offshore accounts.  Therefore, regardless if he won, lost, or simply funded the account and never played, he has lost 100%.

The only US-based binary options group I am aware of is Nadex.  That is the only thing I know about it.

In my Han Solo voice:  "Good luck...you're gonna need it"

Financial.Velociraptor

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #7 on: October 28, 2016, 01:35:55 PM »
My floor for opening a new options positions is a 12% annualized yield.

Crazycarl

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #8 on: October 28, 2016, 01:45:57 PM »
I have a small 1-3% of my overall assets in active trading. I have some in Prosper, but wouldn't count that as active, but nets me about 12.85% currently. I also have some in Robinhood that I like to play around with. I have about $250 automatically go into that throughout the month. Then I pick and choose from a list of about 20-25 dividend paying stocks and look for one or two that are low or seem to be undervalued at the time. If there are none, I do some research and look to add to that list. It keeps me interested and reading about the market. I am holding for the long term unless something drastic happens. Currently I have AA, T, FTR, HCP, F, GM, CSAL, VALE, and a couple others. I am averaging about 14% with that so far. Makes it tough to invest in vanguard funds with the returns I see sometimes, but I doubt I would make some of the moves I do with more money on the line, haha.

FIPurpose

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Re: Active Investors: what's your strategy for stocks, bonds, options, etc?
« Reply #9 on: October 28, 2016, 02:47:35 PM »
Not currently an active investor but I do have a number of alternative investments. I have a secondary Lending Club account that nets me 13-15% and a private REIT that's done about 10-12%. Honestly, indexing has felt really lame when I feel that I could really do a lot more by expanding my portfolio in LC and changing my index to a set of 15-20 dividend stocks with about 2-4% of options selling on top.

I like the idea of my assets be income producing. It's something that shows real value to me, and it's not terribly difficult to find 8% producing stocks buying on low, selling calls at highs (2-4% would be selling about 2-4 calls per year). Alas, my SO's job still requires that I don't trade options/securities. So until then, indexing it is.