What Do People Make Annually From Investing?

For those who maintain their own personal portfolio, what do you typically make annually off that portfolio? And what is a realistic amount for a first-time investor to make their first year? (what did you guys make your first year?)? And for the undergrads on here have you been trading while in school? I'm looking to be trading during my time in college as I feel it would be beneficial to have some money saved by the time I graduate to pay off student loan debt.

 

Trading isn't as easy as you think it is. Your biggest problem will be yourself and lack of knowledge of markets. You can make lots of money or go flat out broke one way or another, only a small percent of day traders are consistent.

...
 

An undergraduate finance student, been trading for around 5 months, from last year October until this year February. Earned around 20-30% in 3 months on different stocks and ETFs. Went ballistic nuts when I sold all of all my AMD Holdings 1 day before they announced their quarterly earnings report, they beat expectations and went up by 17-19% in 1 day. Got pissed, sold all of my holdings, and made random bets on 3x leveraged ETF in JNUG and JDST. Lost all of my earnings and down by 20% (Overall portfolio) Lol. After that, I stopped and cash out, planning to trade again this Fall 2017.

 

Around 6k. Yeah, it's the past, I learned from it. Now I'm looking into cryptocurrencies. Just bought a ledger blue to be delivered in August. Look at this Indonesian guy/group, I wonder who he is. Wew, I think $150 is the entry point for Ethereum. We'll see how it goes. Feeling excited as cryptomarkets is tumbling down.

https://etherscan.io/address/0x00a651d43b6e209f5ada45a35f92efc0de3a5184

 

It depends on what you mean by "trading". Are you a day trader ? Or more like an investor who is willing to hold over several days/weeks/months?

My 10 year average is about 5.5-6% return on securities I hold over a longer period. There were several spikes (both up & down) for day trading activities but those don't matter if return is calculated over a decade.

In my first year I believe I broke even (including brokerage fees that were accounted for).

 
Gumball3000:
It depends on what you mean by "trading". Are you a day trader ? Or more like an investor who is willing to hold over several days/weeks/months?

I'd say I'm more like the latter option. Realistically won't have much time for day trading due to wanting to focus heavily on my academics. Also that seems like a fairly solid 10-year average. What securities do you personally find interesting to invest in?

 

I only invest in stocks, ETFs, or similar securities I have an interest in, so mostly tech, media, manufacturers.

Naturally, there are many other (better?) ways to invest money, some of my friends invest in real estate and had much better return. i.e.: A former EU colleague purchased a relatively new flat (apartment) years ago in SE England and, I believe, after agency fees/realtor commission he had both the rental income from his tenants and the property appreciation over the years and all he had to do was hire a few contractors to paint walls.

 

I trade FOREX for fun, because the margins on OANDA are great.

I trade with a minimum balance of $20,000 and make a few grand a year. Nothing crazy, but it's fun and keeps me up to date with Macro trends.

"It is better to have a friendship based on business, than a business based on friendship." - Rockefeller. "Live fast, die hard. Leave a good looking body." - Navy SEAL
 

I'm honestly shocked you took the time to answer this.

OP, google stuff like historical asset class returns and you'll get a plethora of info. your historical returns depend on a number of things, namely: what index you use, cap weight/equal weight/price weight, survivorship bias, time period, etc.

things like real estate and hedge funds are so complicated and diverse the return characteristics will be dramatically different. for example, a merger arb fund may return 6% annualized because spreads tighten, widen, mergers fall through, and a fund like Baupost may return 20+% annualized, depends on the strategy, so "hedge fund" is way too broad. likewise, lot land in North Dakota probably has a greater 5 year annualized return versus something steady like condos in Miami, so you're comparing apples with coffee tables by just saying "real estate."

my suggestion: learn more about investments and then come back to us with more concise questions. you don't know what you don't know, so get out there and read (plenty of threads on this).

 
chuhean:

Hi everyone. I would like to know to typical annual return rate of the different kind of investments. It would be preferable if you could list them in order. My knowledge is limited and so far I am only able to rank 2 types of investments. The other are marked with a question mark, which hopefully can be filled up by your help.

Rank:
1. Option - ?
2. Futures - ?
3. Commodities - ?
4. Forex - ?
5. Mutual Fund - ?
6. Hedge Fund - ?
7. ETF - ?
8. Warrant - ?
9. Index Fund - ?
10. Stock (S&P 500) - 10%
11. Real Estate - 6% (not so sure)
12. Government Bond - 5%
13. Corporate Bond - ?
14. Bank CD - 3%

For now the investment with the lowest APR goes to bank CD.

Annualized return of stocks (S&P 500) from 1970 - 2013 = 10.1% (with dividends), but you should deduct 1% a year for management fees assuming you are investing in a mutual fund.

Annualized return of gold 1970 - 2013 = 10.2%, no management fees + disaster hedge (what's that worth to you?)

That's all you need to know... buy gold.

 

OP, you also need to know that he's cherry picking a time period, gold bottomed in 1970 and stocks were fairly valued (as measured by Shiller CAPE). if you move it forward 10 years, the S&P and bonds absolutely crush gold.

I personally hate gold as an investment, but I think the overarching point here is just because some asset class didn't win in a particular 44 year timespan by 10 basis points that it should be left out of a portfolio. stay diversified.

of course janky, if you were being snarky I feel like a douche canoe, my b.

 
jankynoname:
chuhean:

Hi everyone. I would like to know to typical annual return rate of the different kind of investments. It would be preferable if you could list them in order. My knowledge is limited and so far I am only able to rank 2 types of investments. The other are marked with a question mark, which hopefully can be filled up by your help.

Rank:
1. Option - ?
2. Futures - ?
3. Commodities - ?
4. Forex - ?
5. Mutual Fund - ?
6. Hedge Fund - ?
7. ETF - ?
8. Warrant - ?
9. Index Fund - ?
10. Stock (S&P 500) - 10%
11. Real Estate - 6% (not so sure)
12. Government Bond - 5%
13. Corporate Bond - ?
14. Bank CD - 3%

For now the investment with the lowest APR goes to bank CD.

Annualized return of stocks (S&P 500) from 1970 - 2013 = 10.1% (with dividends), but you should deduct 1% a year for management fees assuming you are investing in a mutual fund.

Annualized return of gold 1970 - 2013 = 10.2%, no management fees + disaster hedge (what's that worth to you?)

That's all you need to know... buy gold.

It actually does cost money to vault and insure gold. You can't keep a gold bar in your home without destroying some value, because you have broken the chain of custody ensuring the purity rating. So, you will need to pay to melt and test the gold again for purity when you want to sell it. Plus, someone could break into your home and steal it from you. Or, you pay to vault and insure it, like every other major investor does. Nothing is free. Plus, you pay taxes on gains at the collectible tax rate, which is higher than long term capital gains or dividend tax rates.
 
Waymon3x6:

Opening up your portfolio won't help with IB. Two different unrelated industries (unless you're going for S&T).

2k is a small amount. I think most brokerage houses require 2k minimum for margin, so you may be able to do that. You can make a lot off options (and lose a lot, too) with a small amount of capital as well.

A college student is not going to quality for margin. Nor should you be encouraging that. C'mon.
My name is Nicky, but you can call me Dre.
 

Probably the best place to start is really make sure you are well acquainted with the tents of value investing. Read Intelligent Investor, Margin of Safety, Buffet Letters, etc. These are by no means difficult to understand and will give you a good GENERAL idea of proven long term strategies (sorry, don't mean to patronize you if you have already read them.) Also keep trading activity to a minimum. With an amount of money that small, it could easy cut your return by a few % or more if you are too active.

"Strength does not come from physical capacity. It comes from an indomitable will."
 

If you don't care about losing the money all that much, you could bet on earnings reports. If you think a particular stock is going to beat or miss analyst expectations, buy the stock a day or two before earnings come out and see what happens. Another unrelated strategy is to bet on drug companies. If you know that a company is trying to get a drug FDA approved, and you have a hunch whether or not it will get approved, you can long/short accordingly. Both of these strategies are extremely risky and you can lose all of your capital very quickly doing this. But, if you make a few good bets you could end up doubling your portfolio or more. But at some point you'll have to stop rolling the dice and play it safer.

 
RichButLucky:

If you don't care about losing the money all that much, you could bet on earnings reports. If you think a particular stock is going to beat or miss analyst expectations, buy the stock a day or two before earnings come out and see what happens. Another unrelated strategy is to bet on drug companies. If you know that a company is trying to get a drug FDA approved, and you have a hunch whether or not it will get approved, you can long/short accordingly. Both of these strategies are extremely risky and you can lose all of your capital very quickly doing this. But, if you make a few good bets you could end up doubling your portfolio or more. But at some point you'll have to stop rolling the dice and play it safer.

if you're gonna do that, might as well bump it up and just buy the weekly options on those crack rocks. 1000%+ returns on some of those bitchez

 

Extremely tough to make meaningful returns with a small capital base because you get killed on transaction costs. I'd suggest having a concentrated portfolio where you're making bets with a time horizon of at least a few months - ideally 1-4 years. Look for high margin of safety and get to a point of conviction where you're not afraid to put 25% of your portfolio into an idea. I started with $2,000 last year. Using this methodology, I've turned that money into $4,500 (yes, straight equities).

Unless you're going for a PT role, I don't think firms care much about your trading record. More importantly, it's about you showing them that you're actually interested in the markets - which you demonstrate by managing your own portfolio. A lot of people say their interested in the markets, but haven't invested a single penny.

 

Unless you are looking for a prop trading role, get rid of any idea of "placing bets" at all. Don't even let that phrase to be a part of your vocabulary. Buy and go long with a few companies that you have thoroughly researched and are trading significantly below book value, and are confident will eventually realize a full price. Just keep your expectations realistic. With prices at record highs, it's tempting to jump on the band wagon, but it would be impossible for the trend to continue for many more years. It would be foolish to lose a significant chunk of what is already a small amount of capital.

"Strength does not come from physical capacity. It comes from an indomitable will."
 
big f-ing deal:

Unless you are looking for a prop trading role, get rid of any idea of "placing bets" at all. Don't even let that phrase to be a part of your vocabulary. Buy and go long with a few companies that you have thoroughly researched and are trading significantly below book value, and are confident will eventually realize a full price. Just keep your expectations realistic. With prices at record highs, it's tempting to jump on the band wagon, but it would be impossible for the trend to continue for many more years. It would be foolish to lose a significant chunk of what is already a small amount of capital.

Well said. Markets are expensive, look for value and don't be fooled by momentum. Go long on a few solid companies. It sounds like you're pretty new to investing so I'd suggest practicing a few of the strategies already mentioned here on a virtual trading platform ie wall street survivor, yahoo, etc before you blow your 2k on a seaworld short. Although that might not be a bad trade
 

binary options on the over/under of times the "little guy" is mentioned in context of HFT on a monthly basis.

(shameless plug) read my thread on recommended reading (http://www.wallstreetoasis.com/forums/best-books-to-help-investing-skill), read BlackHat & Simple As long posts on how they invest, and decide for yourself if you have the intellectual werewithal, the patience, and the time to invest your own money. you won't get any good help with only $2k, but you can go to Vanguard & buy a target date fund, or play in the stock market. the best way I've found to learn about markets is to make mistakes in them.

realistically, unless you have money from parents, I'd keep the $2k in savings for clothes once you get a job. or if you already have that, blow the money on a vacation before you start bankers' hours.

 

I was in the same boat as you when I was 18 and had about 3K to play with. Super stupid, my reason for going into HAL at the time was this; "Oil is good, get buy it.." Yeah that's right, threw it all in, but like what other have said before, read up on some of the classics and go long only.

If I had to give myself advice I would say, index that bad boy for now, learn to stomach the risk of it going down and continue to throw in money as it comes along from summer jobs and such. No easy way to do it, but taking small steps is the way to go. Once you feel comfortable enough, then may be get into some option plays, but i think some people would disagree

 

Interviewed for a trader assistant position at a MM IB. Was asked if I had a portfolio and what I had learned from trading. Interviewers don't care it you just lost 100k, they just want you to take something away from your investment experience.

Its only 2k, think of the money as part of your tuition and use it as a learning tool. I recommend experimenting within the markets on you own. Learn how to draw your own conclusions about the markets and you will put yourself in a great position when it comes to finding an internship.

 
Hendrickson-VC:

Interviewed for a trader assistant position at a MM IB. Was asked if I had a portfolio and what I had learned from trading. Interviewers don't care it you just lost 100k, they just want you to take something away from your investment experience.

Its only 2k, think of the money as part of your tuition and use it as a learning tool. I recommend experimenting within the markets on you own. Learn how to draw your own conclusions about the markets and you will put yourself in a great position when it comes to finding an internship.

Best idea yet.

 

Are you doing this specifically for a job in S&T (assuming S&T because owning a portfolio is useless for IBD)? If so, you shouldn't concentrate on making money as much as trying out as many different things as possible so you can learn and have more interesting stories to tell when interview time comes along. You could probably lose most of your 2k and nobody would care.

 

As others have stated; $2k is not enough to make meaningful returns under adequeate risk controls. If you size your position enough to outpace transaction costs and make a meaningful gain in raw dollar terms- you're probably taking very concentrated positions. I know this from personal experience, battling to break-even on a trade after ($7.99 a trade round-trips with 1/10 of $1000).

I would say; drop a grand on books and get a paper trading account from TDameritrade or another discount broker. The only thing paper-trading can't emulate is 'skin in the game'. Manage your positions, keep a trading diary where you must note 1) Your long/short thesis 2) Entry/Exit parameters 3) emotional context of the day/yourself 4) position size.

If you can keep to that you will learn tremendously, and i'm sure you are smart enough to think of an incentive system to emulate skin in the game.

Having said all that, sometimes you just have to throw caution into the wind and do it anyway...i know i did.

 

I just put a maximum contribution into a Roth IRA target-date fund and put leftover money into a TD account and bought global index funds. W.r.t. S&T, you don't need to trade a personal account to show interest. My strategy was to learn as much as I could about options (Natenberg, Hull, Taleb, etc.) and then guide the interviewers to option questions so I could ace them. Of course, you can choose any other product too. Also, follow the markets/news.

 

I actually think the best way to start is with a very small account that you can build experience with. 2k is literally the minimum you will need to get margin trading, I'd recommend 3 grand to give yourself a bit of cushion (No one likes margin calls). I'll caveat up front that I hope you have a decent brokerage with inexpensive commissions. Let me tell you how much it sucks to pay 9.99 or something. That will murder you. I will say that i disagree with Aggmonkey above however about dropping a grand on books. You can learn plenty online. Hell, just investopedia alone will give you enough knowledge to look at companies and understand rudimentary stuff you need. I'm of the opinion that paper accounts mess you up more than they help you. The best incentive system is watching your hard earned money disappear after you decided to buy some CHK calls a few days before everyone realized McClendon is half retarded. That hurts.

Regardless, I'll say up front what I think you should immediately disassociate yourself with the actual dollar amount in the account and focus on percentages from here on out. On a small amount of money it's very easy to think "oh, I only made 100 bucks on that trade" and then realize than on a percentage basis that is a decent return on one trade given your capital constraints. Look, no matter what your risk adjusted returns are probably going to be awful but my point to you is that if you can learn how to manage high risk positions with a relatively small amount you can scale that up over time. I started out in college buying like 20 shares of AMD where the transaction cost about outweighed any return I could possibly achieve, but I'll tell you that I learned a ton by putting my own money at risk.

I would personally start by establishing a very clear strategy that you can stick to. Be honest with yourself about your goals, time constraints etc. Don't stray to far from your competency and most importantly have fun with it. I started trading a PA account when I was younger and got addicted which is what made me interested in finance to begin with and consequently forced me to switch majors when i stopped paying attention in poly sci classes to trade.

 
Addinator:

I actually think the best way to start is with a very small account that you can build experience with. 2k is literally the minimum you will need to get margin trading, I'd recommend 3 grand to give yourself a bit of cushion (No one likes margin calls). I'll caveat up front that I hope you have a decent brokerage with inexpensive commissions. Let me tell you how much it sucks to pay 9.99 or something. That will murder you. I will say that i disagree with Aggmonkey above however about dropping a grand on books. You can learn plenty online. Hell, just investopedia alone will give you enough knowledge to look at companies and understand rudimentary stuff you need. I'm of the opinion that paper accounts mess you up more than they help you. The best incentive system is watching your hard earned money disappear after you decided to buy some CHK calls a few days before everyone realized McClendon is half retarded. That hurts.

Regardless, I'll say up front what I think you should immediately disassociate yourself with the actual dollar amount in the account and focus on percentages from here on out. On a small amount of money it's very easy to think "oh, I only made 100 bucks on that trade" and then realize than on a percentage basis that is a decent return on one trade given your capital constraints. Look, no matter what your risk adjusted returns are probably going to be awful but my point to you is that if you can learn how to manage high risk positions with a relatively small amount you can scale that up over time. I started out in college buying like 20 shares of AMD where the transaction cost about outweighed any return I could possibly achieve, but I'll tell you that I learned a ton by putting my own money at risk.

I would personally start by establishing a very clear strategy that you can stick to. Be honest with yourself about your goals, time constraints etc. Don't stray to far from your competency and most importantly have fun with it. I started trading a PA account when I was younger and got addicted which is what made me interested in finance to begin with and consequently forced me to switch majors when i stopped paying attention in poly sci classes to trade.

 

If you want to have the chance to build that to 10k+ in a short amount of time start trading options. Get level 2 approved at least which will allow you to long calls and puts. Fabricate about the information so you can get approved, for liquid net worth, salary etc.

twitter: @StoicTrader1 instagram: @StoicTrader1
 

Penny stocks is the obvious answer here. But in all seriousness buy and hold a group of small but diverse stocks you believe in or go ETF with such a small amount. And then open a paper account to really help you learn the ropes. Even though my penny stock advice was a joke I did make a killing on Oilsands Quest Inc back in the day.

 

Play headline overreaction concentrating entire 2K in one 3x leveraged etf getting in and out in same day. Very risky but can be done, youll want to get familiar with various vehicles price behavior in reaction to different headlines. I play TVIX, XIV, UPRO, RUSS & RUSL recently but there are vehicles available for vol, currency, country, comms (JO-killed it but ive been out). If you dare to play PM me and ill send you a more exhaustive list. Picking your spots is key, you need real movement in underlying contracts in order to breakeven much less make money and if you miss the reaction, you do not want to hold any of these for more than two-three days.

Rarely will any of my posts have enough forethought/structure to be taken seriously.
 

You can make decent money with 2k if you have allot of patience. I turned 3k into 11k in about 1.5 years time. I pretty much just chased bad quarterly earnings reports of strong companies (decent amount of cash and low debt). The opportunity really comes when a strong company has back to back bad quarterly earnings reports; as Warren Buffet would say "that is the time to get greedy." Don't go all in after buying after one bad quarterly earnings report. I use a pyramid strategy where I buy more and more as the stock price goes down. The real underlining issue that allot of people have is that they are not patient enough to wait for the right opportunity to act.

I have lost a few grand on penny stocks. I would not suggest it. Better off using it as a poker bankroll and building.

 

As others have noted, stick the money into something relatively safe like an an index fund, ETF, Vanguard growth fund, etc. and forget about it. Let it appreciate and continue to add to the pot until you have enough where you can start to invest in individual equities if you still want to at that point.

Can't speak to S&T, but in M&A no one cares about your "passion for the markets" and how well your personal account has done over the past 12 months. If anything, it tells me you're going after the wrong job and should instead be going for S&T, ER, AM, etc.

 

So we have the 'invest' crowd who would reccomend plugging it into ETFS and you'll see a good long-term risk adjusted return (because you're not smarter than the market).

We also have the 'trading' crowd, which reccomend using leverage (implicit via options or explicit via margin) and entering/exiting positions on the basis of a trading strategy/methodology.

To be 100% honest I'd use the money to 'learn' about options. See option traders sit atop the totem pole in the S&T hierarchy, so if you can get options, you instantly outsmart cash equity guys. Debt guys are the other side of this but with 2k you can do very little.

Anyways; what I propose is that you get to grips with the different Greeks, how they are important and why - nothing will make you learn faster about these than losing money to them for being stupid. To really 'get' options and volatility, I'd suggest buying a straddle and playing with it. NEVER be short-options as a noob.

 

While its true that options give you the ability to create upside with a small amount of capital, the fees are still going to kill you with that amount of money. Most discount brokerages still charge around $10 per trade +$0.75 per contract, which means you have to buy a lot of contracts before you can make up for transaction costs. And yes, you probably won't even qualify for a margin enabled account (which means no options). Unless you are okay with lying, which is just a bad start to your investing career (not to mention illegal).

But again, I would take the advice of staying away from options until you really have a thorough understanding of what is going on there. If you want a basic introduction: Khan Academy, Investopedia, youtube. Plenty of material out there.

"Strength does not come from physical capacity. It comes from an indomitable will."
 

Before you read this, I fully am aware that I am oversimplifying options and that professional options traders, math guys etc will probably have qualms with this and yell at me. I'm okay with that haha. I'm just trying to provide a basic overview of options for someone looking to understand some basic factors if looking to trade them, similar to how I was when I started out.

Simply, options are a directional bet on an underlying stock which gives someone the right to buy or sell the underlying at a given price by a certain date. For a call, you have the right to buy the underlying at a given price by the given date. For a put, you have the right to sell the underlying at a given price by a certain date. If you own a call, your option is 'in the money' when the price of the underlying exceeds the strike price. For a put, it is in the money when the strike price is above the price of the underlying.

With options there is a multiplier (leverage) of about 100. So for every contract you buy you control 100 shares of stock. The price you see when you look at buying an option is a premium, which is made up of a bunch of different factors (time value, vol. etc). Let's say an option is trading at 1.00 currently and you go to buy that the cost to you will be 1.00 multiplied by the number of shares + commission. So if I buy one contract for 1.00 it will cost me 100 bucks plus commissions.

So what makes up the premium? Very simply, Time value and volatility (probability of the option ending up in the money essentially). The more time you have, the more time value will make up the premium of the option. Theta, the Greek for time value, will also tell you how much you will lose in price due to that time constraint each passing day. As you get closer to expiration, theta becomes a much bigger issue. Volatility also plays a role because that determines the odds on an option ending up in the money. Now I'll throw out another Greek, delta, which measures how much the option price will change given a move in the underlying. There are other Greeks, gamma and Vega come to mind but I won't bother going into them there. There is also a lot more to the ones I talked about and how they all play together but again, that's for someone smarter than me.

I should also note, that if an option goes to the expiration date and it is not in the money it expires worthless. That's why options are pretty dangerous because you can be totally correct on the move of a stock but run out of time for it to happen. So there is a lot to consider just in buying calls or puts. You can also sell them, combine different strategies via buying and selling them. I'm not going to sugar coat anything, most of the time options are at best a well thought out bet. Markets in many cases are less liquid and commissions can eat away at you.

Anyway, I'll shut up. There are a ton of resources online, just start goggling about options and there is a wealth of information. I'll warn you though, options are addictive if you aren't careful.

 

Honestly dude back the f*ck away from options. You don't even understand the basics of what an ETF is. Your portfolio isn't 75% equities and 25% ETF. The ETF has an underlying basket of securities. If you're invested in a broad market equity ETF then your portfolio cosnsists of 100% equities!

Don't listen to these idiots. I guarantee not many people on this thread actively trade options. Grab a book, learn about the theory/math behind options first, and do not risk your hard-earned money on something you don't even understand. If eventually you still want to dabble, then start slowly. Start with covered calls and how to use them as an income source and to protect capital. Then eventually you can start looking at option strategies.

-MD Nasty

 
College Monkey:

Hey Monkeys,
I am a freshman at a non-target looking to gain experience and hopefully break into IB. I opened a personal portfolio several months ago with roughly $2k. Thus far, I am pretty much even on my initial investment.
What are some strategies that I can employ to help me earn some revenue? It's definitely tough with such a small amount of money but what are some methods that have worked well for others? Lastly, do firms care whether or not I am making money or are they just interested that I am gaining experience?
Thanks

As far as getting into trading for IB, it's about choosing your positions and being able to justify why w/ your research & what happened. As far as being able to generate "revenue" it's not really necessary for IB, it's the experience overall and understanding of how/why/why didn't your research work and did the outcome match your prediction. Options are a great way to generate "revenue" but I wouldn't unless you REALLY understand the strategies & types of options "plays" that are available & used to hedge & unwind positions. If you're new to trading, do yourself a favor & do the research, use the resources at your B/D to learn first. There are many "active traders" who think they know what they're doing, until they ultimately realize they don't...right around the time they're in a Margin Call & having positions auto liquidated at the market close or having to have discussions around wash sales & why they were auto assigned.

Great idea...shows you've got skin in the game and actual experience thinking through the entire process, but it can be a very expensive lesson. Tread with caution.

 

Investing and investment banking are pretty different. Sales and trading, Asset Management (hf, mutual funds etc but not PE for the most part) sure but if you want true IB being able to pick stocks has very little applicability. I suppose it shows you have a general interest in finance and want to analyze companies and pick through k's & q's but you'd be better off spending time and money on learning finance and modeling. And take a ppt course to learn how to format-that's the most important thing as an analyst... I've been in PE for a while and for one, most people have no idea what I do and two, they typically ask me for investment advice. I probably have less of an idea of what's going on in the public markets outside of a few particular things than your dentist. I follow the economy, trends, debt markets and certain industries/sectors religiously but I have no idea where the Dow or Nasdaq are.

 

Yea, from what I remember you only need a cash account to trade options. Unless you plan to use Interactive Brokers, I don't suggest trading a whole lot. It's only $1/trade min there, with a basic quote feed of $10/month.

And I don't think most people on this thread have even tried to open a margin account. Back when Thinkorswim was it's own entity, you instantly got approved to trade fckin everything you could type a ticker for. Nothing is more addicting (cept maybe coke) than trading a combo of S&P, oil, and t-bond futures in a single day. Imagine making/losing $600 bucks in an hour in your underwear in college. You felt like a fkin king when things worked out. You just don't realize how much you can lose, though, until you start trading futures. A $2k account trading FX futures could be cut in half within a few hours.

Most brokerages require you to fill out pretty extensive forms now before they give you that kind of power. Some of it's stupid, though, especially when they refuse to give you permission to buy naked calls/puts (when the capital you put is the most you can possibly lose).

 

Ok if you want to make some serious cash you'll disregard everyone's advice and listen to me carefully. If you follow these simple steps you are guaranteed to make a killing in this market.

1) Open up an account with Charles Schwab. They have the highest commissions per trade out of all the brokers out there, but hey, if they're charging that much then they obviously have a SICK research platform. This is the way to go. Be skeptical of brokerages like Interactive Brokers ($2 round trip?? That has to be a Nigerian scam!).

2) Trade big and trade often! Don't worry about those comissions eating away at your investment. Keep churning and burning. The more you trade the more likely you are to make green. This is simple statistics. Don't argue with me on this one.

3) Make sure to add a little leverage to your bank roll. You probably won't qualify for a margin account on only 2K. But that doesn't mean you can't trade 3x leveraged ETFs. I recommend the 3x Bull Long 20+ year Treasury (ticker: TMF). Don't mind the higher expense ratio. This bad boy will maximize your GAINZ. And given where rates are at today, they can only go LOWER!!! I'm talking 'bout QE 3 meets QEZ.

Side note: I recommend you actively day trade your whole portfolio. But a 3x leveraged ETF should be buy-and-hold only. Hold this puppy for about 3 years in order to see the long-term benefits.

4) Don't even think about putting that money into a ROTH/IRA retirement vehicle. You want to have maxium flexibility to trade what you want when you want. It's ok to dip into the fund in order to finance a little Vegas trip every here and there.

5) Always place market orders. STOP and Limit orders are for chumps. Trailing stops are for pussies. Let the market run its course. When you're right you're right. Hedging is for Grandma's 509 plan.

So yeah there you have it. My 2 cents on how to be the next market wizz. Get money get paid son. I look forward to reading an interview about you on Jack Schwager's next book.

  • MD Nasty
 

Minimize your portfolio's variance, use your Laplace scalar within your diversification model to optimize its value, rebalance regularly, and focus on quality (value) stocks that have both direct and inverse movements (Bear-ish and Bull-ish stocks). Just like reporters state on television make sure to hedge any losses, and sell at the most opportune time in order to reduce your AGI.

 

Have you considered betting on sports? Throw 2k on Heat -2.5 tomorrow night, no way they lose 2 in a row to that joke of a team from Indiana

"I must create a system or be enslaved by another man's." William Blake
 

The best way for you to make money online is for you to do something that you like and enjoy. When you do some thing you like and enjoy you will be able to commit yourself to doing it fulltime. The reason for this is working online can be difficult at times and if you do not enjoy it then it will be difficult for you to be successful making money via your website. Bfirm is among the world’s largest online marketplac (http://www.bfirm.in/), where savvy businesses hire, manage, and pay a talented workforce of on-demand professionals.

 

Hey xxx200, you seem like a nice guy so here's your first secret. I play golf with Tim Cook. Last Saturday, he mentioned that Apple will be announcing their first TV, one week from today. It will have voice-activation, wireless, bluetooth, 3D, only round button on the bottom and the ability to hover in mid-air on command.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein
 

Despite the advice on diversification that I would normally give, I am young and probably greedy. I am currently allocated 100% Large Cap Financials and will continue buying in for the forseeable future. My plan is to continue loading up, and in five years when valuations are hopefully more normalized and dividends have returned to 2-3%, I should be making 8-15% on annual dividends relative to what I paid.

 

IlliniProgrammer's investing principles: Invest conservatively in boring, income-producing assets that collect economic rent and scale with inflation

Short-term investors are willing to put up with negative real risk-free rates of return. However, I've got a longer investment horizon and a well-diversified portfolio of inflation-correlated assets is a lot less risky over 30 years than treasury bonds. Best of all, they produce dividends.

I don't like paying other people to manage my money

I'm a conservative investor. I can afford to be- I have a well-paying job and a very frugal lifestyle. I am happy with getting 6% real returns. Paying some bozo 1-2%/year plus agency and transaction costs to do this for me reduces my dividends by 20-30%. Sure, the 30-40 basis points for an index fund is worth it sometimes, but that extra 1.5%/year for thirty years on my own investments works out to an extra 60% in retirement assets.

Save your ordinary income/collectible- taxed investments for a tax-free account if possible. Leave qualified dividend payers and UBTI generators in a taxable account.

This includes TIPS, gold, REITS, Royalty Trusts, and would include corporate bonds if I trusted Ben Bernanke to keep inflation under control.

Collect sustainable dividends, but first have a cash cushion to get you through a recession.

Collecting dividends in a non-retirement account makes the process a lot more fun. I get to say to myself, "Sweet! Dividends are now paying for 7% of my lifestyle. Next year, that number will probably be 10-11%, all things staying proportionate. If this keeps up, I'll be retired in XX years."

Good places for long-term inflation scaling dividends:

-Oil majors (especially in Europe) -REITs -Pipelines -Oil/gas Royalty trusts (just remember that they deplete) -Deregulated Utilities -Pharma

You should be able to average 4-5% CPI-adjusted sustainable dividends pretty darned easy.

I work in finance; there's already a huge MRP in my income. I don't need it in my portfolio.

If you are a doctor, you can maybe afford to gamble on penny stocks and growth stocks with betas of 2-3. I aim for companies with healthy balance sheets with boring assets that I think should fundamentally have betas below about 0.8- and keep a cash cushion.

Series I savings bonds are a free option and inflation hedge to younger investors.

While TIPS are posting negative five-year yields, you can get a Series I savings bond at parity- and cash it whenever the heck you feel like after 11 months (with a three month penalty before five years.) Right now they're yielding 4% (nominal).

 
IlliniProgrammer:
IlliniProgrammer's investing principles: Invest conservatively in boring, income-producing assets that collect economic rent and scale with inflation

Short-term investors are willing to put up with negative real risk-free rates of return. However, I've got a longer investment horizon and a well-diversified portfolio of inflation-correlated assets is a lot less risky over 30 years than treasury bonds. Best of all, they produce dividends.

I don't like paying other people to manage my money

I'm a conservative investor. I can afford to be- I have a well-paying job and a very frugal lifestyle. I am happy with getting 6% real returns. Paying some bozo 1-2%/year plus agency and transaction costs to do this for me reduces my dividends by 20-30%. Sure, the 30-40 basis points for an index fund is worth it sometimes, but that extra 1.5%/year for thirty years on my own investments works out to an extra 60% in retirement assets.

Save your ordinary income/collectible- taxed investments for a tax-free account if possible. Leave qualified dividend payers and UBTI generators in a taxable account.

This includes TIPS, gold, REITS, Royalty Trusts, and would include corporate bonds if I trusted Ben Bernanke to keep inflation under control.

Collect sustainable dividends, but first have a cash cushion to get you through a recession.

Collecting dividends in a non-retirement account makes the process a lot more fun. I get to say to myself, "Sweet! Dividends are now paying for 7% of my lifestyle. Next year, that number will probably be 10-11%, all things staying proportionate. If this keeps up, I'll be retired in XX years."

Good places for long-term inflation scaling dividends:

-Oil majors (especially in Europe) -REITs -Pipelines -Oil/gas Royalty trusts (just remember that they deplete) -Deregulated Utilities -Pharma

You should be able to average 4-5% CPI-adjusted sustainable dividends pretty darned easy.

I work in finance; there's already a huge MRP in my income. I don't need it in my portfolio.

If you are a doctor, you can maybe afford to gamble on penny stocks and growth stocks with betas of 2-3. I aim for companies with healthy balance sheets with boring assets that I think should fundamentally have betas below about 0.8- and keep a cash cushion.

Series I savings bonds are a free option and inflation hedge to younger investors.

While TIPS are posting negative five-year yields, you can get a Series I savings bond at parity- and cash it whenever the heck you feel like after 11 months (with a three month penalty before five years.) Right now they're yielding 4% (nominal).

Probably a stupid question, but do you reinvest your dividends or take the cash?

"Give me a fucking beer", Anonymous Genius
 
IlliniProgrammer:
IlliniProgrammer's investing principles: Invest conservatively in boring, income-producing assets that collect economic rent and scale with inflation

Short-term investors are willing to put up with negative real risk-free rates of return. However, I've got a longer investment horizon and a well-diversified portfolio of inflation-correlated assets is a lot less risky over 30 years than treasury bonds. Best of all, they produce dividends.

I don't like paying other people to manage my money

I'm a conservative investor. I can afford to be- I have a well-paying job and a very frugal lifestyle. I am happy with getting 6% real returns. Paying some bozo 1-2%/year plus agency and transaction costs to do this for me reduces my dividends by 20-30%. Sure, the 30-40 basis points for an index fund is worth it sometimes, but that extra 1.5%/year for thirty years on my own investments works out to an extra 60% in retirement assets.

Save your ordinary income/collectible- taxed investments for a tax-free account if possible. Leave qualified dividend payers and UBTI generators in a taxable account.

This includes TIPS, gold, REITS, Royalty Trusts, and would include corporate bonds if I trusted Ben Bernanke to keep inflation under control.

Collect sustainable dividends, but first have a cash cushion to get you through a recession.

Collecting dividends in a non-retirement account makes the process a lot more fun. I get to say to myself, "Sweet! Dividends are now paying for 7% of my lifestyle. Next year, that number will probably be 10-11%, all things staying proportionate. If this keeps up, I'll be retired in XX years."

Good places for long-term inflation scaling dividends:

-Oil majors (especially in Europe) -REITs -Pipelines -Oil/gas Royalty trusts (just remember that they deplete) -Deregulated Utilities -Pharma

You should be able to average 4-5% CPI-adjusted sustainable dividends pretty darned easy.

I work in finance; there's already a huge MRP in my income. I don't need it in my portfolio.

If you are a doctor, you can maybe afford to gamble on penny stocks and growth stocks with betas of 2-3. I aim for companies with healthy balance sheets with boring assets that I think should fundamentally have betas below about 0.8- and keep a cash cushion.

Series I savings bonds are a free option and inflation hedge to younger investors.

While TIPS are posting negative five-year yields, you can get a Series I savings bond at parity- and cash it whenever the heck you feel like after 11 months (with a three month penalty before five years.) Right now they're yielding 4% (nominal).

REITS – are there any specific things you look at besides high dividend yield and a P/E and beta around the industry average? This is before pouring into more detail and actually going through the financials. I’m trying to set up a quick screener spreadsheet to pull in historical data on securities through Bloomberg (not just REITS, but oil, pharma, utilities, etc.) and t hen go into more detailed analysis.

"Give me a fucking beer", Anonymous Genius
 

The time to invest in REITs was in the dregs of 2009. Right now, I wouldn't touch them.

My portfolio at the moment:

Bank of America Best Buy MBIA Microsoft

I also have a limit order on Wells Fargo for $25, way too much invested in a risky biotech I've been tracking for years called Provectus Pharmaceuticals, and a large amount of money in cash.

 

Hmmm. If you're confident in the individual long-term fundamentals of each of the companies you pick out, it doesn't hurt to reinvest dividends. You just have to be smart about it. For instance, some of my MLPs offer me a 5% discount on DRIPs. EG: they're trading at $50/unit; I get a $95 dividend; instead of buying 1.9 shares at $50, I buy 2 shares at $95.

Other times, the firms hire a custody bank to handle everything (this often happens with ADRs). They tend to screw you. I would recommend just taking cash next time around if you calculate the DRIP price based on your dividend and get a price higher than anything the stock traded at between ex-div and payment date. Then you can use that cash to reinvest on your own.

 

How about some diversification? So far all I've seen suggessted is financial assets, financial assets, financial assets. guess what, when the market crashed in 08/09 all financial assets went down together. I have about 20% in farmland and 15% in gold. They have been great hedges.

 

Well, besides two companies- both South American, one which pays no dividends and one which is located in a socialist country that carries sovereign risk- there's no real liquid opportunities to invest in farmland. Sure, you can form a partnership with a bunch of other people, but many states have a lot of rules on corporate and partnership ownership of farmland. Also you generally have to pay a 6% commission to a realtor. And then you have to buy in 40-acre tracts (Read: increments of $200K) to get discounts on real estate taxes and make it economical to farm. If you are a multimillionaire or a Wisconsin or Argentina resident who can live on the farm, farmland makes a lot of sense. It starts to make less sense for an NYC resident.

I do have some physical numismatic silver and gold coins sitting in a bank deposit box, but this is not a GREAT time to be buying metals. If you do, stick to numismatic stuff. During a commodities boom, a lot of folks who aren't collectors start melting down their old coins into silver to sell as bullion. These are coins that can NEVER be printed again. Meanwhile, folks who value the coins for their collectible value tend to hang onto them. During a metals crash, silver goes from $50/oz back to $5/oz, but those Morgan Dollars go from $54/oz back to $20-$25/oz. So there's a lot more convexity in the numismatic market, and unlike all financial options, numismatic coins carry a permanent conversion option on them. Just as long as there's always a ready supply of idiots in every generation willing to melt down their morgan and peace dollars during a commodities boom, the silver dollars/silver and gold eagles/gold relationship remains fairly convex, and it remains a permanent, theta/gamma-replenishing option (at least over 30 years) until you have stupid kids who inherit them.

 

All equity and MLPs. All long positions. Small, about $15k, with $7,000 in cash and ready to go as needed.

"When I was young I thought that money was the most important thing in life; now that I am old I know that it is." - Oscar Wilde "Seriously, psychology is for those with two x chromosomes." - RagnarDanneskjold
 

Can't help but wonder if there's a magical REIT filled with tenured federal employees...

"When I was young I thought that money was the most important thing in life; now that I am old I know that it is." - Oscar Wilde "Seriously, psychology is for those with two x chromosomes." - RagnarDanneskjold
 

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"When I was young I thought that money was the most important thing in life; now that I am old I know that it is." - Oscar Wilde "Seriously, psychology is for those with two x chromosomes." - RagnarDanneskjold
 

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