Jump to content
drbubb

Beating Buy and Hold (thru disciplined speculation)

Recommended Posts

Beating Buy and Hold (thru disciplined speculation)

Long Bias + no gearing, Options to limit Price Risk

=======================================================

 

Basically: (for definition, see post #539 )

I intend to have a Physical Silver investment at the Core of my two portfolios, and then speculate around that core, using the profits of speculation to boost core investment in Silver.

 

UPFRONT WARNING : This thread is not for everyone.

Implementing these strategies & getting the timing right requires more than skill. You need the right mental and emotional attitude (and a some real luck) to buy at the right time. And you also have to be willing to be wrong sometimes, and live with the implications of being wrong. That may mean entering trades and exiting at uncomfortable moments. If this does not sound like your "cup of tea", then stick to simpler strategies. You will sleep better.

 

WEEKLY Spreadsheet : http://tinyurl.com/beatingBH'>http://tinyurl.com/beatingBH

Weekly Portfolio Updates : http://www.greenenergyinvestors.com/index.php?showtopic=14905'>http://www.greenenergyinvestors.com/index.php?showtopic=14905

 

This compares a 10,000oz Buy & Hold portfolio with two competing Alternative Portfolios:

AP#1, which may have more trading; and AP#2, which will be a more passive portfolio.

The idea is to try to beat the returns of B&H, with both Alt. Portfolios.

 

RECORD

======

Record : B&H Portf. : Alt.Port #1 : Alt.Port #2 : -SLV- : -DXY- /--CRB-- real.SLV

28 Apr.: --- $4,800 K : - $4,800K : - $4,800 K : $47.26 x73.12 / 3.7056 =# 9.326

06 May: --- $3,550 K : - $4,799K : - $4,800 K : $34.48 x74.84 / 3.3735 =# 7.650

13 May: --- $3,536 K : - $4,916K : - $4,802 K : $34.39 x75.71 / 3.3853 =# 7.692

20 May: --- $3,503 K : - $4,953K : - $4,862 K : $34.18 x75.66 / 3.4156 =# 7.571

Latest:

====== : B&H Portf. : Alt.Port #1 : Alt.Port #2 :

Vs B&H: --- 100.0% - : -- 141.4% : -- 138.8% :

 

INTRO:

This is a spinoff from the "$50-ish Peak in Silver" thread, and is intended to show that the Buy & Hold strategy requires a level of confidence and complacency that can be dangerous to your financial health. No one really knows where the price is going to be in 3-5 years (just look at the "miss" by the famous Jim Sinclair on his "$1650 by the end of January 2011" - he was right directionally, but missed by hundreds of dollars.) If you believe and act on these types of point forecasts, eventually you may find yourself on the wrong side of a huge market move. Learning to trade in and out, and protect yourself with stops, options, switching, and hedging may yield a far better result.

 

Dynamic Charts - - - - - - -Gold- - - - - - - : - - - - - - - - - -Silver- - - - - - - - - - : - - - - - - - - - -Copper- - - - - - - - - - : - - - US$ - - - :

 

au_24h_usd_oz.gif : t24_ag_en_usoz_2.gif : copper-d.gif

 

My favorite moving average is 144 days - Have a look:

+ In Gold/GLD

+ In Silver/SLV : a break is big trouble !

I am watching PHYS also ... update

PHYS-vs-GLD.gif.jpg

Gold ... update : 46p-MA : 17p-MA

CHART - GLD ... update : Gold-Futs

GLD-Wkly.gif.jpg

 

Favorite Silver charts ... SLV-intraday-chart : SLV-daily

 

BTW, I think that final spurt in Gold was caused by a switch out of Silver into Gold by those who wanted to switch away from Silver near $50, but wanted to stay long precious metals.

 

CHART - Silver ... update

SilverFut.png.jpg

 

CHART - AG to CRB ... update

AGtoCRB.jpg

 

The early entries on this thread, were posted on the Silver $50 Peak thread, or on DrBubb's diary. Initially, I was focussed on Bob Chapman's position in the Silver market. He had said that he was long with an average price of $18 per ounce. To make it simple, I translated that into the following...

 

"Simplified Portfolio" of a Perma-Bull:

================

Silver: 100,000 oz. x Cost: $18 per oz. = Overall Cost: $1.8 Million

 

Chapman had recommended "Staying long, and buying the dips."

 

I had thought that after such a huge run-up from $18 to $48, such a complacently bullish strategy was dangerous and not opportunistic enough to satisfy those who realise prices do not always move straight up, and that parabolic moves are usually followed by big drops. Taking some profits, or hedging, near $50 seemed highly prudent, even for those long term bullish on silver.

 

Can he really be sure that Silver will hit his $150-200 per ounce target ?

Sure, it is possible, but I also give some possibility to $1,000 - 2,000, and want to let the markets tell me how to trade it. This, I think, will be better than stick to some preconceived target, supplied by The Piper or some other illuminary, which may prove to be an illusion.

 

I decided to compete with the "Perma-bull Portfolio" shown above, with two trading portfolios that I would change from time to time.

 

== == ==

Long Term Gold

realgold.gif

 

LINKS:

=====

Gold charts--- :: http://www.kitco.com/kitco-gold-index.html

Silver charts- :: http://www.kitcosilver.com/charts.html

Adv SLV charts :: http://www.advfn.com/cmn/fbb/thread.php3?id=25153589

Weekly update- :: http://www.greenenergyinvestors.com/index.php?showtopic=14905

Wk spreadsheet :: http://tinyurl.com/beatingBH

Share this post


Link to post
Share on other sites

(By the time of Post #429) : How much progress here?

 

progress3.jpg

 

When I started the Beating B&H thread, there were many people posting here comments something like this:

"You cannot beat Buy and Hold in the long term - Trading Silver or Gold is like gambling: Don't do it."

(I believe they posted these comments because they had read on sites like FS, Goldseek, and JSMineset, that B&H was best, and no one could do better than that by trading in and out, over the long term):

Frankly, I thought that argument was garbage, and believed that there were sensible and disciplined approaches to trading and investing that would handily beat buy and hold over the long term. So I set up the thread to demonstrate through my own actual trading that it could be done.

 

I think the thread HAS advanced the argument, by showing that a better result was possible over the long term, and not a mere one-off fluke. I am not recommending that everyone else use all the same techniques that are employed here, just asking them to acknowledge that it is possible.

 

STAGE OF LEARNING & PARTICIPATION:

===

+1: Acknowledge that there exist disciplined techniques which can consistently beat B&H:

 

...And then, maybe dig a bit deeper and...

+2: Use one or two of my techniques, that might appeal to them, and maybe:

+3: Comment critically on what I am doing (without rubbishing it, but through understanding), and

+4: Help to refine the techniques, learning from each other as we go

 

I am disappointed that few (so far) seem to have made it past stage one, and several folks are not even at the "acknowledging" stage yet.

 

 

(Posted 04 May 2011 - 08:00 AM / DrB's Diary)

 

The Bob Chapman / Perma-bull WATCH, No.1

bob-chapman-of-the-international-forecaster.jpg

 

There's nothing so seductive as a "truth" which is self-evident !

 

I like the guy's thinking often, but I am going to pick on him, because I find he and Chris Walzek just a little "too sure of themselves", and I think they are going to "led their listeners down the garden path" once again - as they did in 2008.

 

So here goes...

 

Bob Chapman says: "Buy Silver, and Keep buying... I am long at an average of $18."

 

Let's see how good this advice is. I warned people we might see a top at about $50, and identified selling or swapping windows at about $48. Let's see how that compares with the perma-bull strategy.

 

At an $18 Cost, Bob had a $30 profit at $48...

 

At Tuesday's low near $40:

 

His $30 profit, was down to $22 - That's a 26.7% drop !

 

Let's monitor this, as we go. I think silver is headed lower, and you will get a chance soon to buy at $35, perhaps lower. If you want to beat the Perma-Bull, then you would take the $30 profit - on 10,000 ounces, that's $300,000 - an buy back those 10,000 ounces at $35. You would be then locking in a better case situation.

 

You would have received $480,000 when you sold out at the top, and it would cost you $350,000 to re-enter. The $130,000 you have left would be pure and protected profit, which you could then use to buy silver, if it fell even further - beating the Perma-bull strategy by a country mile.

Share this post


Link to post
Share on other sites

(Posted 04 May 2011 - 08:58 AM / DrB's Diary)

 

Or you could have sold at $18 trying to rebuy at $16 to ride the volatility only to find you then missed a great run to $50. laugh.gif

Let's see how this goes, before judging it.

 

You won't find another thread on GEI where I called the Top in Silver.

There wasn't one at $18, $30, or $40. Only at "near $50."

 

So I think this is a fair starting point. And you have asked me: Why do I not own Silver or Silver shares. Don't you want to know how I would effect a re-entry?

===== ===== =====

 

(ABOUT MY TRADING RISKS HEREIN / From Post # 461):

 

I think you have not yet taken on board the VERY LOW RISK nature of most of the trades that I am using on the Beating B&H thread. Essentially they are of two main types:

 

+ 1/ "Swapping out" of Silver or SLV after a run-up (and best of all, after a parabolic move up) into a similar sized position consisting of in-the-money Calls plus Cash.

 

+ 2/ "Buying insurance", by purchasing SLV puts, or calls on ZLV, in a size only to protect profits they have already made.

 

What I am NOT DOING is using options to take highly geared bets - When I Buy Calls, I generally have sufficient Cash in the account to exercise the option, so the main purpose is the LIMIT PRICE RISK so if the Silver price drops then I have less exposure to the downside.

 

If less-experienced traders get their minds around these techniques, and use them in a careful and disciplined way, ONLY TO PROTECT PROFITS that they have already made, then they will NEVER BLOW UP. At worst, they will give away some of their profits.

 

Like Nassim Nicholas Taleb says:

"Just by avoiding blow-ups, You can survive."

I also want to avoid the big drawdowns, and so move from Survive to Thrive.

Share this post


Link to post
Share on other sites

DrBubb, on 06 May 2011 - 01:07 AM, said:

Busy with that, and wasn't quick enough to buy May $30 SLV calls at $5.50 - looks like a nice price

= = = = =

Got'em now:

$30 calls:

BOT May at $5.50

BOT Jun at $6.00

They would have been worth $18+ at the top. Long live trading !

 

I think the SLV price has come down too fast. Let's see what I can do with these options

Share this post


Link to post
Share on other sites

(Posted 06 May 2011, 09:44 AM / $50-ish Peak)

 

f7af7d30.jpg

 

Vol on May SLV options is at 85%

 

Bubb, I take it you're expecting a monster rebound?

I think SLV is oversold enough to generate a decent bounce.

 

If we get one, I will have to decide whether:

 

+ To take profits and run,

+ To flip my position into puts for another possible wave down,

+ To exercise and hold for the long term

 

Choice #3 seems the most unlikely one for me right now.

 

BTW, it was the GAP on the opening which persuaded me to go ahead and buy - that plus access to some profits from trading over the last few days. Usually gaps get filled and sometimes very quickly.

 

Another things was the three black crows (now four, I suppose) which might suggest the whole move down could get retraced before a bigger drop.

 

But now, looking at this SLV chart, I see another possibility ... update

 

SLV-half.gif.jpg

 

The gap might just be the mid-point in the drop, and the whole thing might take the price down to $26.

 

Good luck on your silver trading, everyone.

 

Power to the Dollar! (if only for brief periods)

Own gold when it makes sense, but don't marry it.

Share this post


Link to post
Share on other sites

(Posted 06 May 2011 , 10:54 AM / DrB's Diary)

 

Perma-bull WATCH, No.2

BChap.jpg

At an $18 Cost, Bob had a $30 profit at $48...

At Tuesday's low near $40:

His $30 profit, was down to $22 - That's a 26.7% drop !

 

Let's monitor this, as we go. I think silver is headed lower, and you will get a chance soon to buy at $35, perhaps lower.

At Thursday's close: (near $34)

His $30 profit, was down to $16 - That's a 46.7% drop !

 

Meantime, near the close, you could buy $30 Calls : May at $4.50, and June at $5.00.

 

He would have been many miles better off, taking some profits at $48, and re-entering today with Calls.

This way, he takes a huge profit "off the table", and still retains full upside.

 

====== : B&H Portf. : Alt.Port #1 : Alt.Port #2 :

SLV$34

Cash--- : - - - - -- $ 0 : - $4,500 K : - $4,800 K :

SLV.oz : --- 100,000 : -- 000,000 : -- 000,000 :

Value- : --- $3,400 K : - $0,000 K : - $0,000 K :

Opt.Oz : --- 100,000 : -- 050,000 : -- 000,000 :

Note--- : --- - None - : -- jun.$30c : -- - None - :

Opt.Val : --- - None - : - $0,250 K : - $0,000 K :

TotVal. : --- $3,400 K : - $4,750K : - $4,800 K :

 

In Port.#1, I bought back half the ounces thru Jun.$30 calls at $6.00.

 

Trading can beat Buy & Hold, whatever the B&H Monsters tell you !

Share this post


Link to post
Share on other sites

Yes you may be able to do that, but then again you may find that one day your contracts don't get honoured as the system melts down and speculators in silver are punished.

 

Horses for courses really BC is educating the masses on how to protect their wealth rather than how to speculate. Remember that not everyone is a trader and used to the sort of risk you are happy to take-on on a daily basis, but they do understand saving in physical silver or gold as a better option than in fiat cash right now.

My point is that Chapman and Chris Walzek may be "leading people down the garden path" by expressing such strong confidence about precious metals prices rising in the long run. Many people are deaf to their arguments until prices break out, and then they jump in when they start hearing about gold and Silver everywhere. They wind up jumping in at or near the top, like 2-4 weeks ago when the arguments were most shrill.

 

Then when prices start falling, and everyone is getting fearful, people start to realise that the perma-bull arguments are flawed, it is not so easy to hold precious metals through a whole cycle. They get frightened and many may wind up selling out near the lows, when people say the bull market may be over.

 

My idea is to recognise the cyclicality and try to use it. Trading in and out at extremes, contrary to the crowds. And maybe holding a significant core position right through the cycle.

 

I have enough confidence in my trading, that I am willing to run with a smaller core position than most, and be very flexible about how I hold it.

 

Now that I have a nice core cash position in my fantasy portfolio, watch and see how I use it.

Share this post


Link to post
Share on other sites

SLV JUL 16 2011 29.00 CALL

Last [Tick] 6.70[-] Change 0.50

Bid 6.25 / Ask 6.35

---

 

For Portfolio Alt.#1, I am taking the other 50,000 oz.

Thru July $29 Calls at $6.35

Share this post


Link to post
Share on other sites

I understand your thinking completely but don't you think that the masses who buy on peaks and then sell on throughs aren't really suited to attempting to trade. The constant message from those advising a buy and hold strategy is that you should average in and not sell on dips.

 

The big difference is as I have said before that you are used to financial markets and trading most aren't and a buy & hold strategy suits them better. JBTFD easy peasy. cool.gif

This is not always good advice.

 

And although it is easy to give such advice, it is not so easy to follow it.

 

Also, the givers-of-such-advice do not give Options Strategies their full due.

Share this post


Link to post
Share on other sites

Kudos to you Bubb for your timing on the silver situation, your purchase of calls and call on a potential halt to the silver decline assisted me in the sale of my remaining SLV puts yesterday. Thanks.

 

Your timing with this thread may also prove to be rather good, let me explain and see what you think. I posted this to the gold thread;

 

Folks, I think you should be alert to a certain set of circumstances that may be about to play out here. About a year and a half ago I talked about how we could see margin hikes in commodities and metals in order to instigate a dollar rally and try and defuse the inflation problem.

 

From the "$50-ish Peak In silver Coming? thread";

 

PositiveDeviant, on 12 November 2009

 

If the CFTC CME increase margin requirements by a lot it could engineer a sudden and significant dollar rally and therefore a sharp correction in gold, silver, oil etc

PositiveDeviant, on 04 May 2011 - 11:15 PM

Looking back at what I wrote I think we would need large margin hikes in gold, oil and other commodities for this to be possible. Given what's happening to silver, I certainly wouldn't rule it out. It could be spun as a short term "solution" to commodity inflation/speculation. And we know Obama has his sights on oil...

 

Obama asks DOJ to investigate oil speculators

"Amid rapidly rising gas prices, President Obama has asked the U.S. Department of Justice to investigate whether Wall Street speculators could be manipulating oil markets, according to reports."

 

 

and now from ZeroHedge we have this;

 

Crude Dropping On CL Margin Hike Rumor

"And so the margin hike rumor mill shifts from silver to crude. Pretty soon nobody will dare to invest any capital in commodities (or FX) for fear of an imminent 100% margin spike by the exchanges, causing the S&P to trade at 100x P/E, and letting China buy up every commodity at a 50% off. Another brilliant ploy to preserve the wealth effect while not accounting for any possible side effects of Printocchio's actions."

 

 

Just connecting the dots here, what is going to happen to the dollar, gold and oil if gold and oil are subjected to repeated margin hikes by the CME...???

 

I think it would create a dollar rally, dampen inflationary expectations at least temporarily, and cause a capital flight into bonds. A sell-off in commodities has a series of outcomes positively aligned with the FED/US Government.

Share this post


Link to post
Share on other sites

Bubb, don't you think you take this little correction during a mulit-year (if ot decades) bull market in precious metals too seriously? I mean, come one, no one will be talking much about this in 2 years time.

I will let the market show me how serious it is, and not decide how big the correction is before it is done.

 

I have no preconceived price in mind for Gold, and have seen that this sort of notion of "manifest destiny" in commodity markets leads to bad trades and missed opportunities.

 

I see DANGER in this type of thinking:

$1764 Angel Starts To Shine

Posted: May 06 2011 By: Jim Sinclair

Dear Friends,

Today’s action totally eliminates all and any concern for the price of gold. Today’s action lights up the $1764 Angel in gold.

 

What happened to his "$1650 Angel"?

It seems to have died of abandonment and starvation back in January.

Share this post


Link to post
Share on other sites

Anyone who claims to have predicted this 'pullback' based on charts, fundamentals, a feeling in their bones got it dead wrong. They were very lucky not to have lost their position, as well as some dollars if they went short. To knock the dollar price down this time took blatent and open fraud on the part of the CME. Without fraudulent price fixing the price would still be rising.

 

Nobody predicted four or five huge margin increases in a week. Nobody. That was what it took to fix the price this time. Thia is not a natural correction. This is not a pullback. This is open fraud. It is as simple as that.

 

This time we came close. It took a massive effort on the part of the comex to suppress prices. There is now no doubt at all that the price is being fixed. There will come a time when the CME raises margins and it wont work. Try to trade these markets if you like. But be aware that you may end up holding a pile of paper.

Share this post


Link to post
Share on other sites

Anyone who claims to have predicted this 'pullback' based on charts, fundamentals, a feeling in their bones got it dead wrong. They were very lucky not to have lost their position, as well as some dollars if they went short. To knock the dollar price down this time took blatent and open fraud on the part of the CME. Without fraudulent price fixing the price would still be rising.

 

Nobody predicted four or five huge margin increases in a week. Nobody. That was what it took to fix the price this time. Thia is not a natural correction. This is not a pullback. This is open fraud. It is as simple as that.

 

This time we came close. It took a massive effort on the part of the comex to suppress prices. There is now no doubt at all that the price is being fixed. There will come a time when the CME raises margins and it wont work. Try to trade these markets if you like. But be aware that you may end up holding a pile of paper.

Have you read even the Title of this thread: $50-ish Peak in Silver Coming? Hunting the Top : LINK

 

Many folks were predicting margin increases, and that was one of the factors that also killed the Hunt rally in 1980.

 

BTW One of the two fantasy portfolios is now back in control of 100,000 oz. of Silver, at a lower price and with lower risk thru options. The other portfolio is the "swing for the fences" high-risk portfolio which awaits a better buying opportunity.

 

Why not see how I do in relation to the Buy&Hold Mafia portfolio. I can switch to physical at a later stage, but I want the greater flexibility, and freedom from storage risks (& costs) that comes from paper derivatives.

Share this post


Link to post
Share on other sites

SLV-half.gif.jpg

 

The gap might just be the mid-point in the drop, and the whole thing might take the price down to $26.

With my hedging hat on, Ive got an eye on the mid-20s also. I don't mind if I miss it so much as have a good enough position already in silver bullion purchased at lower prices. If I do manage to get the "bottom", I'll be selling on the rebound... in order to increase my dollar hedge.

 

Anecdote: brother-in-law wanting to plie into silver at $48/ 49, after reading hyper-inflationary newletters [he had already bought some silver at 40] . I told him not to chase the market. He didnt. Silver crashes...... now he wants to take all investment advice form me. :lol: Oh dear.

Share this post


Link to post
Share on other sites

Anecdote: brother-in-law wanting to plie into silver at $48/ 49, after reading hyper-inflationary newletters [he had already bought some silver at 40] . I told him not to chase the market. He didnt. Silver crashes...... now wants to take all investment advice form me. :lol: Oh dear.

Refer him here.

Then he can see it is impossible get it right all the time.

 

Even those who get advice from Angels (like the Piper) do struggle sometimes.

Share this post


Link to post
Share on other sites

Why not see how I do in relation to the Buy&Hold Mafia portfolio.

 

The point is, to be blunt, that it doesn't matter how you do. We (I) don't particularly care. You may well make lots more money (probably will) but that means nothing to me.

 

All that matters to me is my strategy and what I do. Everyone has to do what they are comfortable with - some people will never be traders/in-out people no matter how much evidence is provided etc.

 

No offence intended - I'm happy for everyone to do their own thing and try not to condemn any method (apart from perhaps trading highly volatile things on margin!). Just honest response.

Share this post


Link to post
Share on other sites

this 'pullback'

 

Icarus, I posted this on the "$50-ish Peak in Silver Coming? Hunting the Top : LINK" thread;

 

It may not happen but people should not be surprised if it spikes higher, then consolidates for a long time afterwards, as silver did following the $21 high in March 2008.

 

The point I am making here is that all people are talking about is "correction", "pullback", "just buy the dip" etc and that is making a grand assumption that we haven't seen a longer term top, as we did in March 2008. These margin hikes in Silver could even be a form of test being carried out in order to gauge how markets react, before more meaningful margin hikes are applied to gold and oil. If they play their cards right they could potentially cause a significant correction in commodities and a rally in the dollar.

 

James Turk was recently calling for a waterfall decline in the dollar. What did we see, a waterfall decline in silver. There are bound to be some people out there that panicked and loaded up on precious metals at precisely the wrong time.

 

When people are so wrapped up in certain outcomes the market often likes to prove them wrong.

 

I was just listening to the James Turk interview on KingWorldNews.com, a very respectable guy but I was a bit concerned by his repeated use of the word expect. I expect this will happen, I expect that will happen etc etc. He seems fairly certain we are on the precipice of a watershed event for the dollar. I find it disconcerting when people talk in such definite terms.

 

I expect one day next week there will be a large up move in silver with huge volume but the price will collapse on itself and begin to correct.

 

In listening to PM bulls with interests so strongly aligned to PM's there is a certain danger that even they themselves must be blindsided by their own position at times. They look like genuises on the way up and conveniently don't mention the things that could derail their theory. It's very easy to buy into the story that one day because of hyperinflation we will all be among the richest in the world because the majority didn't see it coming. The main problem with that is similar to what happened to the Hunts, the government changes the rules of the game during the game and if you can be alert to changes in the rules of the game then you are in a much better position than simply following others without any critical thinking.

Share this post


Link to post
Share on other sites

The old investors vs. traders discussion again. Oh, and how exciting a 4.9% gold correction is nowadays! :lol: :lol:

 

What the past few months have done is that silver has more than rewarded everyone who did not trade the 2008 plunge. Instead now the short term traders come out, who usually don't hold any silver bullion, and they think they can make money shorting this market. (Why BTW can't they ever see the really large moves, which are UP?? Poor buggers! Now they have to short to at least make some pennies.) Guess what, the buy-and-holders who don't trade have made stress-free elegant money all the time, while the shorters are picking nickels from almost underneath the steamroller. :lol:

Share this post


Link to post
Share on other sites

The point is, to be blunt, that it doesn't matter how you do.

We (I) don't particularly care. You may well make lots more money (probably will) but that means nothing to me.

Errol, you must be rather full of yourself, if you think you can speak for a majority here.

 

There are plenty of intelligent posters on GEI who can see the danger in Buy & Hold.

And those numbers will grow over time in my view

Share this post


Link to post
Share on other sites

The old investors vs. traders discussion again. Oh, and how exciting a 4.9% gold correction is nowadays! :lol: :lol:

And the ridiculously over confident Bob Chapman lost half of his Silver profits in about ten days.

 

At Thursday's close: (near $34)

His $30 profit, was down to $16 - That's a 46.7% drop !

 

That would matter to me, and most folk - I think.

 

The arrogannce of the Perma-bulls annoys more than me. And this thread begins to point out the danger of their blind confidence, and their silliness in being unwilling to grab some huge opportunities when they come along.

 

I made the mistake of taking a stock tip from Mr Chapman, and lost over 90% on it - so I know he is far from perfect

Share this post


Link to post
Share on other sites

And the ridiculously over confident Bob Chapman lost half of his Silver profits in about ten days.

 

That would matter to me, and most folk - I think.

 

I made the mistake of taking a stock tip from him, and lost over 90% on it - so I know he is far from perfect

I would only ever take any information from Chapman with a pound of salt. He is a conspiracy theorist, sees the illuminati everywhere. :rolleyes:

 

As for silver, it will go back up, and those who stayed in will be much better off than those who never traded back in. Just as with the recent gold story. Hugh Hendry is still waiting for $600, and what about Tom O'Brien?

Share this post


Link to post
Share on other sites

The big problem I have with putting my trust and wealth into following an option trading strategy is that we are in the middle of a massive financial crisis. No one knows exactly what is going to happen, there can be manipulation & interventions in markets, defaults on contracts, large financial companies going bust along with massive currency devaulations. This makes me not trust building large positions in any paper financial instrument, particularly ones based on leverage and derivatives.

 

Buying physical gold and silver seems to be a way through this financial nightmare which is simple and without counterparty risk. Of course there will be the same paper manipulations going on as there always is in any financial market, but they can't print more gold or silver, in the long run your buying power should be protected which is what I am interested in.

 

Can I ask for those that crow about they amazing gains in paper trades to be also honest about their loses when they happen. It is very easy to see when a buy & holder of precious metals appears to be losing money, but a lot harder for paper traders who only explain their gains. DrBubb why not start a thread where users can talk honestly about their losing trades I think a lot could be learnt from a thread like that.

 

I will start it off I have been buying ECU silver over the last month and already down 20%, I have bought this as a longterm play so am still holding. I am kind of lucky in that I didn't go into it too heavily I usually start small on a share and build a position as I find out more about a company and like what I see.

Share this post


Link to post
Share on other sites

I would only ever take any information from Chapman with a pound of salt. He is a conspiracy theorist, sees the illuminati everywhere. :rolleyes:

 

As for silver, it will go back up, and those who stayed in will be much better off than those who never traded back in. Just as with the recent gold story. Hugh Hendry is still waiting for $600, and what about Tom O'Brien?

That plainly - is ridiculous !

 

Have you bothered to look at the two portfolios?

Alt. Portfolio #1, has already re-entered the Silver market: Buying call options on 100,000 oz. of Silver struck at $30 and $29. If you add on the $6.20 average premium: then the "worst case" re-entry price is $35.70. In other words, with no other trades, simply by exercising the option, that portfolio is more than $12 ($1.2 million !) ahead of Bob Chapman: the Bull & Hold artist.

 

If an when I put that money into Silver, I think I have secured maybe a 30-50% increase in the number of ounces, zooming ahead of B&H.

Share this post


Link to post
Share on other sites

On hedging an options:

Why do you want to hedge gold? Do you believe it is going up, or not? If not, what are you doing with it anyway? If you believe it will be going up, but you still want to hedge, you're going to pay so much insurance for it that possibly it would have been better to stay just in paper first place.

 

Gold IS insurance.

 

If you hedge, you're going to lose a big part of your profits when they come. That's what the hedgers of hedges never tell you: a hedge costs a lot of money. You think the wise guys on here who dabble with options really consistently beat the huge investment banks they're betting against (i.e. the guys who are selling them the stuff first place)?

Share this post


Link to post
Share on other sites

Have you bothered to look at the two portfolios?

Who's portfolios?

 

EDIT: Retrospectively creating portfolios, I can create fantastic outcomes too. Someone with a buy & hold in silver has made fantastic returns while holding real money and having almost no hazzle.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×