53 replies to this topic

[manuj]

Sorry about that...I meant to answer the net worth question and got off topic talking about the 50% haircut I took in real estate. I would estimate that my net worth is somewhat similar to my brothers. They had things like stock options, 401Ks that the company matched, various ltypes of insurance, etc etc. I had none of those so I had a lot to overcome.

To make something clear, I'm not the most successful trader I know, and I've know a number of successful traders personally. But my brothers aren't the most successful corporate executives either. Look at some of the packages some of these CEOs leave with...pretty fancy money. I think the point is that you can do well in trading if you're good at it.

In my case, trading was something I have loved since I was 20 and I opened my first brokerage account with a phoney drivers license. I couldn't have done anything else. I would have been a lousy corporate executive. And I would have been unhappy doing it. So my thought is that you make your choice based on what you love, what you think suits you. Money is secondary to that. Sky is the limit in trading....there have been those who have proved that. Generally speaking the traders that make the most trade with other people's money. I tried that at one point in my life, and didn't like it. I found that if there was a loss, people tend to whine about it. It put a pressure on me I didn't like.

IT

IT - that is very encouraging. Thanks a lot for sharing that.

[zoropb]

manuj, just thought you may find it interesting Bloomberg about a month ago came out with these income numbers for Oil traders lasting 10 years in the biz $1 million a year. A brain surgeon 600k, a 5 star general 185K. It shows this is not for everyone and not the easiest of professions by those other two comparison jobs. One thing about Losses in Real estate or stocks from a low it could take 25 years to re-coop those kind of losses sometimes (dividend and re income aside) because one can be making cash in other investments too and more of it with your full 100% of not taking those kind of losses specially real estate without the pain in the rear of tenants.

[IndexTrader]

One thing about Losses in Real estate or stocks from a low it could take 25 years to re-coop those kind of losses sometimes (dividend and re income aside) because one can be making cash in other investments too and more of it with your full 100% of not taking those kind of losses specially real estate without the pain in the rear of tenants.

The only time (so far) that I know of that the major stock indexes took 25 years to recover to new highs was after the 1929 top. And at that, the assumption we're making with that is to say that you were long at the top and did not get out at all. There are no other 25 year periods that that statement would be true. I'll leave the 2000 peak of the Nasdaq open to question, since it has not been 25 years. Looking at the 2000 peak, a number of averages went to new highs in 2007, like the NYSE Composite, Dow Industrials, Transports, and Utilities, SP500, and a number of other lesser indices like S&P 400 and 600. And leaving dividends out would way underestimate stock market performance, since dividends account for a good portion of overall return over the years.

As far as real estate goes, there was never a down year since they started with the statistics, let alone a 25 year period (assuming you're talking about US residential real estate). But I will say that in terms of my rental properties, the rent is THE major component of return. It's huge. I'll recover the 50% hit I took in rental real estate in a relatively few years just from rent, forget the appreciation. I did not buy considering appreciation to begin with, I bought based on rental value, and bought under market at the time. But, as it turned out, the real estate did appreciate big over the years. Yeah, you could have timed it if your timing were perfect and got in and out. Maybe a few did that. Most didn't. And I might add, making alot of money in real estate has very little to do with timing the real estate market. If you can do it, your profits will be bigger, but if you invest correct in real estate you will make profits either way.

It's like the old story: the father gives each of his 3 sons $100K and tells them to invest. Sixty years later the first son bought and held, and he is up, but it's like 8%. The 2nd son successfully bought and sold at the tops and bottoms for thirty years....he is up 10X (I made that number up BTW to illustrate this story). The third son invested in the top group of the year for sixty years, so during the depression he was long golds, etc. He made 100X. So the point of the story is that IF you can pick out groups, that's more important than timing. Just saying.

IT

[zoropb]

ah it has happened and it did take over 25 years not only in the US but England, Holland. How about Japan RE and stocks is in year 21 of theirs and I cannot see theirs going to 1990 level for perhaps another 15 or 20 years. Farmland after 1930 took over 25 years housing pretty close and that drop was only 26% in residential (compared to current 33% in US) and 89% in farmland back at 1930 peak. We are no where near a low in this baby yet and to get back to 2005 levels lol. So yes it has gone down but if one only looks at what is convenient instead of what has happened in US history then one falls into the same trap that got all those banks and folks that have taken 50% haircuts off what they could of got and now could buy back two for one or 3 for one perhaps by the time this drop is over. I can say this because I have done pretty good timing of it 3 times in three different decades. Leaving out all rental income ...Starting in Miami Beach in 1986 to 92 buildings a documented return of 3100% on my cash (I started with very little as a 26 year old), again in 1996 buy dumped in end 2003 US all homes 138% on my cash did not catch the exact top but invested in the next big move in Costa Rica dirt cheap land . Bought 2001-4 in Costa Rica farmland converted to teak plantations 2 housing (sold out of both) projects dumped all rest in 2006 that I was not using for something else, return 306%. I think I can talk about real estate or trading on a pretty knowledgeable level. The point you bought years ago at a fraction is besides the point. The point was timing of any asset is crucial to one's overall returns and not absorbing big losses like 30% or in your case 50% from peak. Had you sold say even at the 80% of the peak by next year buying double of what you currently own you could of made double what your making now in rent for the same time your holding your overvalued property making up in spades the 6 years of income you just got in a couple and have double your principal to boot. btw I too as you did lost my first bank in options. It happened in 81-82 as a newbie took a year off before starting that slowly and gave me most of my RE start up money. So I know your pain there. Ditto on that one but have no Idea of losing that much of what I could of gotten on my investments in RE Yikes IT.

Edited by zoropb, 02 October 2011 - 05:38 PM.

[flyers&divers]

To me being successful - in general - means moving towards one's goals with integrity. When we are talking about success in trading it's different because here we measure success in our local currencies, but on some level it is still the same. When I was young I became immensely successful and proportionately over the years I am less and less successful when expressed in percentages. On the way to becoming a full time trader and during it ,while success was mine I was also out of control and I invested my winnings in the same fashion. Trading was all my life, now my life is so much bigger then trading, I am at peace, I do not have the same urgency and my occasional slips of discipline can't hurt me. I'd say if one stayed ahead of the trading game (say banking some coin year after year)without compromising one's health, sanity and relationships and has enough left to give others then one is successful in trading. If trading success is not in proportion to one's life then it won't last. Regards, F&D

[IndexTrader]

ah it has happened and it did take over 25 years not only in the US but England, Holland. How about Japan RE and stocks is in year 21 of theirs and I cannot see theirs going to 1990 level for perhaps another 15 or 20 years. Farmland after 1930 took over 25 years housing pretty close and that drop was only 26% in residential (compared to current 33% in US) and 89% in farmland back at 1930 peak. We are no where near a low in this baby yet and to get back to 2005 levels lol. So yes it has gone down but if one only looks at what is convenient instead of what has happened in US history then one falls into the same trap that got all those banks and folks that have taken 50% haircuts off what they could of got and now could buy back two for one or 3 for one perhaps by the time this drop is over.
I can say this because I have done pretty good timing of it 3 times in three different decades. Leaving out all rental income ...Starting in Miami Beach in 1986 to 92 buildings a documented return of 3100% on my cash (I started with very little as a 26 year old), again in 1996 buy dumped in end 2003 US all homes 138% on my cash did not catch the exact top but invested in the next big move in Costa Rica dirt cheap land . Bought 2001-4 in Costa Rica farmland converted to teak plantations 2 housing (sold out of both) projects dumped all rest in 2006 that I was not using for something else, return 306%. I think I can talk about real estate or trading on a pretty knowledgeable level.
The point you bought years ago at a fraction is besides the point. The point was timing of any asset is crucial to one's overall returns and not absorbing big losses like 30% or in your case 50% from peak. Had you sold say even at the 80% of the peak by next year buying double of what you currently own you could of made double what your making now in rent for the same time your holding your overvalued property making up in spades the 6 years of income you just got in a couple and have double your principal to boot.
btw I too as you did lost my first bank in options. It happened in 81-82 as a newbie took a year off before starting that slowly and gave me most of my RE start up money. So I know your pain there. Ditto on that one but have no Idea of losing that much of what I could of gotten on my investments in RE Yikes IT.

Just thought I'd mention I was referring only to US stocks, and US residential real estate, not Japanese stocks or real estate, Holland, England, etc etc. I'm not aware of any statistics on US residential real estate prior to about the mid 1960s. But I'd sure like to see them or have a link to them.

As far as my 50% haircut, in hindsight it would have been smart to sell at the peak. However, I didn't think they were going down 50% either. At the time I thought maybe 20%, and since I would pay that in tax alone I decided not to sell. BTW, once we were past the peak, the market just basically collapsed. It wasn't like the stock market were it goes down a little everyday. Once past the peak, the bids were all way lower. Saw the same thing at the peak in California in about 1990. The average house in Orange County was $400K one day...the next day it the bids were $200K...nothing in between.

Anyway, it is true that had I sold at the top, I could now buy more property, although not as much as you think after you pay the tax. I'll survive.

IT

[vitaminm]

Don't the India need a big army of 800mn gods and goddesses to protect the nation from surrounding evil Satans? Don't they worship symbolic brave Gods and goddesses?

http://www.religionf...igion_chart.htm
http://en.wikipedia.org/wiki/Atheism

which stocks do you routinely trade to profit stated weekly amount?

My two cents:
Don't trade targets i.e. don't target particular amount or particular target on the scipr u r trading. Just focus one making every trade win for you but how much is decided by markets not you "morons". Who ever think they can treat markets as their fixed deposit and extract a targeted rate, either havent paid their dues to market or havent learnt yet, that you don't treat the mother who is your nurturer (if there is a word like that) or better still raison de etre for your life as an ATM machine.
Respect markets to receive her kindness.

PS: Apologies for sounding all relegious on markets:) . On side note I m atheist, which should say alot about me as I come from land of more than 800mn gods and goddesses

[zoropb]

ah it has happened and it did take over 25 years not only in the US but England, Holland. How about Japan RE and stocks is in year 21 of theirs and I cannot see theirs going to 1990 level for perhaps another 15 or 20 years. Farmland after 1930 took over 25 years housing pretty close and that drop was only 26% in residential (compared to current 33% in US) and 89% in farmland back at 1930 peak. We are no where near a low in this baby yet and to get back to 2005 levels lol. So yes it has gone down but if one only looks at what is convenient instead of what has happened in US history then one falls into the same trap that got all those banks and folks that have taken 50% haircuts off what they could of got and now could buy back two for one or 3 for one perhaps by the time this drop is over.
I can say this because I have done pretty good timing of it 3 times in three different decades. Leaving out all rental income ...Starting in Miami Beach in 1986 to 92 buildings a documented return of 3100% on my cash (I started with very little as a 26 year old), again in 1996 buy dumped in end 2003 US all homes 138% on my cash did not catch the exact top but invested in the next big move in Costa Rica dirt cheap land . Bought 2001-4 in Costa Rica farmland converted to teak plantations 2 housing (sold out of both) projects dumped all rest in 2006 that I was not using for something else, return 306%. I think I can talk about real estate or trading on a pretty knowledgeable level.
The point you bought years ago at a fraction is besides the point. The point was timing of any asset is crucial to one's overall returns and not absorbing big losses like 30% or in your case 50% from peak. Had you sold say even at the 80% of the peak by next year buying double of what you currently own you could of made double what your making now in rent for the same time your holding your overvalued property making up in spades the 6 years of income you just got in a couple and have double your principal to boot.
btw I too as you did lost my first bank in options. It happened in 81-82 as a newbie took a year off before starting that slowly and gave me most of my RE start up money. So I know your pain there. Ditto on that one but have no Idea of losing that much of what I could of gotten on my investments in RE Yikes IT.

Just thought I'd mention I was referring only to US stocks, and US residential real estate, not Japanese stocks or real estate, Holland, England, etc etc. I'm not aware of any statistics on US residential real estate prior to about the mid 1960s. But I'd sure like to see them or have a link to them.

As far as my 50% haircut, in hindsight it would have been smart to sell at the peak. However, I didn't think they were going down 50% either. At the time I thought maybe 20%, and since I would pay that in tax alone I decided not to sell. BTW, once we were past the peak, the market just basically collapsed. It wasn't like the stock market were it goes down a little everyday. Once past the peak, the bids were all way lower. Saw the same thing at the peak in California in about 1990. The average house in Orange County was $400K one day...the next day it the bids were $200K...nothing in between.

Anyway, it is true that had I sold at the top, I could now buy more property, although not as much as you think after you pay the tax. I'll survive.

IT

IT what is done is done but The best way to keep track since the end of 2002 is Bob Shiller's chart without getting into his historical work which I read way back among other stuff out there. Here is the chart for you and others interested in RE. http://www.ritholtz....ler-updated.png. It is a great chart and his work is probably the best out there.
I do know what you mean about the quickness of the drop. I studied Japan and found it was pretty much the same as what happened in the US. The bids dried up super fast. Probably the same is now going on in China in some places. My main timing indicator of RE bottoms has been a local inventory of under 5 months in any market as they are all a bit different in RE. I also run mean regression annually on median home prices going pretty far back and already in 2003 we were about 35% above mean factored in with historical home inflation. btw it is at 177k for the avg home so we are about 14% undervalued already but due to the inventory we still have lots to go. I also use ROI analysis which already were screaming to expensive by 2003. I did not think we would get to the levels we did I admit I got out about 2 years before the US peak and One before the CR peak but I generally leave desert for others specially in RE because of the quick drop of bids they tend to have once the market changes to a buyers market.

I am sure your doing fine. I never doubted that.

[NAV]

I trade for a living. I have gone through various dilemmas and conflicts before settling down on what works for me. To me, having a fixed goal on a trade, either a price target or profit target has not worked well. Having a daily profit goal has not worked either. Having a profit target or price target would mean cutting short on big trending moves and expecting more during a consolidation moves. Both leads to frustration - in the former case the frustration of missing a big move and in the latter case not achieving your set profit goals. Once you start accepting whatever the market gives i.e riding a move without preset expectations or bias, life gets easier. Once expectations and opinions about markets are taken out of the equation, it's becomes easier to ride the big moves and also to accept the losses in choppy zone. My 5 cents...

Hi Nav,

I've noted that you scale-out in thirds on your trades. Is this not in effect some type of profit target? Just trying to understand. TIA

Later,
Wu

Well, most swings don't last until i take the last 1/3rd out. So effectively i ride the entire swing. In those rare cases where i run out of my positions and my signal has not turned yet, i reload on a pullback and rinse and repeat.

So there's a big difference between preset profit targets (which entails missing the rest of the swing) and my style of profit taking and staying for the entire length of the swing.

Edited by NAV, 02 October 2011 - 10:28 PM.

[TechMan]

preset profit targets (which entails missing the rest of the swing)

Assuming the trader did not re-load on the next buy signal after taking the profit.