8 replies to this topic

[ogm]

IRA's are holy and I see a lot of gambling going on in them. Think about this.... What are SDS etc. constructed from ? Index Swaps... Derivative products... Hot air.... So by buying those Derivative products you are taking the other side of the trade against some large financial institutions who are selling these "hedging" products. On the other side.. to hedge that risk they are probably buying the actual indexes. So who is hedging what here ? Are you hedging by buying a hot air baloon derivative, or the big boys are hedging by selling you a derivative product vs a capital producing asset ? Only Capital and income producing assets belong in IRA, IMO. SDS is not and investment, its a short term trading tool, and you need to understand what it is before you squander your retirement funds in it.

Edited by ogm, 12 August 2007 - 08:55 AM.

[traderpaul]

IRA's are holy and I see a lot of gambling going on in them.

Think about this....

What are SDS etc. constructed from ? Index Swaps... Derivative products... Hot air....
So by buying those Derivative products you are taking the other side of the trade against some large financial institutions who are selling these "hedging" products.

On the other side.. to hedge that risk they are probably buying the actual indexes.

So who is hedging what here ? Are you hedging by buying a hot air baloon derivative, or the big boys are hedging by selling you a derivative product vs a capital producing asset ?


Only Capital and income producing assets belong in IRA, IMO. SDS is not and investment, its a short term trading tool, and you need to understand what it is before you squander your retirement funds in it.

The big boys were selling calls on them for years.....Now, those calls they sold are in the money.....What are they going to do?

[greenie]

I agree. Those who invested their IRAs in solid blue-chip companies like CSCO or WCOM know how risky it is. So, stocks, in general, should be avoided in IRAs. Even the indices like SPX can have 50% drop and not suitable for retirement accounts. Same goes for inverse ETFs as well. Bonds would have been good, but lately there are too many mortgage products in the pool, and it is hard for a non-sophisticated investor to figure out the risk in the bond being held. So, bonds are also not appropriate for IRAs. Even money market accouts are risky, as we learned in the last few days. So, one needs to be extremely careful to choose what to put in IRAs. I think only high-dividend paying value players like NRO and RAS are appropriate for IRA accounts.

[ogm]

The big boys were selling calls on them for years.....Now, those calls they sold are in the money.....What are they going to do?

Do you just feel like arguing or what ?
At least know your subject.


These instruments haven't been trading "for years". As a matter of most of them been trading for less then a year. But darn are they popular. Everyone wants to be short stuff....

And there are total 300 open interest in calls for Jan 08 in SDS ( no other month that I see, and even that I think are the calls for Sunguard Data Systems. I think it used to be their symbol)

And no options on QID at all that I can find.

So.... any other arguments ?

[traderpaul]

No arguments .....I caught the top....You caught the dead cat bounce.....Now show me ten reasons why this market should go up?

[ogm]

I agree. Those who invested their IRAs in solid blue-chip companies like CSCO or WCOM know how risky it is. So, stocks, in general, should be avoided in IRAs. Even the indices like SPX can have 50% drop and not suitable for retirement accounts. Same goes for inverse ETFs as well. Bonds would have been good, but lately there are too many mortgage products in the pool, and it is hard for a non-sophisticated investor to figure out the risk in the bond being held. So, bonds are also not appropriate for IRAs. Even money market accouts are risky, as we learned in the last few days. So, one needs to be extremely careful to choose what to put in IRAs. I think only high-dividend paying value players like NRO and RAS are appropriate for IRA accounts.

RAS is a speculative asset play... NRO on the other hand is more suitable for IRA accounts.


And exactly you're proving my point again...
"OMG , stocks are risky! Companies that generate cash flow are risky... the world is ending!
I'm going to retire on my investment of heavily leveraged derivative products, like Index swaps, Long term puts, And what not......"

Go ahead

Take the other side of the trade against those who wrote you the swaps vs their asset and cash flow producing investments. We'll see who wins.

Sentiment.. Sentiment, Sentiment.

People lost the whole idea how to make money in the stock market. Instead of looking for value, income and cash flow opportunities, derivative products like index swaps are beeing praised as investments.

and I don't have to prove anything to anyone, you people are buying crap... time will prove it to you.

Edited by ogm, 12 August 2007 - 12:24 PM.

[thespookyone]

No arguments .....I caught the top....You caught the dead cat bounce.....Now show me ten reasons why this market should go up?

One thing to consider-there are plenty over confident, over leveraged bears to be found-adding up to an easy SQUEEZE here. If the right people decide to SQUEEZE, and take that money, you'll have no need of "the other nine" reasons to go up.

[PorkLoin]

OGM, good topic and for most people I would agree with you. Some are good enough traders that betting long and short with the derivative vehicles is fine, in my opinion, though.

If one goes that way, one sure needs to pay attention, of course!

Greenie: So, stocks, in general, should be avoided in IRAs.

Greenie, I totally disagree there. You have a good point about high-dividend paying value stocks, but as the time frame until retirement gets longer, person-to-person, there is plenty of room for more speculative stuff. Look at the returns on many stocks in the last 3 years, 4 years, even 7 years going back to 2000.

I have two main IRA's - one in Canada and one in the US. Been lucky being onboard for some major trends but have not been that great a trader nor timer. Done some smaller good in-and-out trading and some totally boneheaded moves too, but that hasn't made much difference overall.

Main things have been gold, in near the bottom back in 2000 but sold too late in 2002. Oil & natural gas, in during 2000 and 2001, sold too late in 2005. Uranium stocks, in too late - 2004 and 2005, out just recently, too late but still good profits.

Since 2000, the US account is up about 900%, the Canadian one is up about 1150%. This is substantially due to "risky" stocks. I see no way I could have done anywhere nearly so well without them. If I can do such multiplication in the next 7 years, or one more time, period, before the end of my investing life, it'll be more money than I need.

So here I am pretty much in cash for the first time in many years, and I need to find "the next big thing." Any suggestions?


Best,

Doug

[vitaminm]

One may avoid 1099 reportings by trading in IRA account!!