President: Six Figure Investing
Senior Consultant and Advisory Board Member: Invest In Vol – The Volatility Advisor
My interests include volatility as an asset class, macroeconomic forecasting, investor psychology, tax-efficient investing, and risk management strategies.
I offer consulting in partnership with Invest in Vol. My areas of expertise include volatility as an asset class (VIX, VIX futures, volatility exchange-traded products), options, backtesting, Monte Carlo simulations). For more information see Invest in Vol Consulting.
My investment activities include trading commodity and index ETFs, VIX index related ETPs and their associated options, and dividend capture combinations.
My goal is relatively modest returns at appropriate risk while avoiding “buy and hold” strategies—which I think are fundamentally flawed.
A couple of things I believe:
- The past does not predict the future (see Nassim Taleb’s “Fooled by Randomness“)
- This invalidates much technical analysis—although I think the psychology of stock movements is very important.
- Past behavior of assets relative to each other (e.g., bonds vs stocks) does not guarantee future behavior
- Markets fall a lot faster than they go up, typically at least twice as fast. Buy and hold investing ensures that you will experience the worst days as well as the best days of the market
- Investing in individual stocks involves many more unknowns than aggregates like index ETFs (e.g., greatly reduced the impacts of earnings surprises, analyst’s ratings)
4 thoughts on “About”
Work at MIT showed that Bollinger Bands 1 SD (period 10) clearly show the direction of ANY financial asset over ANY given chart whether 1minute,5 M,15 M,1H,4H,1D,one week etc. Bollinger band direction should be up & candles be in upper part of band(above moving average)preferably pushing against OR riding the bands. Multiply your trading chart by factor of 4 for direction confirmation & IF BOTH CHARTS AGREE–trader is set to go in that direction. I bet that same things happen in HFT, which is controlled by computers(milliseconds charts).Trader is better off joining the HFT computers in deciding what to do. This phenomenon is going to multiply when AI boosts trading by computers. TRADERS/INVESTORS would survive by only joining supercomputers boosted by AI. Please comment.
What is your opinion on investing a significant percentage of your portfolio on SPY/IVV/VOO , and forget? My take on this approach is that you own a piece of the market all the time, good or bad. The advantages I see include:
1. Protection against inflation
2. You don’t have to go after Crypto currencies or other forms inflation agonostic investments
3. Collect premiums thru covered calls
4. Collect dividends
The S&P 500 index has a very long term record of good performance, averaging gains I think around 8.5% a year including dividends. At it’s roots it’s basically a momentum strategy, dropping underperforming companies and adding companies with strong growth performance. With its 500 company composition it is relatively insensitive to unexpected problems with individual stocks and has participation in many industry segments. The main issue with the S&P 500 is that it is susceptible to very large drawdowns. In 2009 I think it was down -55% from its previous high, March 2020 was down over 30%. Most people are not able to deal with those sorts of dramatic drawdowns if it is most of their portfolio, and they tend to exit their positions near the maximum pain point. At those points the press is in full doom-and-gloom mode, with many people predicting additional dramatic losses. And, there is always the possibility that this time will be different and the market will not recover for a very long time(e.g., 1969 – 1979). If you are able to deal emotionally with large drawdowns without bailing out then this would likely be a good strategy, but most people aren’t. When you see that much money vaporize it’s hard not to panic. One possible mitigation of that would be to give up some of the gain, e.g., 2% a year and put that money into out of the money puts, perhaps starting with 60 days to expiration and rolling when they drop to 30 days until expiration. This strategy would limit your worst case losses in the 15% to 20% range for any given bear market.
“One possible mitigation of that would be to give up some of the gain, e.g., 2% a year and put that money into out of the money puts, perhaps starting with 60 days to expiration and rolling when they drop to 30 days until expiration. This strategy would limit your worst case losses in the 15% to 20% range for any given bear market.” I have never seen this strategy posted anywhere, but it makes perfect sense. Kudos.