Level of Involvement/Interest in Stock Market

[Recyclersteve]

Here is a survey about your level of interest in or involvement in the stock market. There is tons of expertise on this site (maybe some lurking in the background that needs to join). It will be interesting to see the responses on this one. I am purposely keeping the poll open for a full 180 days to give plenty of infrequent users of the site a chance to participate as well. Thanks in advance for your responses and comments.

[highroller4321]

This should be an interesting survey.

[68Camaro]

How about this option, because none of the above are applicable to me:

I'm invested in the stock market through my 401K (or related work-related retirement account), but I'm only in it because of distant past activity (when the market was significantly different - and I can't now effectively exit the account without a massive loss and/or penalty). Over the past 10-15 years I've grown to fundamentally distrust any type of electronic trading or electronic fund management, so at some appropriate point I will exit completely when the penalty disappears, and with few exceptions any subsequent stock or fund ownership (which I occasionally see as having value) will be by by old-school stock or bond literal paper certificate ownership.

[Rodebaugh]

I am active almost daily in options. Start a stock trading and think tank thread and I will read and participate. It will likely be just you and I but maybe we can both profit a bit from each others insight. Then just maybe you can talk me out of selling my UAA $16.50 Dec 15 puts 18hrs before earnings. I made 24% instead of 612%.

[natsb88]

I made a boatload of imaginary money playing a stock market simulator in high school but haven't played for real. I have never had enough idle cash to take the plunge. Maybe in a few years.

I did start playing with cryptos a little bit this year just to get the hang of it. Feels like a wild west version of the stock market Easier to throw a couple hundred bucks into crypto than it is to set up a brokerage account and pay $5 - $10 for every tiny trade. All I have done is buy and hold, and even with the current dip in alts, my little crypto experiment is up 60% in 6 months.

[Recyclersteve]

Easier to throw a couple hundred bucks into crypto than it is to set up a brokerage account and pay $5 - $10 for every tiny trade.

Not to be a commercial for Charles Schwab, but they have over 200 ETF's (exchange traded funds- baskets of stocks like mutual funds that trade all day long like stocks) that you can trade as often as you'd like for ZERO commission. So you can open an account for (I believe) a $1,000 minimum. Then you can buy and sell ETF's without paying commission. In a cash account (to be safe until you become more familiar with the rules of trading) you need to wait for settlement (now just 2 business days- it was 3 business days til a couple months ago) before using that money to buy and sell another stock or even the same stock again. There may be some other firms (check out what Fidelity offers- they may have something pretty special like what Schwab has) that have some items you can trade for free like this, but it is a fairly new phenomenon. Regular online stock trades for companies like Apple and Facebook are $4.95 each way (buying and selling).

If you want to trade something actively, be careful about what is called the Wash Sale rule. This is an IRS regulation. Basically, you can't take two losses on the same stock within 30 days. The rule is way more complicated than some people think and they end up paying more in income tax by having to pay tax on all their profits but not being able to count all their losses (because of wash sale violations). Be sure to study this and call your new broker to discuss it if you want to trade a stock more than once in a 30 day period. You can find more info on it by doing a Google search and it is way beyond the scope of this thread. Just be careful about frequent trading of the same stock and you should be ok.

To be able to open an account with a modest amount like $1,000 and trade several hundred securities for absolutely no commissions is WAY WAY better than it used to be. I remember in the late 1990's when lots of commissions were easily $100-200 or more (EACH WAY). Spreads back then (the difference between the Bid and Ask prices) were typically 25 cents PER SHARE. Now there are a lot of stocks where the spreads are just a penny a share. So things are nothing like they used to be. It is absolutely not hard for people of modest means to get into the stock market.

To go one step further, there are those robotic accounts that some of you may have heard of. Schwab has one called Schwab Intelligent Portfolios (SIP for short). This is for someone who wants to be invested in the stock market, but doesn't want to pay a fee for management by a person and wants to just "set it and forget it" (as the old infomercials used to say). This is an account for someone who is comfortable with an online only experience (no statements in the mail to reduce expenses). The account has a $5,000 minimum. You answer questions about your appetite for risk, your investing time horizon, what you would do if the market went down 20% in the next year, etc. Based on your answers a portfolio of perhaps 12-20 ETF's (see definition above) is created for you. It is also automatically adjusted so that if, for instance, foreign markets greatly outperform the U.S. and this throws your portfolio out of balance, a rebalancing is done automatically by the computer for you. All this is done with ZERO commissions, ZERO management fees, etc. Why do they do so much for free? Frankly, lots of people have portfolios that over time become large and quite complicated. They have needs like opening trust accounts, estate planning, adding beneficiaries, 401(k)'s, etc. Schwab has very competitive fees for all this stuff and they feel that if you start small and in perhaps 20 years you have done well, you will remember who helped get you your start. They are open 24x7x365, and you don't speak with a phone rep from India or anywhere outside the U.S.

Yes, I worked there for almost 20 years until retiring this past June. I couldn't talk about it on this site while I was employed there, as that wasn't allowed by our compliance department. Almost all of my time as Schwab was as a broker who spoke with all types of people- some with $1,000 or less and some with $100,000,000 or more in a single account. In the time with Schwab, I figured that I took over 100,000 phone calls, personally did over 15,000 trades with my own personal money, and looked at over 1 million stock charts to try to find the next good opportunity. Being actually paid real money to talk with people about my hobby for nearly two decades was indeed quite a privilege! I talked with people who had tens of millions of dollars with us and were just as nice and pleasant as could be. And then I'd get someone who was age 58 with a total of $2,000. That was all he had and he was bitter. Too late for someone like that to enjoy a decent retirement without getting very lucky. Of course Schwab as a company isn't perfect, but I was very happy overall with how I was treated during my long tenure.

Sorry for the lengthy post, but I had to address the misperception about getting commissioned to death in a small account. It just isn't that way anymore, at least not at some places.

[Recyclersteve]

I am active almost daily in options. Start a stock trading and think tank thread and I will read and participate. It will likely be just you and I but maybe we can both profit a bit from each others insight. Then just maybe you can talk me out of selling my UAA $16.50 Dec 15 puts 18hrs before earnings. I made 24% instead of 612%.

I do enjoy options, but do more with individual stocks. Most of my options trading has been covered calls. In the past I did a decent amount of naked puts and did quite well. I need to ratchet back the naked puts now that I am retired (at least for now).

We might be able to have some interesting conversations about options.

Hey, if I'd had a 24% profit just before earnings on an options trade, I'd have likely sold too. The 612% profit could have just as easily been a loss of 95-100%, depending on how things worked out. Feast or famine, that's how it is with options. As long as you do well over time and don't pay a ton of commissions, you should be ok. I have to admit that most people blow themselves up on options. A very small percentage (I'd guess 2% or less) do well over time. An exception to this, of course, is covered calls where it is hard to lose money if you understand the basics of that type of trade and are not worried about selling the underlying stock at the agreed upon strike price. In some cases people who understand them well can trade spreads and do well over time. Long calls and long puts is something that attracts a lot of people in their 20's and 30's who like to swing for the fences and have lots of time to make it up if their accounts become worthless. In my nearly 20 years in the biz, it was VERY VERY unusual for me to see someone who bought long calls or puts do well after even 100 trades.

Good luck with your trading!

By the way, speaking of commissions, there are some firms that let you close out inexpensive options with ZERO commissions. At Schwab any option that trades at a nickel or less can be closed out without commission. I think Fidelity has this as well, and Fido's limit might even be 10 cents per contact. Not a bad deal.

[IdahoCopper]

I put about $4,000 into a stock market account about 8 years ago. Lost it all in about 6 months.

I sold beef jerky accepting bitcoin, got up to about USD$1700 into the wallet, then lost the passphrase to unencrypt it. The inaccessible wallet is now worth a useless $32,000.

I bought silver starting 10 years ago. I've got a shiny pile that is worth about $1 less per ounce than what my dollar cost average was. So 5-10 years, no profit.

I bought real estate in 2007 to 2008, right at the peak, just before home prices crashed. Lost 3 rentals to foreclosure. Still have one rental that is upside down about 15%.

Over the last 25 years, I started 4 or 5 business ventures from custom bumper stickers to sending a video camera to orbit the moon. All failed, except beefjerky.com. The business never achieved what I had hoped, but it made me a modest living for 10 years with little actual work, and when I sold it, I didn't get rich, but maybe got enough to generate a modest retirement income. If I can figure out a secure way to invest so I don't lose that too.

I got news this morning of my good friend my same age who, on Monday was filling a tank in the back of his pickup. There was an explosion, he was on fire, burned an inch deep from above his waist to his boot tops. He is in a medically induced coma in a burn center in Salt Lake City. If he lives the next few days, he has a decent chance of survival and recovery. However his penis is gone.

That makes my lifetime of unsuccessful business and investing activities seem much less important.

[IdahoCopper]

I went to my friend's accident site today to see if I could figure out what happened. It wasn't gas, it was diesel. Diesel vapor doesn't explode like gas.

I think what happened was, while filling the large transfer tank in the back of the truck, it must have somehow leaked fuel, maybe onto the truck's muffler and a fire started. The fire then caused the tank to explode. My friend is not a smoker. It really is hard to say exactly what happened.



The bottom blew off the truck-bed fuel tank to the right of the truck. All that spilled fuel then ignited and my friend was just covered from the waist down in burning fuel.




You can see the level of the fuel in the large tank on the left, the fire made a horizontal line on the end of the tank.

[Changechecker]

Praying for your friends recovery and peace for his family

[68Camaro]

Wow that's horrible! Prayers here for his recovery. And I would like to know if there is ever any better conclusion drawn as to how it happened, to learn from it if possible.

[silverflake]

I absolutely love covered calls and cash secured put selling. Selling puts has generated a good amount of income for me in my Roth. It ain't big time money but steady 1.5 to 2% on each trade a month adds up. I use put selling also as a way to potentially buy into a stock. Its a very conservative way to get in at a lower price and get a premium to boot. Then if you are put into the stock, you immediately sell a call for some more premium. Took me a while to feel comfy doing it but fairly easy, conservative money can be had.

[Recyclersteve]

+1 (I agree totally, except that I sell naked puts instead of the cash secured type- but the same basic principle applies and both are a source for additional cash to be added to your accounts).

For anyone who is wondering about why do one and not the other, you generally cannot do naked puts in a retirement account. They typically have to be done in a margin account. Cash secured puts can be done in retirement accounts, but cash is set aside that cannot then be used to buy stock until the put position is closed out.

[agmoose]

First off - IdahoCopper - my prayers genuinely go out to your friend and his loved ones. I hope he can recover and have some measure of enjoyable life.

In regards to the poll. I am substantially invested in the market. I have a SMALL amount in a brokerage account that I can play with for buying/selling and "prospecting". Most of that went into CSX a few years back, and did pretty well. I sold that off and it went into Microsoft where it sits now, but I've been looking at selling it. There are a few other small positions, but 80% of it sits in the 1. Our 401k's are at Fidelity, USAA and my TSP. I love watching the business networks, listening to financial radio programs and reading books on economics. I think I have a fairly decent feel on the pulse of the economy and adjust our accounts accordingly.

[Market Harmony]

Through trading, I made and lost and made again a portfolio good enough for 80% of Americans to retire. Research, research, research and then buy at the right price and ruthlessly sell. Sometimes its a loss (which is a ruthless sell) and sometimes a gain (a ruthless sell, too). Ruthless because I learned early (and the hard way) that you cannot marry a position. You need to wipe your hands clean of it and walk away, looking for the next opportunity.

The psychology of trading is not for everyone. Most people cannot trade the whole market dynamic. They might make money while the trend is in their favor, but cannot adjust their trading strategy when the market changes the trend.

Making money by trading came easily to me when I started in 2002. I read some books and starting researching. Then I started to dip my foot in the water by opening an Ameritrade account. I took meager beginnings, and by using leverage, turned it into what was a small fortune for me. I was on a few forums posting under a different name and had followers who would mirror my trades and make money with me. I was happy and others were happy; it was all pointing towards a passion becoming a profession. So, I decided to look into starting my own trading firm, a hedge fund, if you will. I filed the paperwork, began setting up the company infrastructure, and funded the first account. I had been making money on a particular stock and would be using it to trade an upcoming earnings report. I knew the ins and outs of the company and what to expect, and what the market expected. So, I made my first trade and waited for the report to come out and would then make adjustments to the position.

The company, ticker SYNL, beat estimates (both mine and the analysts) and opened trading on a bad market day in July, 2007. Even after great earnings, it traded down. I bought more. It went down more, I bought more. It went down some more and I leveraged into the position more than I had in the account. I was full tilt, fully invested, in over my head, and KNEW I was right. I was wrong. In the next few days and weeks, margin calls came, so I funded the account with my own money. The stock went down. I was forced to sell. I then proceeded to lose it all. When there was about $4,000 left, I tried to recoup the account by buying calls in a struggling company that I cannot even remember, and that was the nail in the coffin. At the end I was down to less than $100 (2008). I totally blew it. I was depressed, defeated, disgruntled, and defiant.

The timing of that venture into professional trading corresponded with the actual turning point of the market crash from 2007-2009. Bear Sterns made the announcement of their massive losses from mortgage back securities and shortly after that the market trend changed and I did not. My intention was to bring a balance to peoples portfolios by offering them a trading partner... someone or some entity that wasn't the typical managed portfolio partner, but someone that dug deep and took risks to offer better gains. I had a great track record that could prove my "investing" prowess to any skeptics. I foolishly thought that luck was on my side, so I even ordered the paperwork for the company on 07/07/07. That company, Market Harmony LLC, has been in a totally different business ever since.

I now trade my personal account only. I have changed strategy to be more conservative, but do take a few well-measured shots. I no longer share stock picks unless the conversation leads itself that way. I was hurt when I lost money, but I was REALLY hurt when others lost money based what I said and did. Their confidence means more to me than any dollar amount or pride in my track record. That is something which I never want to go through again. So, I will fervently read this thread, but I will not be sharing any positions or potential positions.

That diesel story was awful! Prayers for that guy! He really needs people around him. Any kind of comfort will be a luxury should he survive this.

[IdahoCopper]

(Edited per legal advice, sorry.)


Bryan's brother and niece have set up a GoFundMe page. Please visit this link, https://www.gofundme.com/bryan-silvester-recovery and share the campaign on your Facebook, or wherever you can. Thank you in advance.

[Rodebaugh]

Seems like everyone is writing options. Does anyone trade options? Buy to open / sell to close. There is serious money in well placed contract purchases and exits.

[Recyclersteve]

Seems like everyone is writing options. Does anyone trade options? Buy to open / sell to close. There is serious money in well placed contract purchases and exits.

I do both, but the selling of options is done the vast majority of the time to take advantage of the "ice cube" effect. That is, time value is melting away after you enter the position until you exit. Why not take advantage of that bias? It is a little like trying to trade a leveraged ETF- there is that slippage factor which is why almost all of the actively traded (leveraged) ETF's are Hard-To-Borrow. The hedge funds figured it out and quickly borrowed all the shares they could to short them.

When would I just outright buy options (calls and puts)? If I had a thesis that I was convinced would play out over time. Examples: A drug company working on a cure for cancer could be one, but I am definitely NOT a biotech expert. A company that I am convinced WILL GO bankrupt could be another, but that could be tricky when there becomes no market to sell the option into. An example from years ago (circa 1998 or 99) where I did buy a single long call (didn't have much $ back then): I bot a long call on a rapidly growing company becoming pretty well known. The name of the company was Yahoo! (Ticker: YHOO). Bot a long call for $4 and sold it about two months later for $49. Sold it when they were added to the S&P500. So it was neat to make over $4k on a single call option. But I had to pick the correct month and strike price and have luck on my side. The market was roaring, so I had luck on my side.

This trade reminds me of the old quote- Don't confuse genius with a bull market.

If I did that same trade now (YHOO), I could technically afford to buy a lot more contracts since my net worth is much higher, but I probably wouldn't do it or would maybe buy just 1 or 2 contracts. Some of my former co-workers would likely think (if they knew), "Man, what has gotten into Steve. He is WAAAAAAY to conservative!" I can just see too much going wrong with the trade to take the risk.

I agree that (potentially) there is serious money to be made in some cases. But you are relying too much on luck (picking the right expiration, strike price, etc.) for my tastes.

Remember, I've spoken with over 100,000 people in my almost 20 years in the business. I've spoken with lots of people who had a system for this or that and lots of the "systems" had to do with options or penny stocks. At the risk of sounding too irreverent, I believe dinosaurs (back in the day- err millennium) used to have a "system" for world domination.

This is turning into the interesting thread that I thought it might.

[Sanford02]

I sell one high probability (80%) non-directional credit spread on RUT each month (5 to 10 contracts). I watch and adjust if my position gets tested, otherwise I hold until expiration to capture all the theta decay. My average initial credit is $875 per month this year. Volatility has been low most of the year, so I have only had to adjust 3 times. Only one of those adjustments resulted in a net loss of $684, the others were still profitable. For the year so far, I have turned $10k into $18,750 with only doing 10 spreads. I'm no genius, but I think my system works well. I have been dabbling with credit spreads for years, but this year I decided to be consistent and disciplined about it and do it every month for the whole year. The market has been kind to me, but even when my positions get tested, I have an adjustment plan that has worked well for me so far. I am still learning and tweaking here and there, and I realize that I may have just had an easy year....so I will keep doing it, and will likely find some weaknesses to fix when market conditions get a little more hostile.