September 2025 DDD

[ShareSuccess]

My solution.....BUILD The CASH & BUY the CRASH

The only Control we have is to Control Ourselves when it comes to our Finances by preparing for what May or May NOT Happen we Build a Moat around ourselves

I'm Fully Invested & will Stay that Way by Continuing to Build a "Margin of Safety" around my Porfolio so that no Matter what Happens i will Survive!

 

[qldfrog]

My solution.....BUILD The CASH & BUY the CRASH

The only Control we have is to Control Ourselves when it comes to our Finances by preparing for what May or May NOT Happen we Build a Moat around ourselves

I'm Fully Invested & will Stay that Way by Continuing to Build a "Margin of Safety" around my Porfolio so that no Matter what Happens i will Survive!

just a point, fully respectfully
you do not build the cash to buy the crash if you lock it into "fully invested" ?
or your moat does not allow for market closure/halts?
we should be invested in a market frenzy stage but shiuld we be fully invested?
do we trust being able : mentally/technically or physically to jump in time, toward the top?

 

[ShareSuccess]

I Cannot Predict The Future,Therefor i Cannot Control it so why Worry!

Dividends are Building Cash,so i am Building my Cash in Preperation for what may or may not Happen & i will Deploy those funds when i See Opportunity.

I am an Optimist So I Don't worry about what i cannot Control......The one thing i can Control is how i Deploy the Cash i Have.

 

[ducati916]

My solution.....BUILD The CASH & BUY the CRASH

The only Control we have is to Control Ourselves when it comes to our Finances by preparing for what May or May NOT Happen we Build a Moat around ourselves

I'm Fully Invested & will Stay that Way by Continuing to Build a "Margin of Safety" around my Porfolio so that no Matter what Happens i will Survive!

You raise 2 points:

(i) Margin of safety; and
(ii) Survival.


Let's take (i) first.

Do you care to elaborate on how you build a margin of safety? Is it the Ben Graham/Warren Buffett method or the Seth Klarman method? Or a third proprietary methodology?

The Seth Klarman method is probably beyond most (all) retail. Buffett has been selling down market positions. He knows in a crash, there are none spared significant markdowns.

So you may have another way, there definitely are ways, but they do not imply 'value' as implied by 'margin of safety'.

Now (ii): survival. That is a miserable way to go. It takes significant time, Intel has only now, 23yrs later, returned to its 2000 top. The 1929/1933 Bear market took also about 30yrs to print new highs.




Not to mention the psychological torment.


The conundrum of course is greed. If the market were to rise another 20%, 30% before the top, that is a lot of profit to miss out on. Selling now and missing that extra would be as painful as (almost) sitting through the downturn.

Recognising Tops.

Very difficult. If it's a slow, developing top, you probably see it in time. Fast tops are very dangerous however. Luckily, they are also rare.


Come back to me on this, I'm interested.


jog on
duc

 

[ducati916]

I Cannot Predict The Future,Therefor i Cannot Control it so why Worry!

Dividends are Building Cash,so i am Building my Cash in Preperation for what may or may not Happen & i will Deploy those funds when i See Opportunity.

I am an Optimist So I Don't worry about what i cannot Control......The one thing i can Control is how i Deploy the Cash i Have.

Dividends get cut/cancelled as everyone goes into survival mode.

jog on
duc

 

[qldfrog]

I Cannot Predict The Future,Therefor i Cannot Control it so why Worry!

Dividends are Building Cash,so i am Building my Cash in Preperation for what may or may not Happen & i will Deploy those funds when i See Opportunity.

I am an Optimist So I Don't worry about what i cannot Control......The one thing i can Control is how i Deploy the Cash i Have.

you can not control the market, but you can control where your cash or shares are, the proportion/allocation and even the location currencies, physical locations etc etc
anyway to each their own, wish you the best but i try to avoid the black and white, i do not really care about mega Wealth but i care about not going into misery so my allocation and evening spent setting trailing SL even if fully aware of SL fallouts when sxxt hits the fan.
for the time being, we are still in crazy mania

 

[ShareSuccess]

How Do i Build My Margin of Safety?....May Be Different to others?

Example....I have a Small U.S Trading Account that i Trade in & out of, i won't go into how i trade the Account, but i Do Compound my Trades & in Doing this i am Building What i Call My Margin of Safety.

My safety Net if there is one is that i'm only trading for a Small ROI Compounding so if the Market Bubbles & gets too froffy so to Speak there is a Very Good Chance that i will trade out of all or Most of my Positions.

If the Market Crashes without Notice,then the Compounding of my account gives me a Margin of Safety & hopefully enough to Survive.

Hopefully this makes some Sense?

 

[ducati916]

How Do i Build My Margin of Safety?....May Be Different to others?

Example....I have a Small U.S Trading Account that i Trade in & out of, i won't go into how i trade the Account, but i Do Compound my Trades & in Doing this i am Building What i Call My Margin of Safety.

My safety Net if there is one is that i'm only trading for a Small ROI Compounding so if the Market Bubbles & gets too froffy so to Speak there is a Very Good Chance that i will trade out of all or Most of my Positions.

If the Market Crashes without Notice,then the Compounding of my account gives me a Margin of Safety & hopefully enough to Survive.

Hopefully this makes some Sense?

So simply trading. Understood, and I agree.

I don't need to know your system.

However out of curiosity are you trading stock, Options or Futures? Or a combination?

Also I am assuming that you are trading both long/short. You must be comfortable short in a market downturn. Just trading long is possible but very hard and stressful.

jog on
duc

 

[ShareSuccess]

Long Only, Buy Sit Back & relax!

NO Options NO Leverage!

Average Holding Period to Date About 14 Days, but has been upto 45 Days

Currently Holding 14 stocks, Hoping to Build this upto 25 in time by reducing the Compounding & splitting the Trades on Sale, may even take this Further to reduce Risk.

Current ROI per Trade is About 12.8% NET on Average

Don't Believe in STOP LOSS.....To date worse drawdown on an individual stock has been 20% (recovered)

Don't Wish to Be Too Cocky, but a Very Simple System Log in/Log Out once Daily to BUY & or SELL

A bit of Play Money that is Performing beyond What i considered when Starting.

 

[ducati916]

1. Long Only, Buy Sit Back & relax!

2. NO Options NO Leverage!

3. Average Holding Period to Date About 14 Days, but has been upto 45 Days

4. Currently Holding 14 stocks, Hoping to Build this upto 25 in time by reducing the Compounding & splitting the Trades on Sale, may even take this Further to reduce Risk.

5. Current ROI per Trade is About 12.8% NET on Average

6. Don't Believe in STOP LOSS.....To date worse drawdown on an individual stock has been 20% (recovered)

7. Don't Wish to Be Too Cocky, but a Very Simple System Log in/Log Out once Daily to BUY & or SELL

8. A bit of Play Money that is Performing beyond What i considered when Starting.

1. Certainly in a bull market a winning strategy.

2. Options give you options. Which are useful and good to have in financial markets.

3. Again, if you were ever to consider trading Options, that is actually useful information. Also very relevant if the market does turn.

4. 14 is still a concentrated portfolio. If you are in the popular sectors, Tech/Financials, should be outperforming the broad market.

5. Now in (6) you mention a 20% drawdown before it turned around. so roughly a 1:2 profit:loss. That in a bear market will hurt you.

7. Simple is good. Great even. You always want to understand when something stops working.

8. Money is money. A lack of respect for money, sees it depart quickly.


So a long only system in a bull market is definitely the correct strategy. A gunslinger attitude is definitely an attitude of youth.

One advantage that you will experience is the breadth of experience on a site like ASF. There are many that have traded and survived/thrived in bear markets. So it is unlikely that you will be caught unawares by the bear when he arrives.

Anyway, appreciate the insight!

jog on
duc

 

[ShareSuccess]

1. Certainly in a bull market a winning strategy.

2. Options give you options. Which are useful and good to have in financial markets.

3. Again, if you were ever to consider trading Options, that is actually useful information. Also very relevant if the market does turn.

4. 14 is still a concentrated portfolio. If you are in the popular sectors, Tech/Financials, should be outperforming the broad market.

5. Now in (6) you mention a 20% drawdown before it turned around. so roughly a 1:2 profit:loss. That in a bear market will hurt you.

7. Simple is good. Great even. You always want to understand when something stops working.

8. Money is money. A lack of respect for money, sees it depart quickly.


So a long only system in a bull market is definitely the correct strategy. A gunslinger attitude is definitely an attitude of youth.

One advantage that you will experience is the breadth of experience on a site like ASF. There are many that have traded and survived/thrived in bear markets. So it is unlikely that you will be caught unawares by the bear when he arrives.

Anyway, appreciate the insight!

jog on
duc

Thanks for The Advice Duc,very much appreciated!

From an Absolute numpty when it come to trading i Take all on Board & each Day on ASF i Learn Something New From all Those who Post.

Even From those who Think They Knowitall i Learn Something in that sometimes it better to sit Back & listen more than one Talks.

Cheers!

 

[ducati916]

Thanks for The Advice Duc,very much appreciated!

From an Absolute numpty when it come to trading i Take all on Board & each Day on ASF i Learn Something New From all Those who Post.

Even From those who Think They Knowitall i Learn Something in that sometimes it better to sit Back & listen more than one Talks.

Cheers!

So here is a methodology that is a long only system.

It has 5 columns

1. Stock Price
2. Stock Value
3. SAFE = 10%
4 Portfolio Control = market value of stock when purchased
5. Cash

I'll just work a couple of examples and you'll catch on.




Starting cash = 10,000
Stock price = $607.90 which is SPY on Feb. high point.

Invest 50% = $5000

Buy 8 shares = $4863.20
Cash = $$5136.80

March

Price at $560.00

So

Stock price = $560
Stock value = 8 shares x $560 = $4480

Place the largest number on top

Portfolio Control = $4863.20 subtract
Stock Value = $4480 (SAFE = $448)

Equals $383.20 purchase order

But then subtract SAFE

$383.20 subtract SAFE
$448

No purchase

Next month (just to demonstrate I'll take the low)

April

Price at $491.00

Portfolio Control = $4863.20
Stock Value = $3928

Purchase order = $935.20 subtract
SAFE = $448

Buy $487.20 or buy 1 share using Cash of $5136.80 (adjust CASH balance to $5316.80 - $487.20 = $4829.60)

Add 50% purchase price to Portfolio Value. PV = $4863.20 + $224 = $5087.20

May

Price = $580

$580 x 9 shares = $5220

Stock Value = $5220
Portfolio Control = $5087.20

$132.80 subtract SAFE
$509

No sell order.

June

SPY = $620

Stock Value = $5580
Portfolio Control = $5087.20

$492 subtract SAFE
$509

No sell order

September

SPY = $663.70

Stock Value = $5973.30
Portfolio Control = $5087.20

$886.10 subtract SAFE
509

Sell $377 of stock or 1 share in this case at $663.70 and add to CASH balance.

Rinse and repeat for the next 20yrs.


Now I actually had to use the low in April because the volatility is so LOW currently as evidenced by the VIX. So you can obviously jump in if prices are advantageous, of course, now you are 'trading' the system rather than following the system.

Just keep it to once a month and it works well.

Obviously, the 'stock' needs to come back from declines. Hence I would only use an ETF, whether the whole market or sectors. I would never use a single or portfolio of stocks.

You want the most volatile ETF possible. I always traded silver this way.


jog on
duc

 

[peter2]

Damn, as soon as I took my eyes off them. Boom, they go to the moon. Arrgh.
Clearly, there are holes in my review process. More probably due to laziness. Not making the time for the whole process can really hurt sometimes. Opportunity lost, again. Sigh!

Must find a nice quantum computing ETF to add to my watch list. QTUM ?

 

[ducati916]

View attachment 209185

Damn, as soon as I took my eyes off them. Boom, they go to the moon. Arrgh.
Clearly, there are holes in my review process. More probably due to laziness. Not making the time for the whole process can really hurt sometimes. Opportunity lost, again. Sigh!

Must find a nice quantum computing ETF to add to my watch list. QTUM ?

Evening Peter,

I was chatting to Mr Frog earlier and we were discussing the volatility of individual stocks, while the VIX is in the basement.

It is a strange (dangerous) market currently. Reminiscent of 1999. LOL.

jog on
duc

 

[qldfrog]

View attachment 209185

Damn, as soon as I took my eyes off them. Boom, they go to the moon. Arrgh.
Clearly, there are holes in my review process. More probably due to laziness. Not making the time for the whole process can really hurt sometimes. Opportunity lost, again. Sigh!

Must find a nice quantum computing ETF to add to my watch list. QTUM ?

yes, i entered in QTUM below 95 USD, closed last week at 106 trailing SL just mine, not recommendation

 

[peter2]

Good evening Duc. Yes, it's a strange time. I'm having difficulty finding ASX stocks to buy for the medium term other than gold, copper producers. I'm doing more trading in the US markets but still haven't been able to keep up with the sector rotation that occurs regularly. I'm playing the US game, "whack a mole" but when a sector raises it's head, the best R:R entry has passed.

Reminiscent of 1999 eh? No help to me as I started my trading journey in 2005.

Really thought we'd see a market dip in Sept. It's not looking likely at the moment. This leads me to anticipate a strong market rally at the EOY which may or may not be a blow off top. Still, all portfolios and trading books are at equity highs atm. This FY and CY returns are above average, so won't complain. Damn I love this business. Wouldn't be dead for quids.

 

[ducati916]

Good evening Duc. Yes, it's a strange time. I'm having difficulty finding ASX stocks to buy for the medium term other than gold, copper producers. I'm doing more trading in the US markets but still haven't been able to keep up with the sector rotation that occurs regularly. I'm playing the US game, "whack a mole" but when a sector raises it's head, the best R:R entry has passed.

Reminiscent of 1999 eh? No help to me as I started my trading journey in 2005.

Really thought we'd see a market dip in Sept. It's not looking likely at the moment. This leads me to anticipate a strong market rally at the EOY which may or may not be a blow off top. Still, all portfolios and trading books are at equity highs atm. This FY and CY returns are above average, so won't complain. Damn I love this business. Wouldn't be dead for quids.

I and Mr Frog have been trying to figure a way to utilise this:




If we can figure it out, that would allow a pre-emptive entry into any rotation.

Plenty of time for a Sept. dip.

jog on
duc

 

[peter2]

I was quite interested in the RR graphs when they were first introduced. They were hidden behind expensive subscription services and I didn't pursue them. I've always been attracted to stocks showing strong relative strength and I've got chart templates showing RS with multi period look backs. Never really got ahead of sector rotation though. ETFs do make it a little easier as they reduce the size of the required watchlists.

Sudden sector price rallies appear after periods of consolidation which show poor short term RS values. It's easy to overlook them has price is drifting sideways and even down a little. Perhaps I should be focusing on these poor short term RS sectors that have strong longer term RS values.

 

[rolly1]

Worth a read.

https://archive.md/UCjnG

 

[ducati916]

Worth a read.

https://archive.md/UCjnG

Worth posting:


The dispersion trade has become one of the most popular strategies among Wall Street hedge funds. Now, some investors are taking the other side of the wager.

The US equity market has been deceptively calm since the start of August, with 60-day realized volatility the lowest since before the pandemic. The go-to measure of market gyrations, the Cboe Volatility Index, has been stuck below its long-term average of 20 since mid-June. But beneath the surface, individual stock prices are churning violently — Oracle Corp.’s 32% surgeover the past month is just one example.

That dynamic has drawn hedge funds to ramp up bets on calm in the broader equity market and wider swings in individual shares. As long as the S&P 500 Index grinds higher in a tight daily range and stocks move in various directions, the bet pays off, but margins are narrowing.

The trade has become “extremely crowded,” said Benn Eifert, managing partner and co-CIO at hedge fund QVR Advisors. “There are massive dispersion trades by big pod shops.”


Around six weeks ago, his fund decided to go against the herd, putting on the opposite trade. The difference between the implied volatility for single names and for the index is near “the highest level it ever gets,” said Eifert. “We do have the reverse dispersion trade on: We’re long index vol, short single name vol.”

His move against the tide reflects the challenge for fund managers in the dispersion trade. Options on single stocks have become relatively expensive, while the premiums earned from selling index options is limited.

“There’s definitely structural supply of volatility and we think that has a depressing impact,” said Greg Boutle, head of US equity and derivatives strategy at BNP Paribas SA.

That doesn’t mean selling index volatility is necessarily a bad idea, as such conditions can last for long periods of time.
“These things can persist a lot longer than you would think,” said Boutle, noting that 2018’s Volmageddon episode where the VIX spiked violently followed 18 months of low volatility.

In some ways, the index calm can be related to wider single-stock swings. If shares of one company jumps 20% in a day and another similarly-sized stock is down the same amount, the net impact on the S&P 500 will be zero.

Tech Stock's Realized Volatility vs. Index Picked Up​

Equal-weighted basket of Alphabet, Nvidia, Tesla, Amazon, Microsoft, Apple, Meta vs the Nasdaq-100 Index

• 3-month rolling realized volatility ratio
• Recent Increase

Source: Bloomberg
There are downsides to QVR’s opposite strategy: Eifert notes the position has “idiosyncratic loss exposure” that occurs when a single-name stock has a dramatic spike, such as the recent jumps in Oracle or Intel Corp.

Not everyone is convinced taking the opposite side of the dispersion trade is the right move.
“While it looks good, investors are still reluctant,” said Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets. “A lot of investors learned their lesson from the Liberation Day moves and don’t want to get in the way of a right tail,” she added, referring to the rally that followed April’s tariff turmoil.

The reverse dispersion trade “would effectively be a long correlation trade, which in itself is essentially a bet on markets moving lower,” argues Alex Altmann, global head of equities tactical strategies at Barclays Plc.
Altmann thinks it’s a terrible moment to short stocks. “I would use low vol to be buying calls, not puts.”

Custom Baskets​

The other thing investors involved in dispersion trades have to consider is which stocks they make a volatility bet on. For his contrarian reverse dispersion trade, QVR’s Eifert opts for a basket of 125 to 150 large-cap companies.

Read more: Jump in Dispersion Trades Belies Crowding Worries: Options Watch
In July, Stefano Pascale, Barclays head of US equity-derivatives strategy, suggested investors could add dispersion trades on a basket of meme stocks. One way to do that is to use the Barclays Equity Euphoria Indicator, which uses options market data to flag the most manic stocks — which often surge before crashing down to earth.

The advantage of this approach is it avoids the relentless focus on mega-cap names like Tesla Inc. and Nvidia Corp. that can characterize some hedge fund approaches to dispersion. Indeed, the AI frenzy is creating volatility for less profitable, smaller technology companies.
“You really need to zoom in smaller stocks,” said Pascale. “You probably want to buy vol on names that have been picked up by the Euphoria Indicator and sell vol on the other names.”


jog on
duc