Returns

[clowboy]

Hi

Just interested to see ppls thoughts on returns.

In another post 30% was mentioned as "not really worthwhile (in terms of effort etc)

What do ppl think is a worthwhile return and on what initial investment?

Personaly I think that a 30% return on 100k is rather nice but I guess it depends on what effort is put into making the return.

Anyway just thought it would be good to see what ppl think.

Thanks

 

[Joe Blow]

I guess it largely depends on your timeframe.

30% over a year is a great return while 30% over ten years isn't quite so good.

I don't like to set myself a specific target in % terms on each trade. After all, any profit is a good profit!

 

[stefan]

A good return is something that can't be put into a one size fits all figure. As Joe mentioned, it depends on many different things. Sure, there are returns that aren't worthwhile but that's a technical aspect and I think the 30% you mentioned is a bit out of context. What's the interest rate you get when you invest into a fund or when you put your cash into a savings account?

You may want to look at it from this angle:

If you trade to make money, why are you doing it yourself?
Maybe because it's a great way to spend many hours behind your PC while offering you the prospect of making some money with it. Or maybe because you want to make more money than what your bank is willing to pay you? If so, then you'd have to look at what a fund is returning on average. Last year they probably made anything between 13% and 25% (don't remember the highest return, it was published in the fin review a few weeks ago).

So if you want to make it worthwhile, you'll have to do better than that, otherwise you'd be better off spending your time fishing while investing your money in one of those funds.

Just one way of looking at it, really.

Happy trading

Stefan

 

[wayneL]

Presuming that was my comment that sparked this thread, let me clarify;

I think a consistent 30% return is excellent if your trading as a adjunct to a full time occupation, and spending say an hour a day on analysis.

What I meant when I said its not enough, is if you are trading full time and spending 30-40 hours/week in front of the screen. Because some other business would be a better proposition than that.

What IS good enough for a full time trader would vary between each individual based on experience, markets traded, risk tolerance, stage of life, amount of capital etc.

 

[clowboy]

Sorry for my lack of clarity.

I was looking at it as a PA timeframe and not an individual trade etc.

In terms of effort, as you say stefan it largley depends on what you what to do.

Fishing sounds great but you have to have dollars in the bank.

Generally speaking I mean it in the sense of naturally you want to make more than bank accounts/managed funds etc otherwise as you say you are better off simply putting your cash into one of those investment vechiles.

I guess a third element could be added...what % PA with how much effort.

Personally I feel that I can get better returns than most managed funds (some have returned up to 80% in the last year, but good luck picking which ones) and without a huge amount of effort (again this really depends on what you consider effort)

Note *When I say better than most managed funds I'm talking AVG's*

 

[clowboy]

WayneL

Good answer,

Yes I aggree that for an hours work a day 30% is quite a good return.

I also aggree that it is capital dependant.

However if you are returning 30% PA for an hours work (a day) why would you be still holding down a day job (if your capital is 350k + as many ppl have suggested as a good starting point).

I also aggree that it is largly dependant on the individual.

The whole point of this post is not so much a "what should I be looking to make as a return" but more a "what do people, as indivduals consider a reasonble return?"

Basically I think it is interesting looking at other people's perspectives.

 

[tech/a]

However if you are returning 30% PA for an hours work (a day) why would you be still holding down a day job (if your capital is 350k + as many ppl have suggested as a good starting point).

Simply one reason could be interaction with others.
There is only a certain amount of people around during the day who can play golf.

Some simply may wish to work as well.

Often when you arrive at a point the perception is different to the reality.

 

[clowboy]

interaction.


its a fair call but I can think of heaps of things to do that involve interacting with others but not going to work for someone else.

 

[tech/a]

As for Returns.

Anything beyond 20% is exceptional particularly if its achievable year in year out.

Fund Managers and Merchant Banks emply rooms full of Analysts.Many with degrees.If 99% of these who spend millions trying to achieve the very best returns for their investors struggle to do it (There are other reasons I know),then if you can out perform them your doing very well indeed.

The Year in Year out part is the key really.

tech