They say that the goal of every investor should be to outperform the S&P 500. If you're not doing that, then you may as well invest your money into the S&P 500 exchange traded fund (symbol: SPY). As of yesterday my YTD yield is 13%. The S&P 500 is at -1.67%. So far, so good. After each trade is completed I will update my yield vs. the S&P.
Yesterday, I bought shares in a fund that is short the S&P. I am expecting the market to continue its downward trend. I plan on keeping these shares until the market finds support.
Symbol: SDS at $33.80 per share purchased on 7/15/10
Initial Thoughts:
ReplyDelete#1: Good Idea.
#2: If you don't already subscribe to Fortune magazine, you need to. I read a ton of articles in each issue. Good info.
#3: I'm sure you are aware, but short-term trades (1 year or less) reward Uncle Sam with a 35%-40% tax on any income. Long-term trades (holdings of more than 1 year) are taxed at only 15%. As we discussed the other night, I'm more of a long-term guy for a number of reasons, but the tax penalty being probably the most obvious. I suppose if you're just dabbling with a few thousand dollars for fun, then no big deal. Anything upwards of that, and the tax bill is huge and pretty much diminishes the reward side of the risk/reward day-trade balance. At least for me. Just something to keep in mind.
JT
I have two accounts. One is a Roth IRA where I can trade as much as I want without having to worry about taxes. My other account I've been wondering what kind of performance I would need to justify the short term trades. I guess if the year were over right now I'd be paying taxes on my 13% gain instead of holding onto shares of the S&P or something similar that is at -1%. Obviously, there are stocks that have done better. Netflix is up 100% on the year. I still like that stock and we recently purchased some in Jody's Roth IRA for around $113. It's just hard for me to be long term right now until I see the market get out of this downward trend that it's been in since May 4. I was long in '08 when my shares of Google went from $700 to $270. Granted they got back up to $560 before I sold them this year, but that was two years at a loss of 20%. Had I been shorting the market like I am now, I probably would have doubled my entire retirement and then some.
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