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A Tiny Hedge Fund Made 8,600% on a Vix Bet

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Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#21

Post by louprado »

The scariest WSJ headline the week prior to when volatility started was the following: "New account creation hits all time high at E-Trade, TD Ameritrade, etc".

The stock market engine has been hot for 5 - 6 years now and we just threw a can of nitro into the engine by way of massive tax cuts and deregulation. And then pundits and our President brag about how awesome this ride is as if managed growth is somehow anti-American. The retail investor masses heard that message and have arrived. The masses that don't know the difference between an income statement and balance sheet or how a market cap relates to the stock price. Historically they have been a catalyst of instability and trade solely based on the chart and trends.

So volatility seemed obvious two weeks ago. But when an obvious thought arises regarding the market two quotes always come to mind:

"Far more money has been lost anticipating the correction than in the correction itself". P. Lynch

"The first person you must not fool is yourself and you are the easiest person to fool". R. Feynman

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#22

Post by elmar »

elmar wrote: post #11

The other side of the bet just went bust. Credit Suisse Fund Liquidated, ETFs Halted as Short-Vol Bets Die https://www.bloomberg.com/news/articles/2018-02-06/credit-su...

Obscure security linked to stock volatility plummets 80% after hours, sparking worries of bigger market effect

https://www.cnbc.com/2018/02/05/xiv-exchange-traded-security...

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#23

Post by moondev »

ajeet_dhaliwal wrote: post #15
anonu wrote: post #12

In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

Start with ETFs and ease your way into it. Vangard has a great site with lots of info to get you started: https://investor.vanguard.com/etf/

They also have a fund explorer where you can easily look at past performance and compare: https://personal.vanguard.com/us/funds/snapshot?FundId=0970&...

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#24

Post by [deleted] »

anonu wrote: post #12

In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…

[deleted]

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#26

Post by hackme1234 »

ajeet_dhaliwal wrote: post #15
anonu wrote: post #12

In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

Everything that has risk associated with it could be considered "gambling" by your logic.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#27

Post by dyeje »

ajeet_dhaliwal wrote: post #15
anonu wrote: post #12

In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

Check out the The Simple Path to Wealth. It really made everything click for me, in terms of personal finance.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#28

Post by pmoriarty »

ajeet_dhaliwal wrote: post #15
anonu wrote: post #12

In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…

Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…

"Without insider knowledge I don't understand how I could beat the market short term."

This is my own conclusion as well. Well, either that or luck.

This goes double for long-term success. As the disclaimers say, past performance is no indication of future results.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#29

Post by JaggerFoo »

I got a bit lucky. I bought UVXY before the correction as a hedge against a correction. When my stocks were all declining the UVXY soared, which offset the losses I had in stocks. Overall I ended up 2.5% and could have been up 5% if I sold on the worst of it. But it's so volatile you don't know if it will swing up higher.

Having a Robinhood account I could not buy options, but I didn't know about the SVXY play anyways. Now I do, but who knows if SVXY will survive.

Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet

#30

Post by matt_wulfeck »

louprado wrote: post #21

The scariest WSJ headline the week prior to when volatility started was the following: "New account creation hits all time high at E-Trade, TD Ameritrade, etc". The stock market engine has been hot for 5 - 6 years now and we just threw a can of nitro into the engine by way of massive tax cuts and deregulation. And then pundits and our President brag about how awesome this ride is as if managed growth is somehow anti-…

> The retail investor masses heard that message and have arrived.

The retail masses showed up many many years ago in the form of retirement accounts. And we’ve also benefited tremendously from this bull market. This last correction is nothing if you’ve been in the market for a few years.

Also I really doubt retail investors are the catalyst for anything here. Normal people don’t move a trillion dollars out of the market in a few minutes.

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