Make Money While Cruising - List

[Cormorant]

Originally Posted by Delfin

Regarding brokers, you're right, that might not be a bad idea in some cases. The commissions on a spread set self traded are $11.00 or so round trip. Add $20 and a broker will place them for you. I only know of one guy who does this for clients. . . .

Delfin -- who is the broker you know of who will execute the MRCI spreads?

MRCI has a list on their site, (Commodity Brokers) but it seems pretty undifferentiated, and I'd really like to have full confidence and trust in an outfit before sending them a big chunk of my money.

My current thinking is I would like to split my account (if I can build it up to the requisite amount), and send off enough to cover a full 1X MRCI list to a broker. Set it and forget it, check in once a month or so.

And the other part of my account I would keep and run myself. I actually find it fascinating and enjoy it immensely . . . except on down days. . . .

I think for many cruisers, who want the flexibility to be out of contact for weeks or months at a time, going with a broker would be a good idea. Plus . . . the broker will protect you from the sort of bonehead errors I've just made. If you started off well-margined enough, you could set it up with a broker, and ask for an electronic transfer of some monthly stipend into your bank account. Then go off sailing.

[ArtM]

When trading spreads, stocks, options, or any other market "instrument", here are my observations:

1) These instruments are first and foremost statisitical instruments. The more derivative they become, the more statistical the become. In today's world, even stocks behave as if they are statistical instruments because their values are based on anticipated future profits, not current value.

2) Your ability to be successful with these statisitcal instruments is not based on your ability to correctly predict or evaluate statistical likelihoods, it is based on your ability to beat the market at evaluating the statistical likelihood... in other words, everyone knows that oil is going to go up next summer (this is just a hypothetical example). To successfully trade that, you either have to own a tanker full of oil, or you have to be able to guess whether the market is high or low with regard to it's prediction

3) Suppose you get very good at making that evaluation. Here's the next risk - most of the time, you'll find the market has made a nearly perfect evaluation. What will you do then. Unfortunately, for many, this results in a drive to speculation. You are now faced with a doldrums - a period of sitting and waiting, earning no profits and making no headway while you slowly eat through your reserves. Your "tried and true" method is now on hold, and you have no choice but to find a new source of revenue, or start taking the long-shots.

4) In every market, there is a method that does very, very well for a period of time. It gets highly publicized. The trick here is to get the amateurs into it big time. Then the wolves will feed on the lambs.

5) Eventually,if the method holds up, it will be adopted by the hedge funds who will arbitrate it to the last penny. At that point, there will be nothing left in it for the small trader. There are a few professionals out there - perhaps Delfin is one of them - who will adapt and find a new method for the new market. The vast majority of the traders, who are amateurs, will blindly follow their method out of boredom, ignorance, and frustration until their last penny is gone. Those people will never been seen in the market again.

6) Most common causes of poor performance in derivative trading include:
- Trading errors - when margins are slim, a small error can wipe out a dozen successful trades
- Data or analytical errors - bad math, bad methodology, bad theory, bad information, bad advice - the end result is that sound analysis on bad data or bad analysis on good data will result in losses
- Desparation plays - most often arising from a string of losing scenarios, or failing to recognize that a trading condition has ended, or biting too deeply into reserves, combined with a dependence on the income to meet basic needs result in total losses over a short period of time
- Gambling mentality - no amount of success is enough, no amount of losses is too much to recover.
- Ignorance, inexperience, inattention, overconfidence - people who think they have a sure thing, or that it will be easy, or that they will have more time and ability than they actually do are at risk for total losses

[Certeza]

Wow! Didn't realize this market trading discussion had gotten so heated. I don't really have much more to say, but my name and comments have been brought up and a couple of times misrepresented, so I feel I should correct them.

1st) Trading futures IS NOT gambling. But doing so without a full understanding of expectancy IS similar to gambling. It has been pointed out that futures trading is "zero-sum". That is not true of the stock market as a whole, but it is certainly true of the futures market. IOW, for each $1 won there is $1 lost by someone (plus commissions). Just one point of clarification. In the futures market if I make $1 from someone, they aren't necessarily mad at me, or disappointed at all. A huge portion of the futures market is made up of those buying guarantees or insurance. If a farmer's business model is to consistently lock in his August corn price in May, he doesn't really care if the price goes beyond that. For example, (made up numbers) he sells his August corn to me in May for $10 per unit. When August comes around, the market price is $12. I then sell it on the market for $12 and keep the extra $2. The final buyer gets his corn to feed his cows. I made $2, and the first farmer locked in his price. Technically, the farmer 'lost' $2 to me, but that isn't the way he sees it. He actually just bought a guaranteed price. They are what we call "edge providers", or people without a profit motive on a trade. There are MANY of them.

2nd) I suggested that the industry rule of thumb is that a system should have average annual net profits at least 2x the largest peak-to-trough drawdown. The MRCI system is decent, but it DOES NOT meet that benchmark. That system is actually about 1 to 1. For the amount of risk it gets 1/2 of the minimum required returns. I did a full weekly performance analysis of it for 20 years. It has been suggested here that during a certain time period it gained $60K with a max risk of $30K, so it met the 2 to 1 requirement. That is a misleading statement and an incorrect analysis. In basic risk analysis we traditionally use the max "peak-to-trough" drawdown as the risk metric for the 2 to 1 rule. As stated by MRCI themselves, the max drawdown in this system is >$50K. It averages a bit over $40K annual net profits. So in fact it is actually very well below the minimum 2 to 1 benchmark. THis doesn't mean that the system isn't consistently profitable, just that it requires excess risk to get those returns.

3rd) Actually there have been 3 occurrences during the last 20 years of losses in excess of $40K and another one or two in excess of $35K. What this means is that if anyone here takes the provided advice of trading that system in a $40K acct, they should realize that there have been 5 "blow up events" during the last 20 years. It should go without saying, but risking an acct blowup on a frequency of once every 4-5 years is pretty wild, by any standard.

I'm not saying the system is bad, or not to trade it. I'm just trying to make sure that everyone knows the facts. I stand by my previous statement that this system should preferably be traded in accounts larger than $120K. I would say $90K absolute minimum for long term success without risking an event that would require you to replenish the account.

[Vino the Dog]

Curious about all this stock market type stuff on the thread... is that not "cruising while making money" instead of "Make Money While Cruising"? Very few cruising sailors have the capital to "invest" in the stock market casino, and very few who play stocks have the time, knowledge, or experience to live long term on a cruising sail boat.

For me, and those in a similar economic status, "investing" in the stock market would be idiotic and less profitable than dealing drugs (which I WILL NOT do), or a hundred other less profitable things (compared to successful "investors" as opposed to fools who have inadequate knowledge or lack of interest in spending enough time to realistically profit), and has little to do with a cruising lifestyle.

Please correct me if I am wrong and let me know what I am missing.

[boatman61]

Well.. some are at desks trying to invest themselves into cruising.. others I think are 4 week a year cruisers.. and Delfin is for sale.. just wondering.. has the system failed.. or is it so good he needs to raise more money to invest...

[Certeza]

I haven't read all his posts, but I haven't seen Delfin directly selling himself. If he has any monetary affiliation with MRCI, I'm not aware of it. Admittedly, I don't know enough about him to know either way.

Conversely, I have made it clear that I am a fund manager. I'm not free to discuss performance or other details on a public forum. Also, I only manage accounts for people with a net worth greater than $1MM. So my participation is simply meant to help ensure that people understand what's being proposed, and a little free advice to get people pointed in the right direction if they ask.

[Cormorant]

Originally Posted by Vino the Dog

Curious about all this stock market type stuff on the thread... is that not "cruising while making money" instead of "Make Money While Cruising"? Very few cruising sailors have the capital to "invest" in the stock market casino, and very few who play stocks have the time, knowledge, or experience to live long term on a cruising sail boat.

For me, and those in a similar economic status, "investing" in the stock market would be idiotic and less profitable than dealing drugs (which I WILL NOT do), or a hundred other less profitable things (compared to successful "investors" as opposed to fools who have inadequate knowledge or lack of interest in spending enough time to realistically profit), and has little to do with a cruising lifestyle.

Please correct me if I am wrong and let me know what I am missing.

This spread trading we've been discussing is just one potential tool in a cruiser's financial toolbox. (By the way, it's commodities -- like corn/oil/coffee/sugar/wheat -- not stocks. It's just seasonal patterns in how various commodities get valued.)

We all need money to be able to go off sailing. Some have pensions, some have savings, some have rental income, some have a skill they can sell/barter along the way, etc. As Certeza rightly points out, futures spread trading carries relatively large risk. But it can also deliver big returns on a modest investment. It's not right for everyone, obviously.

I'm still working fulltime, supporting a family, lucky to go off cruising a few weeks each summer. In the meantime, I'm trying to build up a cruising kitty for the day maybe 5 or 6 years from now when our youngest will be off at college. But generally my work income is just enough to keep us fed and clothed. So I'm willing to take some risk for now in hopes of getting ahead a bit.

You mention needing "time, knowledge, and experience" to make money in the market -- but luckily spread trading requires very little of those three. You just follow the recommendations of MRCI and hope for the best. As Delfin has said, he has made money every single year for 13 years. And as mentioned recently you could turn it over to a broker and it would require none of your time at all.

Anyway, I'm just trying to clarify things a bit. Not pushing this on anyone. My wish is that you all have enough money to do all the sailing you want!

[ArtM]

Originally Posted by Cormorant

You just follow the recommendations of MRCI and hope for the best. As Delfin has said, he has made money every single year for 13 years.

Here is another common observation you reminded me (which is not to say this is true of either Delfin, or of MRCI)

- Most people who claim to be making money trading stocks are not. They are using tricks of their own mind to make-believe they are making money, or else are temporarily in state of making money which they have deluded themselves into believing is the result of their own prowess.

- Most trading systems only tell you when to buy, not when to sell, and you can see this very clearly in the marketing literature if you look closely enough. The phrasing is often like this - "If you bought when we told you to HERE, and sold your stock THERE, then you WOULD HAVE tripled your money!"
The problem is they didn't tell you to sell there, it's just a hypothetical scenario.

[Jack Eboat]

I was thinking instead of go cruising to far distances...why not create a travel agency but then for families or couples or older people (target group). Take them on a day or two sailing/fishing etc. And bring them back to the marina. In that sense it leaves you flexibility. You simply create flyers and an info point somewhere in the city or on the beach. You offer the product for one day next day you welcome the people on boar and give them the time of their life. Of course you would need to edge a bit the whole concept but i can help you with that as a tourism specialist

J,

[jeanathon]

The need for a captain's license, and the relative insurances limits this idea.

[SV THIRD DAY]

Originally Posted by Jack Eboat

...why not create a travel agency but then for families or couples or older people (target group). Take them on a day or two sailing/fishing etc. And bring them back to the marina. ,

Try that is Mexico and see how long you go before the local Mexican charter companies have you arrested and boat confiscated for working illegally....I've seen it before.

Working illegally in a foreign Country and especially competing against the locals will get you in hot water faster than offending the moderators on the Cruisers Forum.
Getting legal working permits is time consuming and expensive, but of course can be done.

I keep coming back to the concept of finding something that you can do with a Laptop and internet connection.

[boatman61]

You guys have got to shed your shore side mentality.. if your actively cruising.. ie; going to different countries/places then a work permits a waste of space.. many times you'll be ready to move on before its been through the system..
If you've a skill then carry cards and hand em out to everyone you meet when you first arrive somewhere.. if your a skipper the same.. post on marina boards etc.. I just got a call from La Coruna where a guy saw my card on the board and wants his boat moving..
These days laptop repair is a good thing to get into.. mine crashes I'm stuffed.. its my CP etc.. so a fellow cruiser who can rescue stuff and maybe even get it back to life is a godsend..
Just be careful you don't steal from a mans rice bowl and then take the piss.. it annoys em

[SV THIRD DAY]

Originally Posted by boatman61

You guys have got to shed your shore side mentality.. if your actively cruising.. ie; going to different countries/places then a work permits a waste of space.. many times you'll be ready to move on before its been through the system..

No...it's called having a LEGAL mentality...some give a **** about following the laws of the Country they are guests in...some don't. Make your own choices and deal with the results.

Giving advice to wanna-be cruisers looking for a way to earn money while cruising without advising about the laws or telling them to ignore them is crazy. They need to know that if they are caught working Illegally in a foreign country they can lose far more than their beer money. The point isn't that is will take TIME to get the work permit...it's that they won't be able to get one....so focus on making money that doesn't require a work permit in the first place. It's all part of the Clean Wake concept of cruising.

[boatman61]

Originally Posted by SV THIRD DAY

No...it's called having a LEGAL mentality...some give a **** about following the laws of the Country they are guests in...some don't. Make your own choices and deal with the results.

Giving advice to wanna-be cruisers looking for a way to earn money while cruising without advising about the laws or telling them to ignore them is crazy. They need to know that if they are caught working Illegally in a foreign country they can lose far more than their beer money. The point isn't that is will take TIME to get the work permit...it's that they won't be able to get one....so focus on making money that doesn't require a work permit in the first place. It's all part of the Clean Wake concept of cruising.

It is part of the clean wake mentality.. just you don't know it yet.. your still thinking of things as a business.. when your cruising your not.. for example in Spain or Portugal and many other places if you go on some ones boat on the water and do some work on it for cash benefits your not breaking the law.. however.. if its on the hard and you start sanding down and antifouling some ones boat for cash.. or work on some ones engine/rigging.. you'll get a slap around the head..
If you scrub some ones bottom clean while afloat no worries..
If you choose to see it as illegal fine..
I call it finding out the scene and working it..
You'd be surprised how many boats in the Med are mini sail lofts..
A lot of cruisers do pirate chartering.. and are tolerated in the main.. however some get cocky and start trying to poach from the local boat owners.. slap round the head and a confiscated boat.
Its down to educating yourself.. the big bad world is not nicely defined like back home.. its down to you to learn the street smarts.. guess it comes easier to us blue collar folks..

[denverd0n]

Originally Posted by ArtM

Most people who claim to be making money trading stocks are not. They are using tricks of their own mind to make-believe they are making money...

Yep. Just like with gamblers. My mother in law will come home from the casino and say, "I made $60 on the slot machines!"

Translation: "I spent about $100 on the slots, and got back about $60 of it."

Speculators (being just another form of gambler) do exactly the same thing.