Make Money While Cruising - List

[u4ea32]

Whenever someone suggests that gambling is a way to make money, I always point out the obvious: who has more money, you or the "house"?

When gambling on the market (margin trading in this instance), do you really think that you can compete against the "house"? They have their computing systems as close to the trade floos ar possible, and they spend and employ whatever ot takes to decrease their trading latency. Meanwhile, without owning a seat on the exchange, how many thousand times slower is your data?

People who own a seat can and do make money. The others are just pulling the handle on the one armed bandit, with similar results. Just like an Atlantic City sucker, the brain remebers the thrill of the win, while forgetting the far more common agony of loss.

Like other forms f gambling, its a losers game. Its not investing.

[Certeza]

Originally Posted by Delfin

As I noted in the above post, Jerry Toepke makes his own recommendations, which are different than the programmatic results they publish. I don't follow Toepke's recommendations so I have no idea whether his results are less because he makes fewer trades or because a professional can't beat the algorithm used by Moore to make their recommendations. Without confidence it will post as a jpeg, I attach 2012 theoretical results for Toepke and Moore computer modeled trades. In 2012, he came close.

OK, that makes more sense.

Delfin, IMO, if you are going to post equity curves and advocate a service like that then people should really understand what they are (or are not) looking at.

First, I have to note that the graphs posted are formatted improperly. If MRCI was operating as federally registered professionals, the NFA and CFTC wouldn't approve of that formatting and would make them pull it from their website. From that graph there is no way for the viewer to get a sense of the risk involved. Acceptable formatting would be more like the equity curve of trading a $40,000 account. Typically then accompanied by a graph that indicates returns in percentage format. They also must note whether they are assuming that gains are reinvested or withdrawn. The best that anyone can do with the graphs currently is to deduce that there are times this program has exceeded 30% losses. It could be less than that, or the risk could be much greater than that, but with improperly formatted graphs, it is impossible to tell.

Secondly, if professionals ever use hypothetical results, which is what these are, they must be accompanied by the performance of any actual trading accounts (personal and professional) that are managed by them for at least the last 5 years. This is because it is very misleading to investors to use hypothetical results. Hypothetical returns are always much higher than real results. MRCI is operating in what is still the grey area of investment advising. There is an interpretive loophole in the federal regulations that allows 'newsletters' to be offered on a subscription basis. Thus they can claim that they aren't charging "fees" based on investment advice. They are just charging for a "subscription" to an investment newsletter.

The federal regulators have looked at clamping down on this practice, but until they do, these subscription based services will continue to skirt the regulations that apply to the rest of us.

[Delfin]

Originally Posted by u4ea32

Whenever someone suggests that gambling is a way to make money, I always point out the obvious: who has more money, you or the "house"?

When gambling on the market (margin trading in this instance), do you really think that you can compete against the "house"? They have their computing systems as close to the trade floos ar possible, and they spend and employ whatever ot takes to decrease their trading latency. Meanwhile, without owning a seat on the exchange, how many thousand times slower is your data?

People who own a seat can and do make money. The others are just pulling the handle on the one armed bandit, with similar results. Just like an Atlantic City sucker, the brain remebers the thrill of the win, while forgetting the far more common agony of loss.

Like other forms f gambling, its a losers game. Its not investing.

You are certainly entitled to your opinion, but there is nothing in your post that maps to reality. First, there are hardly any trade floors left with the guys in funny coats shouting at each other. Everything is electronic, or at least everything I trade. Second, if the price of something is being jiggered by Simon LeGree, with a spread you neutralize the effect of the manipulation because both legs are going to be impacted. Trading latency has nothing to do with anything. Third, the results are the results and I and others I know who have the brains of a squirrel and follow simple directions make money year in and year out.

But I will agree that there are folks who are unsuited for trading, and they should steer well clear, and concentrate on ways of making money they understand.

[Certeza]

Originally Posted by u4ea32

Whenever someone suggests that gambling is a way to make money, I always point out the obvious: who has more money, you or the "house"?

When gambling on the market (margin trading in this instance), do you really think that you can compete against the "house"? They have their computing systems as close to the trade floos ar possible, and they spend and employ whatever ot takes to decrease their trading latency. Meanwhile, without owning a seat on the exchange, how many thousand times slower is your data?

People who own a seat can and do make money. The others are just pulling the handle on the one armed bandit, with similar results. Just like an Atlantic City sucker, the brain remebers the thrill of the win, while forgetting the far more common agony of loss.

Like other forms f gambling, its a losers game. Its not investing.

Absolutely NOTHING to do with how big the house is. EVERYTHING to do with expectancy. Nobody here needs me to rehash it, but a casino always wins because every bet in every game have positive expectancy. Consistently profitable traders win for the same reason, positive expectancy. Goes back to my previous comment, that with knowing the expectancy, the trader is gambling. If you know and utilize the expectancy, you become "the house".

Also, latency has nothing to do with swing trades (holding period of a week to a couple months) which are what is being discussed here. Nobody here is talking about buying and selling many times a day. Who cares if I miss an entry price by $0.01 because I'm not located on-exchange?

[Delfin]

Originally Posted by Certeza

OK, that makes more sense.

Delfin, IMO, if you are going to post equity curves and advocate a service like that then people should really understand what they are (or are not) looking at.

First, I have to note that the graphs posted are formatted improperly. If MRCI was operating as federally registered professionals, the NFA and CFTC wouldn't approve of that formatting and would make them pull it from their website. From that graph there is no way for the viewer to get a sense of the risk involved. Acceptable formatting would be more like the equity curve of trading a $40,000 account. Typically then accompanied by a graph that indicates returns in percentage format. They also must note whether they are assuming that gains are reinvested or withdrawn. The best that anyone can do with the graphs currently is to deduce that there are times this program has exceeded 30% losses. It could be less than that, or the risk could be much greater than that, but with improperly formatted graphs, it is impossible to tell.

Secondly, if professionals ever use hypothetical results, which is what these are, they must be accompanied by the performance of any actual trading accounts (personal and professional) that are managed by them for at least the last 5 years. This is because it is very misleading to investors to use hypothetical results. Hypothetical returns are always much higher than real results. MRCI is operating in what is still the grey area of investment advising. There is an interpretive loophole in the federal regulations that allows 'newsletters' to be offered on a subscription basis. Thus they can claim that they aren't charging "fees" based on investment advice. They are just charging for a "subscription" to an investment newsletter.

The federal regulators have looked at clamping down on this practice, but until they do, these subscription based services will continue to skirt the regulations that apply to the rest of us.

And, apparently deliver better returns.

I understand why those who make money managing others money would have complaints about a purely analytic service like Moore that makes nothing whether you win or lose because they have no connection with your trading and cuts the broker/adviser out of the picture. To suggest that they should be barred, or ever will be barred from publishing analytic DATA is silly, besides being clearly unconstitutional. I have no idea where you get the notion that a source of DATA is subject to regulation by the SEC, the CTFC or any other government agency, or that they would give a rip as long as the source of the data is in no position to make money on actions taken by people following their advice. If this were not so, then every money management program on TV is gone, every radio program discussing investments is gone, Forbes, Fortune, Investors Daily is gone. Good grief.

Without putting too fine a point on it, there is only one party here who makes money providing investment advice to people and that's you. I am sure this doesn't affect your comments here, but given that it is a fact, you might want to consider being a little more circumspect in what you tell people.

[Certeza]

Originally Posted by Delfin

And, apparently deliver better returns.

Not sure what you are suggesting. Returns are always relative to risk. Hypothetically, let's say a client of mine is only willing to accept 5% max risk and the program returns 10% annual (0.8% monthly). Given that my program is designed to be able to leverage for those with higher risk tolerance, another client might come to me and say that he is comfortable with 30% max risk. With the same trades (leveraged 6X), if the first client got 0.8% monthly, then the second would get 4.8% monthly, or 75% annual. THE ABOVE EXAMPLE WAS FOR DEMONSTRATION ONLY. That is why the returns of different programs and strategies must be compared based on equal risk.

I understand why those who make money managing others money would have complaints about a purely analytic service like Moore that makes nothing whether you win or lose because they have no connection with your trading and cuts the broker/adviser out of the picture.

Oh c'mon... I fully admit that their returns seem decent, and the concept appears sound. Before you start implying ulterior motive... On this thread we are mainly talking to people with total savings of $10k to maybe a couple hundred thousand. I don't take on clients in that circumstance. I have given and I'm willing to give free advice to people in that circumstance though.

Also, your comment that, "they are purely analytical and make nothing whether you win or lose", is just ridiculous. They charge about $600 a year for a subscription. It's pretty simple to get around 2-3,000 subscribers on a decent strategy. The best ones will have around 10,000 subscribers. That's anywhere from $1.5 to $6 million a year in subscription revenue.

Allow me to describe how the industry works. If they offered this program professionally, it could only be offered to millionaires, per federal regulations. Competition for this group is very intense and with an equity curve like theirs, they might expect to acquire about 100-200 clients. With the performance you've explained, they might expect annual revenue of $2-3 million. Operating costs would be around $200-500K annual depending on location, and actively managing 200 clients is a big headache.

Conversely, if they offer a newsletter, any Joe Schmoe can subscribe. There are around 20 of these potential subscribers to each of the previously mentioned millionaires, so the demographic is MUCH bigger. Since they aren't actively managing accounts, it isn't really any more work to service 2,000 people than it is to service 100. Mostly just clerical work and web services.

Here's the kicker. The average investment adviser makes about 0.5-1% of AUM annually in fees. Typical subscribers to this type of newsletter have an account size around $30-$100K, which puts the average subscriber paying annual fees equivalent to 0.5-2%. Point is, for the vast majority of people, they are paying a similar amount in "fees" for this type of service that they would be for a professional adviser, only the adviser in this case does less work. You can't in any way suggest that they haven't consciously made a business decision to position themselves the way they have. It is a very lucrative business and there are literally thousands of others with this same business model.

To suggest that they should be barred, or ever will be barred from publishing analytic DATA is silly, besides being clearly unconstitutional. I have no idea where you get the notion that a source of DATA is subject to regulation by the SEC, the CTFC or any other government agency, or that they would give a rip as long as the source of the data is in no position to make money on actions taken by people following their advice. If this were not so, then every money management program on TV is gone, every radio program discussing investments is gone, Forbes, Fortune, Investors Daily is gone. Good grief.

Without putting too fine a point on it, there is only one party here who makes money providing investment advice to people and that's you. I am sure this doesn't affect your comments here, but given that it is a fact, you might want to consider being a little more circumspect in what you tell people.

I'm not suggesting that they SHOULD be banned. I'm stating that it is a fact that federal regulators have been examining this type of service for many years and they are coming under greater scrutiny. This is justified because as explained above, most of them are really performing the same function as typical investment advisers without complying with the same regulations.

The only thing I'm doing here is trying to make sure that anyone who might actually take that advice realizes what it is and what it isn't. There is a reason that federal regulations require results to be formatted properly. It is so that people can compare apples to apples. I'm not going to apologize for pointing out that their website is not in accordance with those regulations. Specifically, you'll note that nowhere on Forbes, Fortune, or IBD is there a graph that suggests that if an investor had subscribed to their service since 1990 he hypothetically would've made $XXXX or XXX%. That is a big no-no for them, and their legal department knows it.

[Delfin]

Originally Posted by Certeza

I'm not suggesting that they SHOULD be banned. I'm stating that it is a fact that federal regulators have been examining this type of service for many years and they are coming under greater scrutiny. This is justified because as explained above, most of them are really performing the same function as typical investment advisers without complying with the same regulations.

No, federal regulators are not examining investment newsletters like Moore's because the Supreme Court has determined they provide protected commercial free speech under First Amendment protection, see Lowe v SEC. The SEC in that case was specifically barred from regulating folks like MRCI, who only offer impersonal investment data analysis that you can act on or not. Moore doesn't know whether you do act on that data or cares and it is up to the consumer of that product to decide whether it has value. If Moore were a regulated investment adviser, as I gather you are, then the investment advice offered in a public forum, like this one, is subject to regulation by the SEC.

Since Moore offers impersonal data analysis that they don't benefit from other than to charge for that analysis, they can format their data however they please because they are unregulated. To suggest otherwise, is to suggest that there is something shady about their operation, and while I have no affiliation with them, making false statements about them is wrong.

[frank_f]

Maybe we should start a thread titled "Trading stocks while you're cruising" because I would certainly subscribe to that.

My knowledge of stocks is that they go up or down and you're supposed to sell at the top and buy at the bottom. Beyond that, I fade fast. For those of us who are financially challenged, where and how can you start?

[Certeza]

Originally Posted by Delfin

No, federal regulators are not examining investment newsletters like Moore's because the Supreme Court has determined they provide protected commercial free speech under First Amendment protection, see Lowe v SEC. The SEC in that case was specifically barred from regulating folks like MRCI, who only offer impersonal investment data analysis that you can act on or not. Moore doesn't know whether you do act on that data or cares and it is up to the consumer of that product to decide whether it has value. If Moore were a regulated investment adviser, as I gather you are, then the investment advice offered in a public forum, like this one, is subject to regulation by the SEC.

Since Moore offers impersonal data analysis that they don't benefit from other than to charge for that analysis, they can format their data however they please because they are unregulated. To suggest otherwise, is to suggest that there is something shady about their operation, and while I have no affiliation with them, making false statements about them is wrong.

I'm very familiar with that court case, and I'm not intending to imply shadiness on Moore's part. That court case highlighted the first time that it was deemed by the federal regulators that newsletters often times really are de facto advisers operating outside the rules. They moved to clamp down and got their wrists slapped. I'm just pointing out that the ONLY material difference between what they do as compared to a typical investment adviser is that they do not execute trades for you. There are several legal hoops that they must jump through to maintain their exempt status, and I assume they know them and follow them. In the end, for the bulk of their clients, the fee structure is similar to a typical adviser. To suggest that they have no profit motive is patently false.

But I'll say it again. THEIR EQUITY CURVE GRAPH IS NOT PRESENTED PROPERLY AND CANNOT BE USED TO PROPERLY DETERMINE THE VALIDITY OF THEIR PROGRAM AS COMPARED TO ANY OTHER. It would really be doing everyone a favor if they would follow the prescribed guidelines in the way they state performance. It is not a false statement to point out that they are not doing so. A simple question makes this obvious. What is their annualized return since inception according to that graph? What is their largest peak to trough loss? These are questions an investor must be able to answer before investing in any program.

P.S. No I am not an RIA and I am not regulated by the SEC. Futures programs aren't regulated by the SEC, but instead by the NFA and CFTC. Also, I don't charge my clients for advice. I'm free to distribute free advice to anyone. I encourage most of my clients to self-manage the bulk of their portfolios. Who knows, if Moore would provide useable data, I might even recommend them to my clients if their risk adjusted returns were good.

[Certeza]

Originally Posted by frank_f

Maybe we should start a thread titled "Trading stocks while you're cruising" because I would certainly subscribe to that.

My knowledge of stocks is that they go up or down and you're supposed to sell at the top and buy at the bottom. Beyond that, I fade fast. For those of us who are financially challenged, where and how can you start?

That would be a short thread. The answer: DON'T TRADE STOCKS. There are better trading methods available that can provide better returns for lower risk than stock picking. They require a bit better understanding of the market than arbitrarily picking stocks, but would you rather devote a bit of time to understanding something that makes money, or no time in understanding something that loses money?

[Therapy]

My brain must be smaller than a squirrels because I am not sure I can understand Moor's stuff.

I could only get it with one on one hand holding I think.

[frank_f]

Originally Posted by Certeza

That would be a short thread. The answer: DON'T TRADE STOCKS. There are better trading methods available that can provide better returns for lower risk than stock picking. They require a bit better understanding of the market than arbitrarily picking stocks, but would you rather devote a bit of time to understanding something that makes money, or no time in understanding something that loses money?

Is there a difference in stocks? What are the 'better trading methods'?

I've seen the word 'spread' being tossed around. Is that buying and selling the same stock or commodity at the same time? Honestly, you are dealing with a true neophyte here.

You and Delfin probably have a world of better things to do than lead me around but if you could point me in a direction that could get me started understanding some of this, it would certainly be appreciated.

As a caveat, I am by no means rich or even well off if that helps in the direction.

[Delfin]

Originally Posted by Therapy

My brain must be smaller than a squirrels because I am not sure I can understand Moor's stuff.

I could only get it with one on one hand holding I think.

Try subscribing to Jerry Toepke's newsletter, as from memory it goes into the underlying basis for different spread trades. There are also some tutorials on there that might be helpful. Feel free to PM me with specific questions.

[Delfin]

Originally Posted by frank_f

Is there a difference in stocks? What are the 'better trading methods'?

I've seen the word 'spread' being tossed around. Is that buying and selling the same stock or commodity at the same time? Honestly, you are dealing with a true neophyte here.

You and Delfin probably have a world of better things to do than lead me around but if you could point me in a direction that could get me started understanding some of this, it would certainly be appreciated.

As a caveat, I am by no means rich or even well off if that helps in the direction.

I'd echo Certeza's comment on stocks, but mostly because I think there are lower risk ways to passively make money. A spread is a combination of an agreement to purchase a commodity at some point in the future coupled with an agreement to sell a commodity at another point in the future. Because these are future commitments, they are called futures contracts and the reason they represent lower risk than simply buying or selling without the offsetting contract is because it doesn't matter whether the overall market goes up or down as long as the difference in value between the spread legs increases over time.

Perhaps this will help: Spread trade - Wikipedia, the free encyclopedia

[Certeza]

Originally Posted by frank_f

Is there a difference in stocks? What are the 'better trading methods'?

I've seen the word 'spread' being tossed around. Is that buying and selling the same stock or commodity at the same time? Honestly, you are dealing with a true neophyte here.

You and Delfin probably have a world of better things to do than lead me around but if you could point me in a direction that could get me started understanding some of this, it would certainly be appreciated.

As a caveat, I am by no means rich or even well off if that helps in the direction.

It all depends on your objectives. What is your target return, and what is your tolerance for risk? For people with only a small account, they can easily achieve around 10% annual with statistically limited risk and not much effort. That would not be a program like I offer and could not be done in a program like Delfin uses either. I'm talking about accounts less than $25K or so. The best, although offering higher potential returns, typically require more capital than that and also carry higher risk.

If you had an account of around $35K you still wouldn't be right for a program like mine, but Delfin might convince you to do a program like Moore Research offers. I personally think that futures spread trading can offer better returns for the risk which is why that is what my firm focuses on. But you must understand how it works and what the risks are. Despite the numbers being thrown around here about Moore's program getting 50% annual returns. Their published data suggests that it is actually something more like 18-25% annual when calculated the right way. But there is no way to really tell without more info, which is my biggest complaint here.