Hedging Question

[william the wie]

II have ended up with a portfolio beta of 0.1-..2.this makes finding a hedge insanely difficult. SPLV at $36.08 and beta 0.77 which I round up to 0.8 means each straddle insurance policy comes in lumps of 14,400 to 28,800 or maybe worse since I round up my own Beta as well and the range is -.23 -+.27, which I listed as -.2-+.3 so my dollar cost average is likely to be off to the downside. Also as you may have noted I rounded down coverage.

Any safety plays to avoid insuring my positions at more than double value?

 

[DarkFury]

II have ended up with a portfolio beta of 0.1-..2.this makes finding a hedge insanely difficult. SPLV at $36.08 and beta 0.77 which I round up to 0.8 means each straddle insurance policy comes in lumps of 14,400 to 28,800 or maybe worse since I round up my own Beta as well and the range is -.23 -+.27, which I listed as -.2-+.3 so my dollar cost average is likely to be off to the downside. Also as you may have noted I rounded down coverage.

Any safety plays to avoid insuring my positions at more than double value?

Coal company stocks suck right now at less then 2 bucks a share.
With 15 moths to go they could lose a little more. If the GOP is elected they are expected to soar but if you are looking at "parking" it would work.

If the GOP wins the profit margins could far exceed any tax issue.

 

[william the wie]

Thanks, but given the rates of NG fields discovery and the PEs on major pipeline companies it looks like the world price of NG/BTU could be less than that of coal in as little as five years. In fact Australia is changing over some coal fields to NG fields because they pollute less and it is cheap to do so. (A PR campaign "little black rock" backfired badly.) So, now the idea is drill some shafts, place thermite charges, seal the field and get low pollution returns when the charges cut loose.

 

[DarkFury]

Thanks, but given the rates of NG fields discovery and the PEs on major pipeline companies it looks like the world price of NG/BTU could be less than that of coal in as little as five years. In fact Australia is changing over some coal fields to NG fields because they pollute less and it is cheap to do so. (A PR campaign "little black rock" backfired badly.) So, now the idea is drill some shafts, place thermite charges, seal the field and get low pollution returns when the charges cut loose.

Forgot you were an Aussie. Does your tax code allow profits/loss from overseas? If they do you can still offset gains by just placing you loss leader here.

 

[william the wie]

Thanks, but given the rates of NG fields discovery and the PEs on major pipeline companies it looks like the world price of NG/BTU could be less than that of coal in as little as five years. In fact Australia is changing over some coal fields to NG fields because they pollute less and it is cheap to do so. (A PR campaign "little black rock" backfired badly.) So, now the idea is drill some shafts, place thermite charges, seal the field and get low pollution returns when the charges cut loose.

Forgot you were an Aussie. Does your tax code allow profits/loss from overseas? If they do you can still offset gains by just placing you loss leader here.

no legally I'm non-reservation native American, Cherokee, and my ancestral village is in Jackson's Gap Alabama. During the transportations the US Army couldn't figure out how to find Horseshoe Bend. I reside in FL and I keep u[ with the international news.

 

[danielpalos]

II have ended up with a portfolio beta of 0.1-..2.this makes finding a hedge insanely difficult. SPLV at $36.08 and beta 0.77 which I round up to 0.8 means each straddle insurance policy comes in lumps of 14,400 to 28,800 or maybe worse since I round up my own Beta as well and the range is -.23 -+.27, which I listed as -.2-+.3 so my dollar cost average is likely to be off to the downside. Also as you may have noted I rounded down coverage.

Any safety plays to avoid insuring my positions at more than double value?

Have you considered short selling?

 

[william the wie]

II have ended up with a portfolio beta of 0.1-..2.this makes finding a hedge insanely difficult. SPLV at $36.08 and beta 0.77 which I round up to 0.8 means each straddle insurance policy comes in lumps of 14,400 to 28,800 or maybe worse since I round up my own Beta as well and the range is -.23 -+.27, which I listed as -.2-+.3 so my dollar cost average is likely to be off to the downside. Also as you may have noted I rounded down coverage.

Any safety plays to avoid insuring my positions at more than double value?

Have you considered short selling?

Yes. While a great tool for dealing with converts like many low rated bonds shorting is too blunt, costly and risky a tool for my purposes at this time. Come May 1st to Nov.1st being both short and long on a portfolio avoids risk in the low return half of the year. The difficulty with that strategy is my wife wants an in town office in case some accounting change screws up her tax accounting as it did earlier this year. So, while now Gail can go scream at Mike about taxes it has screwed up my usual strategy.

 

[danielpalos]

II have ended up with a portfolio beta of 0.1-..2.this makes finding a hedge insanely difficult. SPLV at $36.08 and beta 0.77 which I round up to 0.8 means each straddle insurance policy comes in lumps of 14,400 to 28,800 or maybe worse since I round up my own Beta as well and the range is -.23 -+.27, which I listed as -.2-+.3 so my dollar cost average is likely to be off to the downside. Also as you may have noted I rounded down coverage.

Any safety plays to avoid insuring my positions at more than double value?

Have you considered short selling?

Yes. While a great tool for dealing with converts like many low rated bonds shorting is too blunt, costly and risky a tool for my purposes at this time. Come May 1st to Nov.1st being both short and long on a portfolio avoids risk in the low return half of the year. The difficulty with that strategy is my wife wants an in town office in case some accounting change screws up her tax accounting as it did earlier this year. So, while now Gail can go scream at Mike about taxes it has screwed up my usual strategy.

what about risk management through diversification of markets, such as options, futures, etc.

 

[william the wie]

II have ended up with a portfolio beta of 0.1-..2.this makes finding a hedge insanely difficult. SPLV at $36.08 and beta 0.77 which I round up to 0.8 means each straddle insurance policy comes in lumps of 14,400 to 28,800 or maybe worse since I round up my own Beta as well and the range is -.23 -+.27, which I listed as -.2-+.3 so my dollar cost average is likely to be off to the downside. Also as you may have noted I rounded down coverage.

Any safety plays to avoid insuring my positions at more than double value?

Have you considered short selling?

Yes. While a great tool for dealing with converts like many low rated bonds shorting is too blunt, costly and risky a tool for my purposes at this time. Come May 1st to Nov.1st being both short and long on a portfolio avoids risk in the low return half of the year. The difficulty with that strategy is my wife wants an in town office in case some accounting change screws up her tax accounting as it did earlier this year. So, while now Gail can go scream at Mike about taxes it has screwed up my usual strategy.

what about risk management through diversification of markets, such as options, futures, etc.

Sorry about the wait for a reply but I wanted to wait to see if we would have a countertrend turnaround Tuesday before making my decision. That's a semi-reliable indicator of heightened volatility.

Since the US is the world's cleanest dirty shirt I bought 3 long dated SPLV straddles as a volatility play today

 

[danielpalos]

Hope you get enough volatility.

 

[danielpalos]

I think over the counter stocks can be a good experience.

 

[william the wie]

I suspect I will

 

[saveliberty]

What if the Fed rate increase is already priced into the market? Actually raising the rate may eliminate the uncertainty and the market rebound.

 

[william the wie]

I think over the counter stocks can be a good experience.

They can be but I prefer safety to higher return so I can get return of my capital as well as return on it.

 

[william the wie]

What if the Fed rate increase is already priced into the market? Actually raising the rate may eliminate the uncertainty and the market rebound.

Quite true that's why I am hedging with straddles. The stronger dollar creates a twofer for hot money: Get decent returns in the world's least corrupt and rigged markets while making a profit on the currency. That sir, is the recipe for upward trend volatility. We will get IPOs for a product to be named at a later date. To give an extreme example Austin is the start up capital of the world but most Americans don't know that. For that matter if my wife and I hadn't seen that CNBC report on NBR I wouldn't know that. I don't recall if that was per capita or in absolute numbers. However the number of foreign investors who know that is much smaller in percentage terms and maybe absolute numbers than for American investors. That northern AL is a major aerospace hotspot is another major unknown for most of the world's investors.

 

[danielpalos]

I think over the counter stocks can be a good experience.

They can be but I prefer safety to higher return so I can get return of my capital as well as return on it.

what about a simple "higher risk management fund" to help with "diversification" and "strategies" to explore that market?

 

[william the wie]

That's a flat rip-off based on a few disproved postulates of the efficient market hypothesis.

When actual inefficiencies are found in the market they are exploited until they quickly disappear.
The presidential and census cycles persist because they are part of the Constitution. The Mayday/Hallowe'en cycle is ultimately driven by annual seasons. These cycles ain't going to disappear.

Economic actors are rational according to the definition used by economists. Economic Nobels have been given for disproving this assumption, most recently Shiller's.

The need for non-economic rationality in breeding for example means that higher risk instruments are used for bragging rights not economic returns. Therefore higher risk results in lower returns

 

[danielpalos]

i am learning how to "short sell" "emotional investments" for hedging purposes.

 

[william the wie]

i am learning how to "short sell" "emotional investments" for hedging purposes.

Find out:
dividend and buyback rates
the amount of margin you'll get tagged with and interest rate you'll pay.
Then print it out in case you have to do to arbitration. IC3.gov is the reporting place for white color crime but expect your complaint to take awhile to work through the queue.

 

[danielpalos]

I usually factor for overhead costs; and, I am learning to Only use "risk capital" for my investment purposes.