Daytrading in ROTH to hedge TSP

[offtrack]

I'm having a lot of success with this lately. Curious whether any of you have been doing the same. I'm retired and have the free time to pay attention and am using Scottrade for the $7 fee. I pretty much have been playing with high-yields (Canroys, drybulk shippers, health reits, large cap financials etc.; combined with stocks which I like based on fundamentals; and finally stocks that are hot and that I would normally avoid but play because of the attention from other investors. The market volatility has made this profitable and fun but draining and can't spend more than a few hours streaming 20 or so stocks.

 

[Bullitt]

I would consider a daytrader one who makes 20 trades or more in a day on average. I don't have the time to play those games. You mentioned that you "Hedge" your TSP via Roth. I'm assuming you have short positions if you are hedging your bets as in a hedge or long/short fund. If so be careful, as professionally managed Hedge Funds have significantly underperformed Stock Funds in the past.

GL, I hope your plan is working out in your favor. Either way, take a look at the quote at the bottom of this post.

 

[rokid]

if you are hedging your bets as in a hedge or long/short fund. If so be careful, as professionally managed Hedge Funds have significantly underperformed Stock Funds in the past.

I just received a copy of the Journal of Indexes in the mail. The July/August issue is devoted to hedge fund replication, i.e. creating synthetic hedge funds that are more liquid, more transparent, and available to the retail investor.

However, they made a similar point. Hedge fund returns are decreasing and hedge fund correlations with domestic and foreign markets are increasing. One of the Journal of Indexes editors, Brad Zigler, mentioned that the HFRX Equal Weighted Strategies Index produced a compound annual return of 5.8% vs. 6.4% for the Wilshire 5000 (C&S funds) over the last five years. That's not much bang for the "two and twenty" buck.

With 9,000 hedge funds chasing a limited pool of alpha, it's tough out there.:laugh:

 

[Birchtree]

It's virtually impossible to day trade a Roth unless you've owned it for twenty years - it takes money to make money. Use the Roth to reinvest dividends on a DCA basis and you'll do fine.

 

[offtrack]

I should have made myself more clear. I forgot how terms change over time. I meant the term hedge generally as to offset or reduce risk but not with any specific reference to buying into hedge funds or using the strategy of hedge fund managers. Instead of implying that I use the Roth as a hedge against TSP, I should have said I use the TSP as a hedge against riskier moves in my self-managed Roth. I just like the options and control I have with my ROTH in a market that has been bulling along for a few years and is getting pricey. I expect more market volatility over the next 1 1/2 year in S,C, and I with potential for large daily swings in the price of individual stocks and for our 3 stock funds. And though I am bullish for that period, I tend to have a bearish overall personality. (I got hurt in 1987. Someday I'll have to start a chat with the other older investors about that. But the market dropped 20% in a day. My best fund went from $52 to $42. And dumbass that I was, I used my cash savings to buy more shares that dropped another 10% over the next couple of weeks. I was lucky being young enough that I could recover without much affect but it definitely colored my outlook. )
I can buy in and out of individual stocks and move quickly in my Roth. One need not short or get involved with options. Trades are cheap. Although being retired I have a bit of money in my account I haven't needed to move too much around to get nice gains. And my stepdaughter has done well with a very small account, less than $10K. She's only 21 and has a lot of years to catch up from any blunders she makes.
I have not made more than 6 trades in one day and usually don't make more than 2-3 and I'm definitely not watching everyday. Most of the work is in the homework for what to buy and then waiting and looking for an opportunity. (ala the run-up for the 4th of July) I watch premarket and aftermarket trading on play days but there is money to be made and most of the members on the board are far more savvy to present day markets than I.
I'm hoping some of the members will continue to discuss individual stocks and trends for the future.

 

[Show-me]

It's virtually impossible to day trade a Roth unless you've owned it for twenty years - it takes money to make money. Use the Roth to reinvest dividends on a DCA basis and you'll do fine.

Maybe you can't day trade, but you can swing trade very successfully. Don't know why I did not notice this thread before, I was looking for the SU thread I thought I started here.