I would feel I have done a decent job. How many active fund managers really manage to do that.
Yeah may be. Because I am very very conservative. High returns come with high risk. Right now if I check my XIRR it is around 41 percent over a period of 5 years. I feel it’s decent.
May be if I had taken higher risk it would have been higher.
I keep it around 50 percent for the main reason of pledging it for equity component. Remaining comes from debt funds and I use it for trading too.
That was the only time I went that low. Nifty went from 17k to 18800 so fast I knew I would get a lower entry. I didn’t really sell my long term holding. I just sold futures at 18800 and squared it back at 18200 for around 50 percent of my portfolio. So from 45 percent in equity it came down to 20 percent.
When we went to 15200 last year I had reached 80 percent. Covid time at 8000 level of nifty I was at 120 percent. (Used futures). When we came back to 9000 I brought my exposure to 100 percent and then eventually reduced it.
Doesn’t that mean I will bring it down to 20 percent again? by the end of this march if we reach 19500 then definitely I will do it again. In fact I have already sold 19500 march call.
Not sure if you are following what I am saying and there is a very good chance that I am doing it all wrong. So far this has worked. And I know it may not work in future.
How do I make below returns from bonds. I didn’t understand this.
A long term investor doesn’t expect to generate more than 25 percent. I do not know many long term investors here in this forum but @neha1101 is definitely one. @ANKIT_T are u also one ??
I’m quiet sure, since you are an active trader, your overall portfolio will beat the index returns.
The above comment was regarding your pledged holdings. Look at it this way, If you miss even 1% of the largest green days, your returns will be abysmal. So, when you take money out (cut those profits short) when the index makes those huge moves, you are likely missing out big.
Seeing that equity gives about 1.5x (max 2x) returns of bonds, you will end up making less return than bonds following this approach over your investing career (on your pledged holdings), with added drawdowns to portfolio.
In short, what is the advantage of your approach over pledging bonds and trading?
A big misconception here. I am not a trader. I use derivatives as a hedge instrument. That’s it. I do not understand any indicator or chart.
I never even bothered to understand it because I believe more in fundamentals and short term trends are just random walks. I feel they have 50 percent probability to move either way. I believe in law of averages. If nifty shoots up 10 percent in 1 month I believe we will get some correction. That’s when I either sell calls or sell futures. When market dips I add niftybees or sell puts. I am always against the trend. Doesn’t that make me a long term investor?
All my derivatives trades are on fundamentals, expiry day peanuts on OTMs, long term calls against my level of nifty (19500 for march right now.) long term puts to add more to portfolio. Right now at 17k put.
In no way I have stop loss.
So I am not a trader as you think.
I definetely qualify as a Long Term Investor. My return expectation from equity is 5% over and above the Bank FD rate i.e around 12%p.a and will be very happy. I strictly follow asset allocation and will park only that portion of money in equity which is surplus meaning I am not dependent on this in case the market falls. I sell when I feel the market peaks and will buy back the same when it falls. This reduces my average cost and quite happy with this strategy.
What exactly is this if not trading? You aren’t just an invester (since you do more than just buy and hold). What other term would you use to describe what you do?
Totally agree. Basically the same thing I do but I use derivatives to adjust my portfolio to get the benefit of period of holding. So most of my gain will only be long term capital gains.
Pledge bonds and trade spreads. Buy/sell call/put spreads as you would go long or reduce/increase size. This would cap upside, which you are anyway doing (in your investing approach). This would make your downside almost negligible compared to just buying equity (pretty much win-win). This makes far more sense to me, or am I missing something?
Coincidentally I was arguing on the same thing with my friends over drinks last week (yes, we discuss finance and investing after getting tipsy). Summarising the response I got.
It’s better to hold physical gold vs sgb/gsecs, while planning for such doomsday scenario. But what’s even better, is holding guns. You can accumulate a lot of physical gold with it when the time comes.
Deep and insightful .
On an unrelated topic: what’s the process to apply for arms license in India?
why though? If there was a zombie apocalypse, I would rather just die. Can’t even take a shit in peace, why live?
On a lesser tragic scenario: If all institutions fall, I would rather not hoard gold (puts a target on your back). I’d also rather not take up arms. What exactly can you do with lots of guns and gold when the world has gone to shit.
The point is not holding physical gold. The point is being able to maintain your purchasing power from central bank. We use fiat currency so they have the big stick and it’s their playground. You store your ammo of gold but then become HVT(high value target) almost from neighbours to govt if hyperinflation comes.
The thing I have and is like other rich ppl is have some gold In hand or have offshore safe heaven vault. When things go bad survive make it to another safe country and start a new, don’t mind being homeless and working as janitor to raise money and then buy myself a suit and get a job. Well that’s what I have in my mind and that’s what people of Syria & Iraq go through. All depends on my Survival. Now if nuclear blast happens well, what’s even point of all these investments. I am pretty sure I wouldn’t need it .
Has anyone here or anyone whom you know ever tried to sell physical gold in the market and get cash. Can someone tell me where can I sell Physical Gold and get cash as per the market price.
I am talking about Gold biscuits and not jewellery, the obvious answer is, go to a Jeweller. In reality the situation is very bad. Jeweller will welcome you if you wish to exchange and buy another jewellery as he makes margin on the making charges, etc. However, if you approach the same Jeweller and ask him to buy the gold biscuit for cash, the attitude is different. He will ask for the bill, ask a lot of questions and if your answers are vague, he will agree to take it at a discount. Even if he is willing to take it, it will be cash. So is there any recognised parties in India who will buy the gold biscuit and the holder can get the market price of the gold on the sale date.
Yes, I am aware of SBI has started Gold account where biscuit can be converted to digital gold and they give interest as well on the gold account. However convincing family members to do the same is a bigger challenge than talking to the Jeweller. Also all branches of SBI do not provide this service only select branch.
If you are buying gold for the purpose of diversification/investment it always better to buy digital gold, as you can sell it online and you get the market price and the proceeds come to your bank account.
I think you missed the context. This is for a hypothetical scenario where the govt defaults (hypothetical being the operative word here) - Since SGBs are not backed by physical gold, and are more of a promise, like the fiat currency.
PS: Unless you’re a cynic, no point holding physical gold as an investment. Anyone with a gun can take it away from you.
I fully understood the context and there is no confusion. What I am asking is a related question - Does anyone know where to sell physcial gold in today’s time apart from jewellers.
Your point of holding physcial gold - I know so many individuals who hold gold coin/ biscuits - The idea is convert the same to jewellery when their kids grow up for their wedding etc, but the point is there are many individuals who hold gold coins and biscuits.
Well with regard to holdinng a gun… Bank lockers are meant for this sole purpose…
Well, I do know someone and it’s kinda how things unofficially go here, I mean shadow economy , black market , black money. You know those shady chit fund😛. I mean if you grew up in a place as they call “hood” you might know.
So I have a idiotic neighbour, can’t blame the family when community influence is too much. So the way it works is according to rules you buy gold, pay the taxes and have it. But if you earned in chit fund (unofficially I don’t know what they call it in your place, kinda like it’s one group where each member puts fund and is loaned out to one person in group who pays high interest + principal which is then shared, all black money in cash), you would take this unaccounted money approach a jeweller. a kinda shady jeweller I mean not big ones like joyllukas , GRT. Down here in chennai Sowcarpet plenty of small to medium jewellers are there. You buy jewells from them in cash , no taxes at all. It’s what they call katcha bill(I don’t know if it exists).
Now for selling the unaccounted gold, you can sell the same to them for katcha bill at their rates. If they cheat you, good luck!. Well this how things work in background. The only thing here is authentic , legit and safety are a big question. You can’t even lodge a formal complaint if you lose gold and ofcourse IT department can confiscate it which my neighbour says “will bribe and be safe” lol.
Not really. With spreads of 200 to 300 range you are just getting 1 to 2 percent. I make changes in portfolio only when there is more than 5 percent change in nifty in less than one month. 5 percent is 900 points. With spreads I will also have to give away premium if it doesn’t go in my direction. If you taking about monthly spreads then I would be paying 200 points for time value. If you are taking about credit spreads then upside is very limited.
To me it still doesn’t. Am sure there are a lot of advantages to whatever you are saying. But for me it doesn’t sound right.
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