HOW ONE iTuliper IS INVESTED?

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

1. I currently have a long term term core position in gems and precious metals that's around 25% of my total net worth. I own no real estate.

Last Friday morning my approximate futures positions, including leverage, were:
270% S&P short
100% cotton long
250% gold long


I exited both the S&P shorts and cotton trades this morning, partially due to a loss of power and 'net connections due to the wind issues in southern California, and partially due to TA factors.

2. The core holdings are primarily based on long term cycles like Dow/gold and also the extant negative real interest rates.

The trading positions are generally quite short term, averaging under two weeks. They're based on an eclectic combination of my own charts, fundamental and technical analysis.

My yearly rate of return since I started investing and trading full time in 2004 have never been lower than about 30%... and I do not recommend or want to encourage using the kind of leverage that I use to anyone, but it works for me.

Hey, Bart, get offa my thread.

Glad you put forth your thoughts and positioning.

I asked Fred, whoever that is, if he could start a Forum--somewhere--into which individuals who choose could put up their positions and whatever discussions they wish for whatever comments such might elicit.

So far he has not PM'd me back saying he would do that, perhaps he has done it, and I just haven't looked for a new Forum.

At any rate, I am serious in my suggestion, Bart, that I think it would be great if you could put the information you put in MY THREAD into a thread of YOUR OWN, and that way any on-going changes you wish to make will be consolidated and tidily in one place, and also perhaps keep any one thread from becoming too lengthy.

If we are lucky, one of the Freds, whoever they are, will see fit to begin a new Forum and put c1ue's comments, mine, and yours, Bart, into it, and hopefully some others too.

Here's hoping Fred is paying attention.

So, Bart, what happened before 2004, is it something like you were a secret agent and if you told us you'd have to kill us? (I can't get over how smiley I am today--it must have been that Brit u-tube video.)

What is a TA factor? Tight ass?

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

EJ says gold is a bubble. It will go up, but then go down . . . and it's been said here many times that it's hard to catch a top.

What about taking that cash and buying long-term T-bonds at around 20% (interest rates predicted by EJ in KaPoom theory), then collecting 20% for the next 25 - 30 years (depending on when the Fed calls them)?
Of course, you'd have to try and catch the top with bonds, too.

Or maybe a combination of both . . . ride gold up, then buy T-bonds.

You should do that, Raja.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

From Canada , we must have a different perspective as our Loonie has gone through the roof vis a vis the USD.

My current holdings for a 12-15 year investment horizon:

10% CAD cash --short term deposits==> to take advangtage of any real significant short term market downturn.I will resume being close to 100% stocks when the crisis is over.Long only.

40% Claymore BRIC in CAD fund --Ticker : CBQ on Toronto S/E==> Longer term , these countries are/will decouple from the USA and Europe as their internal demand will replace current exports.

40% Jarislowski Fraser Canadian equities (Jarislowski is our Canadian proxy to your Warren B)


10% XOM in USD---does not need justification IMO.


I was at Bullion Vault August & September 07 (25-30% position and in a confused state of mind :eek: I must say) but the Gold gains were largely offsetted by our currency appreciation so I dropped it --too much headache for me to speculate about 2 things (price of PM and currency fluctuation) in one trade.

2 years ago , I had a good run with Canadian income trusts (energy and real estate) (Barclays BAI.UN on Toronto) and was lucky enough to sell before new fed regulations were voted.

My average returns are high teens--sometimes low twenties.

Good, Nicolasd,

Would you please start your own thread as I suggested to Bart right above. I encourage you to do this. I think it is good to put up what you think, but it will aid clarity if individuals keep their own threads.

Thanks for posting.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

RRPIX, rises when the yield on the 30-year bond rises, leveraged to 125% of moves in the price of 30-year bond.

I initially opened an ~ 1% position in this on 9/20/07, thinking yields were breaking out and would continue to rise. WRONG?!

Added ~ 0.5% more the next day. Yields have steadily fallen since then, and I had about a 5% loss.

Today I put about 1% of my portfolio into more RRPIX. This makes that position 2.29% of my portfolio as of today.

If the prime-Poomist turns out correct, I think at some point bond yields will rise. Whether Bananake equals Greasespam in lowering rates again to 1%, we'll have to see, but at some point, I think bond rates will begin to more adequately reflect the US's inflation.

If Raja is following this, Raja, tell me how to pick the bottom in long-bond rates as you propose to do with the top whenever that comes?

If the secular move up in bond rates is a long as has been the secular move down, it will be a long wait for you to see the top rates again in Treasuries.

[bart]

Re: HOW ONE iTuliper IS INVESTED?

Hey, Bart, get offa my thread.

Glad you put forth your thoughts and positioning.

I asked Fred, whoever that is, if he could start a Forum--somewhere--into which individuals who choose could put up their positions and whatever discussions they wish for whatever comments such might elicit.

So far he has not PM'd me back saying he would do that, perhaps he has done it, and I just haven't looked for a new Forum.

At any rate, I am serious in my suggestion, Bart, that I think it would be great if you could put the information you put in MY THREAD into a thread of YOUR OWN, and that way any on-going changes you wish to make will be consolidated and tidily in one place, and also perhaps keep any one thread from becoming too lengthy.

If we are lucky, one of the Freds, whoever they are, will see fit to begin a new Forum and put c1ue's comments, mine, and yours, Bart, into it, and hopefully some others too.

Here's hoping Fred is paying attention.

So, Bart, what happened before 2004, is it something like you were a secret agent and if you told us you'd have to kill us? (I can't get over how smiley I am today--it must have been that Brit u-tube video.)

What is a TA factor? Tight ass?

I generally avoid posing any specifics about what I do (except on my blog, and I'm even backing off on that at the end of the year) since it's so far off the beaten path. I misunderstood and thought you were asking what others did.
Shall I just blank out my post?

Before 2004, I only invested in mutual funds and did minimal switching around although I did buy my first precious metals for this cycle in early 2003.

TA stand for Technical Analysis and includes thing like trend lines and moving averages.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

I generally avoid posing any specifics about what I do (except on my blog, and I'm even backing off on that at the end of the year) since it's so far off the beaten path. I misunderstood and thought you were asking what others did.
Shall I just blank out my post?

Before 2004, I only invested in mutual funds and did minimal switching around although I did buy my first precious metals for this cycle in early 2003.

TA stand for Technical Analysis and includes thing like trend lines and moving averages.

No, Bart, don't blank out your post, and certainly it is up to you if you want to post comments as you see fit about how you are positioned.

I know technical analysis, just didn't correlate the "TA."

I look at a lot of charts too--don't always get them right, but I look.

You keep up 30% a year and you can quit in a few more years.

[bart]

Re: HOW ONE iTuliper IS INVESTED?

No, Bart, don't blank out your post, and certainly it is up to you if you want to post comments as you see fit about how you are positioned.

I know technical analysis, just didn't correlate the "TA."

I look at a lot of charts too--don't always get them right, but I look.

You keep up 30% a year and you can quit in a few more years.

Cool and wilco on posting. Sorry for the diversion.

[raja]

Re: HOW ONE iTuliper IS INVESTED?

If Raja is following this, Raja, tell me how to pick the bottom in long-bond rates as you propose to do with the top whenever that comes?

If you tell me how to pick the top in PM, which you are intending to buy then sell, I'll tell you how I will pick the top in bonds.

If the secular move up in bond rates is a long as has been the secular move down, it will be a long wait for you to see the top rates again in Treasuries.

Going by EJ's KaPoom chart, about 7 years to hit 20% -- although it may be that we're already in the disinflation period, which would move that up 2 years. And if the whole process is accelerated, maybe 3 or 4 years for rates to hit 20%. Meantime, maybe it's good to buy PM now, then sell and move the proceeds into bonds later?

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

If you tell me how to pick the top in PM, which you are intending to buy then sell, I'll tell you how I will pick the top in bonds.

Going by EJ's KaPoom chart, about 7 years to hit 20% -- although it may be that we're already in the disinflation period, which would move that up 2 years. And if the whole process is accelerated, maybe 3 or 4 years for rates to hit 20%. Meantime, maybe it's good to buy PM now, then sell and move the proceeds into bonds later?

http://stockcharts.com/charts/histor...pxusb1978.html

Look at the chart above, the bottom pane shows the USB--30-year Treasury. It bottomed in price in late '81 and possibly has topped out in mid-03 or perhaps it has yet to top out.

Along the 22 years, so far, there have been some good peaks and valleys, all of which could have allowed some trading, and I doubt anyone who may have traded this trend picked more than one top or one bottom of an intermediate trend reversal along the way.

Markets, excluding Shanghai, seldom, if ever, move in straight lines. It is my opinion that using technical indicators, one can get reasonable notions of what are lows and what are highs and still not know which way the next move will unwind. I don't think I have yet picked a top or bottom; I don't even try. I do try to get into up trends and out of downtrends.

Buying and holding over long terms only works as long as the trends continue and as long as one's life continues.

I certainly do not have a perfect answer to market timing, as I don't think it exists.

[raja]

Re: HOW ONE iTuliper IS INVESTED?

Jim,

I am truly a novice investor . . . so please help me understand something:

It's generally agreed on iTulip that PM are a good investment, because they're expected to go way up. I, myself, am invested in GLD and SLV due to reading iTulip and other sources.

But how does one know when to sell?

Would knowing when to sell PM be any easier than knowing when to lock in a high rate for a T-bond?

I am perplexed . . . . :eek:

[WDCRob]

Re: HOW ONE iTuliper IS INVESTED?

But how does one know when to sell?

I'm also in gold and am a novice at all this - so had to answer that question for myself. I don't expect I will ever 'know' when to sell. And I'm not interested in nailing the absolute tops and bottoms, just in avoiding the big falls and being invested for the large runups.

YMMV (and I could be totally wrong), but I found it helpful to think in terms of ten years instead of ten months, ten weeks or ten days. With that in mind, I'm fairly confident that the Dow/Gold and Housing/Gold charts you can find if you poke around here for a bit are useful for getting an idea when we might be near the top/bottom.

IIRC the Dow has been buyable for ~1-2 ounces of gold and the average house for under ~150-200 ounces at the end of the previous cycles. Of course, as always, past results may not be indicative of future performance.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

Jim,

I am truly a novice investor . . . so please help me understand something:

It's generally agreed on iTulip that PM are a good investment, because they're expected to go way up. I, myself, am invested in GLD and SLV due to reading iTulip and other sources.

But how does one know when to sell?

Would knowing when to sell PM be any easier than knowing when to lock in a high rate for a T-bond?

I am perplexed . . . . :eek:

Raja,

Well if you bought gold and silver based on your readings of iTulip and other sources, you might continue to check those sites for when they say sell. That, I admit is a crappy answer, but there is possibly a bit of worth in it.

I can't tell you exactly when to sell anything or when to buy anything, buy low, sell high; then the problem comes in trying to figure those things out, and whatever you decide, it ends up being a bet.

Learn to use stops if a trade goes against you. I used MACD and RSI indicators to develop ideas about what is possibly a high or low. Nothing about which I know is perfect.

I don't have an opinion about your last question, Raja, but I can tell you one thing I believe: one cannot extrapolate from looking at highs and lows on historical charts and then say something like, "I am going to do that, buy at bottoms and sell at tops," because today may be a top or it may be the second step on a long run further up, and when it comes to actual deployment of real bonars today you do not know what tomorrow will bring. You can only try to make educated bets about what is undervalued or technically oversold when considering buying vs. what is overvalued and technically overbought when considering selling.

Sorry, I cannot un-plex you.

[Guest]

Re: HOW ONE iTuliper IS INVESTED?

Raja -

"When to sell" may be a red herring.

If one had for example a half a million dollar portfolio (and many of us would be very pleased to have that for starters!), one should absolutely be willing to spend $1000 or even $3000 per year and simply buy oneself a cross section of the best newsletters following ones preferred investment that can be sourced. If you find yourself disinclined to spend that relative small change while you are willing to invest $500K on new ventures, it's risking a case of "penny wise, pound foolish".

If any of those newsletters are worth half what they charge you, they'll point out to you the window that's at very worst 30% to 25% short of the so called "top". So that approach is as good as done by those means.

Here's something arguably more significant. If you have arrived at the idea of investing in Gold, which has been a long disfavored investment class, which was systematically sold and shunned for 25 years, you've done some reading and presumably confirmed that it's re-entered a primary bull market. If you did not think it was in a new bull market of any duration you'd not be in it. You've further ascertained that at six years running, and at a non inflation adjusted price of $700, it's still reasonably "young" for a primary bull market.

Then from the same reading you ascertain that a typical run in such a primary bull market might be 600% to 1500% (for the sake of discussion). So you look around and take stock of the fact this particular bull run has accomplished barely 300% to date.

Now the question becomes, are you the type of investor that likes to put a hesitant amount of their investments into a mature bull market, say where it was already at $1200, and try to ride it up to within 25% of it's "top" (which no-one really has more than a guess about), or are you the type of investor that prefers to put a really significant part of their investment funds into a very early bull market, when the probability of a higher price within a strictly finite future is the highest?

The former aproach invests a smaller sum, but with higher risk. The latter approach has less risk being early and so can invest a much larger sum. But the crucial ingredient is, it does so very early.

If you do diligent research and determine your are still quite early and the fundamentals for paper money are making gold look more sure a bet for some upside with each passing day, then the more conservative approach for an investor determined to significantly grow their worth is to invest emphatically when it is early in the trend. We probably are still early, but we are not "as early" as we were at $400 Gold. Food for thought.

The investment point being made here is this: Conviction and action with considerable emphasis, after duly confirming a trend really is very early, are the more prudent way to invest. We might call it the "Charles Mackay Method" [TM], or to be fair, also "the iTulip method" although iTulip apparently did not approach it with as much "all or nothing" Banzai spirit back when gold cost $270 per Oz. as Charles Mackay seems to have done. Either way, these guys were "very, very early".

Paradoxically, what imagines to be the cautious approach which opens very small positions when price is very low, and gradually builds them up when price is intermediate, to then accumulate a very large position when price is high - this approach relies then critically upon such artificial constructs as "what is the market top, and how can I time it"? This kind of attempt loads ones investment with risk.

My question is this: Why don't people here, who can see the world's senior currencies are tethered to a US dollar whose deep seated fundamentals looks like the space shuttle losing a bunch of ceramic tiles on reentry orbit and about to burst into flames, not then clearly acknowledge that the lowest risk strategy for "investing in gold" is to invest a large amount very, very early, and then be sure to get out - also "very early" or pull funds out progressively as the price climbs beyond median numbers??

If you buy gold at $700, with 10% of your assets and then spend another five years fretting about missing the top, you've eked a potential double or even triple, with lots of risk because you want to dance right up to the top of the bull market. Even if you triumph on the timing, you've only added 20% to your net worth at best.

If you decide instead Gold is likely going up to $2000 dollars nominal (which is still less than the old 1980 high so that's looking fairly conservative), but you are a very cautious bloke and don't like risk at all - you decide you will ride it up to only $1050 or so - for a paltry 50% gain, but in this "very early" low price risk environment, you commit 50% ++ of your investment funds to it. (I can just see the shock, suspicion, and deep disapproval of any portfolio managers here! :eek: :eek: :eek: ).

Or of course, if you are a wealthy chap, you need commit nothing near that percentage - but the point is, you commit serious funds to the play because you know A) you are very early, and B) you plan to get out very early too!

Conventional thinking says that is the risky gambit. I think it's the far safer gambit when fundamentals are aligned for the reemergence of the senior currency as they are today. Mind you, we are not talking about any stocks here. Being very early or late in the move exerts a larger qualitative effect on risk than the size of one's position. A very small position placed very late is still very risky. A large position placed very early still has risk that's incommensurately lower than the size of the committed funds.

Timing is a mugs game. By being early, placing a really serious bet, and being quite sure the macro events are producing a very high probability result for Gold (you've done all the homework to nail the thesis to the floor as well as any investment idea can be), risk becomes suddenly quite low.

This is the epitome of an ultraconservative yet also aggressive investment. By resolving to GET OUT most or all of your investment after you've satisfied yourself with a mere 50% (or 75% - it's up to you) you are setting your safe exit far in advance of all the loosey goosey self confident market timers out there who will be getting ulcers trying to figure the top in that market.

I submit this is the appropriate seriousness with which to catch some portion of a once in a lifetime inflationary explosion. You simply need to determine for yourself whether the inflationary explosion will occur. On one side the inflationary meltdown threatens you like it threatens all hapless Americans laboring under our present sleepwalking government. On the other side, you harness the meltdown with an extremely conservative curtailment of entry and exit points, and select the precise degree of risk you wish to undertake.

CAVEAT - It is certainly very open to debate whether we are at this point still "very early". Others here will swear that betting significantly on gold is a terribly foolhardy notion now, and they probably had similar views three years ago. Everyone must find their own visceral sense of this play's validity.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

Raja,

I agree with Lukester's comment about spending some money for some investment letters. Then the question becomes which ones?

I have no vested interest in The Chartist run by Dan Sullivan, but he is one guy that makes investing easy in that he picks stocks and tells you when to buy and when to sell, or if you follow and invest in those issues in what he calls his Actual Cash Account, you again do what he does.

He also runs a mutual fund letter using similar principles. I don't read the mutual fund letter.

One thing that adds credibility to this newsletter is that the guy does invest himself in what he suggests to subscribers.

He is a momentum investor which means buying stocks that have already appreciated by the time he recommends them, and then he hopes they will continue their outperformance and be sold at higher prices.

What exposure to this letter has taught me is a discipline, Sullivan's discipline, about investing. There are no doubt many ways to succeed (or fail) in investing.

[c1ue]

Re: HOW ONE iTuliper IS INVESTED?

Lukester,

You've got a good handle on the essence of investing for YOM (your own money).

It ain't being right, its being the mostest and rightest (to paraphrase Forrest).

As for me - the folding money is how I test my trading instincts.

As I've also noted before, the rare occassions when I 'back up the truck', I've put in 70%+ of my liquid assets.

Then again, my general ratio of liquid to non-liquid assets is itself a function of my analysis of the market.

I too sold my property - in 2004 - but my rationale was different: I bought the property for cash flow purposes as the 3BD 2BA house in Austin cost me $150 more than renting a nice 1 bedroom apartment. Even after moving away, I continued to hold it despite losing $300/month cash flow because I had a 100% reliable renter.

My reason for selling then was because he lost his job and moved back to the Bahamas.

As for gold, it is great that some people have jumped in early and gained a nice multiple.

My analysis of the situation is telling me that it is opening a correctly positioned business now which will yield the better overall benefit.

It is a very much contrarian view: it seems everyone around is more focussed on real estate or financial securities to make money in, not so many looking at new businesses. ;)