CONFESSIONS OF A NICKEL SLOT PLAYER!!! . .
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WARNING! This post might be offensive to many. If it is don’t read it!
I am posting to demonstrate and define what is/was a Nickel Slot Player in the markets this year.
For this demonstration I’ll refer to a chart of the HUI for 2009.
Now the assumptions – assume one bought the HUI at the closing price on December 31, 2008 – it closed 2008 at 302.37 with this year’s close at 429.91. A buy & hold strategy would have brought a return of 42.2%. Let’s call this the base case. Note: I gave a preliminary picture of this idea in a post in November and included a similar chart:
i21.photobucket.com
Now assume one wanted to trade the moves in the HUI and use that as a benchmark. If one was extremely lucky and bought in at the exact low of ever move and sold at the exact high of every move, as shown on the chart, the return for the year would be 205%. Let’s call this the “Full HUI Case.”
But a more realistic target is that a trader captures 50% of those major moves. That would give a nominal return of 102%. [I’ll call this the “HUI Moves Case.”] Now if one took all of the gains from each of these individual moves and put it back into future trades, it would compound the returns and lead to an annual return of 167%. [For no particular reason, call this the “Compound HUI Case.”]
So there you have it – a spectrum of possible returns to which one can benchmark a year of trading.
Possible HUI Based Returns 2009
HUI Base Case – 42.2% (buy & hold strategy)
HUI Moves Case – 102%
Compound HUI Case – 167%
Full HUI Case – 205%
Now note all of these different cases, the base case excepted, exceed the nominal returns of any other normal measuring stick on Wall Street:
Annual Returns:
DOW – 18.8%
S&P - 23.5%
Gold – 23.6%
QQQQ – 53.8%
I know others will ask or imply – Are you a Joe or a Pro?
I think anyone that beats the standard measures has done well and deserves a nice pat on the back. You’ve taken the first steps away from a buy & hold strategy!
Now if one falls in the range of “The HUI Moves” or “Compound HUI” cases one has demonstrated an excellent proficiency in the market and can call them self a “Pro!” Clear these investors are doing significant trading and capturing most of market moves, while protecting profits.
However, I think a “Nickel Slot Player” is defined as one who exceeds the returns of the “Full HUI Case!” After all, being able to capture the equivalent of all of the Full HUI moves and a bit more, suggests one is actively managing positions, avoiding larger draw downs and performing at an exceptional level. For that performance, I think one should truly be dubbed a “Nickel Slot Player!”
So how did you finish up the year? Hope it was good!
What will one do next year to improve their performance?
Happy New Year!
Hubris33
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Oh and in case anyone is wondering about yours truly – put me down as firmly in the Nickel Slot Player category!
…..yeah, yeah, I know – demonstrating my moniker attributes again – so sue me! |
