If you had $100,000 in free cash flow every year how would you invest?

[BeTheChange]

Just interested to hear thoughts from fellow SS'ers.

My aim would be to invest most of it into property in areas where the chance of occupancy is high, then you could essentially have other people paying the mortgage and building the equity for you.

I honestly can't think of another asset class that would interest me or that I have enough knowledge of. The problem is every man and his dog "invests" in property the moment they have a bit of cash in their hand so is it really a worthwhile investment with the market the way it is now?

 

[Tictac]

If you don't sweat being illiquid, have some idea of appreciation potential and can ACCURATELY establish high probability cash flow from property, real estate isn't bad.

 

[Bible_Belt]

I could trade $100k into a million in about 3-5 years in the stock market, depending on if the account has to pay income tax every year.

 

[Tictac]

I could trade $100k into a million in about 3-5 years in the stock market, depending on if the account has to pay income tax every year.

Show me, convince me and I'll stake you.

 

[guru1000]

BB, show me your five-year track record, and I'm in as well. Even better, I'll draw up hedge fund docs (75k in legal work) fully comp'ed, and raise mid eight-figures at a 80/20 profit-split with investors.

BeTheChange, I'm going to share my real-estate stratagem in this thread soon.

 

[Tenacity]

I could trade $100k into a million in about 3-5 years in the stock market, depending on if the account has to pay income tax every year.

Yes, I want to know how as well. Hell if you are this good, why aren't you on Wallstreet .

IF I had an additional $100,000 slapped in my bank account tomorrow, I would:

- Put $50,000 of it away for 30 years in a FDIC-Insured Brokered CD for about 3.25% per year

- Use $50,000 of it towards some sort of business project and seek to generate at least a 400% return within 3 years.

 

[Tictac]

BB, show me your five-year track record, and I'm in as well. Even better, I'll draw up hedge fund docs (75k in legal work) fully comp'ed, and raise mid eight-figures at a 80/20 profit-split with investors.

BeTheChange, I'm going to share my real-estate stratagem in this thread soon.

Most hedge funds aren't even able to beat the Vanguard S&P 500 Index Fund over five years.

 

[guru1000]

Most hedge funds aren't even able to beat the Vanguard S&P 500 Index Fund over five years.

Yup. And all the highly "successful" day traders I have known (and I know dozens) are insolvent today.

I also would like to add that the derivative portfolio in which I was averaging 50% per annum for several years is down 75% in the last six months. And I've been in the market over 20 years, 10 of those years on Wall Street.

 

[Tictac]

Most hedge funds aren't even able to beat the Vanguard S&P 500 Index Fund over five years.

Thank you Burton Malkiel, John Bogle and Jeremy Siegel.

 

[Bible_Belt]

Most hedge funds aren't even able to beat the Vanguard S&P 500 Index Fund over five years.

That's because of their size. The larger the account gets, the harder it is to maintain returns that are a giant percentage. Every hedge fund manager would clobber the S&P in a small account.

I used to be a day trader, but that gig has run its course. I worked for a company called Worldco. They were the dirt bags of Wall Street, but they were also the only ones who hired nobodies like me. I eventually had an account with over a million in buying power. Because they self-cleared and were their own broker-dealer, the Feds let them margin as aggressively as they wanted. Normal people get 2:1 margin. I'm guessing my account was more like 100:1, which meant my million dollar buying power was backed by just $10k in actual cash. I pulled out a measly $3-500 a day from the market, almost all of which the company kept for themselves, but it was enough to keep a job where 90% get fired. But then the company went under. After law school, I managed to find a place that would give me 10:1 intraday margin because of my experience, and having had a series 7, and I thought I would day trade my own money. But I hated it. Day trading by yourself is no fun; it's supposed to be a frat house environment. And the SEC very quickly shut down the 10:1 loophole that I had; it's not available any more.

I came along right at the end of the day trading boom, right as computer trading was killing it. Swing trading, which is holding for days to a few weeks at a time, is still a realistic way to make a nice return for the small investor. You margin your money 2:1, and then look for stocks priced $5-10 . Then you screen for volume, look at 52-week highs, start tracking the stocks that keep setting 52-week highs, and pick them up as they are consolidating sideways off of the high. It helps if they were once valued much higher within the past few years. Three out of four trades will be losers, but the losses will be small. The fourth stock will take off and more than cover the three small losers.

As for what the company actually does, I might look at the sector it's in, and the chart of that sector index, but beyond that, I don't give a flying fvck. Financial statements, news stories, analysts picks...all of those are for suckers.

 

[Tictac]

I could trade $100k into a million in about 3-5 years in the stock market, depending on if the account has to pay income tax every year.

We're done here. You're blowing smoke and won't even try to answer because you know you are blowing smoke.

Fund size has almost nothing to do with hedge fund pathetic performance. It's the 2/20 compensation structure and 'marketing' to stupid (now formerly) 'rich' people that believe that overpaying for active management and getting outsized returns without risk is even possible.

I have known so many wealthy people and finance executives (many with MBAs from Harvard, Wharton and Stanford) have blown themselves up with these assh*les that it's ridiculous.

I had some money with DE Shaw for a couple of years. It underperformed the Vanguard S&P 500 Index Fund (the management fee for which is 2 basis points).

 

[Bible_Belt]

We're done here. You're blowing smoke and won't even try to answer because you know you are blowing smoke.

No, I'm trying to communicate with someone who has never traded before.

These $5 stocks I am talking about, I mean exchange-listed, and I said to screen for volume, but you're not going to get Dow component type of volume. Let's say I want 1000 shares of a $5 stock in my $25k account. That's a 20% stake, but only 1,000 shares. No one gives a sh!t about 1,000 shares. Now, let's imagine I'm Mr Hedge Fund, with $100 million to throw around, and I know this $5 company is going to take off, so I just plop down a bid for 4 million shares. Do people care about that? Yes, yes they do. That stock would double in price on the RUMOR of that order, much less letting the world see it. So Mr Hedge Fund can only pick up a few shares here and there, and even then he is going to drive the price up with his own buying. It's not even worth their time.

Are you beginning to understand now?

 

[Tictac]

No, I'm trying to communicate with someone who has never traded before.

These $5 stocks I am talking about, I mean exchange-listed, and I said to screen for volume, but you're not going to get Dow component type of volume. Let's say I want 1000 shares of a $5 stock in my $25k account. That's a 20% stake, but only 1,000 shares. No one gives a sh!t about 1,000 shares. Now, let's imagine I'm Mr Hedge Fund, with $100 million to throw around, and I know this $5 company is going to take off, so I just plop down a bid for 40 million shares. Do people care about that? Yes, yes they do. That stock would double in price on the RUMOR of that order, much less letting the world see it. So Mr Hedge Fund can only pick up a few shares here and there, and even then he is going to drive the price up with his own buying. It's not even worth their time.

Are you beginning to understand now?

You're geared on margin and exposed to vacuums that will have you owing your spread. No thanks. I'm clocking 11%/yr for 20 years now (except for 2008-2009 when it was only 8%) all in Vanguard funds with annual management fess under 4 basis points and very low tax events. I stayed overweighted in REITS for most of the time because interest rates went through the floor and stayed there. I am now gradually rebalancing down to 15% REITS.

I don't do rumor arbitrage. Ask Jim Chanos and Bill Ackmann (they take board seats with their investments) how that went for them. Better yet, watch them testify to Congress.

 

[guru1000]

BB, although I like your trading ambition, if you could achieve 1000% returns every 3-5 years, you would be a multi-millionaire. From what I understand, you're not; unless things have changed for you.

I do well, thankfully. But, 0% of that is due to the stock market, although I held a Series 63, 7, 24, 27, and 55 as well as was an owner of a broker-dealer. I made my returns with smart business decisions and real-estate investments (where I'm active, not passive).

 

[Bible_Belt]

I had a 55, too. That was a dumb test.

if you could achieve 1000% returns every 3-5 years, you would be a multi-millionaire.

Not when you start from zero, you don't. It takes money to make money, and I don't exactly come from it.

Funny you mention derivatives, the guy who first taught me how to trade was a Schonfeld trader from Boca. He had a lot of success in the stock market, and then would always lose it back on options. He said his wife told him if she saw another options trade confirmation mailed to the house that she would leave him.

 

[BeTheChange]

If you don't sweat being illiquid, have some idea of appreciation potential and can ACCURATELY establish high probability cash flow from property, real estate isn't bad.

I would say I'm probably in the category of having spare cash and not needing to access it for a while (no kids, no major expenses, no dependents) so I'm looking for any opportunities really. My current business is cash generative but not really scalable so retained earnings need to be utilised in other ways.

I have been doing a lot of research around arbitrage betting and it seems pretty solid. I knew an Econ Major who used to do this at college. Made an absolute killing. What are your thoughts tictac?

 

[BeTheChange]

BB, show me your five-year track record, and I'm in as well. Even better, I'll draw up hedge fund docs (75k in legal work) fully comp'ed, and raise mid eight-figures at a 80/20 profit-split with investors.

BeTheChange, I'm going to share my real-estate stratagem in this thread soon.

Fascinated. Look forward to it. I have loose connections with a international students agency so I'm thinking about buying up some property to house them in when they come across here to learn English.

What are your thoughts on arbitrage betting and this guy's claim of being able to make $5k a month from initial capital of $25k.

http://www.soccerwidow.com/football...trage-worthwhile-pursuing-is-arbitrage-legal/

 

[BeTheChange]

Yes, I want to know how as well. Hell if you are this good, why aren't you on Wallstreet .

IF I had an additional $100,000 slapped in my bank account tomorrow, I would:

- Put $50,000 of it away for 30 years in a FDIC-Insured Brokered CD for about 3.25% per year

- Use $50,000 of it towards some sort of business project and seek to generate at least a 400% return within 3 years.

Do you think generating 400% returns is realistic and if yes why do you still want a salaried job (per your other thread) ?

 

[Tictac]

I would say I'm probably in the category of having spare cash and not needing to access it for a while (no kids, no major expenses, no dependents) so I'm looking for any opportunities really. My current business is cash generative but not really scalable so retained earnings need to be utilised in other ways.

I have been doing a lot of research around arbitrage betting and it seems pretty solid. I knew an Econ Major who used to do this at college. Made an absolute killing. What are your thoughts tictac?

I'm not a markets arbitrage believer. A couple of wins at it is not a 'track record'. Big brokerages like Merrill have whole departments of geeks and wonks working it. They do well some years and get kicked in the ass on others. With computers hoovering data, analyzing it and acting on it at speeds you cannot imagine, I don't think it's for amateurs. "Kids, don't try this at home".

I worked in the district for over 20 years before going off on my own. My financial investments are all in index funds. When you've seen what the big firms do, you almost have to conclude that with billions in capacity, technology investments and payrolls, reading blogs or the WSJ and making moves based on them is a crapshoot. And, not for nothing, I don't call the big firms the 'smart money'. They are the herd now.

 

[Tenacity]

Do you think generating 400% returns is realistic and if yes why do you still want a salaried job (per your other thread) ?

Oh yeah, it's going to mainly be in a low overhead consulting type of business though. So for example let's say for the year, a one-person consulting shop has expenses of $15,000 for location (shared office), marketing, website, communications, and other related expenses.

One new client/new closed deal = $1,000 let's just say. So let's say he goes about the year and acquires 50 new clients for $50,000. But he has client ownership so let's say on average he will generate some type of renewal compensation from 50% of the new clients that produces another $1,000 each on average within the next 2 years. So that's a total of $75,000 ($50,000 upfront and $25,000 within 2 - 3 years).

This is a 400% return before taxes ($75k total revenue, $15k expenses, $60k profit before taxes).

In relation to my career changes, I'm on the market looking for better opportunities. I'm considering a couple of different avenues right now, from W-2 work, to operating independently, to a combination of both.