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A good way to start a new portfolio is to select one that has as little volatility as possible. For example, I select the Vanguard Total Stock Market Index ETF (VOOFX) because I expect it to be a safe, low-risk bet.
But you don’t have to put all of your eggs in one basket. You can also make a risk-adjusted hedge of other assets by adding them to your portfolio. The trick is to choose such a portfolio that has good predictability and yields, but no significant change in your portfolio performance, so as to maximize risk-free performance.
It may be tempting to put all your eggs in one basket, but make sure it’s diversified and stable. So I pick Vanguard’s Growth and Value Portfolio (VGV). The idea is that it tends to have good predictability, but will trade in waves and will never fall over.
Now here is the thing. It’s very difficult to predict individual stock prices. And it gets worse still with complex or fast-moving stocks.
In the first couple months of trading I’m looking to lock in a couple of the best-performing stocks and hedge them for the next couple of years.
There’s no guarantee it will work. But if it doesn’t, in my very limited experience, it means no more profits for me.
For example, I bought stock in Intel for only $0.0017 on May 16, 2016, after I had sold every other stock I owned in the portfolio at that time.
That’s how easy it is to sell and buy stocks with zero risk for very modest gains.
For example, my last stock purchase was in January, 2016, the beginning of the year, but the start of July I was making almost nothing for about ten months.
So for every 10% gain my portfolio earned, it cost me $0.0017. So basically I wasted $10,000 just to be able to profit $2,000 last year.
I also lost almost $50,000 to a small but random mistake in the price of an ETF and I’d have lost even more with a less-risky purchase.
The only way to achieve profit on this type of trades is to make many of these types of trades. I’d say you have about one, five or 10 a day.
But even if you make $2,000 a month doing
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