Optimizing ROI

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Optimizing ROI

• Time and Money
• By Ken Hodor

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Investment Objectives

• Safety
• Highest possible return
• LiquidityI want my money now!
• Minimal time commitment
• Simple
• Automate as much as possible

3
Evolution

• Bank returns 4
• CD returns 6
• Own your own home 8 or less
• Buy investment property
• depending on where 100 to 100 per year
• ---------Below here meets my objectives----------
• Buy and hold quality stocks 8
• Options 100 in one day! WOW
• Trade QID and QLD 0.5 per day

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Chasing Beta

• SP 500 Beta 1
• Good stocks Beta approaches 2
• HPQ 1.9
• HON 1.63
• GS 1.16
• CSCO 1.71
• QLD / QID Beta is 2 and 2 respectively

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QQQQ Diversification

• 100 top NASDAQ stocks (such as top 10)
• AAPL Computer
• CMCSA Consumer TV network
• MSFT Software
• GOOG Marketing
• AMGN Medical
• CSCO Networking
• SBUX Coffee
• QCOM Semiconductor phone ICs
• INTC Semiconductors
• ORCL Database software

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Change per dayLong term

• QQQQ 0.29 / day
• QLD 0.58 / day
• QID -0.58 / day
• Rule of 72
• Double in 124 days

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Green Arrow Buy
8
Green Arrow Buy (calls)
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Style

• Minimal tradesbig market moves
• Last year 60 return
• Update daily to catch corrections
• Last year potentially gt60 return
• Day Trade
• gt0.5 per day

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Style 1 Follow the arrows

• 3 green arrows on QQQQ
• Buy QLD
• Sell QID
• 3 red arrows on QQQQ
• Buy QID
• Sell QLD

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Style 1 Minimal Trades
3-Green Arrows Buy QLD Sell QID 3-Red
Arrows Sell QLD Buy QID
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Can you avoid big negatives?

• Channels
• Candles
• Feb 27, 2007

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Style 2 Catch Corrections

• Stick with trendeither QID/QLD
• Too hard to flip between the two.
• To Buy
• Every day adjust stop buy
• previous day high
• To Sell
• Every day adjust stop loss
• previous day low

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Style 3 Day Trading Drive you Crazy

• Plots with 3 minute intervals
• EMA 20
• EMA 60
• Like looking into hand of market makers

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Style 3 Day Trading (plot)
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Style 3 Day TradingDepends on market conditions

• EMA 20 crosses EMA 60
• Candles touch EMA 20
• Watch for peaks and valleyshesitations
• Goal 1 per day
• Tighten stops 0.05 on QQQQ trigger QLD/QID
• Cash out and wait for confirmed movement
• Momentum distance (0.05) from EMA 20 to buy
• Use very tight stops from here on to follow trend

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Risks

• QID/QLD move fast
• Emotional roller coaster
• Set up automatic triggers
• Trailing stops
• Stop losses
• Stop buys
• QID can go to 0
• When only 50 stock holders trading

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Tax ramifications

• If qualify as IRS 1256 contracts then
• 60 profit is long term capital gains
• 40 profit is short term capital gains
• NOTE at this time DO NOT BELIEVE TRUEstill
  checking.

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So What Happened?Since Last Meeting
10-year Treasury gt5
5/16 10-year Treasury start creeping up
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Traders Saying

• Sell in May
• and go away
• It worked for me !

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Conclusion

• Make it as simple as you can,
• but no simpler.
• Einstein
• Trade 2 stocks QID and QLD