Interest, dividends, capital gains – an all-in-one investment strategy, Part 5
moneyrelations :: Dec.21.2007
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Today ends my five part series on swing trading for interest, dividends and capital gains. Part 1 and Part 2 set up the definitions of dividends and ETFs. Part 3 supplied an example of the strategy involved while Part 4 described the execution.
I guess all that’s left now is to find out how I did.
Well, it’s not going to be a 2 day turn around like I had hoped. As explained yesterday, in order for this strategy to be successful, it depends on several factors including the reporting of bellwether companies. Oracle reported on the Ex-dividend date and the news was good. Since I bought Proshares UltraShort (QID) which tracks twice the inverse of Nasdaq-100, this was bad for me. I had bought at $40.32 with a $0.47092 dividend and it closed yesterday at $38.22 with a High of $39.69.
Now, no need to panic as I had thought this through.
My QID shares were bought with US cash I was sitting on, in my tax-deferred RRSP account (401k for Americans).
Of special note, the dividends I’m getting cannot be “wash traded” (to avoid exchange rate conversion) with TD Waterhouse’s US money market fund. The profit will be converted to Canadian dollars. You can only “wash trade” with buy/sell transactions.
Since I currently have an unrealized loss, I’m not selling. With a volatile market, I’m hopeful that I will still come out ahead. When I sell for capital gains, that can be “washed” and put back into the US money market fund to generate interest – the final component in this series’ title.
This swing trading strategy is not for everyone and you must be comfortable with any outcome. I was sitting on some American money and saw an opportunity to put it to work. Instead, now it’s “tied” up which for traders is a bad thing. Since this is my baby step foray in swing trading, I can wait it out.
During the progression of my blog, it was hinted that this was the direction I’m heading. I will probably be trying this again. I’ll let y’all know about the gory details 
P.S. The brother gets to live.
Definitions, Investing, Swing trading ::
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- Interest, dividends, capital gains – an all-in-one investment strategy, Part 2
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- Interest, dividends, capital gains – an all-in-one investment strategy, Part 6
- Interest, dividends, capital gains – an all-in-one investment strategy, Part 1
- Interest, dividends, capital gains – an all-in-one investment strategy, Part 3
It seems to me that the whole point of creating a strategy is to follow it which you aren’t doing by not selling.
Question – will you be repeating this strategy multiple times before deciding if it’s successful or not?
Mike
Good point
Sure, I would have liked to have unloaded my shares – if things had gone my way. I think I stressed too much on swing trading and not enough on the theory.
Overall, I think the theory makes sense. And I will probably try it again. As you noted, I’m not executing my strategy and it was from the beginning. Greed? I did mention to look out for bellwether companies and I knew that Oracle was reporting. Although it didn’t scare me off completely, it did prevent me from being more aggressive.
Am I making a bigger mistake by not cutting my losses right now? Time will tell. I still think I can make it back on fluctuations at the end of January.