Two months of day trading. How'd I do?!?

I recently wrote a post on my blog about "Robinhood," an app that is designed to make it as easy as possible to lose as much money as possible day trading publicly traded stocks and ETFs.

I've been fooling around with it for a few months now, and thanks to my years of experience, deep business savvy, and clairvoyant sense of the national mood, have made $32.23. In other words, I've been gambling. Gambling is fun.

Anyway, as people who actually invest in order to meet financial goals know, you don't compare your investment returns to cash, you compare them to the returns you'd get investing in a low-cost benchmark fund. So I decided to see how my portfolio compared to a "synthetic" portfolio of VTI (Vanguard Total Stock Market ETF) traded on the same days as all my purchases and sales. Vanguard has a tool that shows historical price data by day, but I didn't bother figuring out the hour-by-hour price changes, so this is not totally scientifically sound since there are daily price swings I didn't account for.

The attached file shows all my trades (I am actually still holding IP and VXUS, but I wanted to include them for illustrative purposes). For each trade date, I include the price I paid for each security, and the price I would have paid for the same NUMBER of corresponding shares of VTI. Since the securities are traded at different prices you shouldn't pay attention to the nominal values, but rather the percentage changes in value between purchase and sale. In other words, mentally scale the purchases by price, as I do in row 28 of the excel spreadsheet.

Also this doesn't take into account the cost of funds, which over 2 months should be basically nothing but, you know, it's a thing.

So, who wants to hire me to manage their hedge fund?
 

Attachments

I got in on RDS.A at dividend yield of 9.27-10.3%, then got out at 8.38%. I got in at BP at 8.44% and 8.72%.

So it was basically taking advantage of the outsized RDS.A yield while it was outsized, then swapping to the slightly higher BP dividend yield (and creating a taxable event, yeah, yeah).
 

Matt

Administrator
Staff member
Well.. taxable event aside, you got out 12 days before the ex date. How can you cite yield as motivation if you don't wait for the dividend?
 
I'd already locked in a 15.89% return, and losing that through random price walk was a bigger risk than losing a quarter of a 9.785% dividend yield. Birds, hands, bushes, etc, etc.
 

Matt

Administrator
Staff member
I'd already locked in a 15.89% return, and losing that through random price walk was a bigger risk than losing a quarter of a 9.785% dividend yield. Birds, hands, bushes, etc, etc.
Some weird rules you need to consider:

T3 and Ex Date.

You cited Yield motivating RDS.A and BP. You exited RDS.A without waiting for the yield, and you bought BP on the Ex Date. The Ex date tends to be 2 days before the date of record, however, a trade requires 3 days to clear (T3) therefore, if you buy BP on the Ex date, you pick up the stock, but the seller keeps the dividend, and earned that in Feb.

Yield is dividend/stock price. If you constantly miss the dividend aspect of the equation by selling before it is due, or buying right after it has been assigned to someone else your dividend is zero, ergo your yield is zero. If the manner in which you are trading is seeking yield, but never gaining any, you've got something to work on.
 

Someone

Level 2 Member
One time that strategy works is when you have a REIT or Bdc that's a nonqualified div and you held it one year plus and want to get rid of it immediately prior to the next div to lock in a lt cap gain instead of the ordinary income from the div. Rare but it does happen.
 

Matt

Administrator
Staff member
One time that strategy works is when you have a REIT or Bdc that's a nonqualified div and you held it one year plus and want to get rid of it immediately prior to the next div to lock in a lt cap gain instead of the ordinary income from the div. Rare but it does happen.
A funny thing happens if you short it though :)
 
So @Matt you're absolutely right and I actually excluded from the spreadsheet the $0.44 dividend COP paid on March 1 which brings my total return up to 11.53%.

My overall feeling on this day trading nonsense is to either (1) get a long-term return by buying in very low on a very high-yield stock or (2) get a short-term return by selling a stock after its rapid appreciation. It turned out I was able to do the latter to the exclusion of the former in this extremely small set of trades, but I'm theoretically agnostic between long-term returns and (much higher) short-term returns.

When I say "long term" I mean very long term. If short term price fluctuations allow me to lock in years of "long term" returns in a single week, I'll take those short term returns in order to use the cash for cashy things. If the stock never moves, I'll just take the dividends and play with them.
 
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