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Schwab’s StreetSmart Edge arrives!

Monday, February 28th, 2011

Notice: There is a new xversion (build 1.6.16.0)  of StreetSmart Edge available on the Schwab web site.  If you are using an older version I recommend you upgrade—Schwab has fixed a fair number of problems with this newer release.  You don’t have to remove your current version of Street Smart Edge, you can just download and install the new version.   Your current version shows up in the upper right hand corner of the application (see the picture below).

See here for an May 2011 review on Street

Smart Edge.

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Early observations:

Schwab beat their “Coming in March” claim by at least a day in introducing their new StreetSmart Edge product in February.

After a 16.5 MB download I was up and running—slowly.    My 3.3Ghz single processor machine with 900Meg of RAM does

not meet Schwab’s minimum requirements of a dual core processor with 2 Gigabytes of RAM.   They warned me and continued to load and run the program—which I appreciate, but clearly snappy performance is going to going to require a substantial hardware upgrade.    Even my 64 bit  2.4 Ghz quad core machine with 5 Gbytes of RAM falls slightly short of Schwab’s recommended configuration.

I only had a few minutes to try out this new platform, but there were a couple of pleasant surprises.   Schwab has included the notion of midpoint pricing into their quotes.  So instead of just getting the bid and ask prices, they also provide the price halfway in between.   This can be very useful with lightly traded stocks and options.   Also there are option charts,unfortunately limited to no finer than daily frequency, but still a step forward.

Two quick disappointments: their VIX options chains are still pretending the cash VIX index (Schwab symbol $VIX) is their underlying rather than the volatility futures they are truly based upon (this totally corrupts their Greeks) , and there doesn’t appear to be a way to easily download chart data into a spreadsheet.

A couple things I’ll look at next:

  • Are watch lists/settings  dedicated to specific computers, or are they tied to the account?
  • Are the Greeks on weekly options calculated correctly?

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Posted in all, Mainstream | 3 Comments »

Predicting the future: 27-July-2010

Tuesday, July 27th, 2010

I am an engineer by training.   It is in my blood to try to engineer a investment solution that gives good upside performance while structurally limiting risk to reasonable levels (e.g., no greater than the upside opportunity).   A few years ago I concluded that I had not figured out a way to do this, and that it is probably impossible.

For example highly rated bonds, usually not considered the riskiest of investments, are sensitive to prevailing interest rates.  AGG, a bond ETF is currently yielding around 3.7% annualized interest.  Its duration, a term that defines the average time until maturity for the bonds in the fund is around 4.    The duration metric quantifies how sensitive a bond investment is to interest rate fluctuations. Read More

Posted in all, Mainstream | No Comments »

Dealing with risk — diversified asset allocation

Sunday, July 25th, 2010

Diversified asset allocation, the belief system that most investment advisors preach—has the “right”  mix of stocks, bonds, real estate, commodities spread out over the entire world.   This investor age dependent mix is rebalanced, typically quarterly, by reducing your investment in areas that have performed well and increasing your stake in areas that are now underweighted—presumably waiting their turn to perform.

I don’t think this is a bad strategy, but it does make the assumption that the future will be like the past (e.g., equities average around 10% growth per year over multi-decade periods, and that some assets classes like bonds and commodities tend to counterbalance trends in equities. Read More

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Portfolio action

Thursday, May 27th, 2010

This morning I  put portfolio B mostly in place (see Three portfolios).  I only put in 50% of the large cap weighting (so it is at 25% of the portfolio, instead of the eventual planned 50%).  Psychologically I have found it is better to ease in a little with significant investments like this—if the market goes up from there you can tell yourself that you got at least some of it early in the rally, and if the market goes down you can tell yourself that at least you didn’t put everything in right before it went down.  The games we play…   For the commodities, I felt they were pretty much bottomed out— really how cheap is oil going to get?  So I put in the full percentages for those.

I filled the equity orders between 9:30am and 10:00 EDT.  The mutual funds, as is their custom, closed at the end of the day (arrgh..).

Trades    USO  33.47
SPY  109.16
VT    39.88
IGNAX  16.39
TVRVX   20.45

Posted in all, Mainstream | No Comments »

Crash, bounce, or sideways — what’s next?

Sunday, May 9th, 2010

It’s 12:41AM Eastern time, 10-May-2010 and the Asian markets are up—evidently they are liking the central banks moves to shore up the Euro.   I think Greece’s days in the Euro camp are numbered—maybe 6 to 18 months.   The UK has shown that it is perfectly OK to be a member of the EU without being on the Euro, and I believe Germany and France will soon tire of bailing out Greece when their empty promises of fiscal reform don’t pan out.   Devaluing a currency is a much less painful way out of a crisis like this and I think all parties will eventually come to that conclusion.

Regarding the market for the next couple of days, I think there is too much fear out there for a sustained rebound, but other than that I don’t have strong opinions on what’s going to happen.  I’m about 80% in cash, and happy to be there right now.  Not losing money isn’t a glamorous goal, but from first hand experience a week like last week is no fun for the buy and hold crowd.  When markets go down, they go so fast—even without the help of warring computerized trading programs.

The 2003/2004 vs 2009/2010 tracking for SPY got back in sync on last Thursday—when SPY matched its 6 year old value again.   If I had only bet on my own hypothesis (that SPY 2010 will continue to roughly track SPY 2004) I would have made a boat load of money going short last week.  If the synchronicity continues SPY in  2010 will show much wider swings than 2004.  Looking at the graphs, the big question is whether the 2004 bottom trend line will be the 2010 bottom line too, or will my already projected 2010 bottom line turn out to be more like it.

SPY 2003/2004 vs 2009/2010, click to enlarge

SPY 2003/2004 vs 2009/2010, click to enlarge

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XLU Dividend History

Tuesday, April 20th, 2010

XLU’s  ex-dividend dates and pay dates are below.   Data is from SPDR’s web site.

If you would like the dividend history for another security, see this post.

 

SYMBOL --DESCRIPTIONGroup --Last Dividend (Q4)Q4 Ex-Dividend / PaydateQ4 Distribution / Paydate
XLEEnergy Select Sector SPDR FundSPDR Sector0.277316-Dec-1116-Dec-11
XLFFinancial Select Sector SPDR FundSPDR Sector0.080416-Dec-1116-Dec-11
XLIIndustrial Select Sector SPDR FundSPDR Sector0.217516-Dec-1116-Dec-11
XLPConsumer Staples Select Sector SPDR FundSPDR Sector0.285416-Dec-1116-Dec-11
XLUUtilities Select Sector SPDR FundSPDR Sector0.388016-Dec-1116-Dec-11

 

If you don’t see the ETF symbol you want there are a lot more here: Dividend, Ex-Dividend, and Paydate / Distribution Date information for ETFs

 

Posted in all, dividend, Dividend Capture, Mainstream, master | No Comments »

2010 — overachieving compared to 2004

Monday, April 19th, 2010

The S&P 500 has already reached levels this year that weren’t reached until December 2004 in the tech stock crash recovery.   The volume levels are underwhelming, but on almost every other front the bulls are celebrating.  It doesn’t hurt that business continue to report very good numbers.   It is hard to get a good doom and gloom mood going with folks like Intel and IBM beating  analyst’s  numbers.  Malaise in the financials could spread if Goldman gets taken down a few notches, but after a weekend to think about it investors evidently decided that it wasn’t enough to derail the whole recovery.

My tendency is to react too quickly to the market’s moves—so I’m trying to be patient.    I wouldn’t be surprised to see this correction last a bit longer, the market seldom jumps back up immediately after a blow-off day like last Friday.    The VXX continues to build popularity on down days—it traded over 22 million shares on Friday—which looks to be 7 million over their previous record.

SPY 2004 vs 2010, click to enlarge

SPY 2004 vs 2010, click to enlarge

Posted in all, Mainstream | No Comments »

Comparing ETF index funds to mutual funds

Wednesday, April 14th, 2010

Advantages of ETF index funds over mutual funds index funds:

  • Management  fees are usually lower.  For example for inflation protected bonds the Schwab mutual fund SWRSX has a .5% expense ratio and the iShares Barclay equivalent TIP has an expense ratio of .2%.
  • Instead of trades executing at the end of the day they can be bought or sold at any time the market is open (including pre and after market trading)
  • No penalties for selling or restrictions on timing/ durations of round trips
  • Low or no commissions – Schwab has introduced some commission free funds and Fidelity offers 25 ETFs for commission free.  These ETFs enable people to dollar-cost-average by buying relatively small amounts every month without getting eaten up by commissions.
  • Many can be sold short (in standard taxable accounts)
  • Options are available on the mainstream ETFs  (opens up protective put, covered call strategies)
  • Standard tools (e.g., charts) work better with ETFs vs Mutual funds.  ETF quotes are updated in real-time during trading hours, vs once per day updates on mutual funds.
  • Inverse index funds exist as ETFs – for specific indexes they move in the opposite direction as the index on a daily percentage basis (e.g., SDS is double inverse of the S&P 500).  For popular indexes these are available in single, double, and triple multipliers.   They can be bought/sold in tax protected accounts (IRAs) – so you can go short the indexes if you want to.
  • Some indexes (e.g., VIX) have no mutual fund coverage  — VXX/VXV  are the available ETFs that are related to the VIX S&P 500 volatility index.

Disadvantages of ETF index funds

  • They have a bid/ask spread, although for popular ETFs during regular market hours this is usually only $.01

Posted in all, Mainstream | No Comments »

Dividend Capture Strategies

Saturday, April 3rd, 2010

In trying to capture dividends there is no free lunch. In fact, since Wall street is involved, the best you can hope for is an affordable lunch. I have looked at, and tried quite a few approaches—most of which don’t work, but I have found one approach that does work with some ETFs. Ironically you don’t actually collect the dividend most of the time, but you can collect an amount similar to the dividend-with a reasonable amount of risk.

Anyone with money can capture a dividend—you buy the stock (or ETF) before the ex-dividend date and hold it until the ex-dividend date. The challenge is to close out your position with a profit that is worth the risk. Typically the stock will drop by about the dividend amount when it starts trading on the ex-dividend day, but if the stock has a generally up day your overall profit can be better than the dividend. You lose money if the stock drops by more than the dividend amount (ignoring commissions)—and if the market goes bad you can lose many months worth of dividends in a hurry.

There are two ways to deal with this kind of risk, you can try to predict the future, or you can hedge. If you are any good at predicting the future then you don’t need to be messing around with dividends, you should just be buying and selling based on your predictions. With hedging you try to reduce, or better yet eliminate your risk by also investing in something that moves in the opposite direction of the stock so that the price movements cancel out. Some high quality hedges for a stock or ETF:

  1. Sell the stock short
  2. Sell a stock short that very closely tracks the stock you own (e.g., IVV for SPY)
  3. Buy an ETF that has an inverse relationship to your stock  (this can be done in IRAs, they don’t allow shorting)

 

Hedges that can reduce your risk, but only provide medium protection include:

  1. Shorting the general market or industry sector that your stock is in
  2. Buying inverse ETFs for the general market or industry sector
  3. Use stock options with strike prices close to the current market price
  4. Use stock futures (sell futures)

 

The folks on Wall Street aren’t about to let you get away with any sort of risk free profit, even if it is only a few tenths of a percent.   The high quality hedges above don’t work at all (see here) for dividend capture.   The medium level hedges don’t eliminate the downside risk and introduce the possibility that an upside move by your stock might be more than wiped out by an even stronger downside move by your hedge.

 

I have used one approach that offers a reasonable payoff, with reasonable risk—using deep-in-the-money stock option calls to capture the dividend amount.   More about this in this post.

Posted in Advanced Topics, all, Covered Calls, dividend, Dividend Capture, ex-dividend, Mainstream, Options | No Comments »

2011 Ex-dividend and Pay date information for AGZ, CFT, CIU, EMB, GBF, GVI, MBB, MUB, NYF SUM, MUAA, MUAB, MUAC, MUAD, MUAE, MUAG

Wednesday, March 31st, 2010

The Ex-Dividend and Pay Date  information below is based on Ishares distribution schedule,

Ex-Dividend Date:   1-Feb-12    1-Mar-12    2-Apr-12     1-May-12   1-Jun-12   2-Jul-12   1-Aug-12   4-Sep-12   1-Oct-12   1-Nov-12   3-Dec-12   26-Dec-12

Pay/ Distribution Date:  7-Jan-12   7-Feb-12   9-Mar-12  7-Apr-12  7-May-12    07-Jun-12    9-Jul-12   7-Aug-12   10-Sep-12   5-Oct-12   7-Nov-12   7-Dec-12   02-Jan-13

AGZ      iShares Barclays Agency Bond Fund (AGZ)
CFT      iShares Barclays Credit Bond Fund (CFT)
CIU      iShares Barclays Intermediate Credit Bond Fund (CIU)
EMB     iShares JPMorgan USD Emerging Markets Bond Fund (EMB)
GBF      iShares Barclays Government/Credit Bond Fund (GBF)
GVI      iShares Barclays Intermediate Government/Credit Bond Fund (GVI)
MUAA iShares 2012 S&P AMT-Free Municipal Series (MUAA)
MUAB iShares 2013 S&P AMT-Free Municipal Series (MUAB)
MUAC iShares 2014 S&P AMT-Free Municipal Series (MUAC)
MUAD iShares 2015 S&P AMT-Free Municipal Series (MUAD)
MUAE iShares 2016 S&P AMT-Free Municipal Series (MUAE)
MUAG iShares 2017 S&P AMT-Free Municipal Series (MUAF)
MBB     iShares Barclays MBS Bond Fund (MBB)
MUB    iShares S&P National AMT-Free Municipal Bond Fund (MUB)
NYF     iShares S&P New York AMT-Free Municipal Bond Fund (NYF)
SUB      iShares S&P Short Term National AMT-Free Municipal Bond Fund (SUB)

Looking for ex-dividend information for other ETFs?   Check this page.

Posted in all, dividend, Dividend Capture, ex-dividend, Mainstream | Comments Off

« Previous Entries

SYMBOL Next Ex-dividend More Info
DIA 20-Jan-12 SPDR
DVY 26-Mar-26 iShare
IVV 26-Mar-12 iShare
IWM 23-Mar-12 Russell
JNK 1-Feb-12 SPDR
IEF,HYG,LQD 1-Feb-12 iShares
OEF 26-Mar-12 iShares
SCHX 19-Mar-12 Schwab
SPY 16-Mar-12 SPY
VIG 23-Mar-12 (est) Vanguard
VOO 23-Mar-12 (est) Vanguard
XLU 16-Mar-12 SPDR
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Bloomberg Rolling 1M vol.  SPVXSTR

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