vincent_c wrote: ↑Fri Dec 04, 2020 11:37 am
Well just to clarify it's not that I don't have a gambling itch, but more like my gambling itch needs to also follow a strategy.
So first I identify an edge (the regular PP) and then I apply a conservative leverage using a % of the kelly criterion.
Personally I have a paid off home with a HELOC attached which I use for emergency funding instead of using the cash portion of the PP because if you can convince yourself that the size of your portfolio is the total exposure and not only your equity then you don't really need cash, you just need sufficient liquidity to survive drawdowns.
The trick is to eliminate the risk of ruin through portfolio insurance and hedging but the total returns are higher because you can optimize your leverage and remove the drag caused by the cash portion.
Many helocs were closed down in 2008 since banks had no money to loan , just when people needed the money most ..a heloc really is no emergency fund.
When the real emergency hits you can find yourself with no heloc
vincent_c wrote: ↑Fri Dec 04, 2020 11:37 am
Well just to clarify it's not that I don't have a gambling itch, but more like my gambling itch needs to also follow a strategy.
So first I identify an edge (the regular PP) and then I apply a conservative leverage using a % of the kelly criterion.
Personally I have a paid off home with a HELOC attached which I use for emergency funding instead of using the cash portion of the PP because if you can convince yourself that the size of your portfolio is the total exposure and not only your equity then you don't really need cash, you just need sufficient liquidity to survive drawdowns.
The trick is to eliminate the risk of ruin through portfolio insurance and hedging but the total returns are higher because you can optimize your leverage and remove the drag caused by the cash portion.
Many helocs were closed down in 2008 since banks had no money to loan , just when people needed the money most ..a heloc really is no emergency fund.
When the real emergency hits you can find yourself with no heloc
I had not known that until reading what you wrote.
A cousin to..."banks will not loan money to you when you need it....only when you don't need it"?
Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
vincent_c wrote: ↑Sat Dec 05, 2020 4:02 pm
I think this is why when things are bad individuals and companies draw down their helocs and put it in a savings account just to be safe
Except that during a financial crisis like 2008 or earlier this year...things can just happen too suddenly to make adequate preparation...
Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
vincent_c wrote: ↑Sat Dec 05, 2020 4:02 pm
I think this is why when things are bad individuals and companies draw down their helocs and put it in a savings account just to be safe
Except that during a financial crisis like 2008 or earlier this year...things can just happen too suddenly to make adequate preparation...
Vinny
Exactly , it is like thinking when markets don’t look good I will sell out before the damage .
As a note , in 2008 we sold two of our co-ops in manhattan...when closing time came both buyers banks had no money to loan ....it took six long months before banks came across with funding
vincent_c wrote: ↑Sat Dec 05, 2020 4:02 pm
I think this is why when things are bad individuals and companies draw down their helocs and put it in a savings account just to be safe
So when one is at the point they need their emergency money they should pay a load of interest too on money stockpiled and not even needed yet ?
Personally having been through 2008 I don’t want to depend on loans for my emergency money ..today you Need the same criteria to get a heloc as a mortgage .
One can find themselves at a point with no income to qualify just when they need the money
