A Broad Investment Strategy

I get quite a few questions about what else I do, more long term, apart from the day trading that you see in the blog.

Let me first say that in these times, I want to be able to convert to cash with the press of a "Close All" button. Anything can still happen as far as I am concerned. I believe in diversification, but of a particular kind.

OK, how is my diversification different? Well firstly, I don't think that passive investment works now. Passive means buying something and letting it sit until you get rich. I think active investment is needed if I want to reduce risk and get a high return. Maybe my diversification isn't really diversification in the normal sense. Wasn't it Warren Buffet who said: "Diversification is a protection against ignorance. It makes very little sense for those who know what they're doing". I diversify between different derivative strategies.

Specifically, I work my investments. Investments are like a garden that needs to be watered every day, looked after, fertilized and harvested. Presently, this is what I do:

1. Discretionary day trading - you see it in the blog

2. FloBot - Flo autotrades a portfolio of futures markets across the spectrum and I'm adding markets regularly

3. Non directional option trading - earning the time decay

4. Directional option trading - both earning time decay and earning by longer term (swing) directional speculation

5. Pairs trading (sometimes called Spread trading) - inter-market spreads, buying one and selling another, both with the underlying and options

Some of the above is computer assisted but all need to be worked, some only a few minutes a day. I can liquidate all my investments with just a few clicks of my mouse. This is very important to me in today's environment.

Active investments earn their keep every day. I can see what I am earning. I can make any adjustments and I am not relying on hope for the investments to pay off.

Today's Gap trade in the Dow Euro 50 showed the benefits of this trade. I could do this one trade and be done for the day. Pity the snow has melted here, so I guess I'll be working all day.