On the 18% yearly gain on trading this year...

I'm not a day trader, although I watch the market couple of times throughout the day. I trade, but I don't feel compelled to make bets or to close out my position by end of day, everyday. That takes too much energy and my time. I have a family to attend to, a day job to do, and side venture to worry about it. I don't need to have to think of my investment in equity.

After I saw the balance of my rollover IRA cut in half, I've decided to take it back in my own hands. So, late last year (Dec 2008), I rolled-over almost all my IRA balance to etrade, and started trading on the stocks and ETF's that I like, rather than praying for the mercy of some mediocre fund manager to work his/her way back to where my IRA was supposed to be.

I was a bit lucky, since I liquidated during a 7-day rally in Dec '08, and got 10% extra on the balance. When I rolled-over, I was pretty much breakeven, as if I never got any employer matching 401k contribution, and no growth over the entire period. In short, I would have been better off putting it under my mattress.

Still, I don't like to look back. I'm mostly a forward-looking person. After a few months of trying things out, I located the stocks and ETF's (in various sectors) that I like, and started trading. I don't have time to do basic research, so I have to trade on momentum. But I only pick the stocks and ETF's that I wouldn't mind holding, for the long term.

I pretty much started in Jan 2009. My year-on-year gain so far is 18%. Since it's my rollover IRA balance, I don't have to worry about taxes (for now), though I still keep all trading records, just in case. And I save a few percentages paying those fund managers who might be choosing some pigs that I don't like.

I must admit, I feel quite good about it. I take an ultra-conservative approach, since I only use about 10-40% of my balance to trade. I keep everything else in cash (not money market fund, but cold-hard cash). My husband was quite impressed by my record so far as well, since to have the gain of 18%, that would mean I would have almost doubled the amount I have put in to trade, all the while keeping over 50% of my balance in cash to buffer any drastic market downturn.

I know momentum trading is not going to last forever, since I need the huge market volatility to make gains. (Mind you, I don't do leverage. I strictly buy-and-hold, or buy-and-sell only.) But looking at the performance of average hedge funds (14% so far for this year), with some making losing 15% or more, my record so far this year really hasn't been too shabby at all.

But that article in Wall Street Journal also brings up a very good question: If S&P is up more than 55% in the first half of 2009, while these fund managers are down, someone (or some company) must be ripping huge gains. I'm always intrigued by questions like this. Someone, somewhere out there, must be doing some detective work right now to find out who that might be. If anyone tells me it's Goldman Sachs, I would not be too surprised, given its big gains in flash trading.