Tom Nunamaker and Wayne Klump are both advocates of diversification. They’re all for taking some risky strategies and growing a portfolio quickly. But they strongly agree that if you do make money that way that you have to slow down. You take some of that money and spread it out and diversify it. This still allows you to play around with speculative trades while slowly and steadily building your portfolio. Listen to this episode of How To Trade It to learn about their Sleep Well Portfolio, Aeromir, and their trading methodologies!How do you make money, slow down, and spread out your risk? Learn more from @AeromirCorp in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks Click To Tweet
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- [1:03] Learn more about Tom Nunamaker + Wayne Klump
- [5:18] Their most difficult trading experience
- [10:41] What does “esoteric strategy” mean?
- [13:35] Make money, slow down, and spread out
- [18:09] What they’re watching in the markets right now
- [23:50] How is a leveraged ETF different from a regular ETF?
- [27:47] How to connect with Tom + Wayne
Their most difficult trading experience
When Tom starting working with Dan Sheridan in 2006, he traded through the massive drawdowns in the market through the housing crash. He felt that new traders constantly got blindsided in that type of market. But Tom learned a lot about risk management. You have to control your losses and the profits will take care of themselves.
In 2016, Wayne was more gung-ho and put a lot of risk in a single type of trading strategy. He was shorting volatility aggressively and was leveraged up. He took a $300 account and grew it to $50,000. He felt like he was on top of the world—but it ended up blowing up in his face. After that humbling experience, he reduced risk by diversifying. He paired strategies together that were fundamentally different using risk parody models to create more upside. It was a humbling experience that turned into a huge leap forward in his career.
A lot of people find a strategy they like but after one or two failed trades, they move on to the next big thing. They don’t stick with something or understand how it works and bounce from strategy to strategy. The risks build and suddenly you’re leveraged up and things go south. It messes with you psychologically. You can easily get into a cycle of losses.
The Sleep Well Portfolio came from requests from clients to handle their retirement accounts. They wanted something adaptive, so Wayne started working on it. He created some strategies that became a great place to park some money and watch it grow.
What does Wayne mean when he talks about an “esoteric strategy?” Listen to learn more!
Make money, slow down, and spread out
Can you make money quickly without becoming over-leveraged? Tom notes that you want to walk before you can run and prove that you can be consistently profitable before you start mortgaging your house or quitting your job. Dan Sheridan used to say, “If you can't make money with a $10,000 account, what makes you think you can make money with a $100,000 account?” That’s where you put your money into something safe like a Sleep Well account. Then you take a small part of your money and do your speculative trades and scale it up. But he recommends that you keep the bulk of your investments in something safer and consistent.
You also have to push into that something that makes sense to you. Complicated strategies fit for Wayne. Once you build a certain amount of money, you don’t want to keep it all in one avenue. It can go south quickly, so you have to spread it around. You can make a killing with crypto, but if a government bans it, you can quickly get wiped out. So when you hit big with risky plays, take a percentage and put eggs in other baskets. Maybe every $5,000 you make you pull a percentage and put it into something diversified. Or every $1 million, you put some money into something fundamentally uncorrelated (for example, if you’re in Crypto, perhaps you can put money into general currencies in Forex).What does @AeromirCorp mean by “Make money, slow down, and spread out?” Learn all about it in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks Click To Tweet
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What they’re watching in the markets right now
The hot word right now is “inflation.” After a large printing and dropping of interest rates, there’s a huge flood of money in the market which can lead to inflationary pressures. The Sleep Well Portfolio has been buoyed by inflation. You can play the portfolio differently in different environments. The deflationary backside of the cycle is what you should watch. It takes time to ramp up when supply levels out again. If slowing business growth is paired with deflationary pressures, it’s not a great environment macroeconomically. There will be cooling of commodities and there is always opportunity to be found. What do Tom and Wayne look for? Listen to find out!
How is a leveraged ETF different from a regular ETF?
An ETF is a basket of assets that are attempting to get exposure. One of the most well-known is the SPY. It’s an ETF that follows the S&P 500 index. They can go into different sectors as well. They are baskets that are diversified but can be traded like individual stocks. Diversity works. If you have enough assets paired together, it can significantly reduce your risks.
A leveraged ETF is where derivatives are used. It can be futures, heavier allocations in high-beta stocks in a sector, or things that create a growth engine. They’re looking to get twice the movement to capture more returns. With leverage comes increased volatility which can lead to a long-term return that doesn’t quite equal a 2x. With a Sleep Well Portfolio, they are adaptive. They can leverage it without reducing returns.
How do you find a leveraged ETF? Almost every broker offers them! Many people use TD Ameritrade, Interactive Brokers, and even Robinhood. You trade it just like a normal ETF. You can do a Google search for things like “2x SPY” and see what comes up.How is a leveraged ETF different from a regular ETF? @AeromirCorp shares more in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks Click To Tweet
Resources & People Mentioned
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Connect with Wayne Klump + Tom Nunamaker
- The Sleep Well Portfolio
- Get on the Aeromir email list
- Watch on YouTube
- Connect on LinkedIn
- Follow on Twitter
Connect With Casey Stubbs
- Website: https://caseystubbs.com
- YouTube: https://www.youtube.com/TradingStrategyGuides
- YouTube: https://www.youtube.com/caseystubbs
- Twitter: https://www.twitter.com/caseystubbs
- Facebook: https://www.facebook.com/TradingStrategyGuides
- LinkedIn: https://linkedin.com/in/caseystubbs
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Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment. Therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.