Emini or SPY? Trader or Investor?
May 15, 2017 at 7:22 PM (GLD)(SLV)(SPY)(DIA)(CNAB)
Are Emini Futures As Good As Gold?
Special Guest - Craig R. Smith / Swiss America CEO
Joins Us 05/16/17 @ 1pm EDT
Are E-mini's as good as #Gold? It depends. Are you trading or investing? While some would say "What's the difference?", night and day I say. For less than $1,300 I can own an ounce of Gold. What's that worth? In American dollars less than $1,300. In Canadian dollars? Closer to $1,700.
How Much Does An S&P 500 Emini Contract Cost?
Tonight as I type, I can purchase 1 June S&P 500 E-mini Contract for $500. What's that worth? Tonight as I type, $119,850.00. Say what? That's exactly why Gold is Money and the S&P 500 Emini is the single most traded instrument this side of Elon's summer home (Mars).
Warren Buffett and E-mini Futures
This year in Berkshire Hathaway's annual letter to shareholders, the Sage of Omaha had this to say about Investing, not Trading.
"Over the years, I've often been asked for investment advice, and in the process of answering I've learned a good deal about human behavior," Buffett said in the letter.
"My regular recommendation has been a low-cost S&P 500 index fund," he said. "To their credit, my friends who possess only modest means have usually followed my suggestion."
Now to clear the air, investing in an S&P Index Fund and Trading S&P Emini Futures is as different as... yep, night and day.
Trading's Not Easy But It Can Be Simple
Let's face it. Not everyone has what it takes to become a Trader. What does it take?
- Patience
- Discipline
- A Personal Mentor
That is the Trading Trifecta and most "would be" Traders are missing at least one of the three. The most common missing element? The Personal Mentor, who by the way, will help you develop discipline and learn to be patient. He or she, will also help you Learn How to Trade.
What Buffet Knows About Eminis That You Don't
He recommends investing in an S&P Index Fund because that takes no training, no special skill or talent. You buy it, forget it and hope for the best. So how much does that cost? If we use the Spyder S&P 500 ETF as an example, 1 Share (not a contract) the cost (as I type) is $240.30. What's it worth? In US Dollars - $240.30. Today was an up day in the markets and the share price of the SPY increased by $1.30 per share.
The S&P Emini which requires a Trader not an Investor at the helm, opened Sunday Night (last night) @ $2,3888.75. Over the course of the trading day today (Monday 05/15/17), price climbed to $2,402.25. That's a difference of $13.50 per Contract, not per Share. Each dollar or "point" the Emini Futures Contract rises or falls, is worth $50.
E-mini Math
So the S&P Index Fund Investor made $1.30 per share today. Don't forget, as I type, each share will cost you $240.30. Just buy it and forget it.
The Emini Futures calculation is a little bit different. Remember, the Emini rose $13.50 per contract. Each point is worth $50.00. 13.5 X $50 = $675.00 Hmmm... why would Warren put you in the Index Fund rather than the Futures Contract?
Simple! He knows most "would be" Traders do not possess the Trading Trifecta - Patience, Discipline, Personal Mentor. He's helping you play it safe. Nothing wrong with that.
Keep in mind that since the S&P 500 Emini contract costs $500 to Buy (or Sell), and trades around the clock unlike the Spy, you could have bought 2 Shares of the SPY with $500, so your gain Monday is actually $1.30 X 2 or $2.60, plus you sleep like a baby. Right? Well... as long as it continues to go up you do.
Who Are You? What Are Your Goals?
Based on a semi typical up day in the markets (Monday), for $500 the SPY Investor with 2 Shares made $2.60. The Emini Futures Trader if he bought the open last night and sold the high today (pretty tough to do unless you have Weekly Trading Zones or a Personal Mentor), the market made $675.00 per Contract available.
It doesn't take a CPA to figure out $675, or even half of $675, is slightly better than $2.60. Agree? However, remember this... arguably the world's greatest Investor just told you to buy the SPY. Why? Safety, peace of mind, no muss, no fuss. Almost.
Remember 2008? Many Investors owned the SPY. On October 1,2007 the SPY was trading @ $135.24 per Share. Fast forward to February 2, 2009 and the SPY was trading @ 66.56.
During the "Great Recession" many retirees who were married to the SPY or many other Index Funds saw their portfolio drop in excess of 40%. Many were forced to come out of retirement and return to work. Can you say "Welcome to Walmart?".
Suffice it to say, both Trading and Investing are risky. While Futures may offer an opportunity to rack up outsized gains quickly, without a Trading Trifecta, you can actually lose it all and then some.
Count The Costs
As you decide which path is correct for you, consider the amount of time you have to work with. How soon will you need to access your retirement funds. The longer the time horizon, the more risk you can afford. Please don't run scared and get that wisdom backwards.
Each person and financial situation is unique. Always check with a licensed Investment Professional before making any investment decision. If you chose the "Way of the Trader", ask yourself this very important question - "Do I have the Trading Trifecta?". Unless your answer is a resounding YES / YES / YES! Take Warren's advice, buy an Index Fund and simply forget about it.
Whichever decision you make, I wish you all the very best on your financial journey.
CATCH OUR LIVE STREAM DAILY
Read My Digital Diary for the past 3 Years
CAN YOU DO IT? DO YOU WANT TO KNOW?
There's something on this earth you were created to be GREAT at! God created each of us to excel at something. Some of us know instinctively. Others spend years searching. Sadly, some just meander through life never finding the thing that wakes them up before the alarm and keeps them awake long after the Sandman has passed through Sleepy Town. Your spouse is snoring (gently), but when you close your eyes all you can see is Candlesticks. You slip out of bed at 3am to check the London open. If that's you, you might be a Trader.
FIND OUT AND GET ON WITH YOUR LIFE
It's this simple. Go to Apply.CFRN.net . Make a 5 Day - No Cost - Commitment. Put your name and your email in the little boxes, hit SEND, go check your email. Read the email, follow the instructions, then show up @ 9:30am EST any day M-F and let the journey begin. In a week you'll know. Don't let the past dictate your future. When your welcome email arrives with your Link and Password, keep reading.
THE EMAIL IS FILLED WITH INSTRUCTIONS.
We do Ninja and any Broker who clears through Gain Capital. If that's not you, there's instructions to download dtPro. We not only give you our Indicators for a week, we even provide the Platform (at no cost). There's no more excuses. Take the trial or go learn how to tie fly's. Bake a cake. Do something! You'll go blind if you keep watching Springer all day.
See you in the Trading Room - Apply.CFRN.net .
Live Charts / Lively Discussion / Participate in the discussion...
Questions?
Call us toll free @ 866-928-3310 during normal business hours.
After Dark - email support@cfrn.net or call 949-42-EMINI
emini, futures, index fund, sp500, warren bufett 
Reader Comments