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American Capital Agency Corp. Message Board

  • reits_r_us reits_r_us Mar 5, 2013 3:51 PM Flag

    Mote 3% stuff answer to AL

    Hi AL,

    The 3% rule works when a stock is trending up. So yes, on one month out to EX, AGNC has historically been very consistent at running. Because it has a typically tight spread, I would use 1.5%. This is determined by observing historical trends and spreads for each security.

    On the Dec fizzle last Q, from one month out to EX, it still works, which is the beauty. So starting one month out last Q on Nov 21 ,at 31.42 PPS, fizzling all the way down to the DBEX on 12/21 at 31.15, a .27 loss, and using each close x .985, which is 1.5% less, you get fills on Nov 26 at 31.18, Dec 5 at 30.00, Dec 12 at 31.05, Dec 13 at 30.37 and Dec 14 at 30.04 for a five fill average of 30.73.


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    • (cont).

      If each fill was for 1000 shares you just pocketed .42 x 5000 = $2100. Not a lot of bacon, but sure beats the .27 loss on the PPS...;-)

      To recap, You keep going all the way to EX-1, placing your orders after the close of each trading day for the closing PPS times .985, which is 1.5% lower than the close. Leaving it as a limit buy for the next AM. Repeat the following day, etc. You are obviously trying to buy at the low of each day.

      Works best for up-trending stocks. Works well for flat times also as seen in my example. Does not work well for down trends so pick stocks and times which offer the best probability of up trends, like AGNC for the next 15 trading days until EX-1.

      Good luck,


      • 1 Reply to reits_r_us
      • I guess I meant More instead of Mote...Mote does kind of hearken back to the "Crumbs" theme, I suppose...;-) Certainly are't going to get rich doing this, but I believe most folks who have the drive and desire can make enough on the GLAD/3% Rules with the right stocks(which I have outlined), to make enough each month to retire and live comfortably.

        This is assuming, the capability of trading a few 1000 shares on each security, between cash and margin. This is why I chose small cost stocks so most can play. If not, start smaller, make 30% on this method and what you make, re-invest. Crumbs to riches...;-)

        DocReits...aka The Pied Piper, by detractors

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