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George Acs

 
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  • Who's Wagging Who? [View article]
    If I have a stock whose current price is significantly below the purchase price, I usually don't write calls, other than an occasional "crumb" call http://seekingalpha.co... . Usually I exercise patience. Two such examples this week were EMC and Intel. I had been sitting on those shares for a while, especially Intel, waiting for an opportunity to generate premium income again. I believe that the last time I wrote options on Intel was Nov 2012 and EMC around March 2013.

    However, I do frequently write in the money calls, so if assigned, would have a loss on shares, but which is typically more than made up for in the option premium.

    In general, I've lowered my option income objective from 4%/month to 2%, reflecting lower volatility and having defensively positioned to longer term monthly options, rather than weeklies, thereby giving up some potential ROI for safety.
    Jun 1 06:57 AM | Likes Like |Link to Comment
  • Who's Wagging Who? [View article]
    You are the second person in the last week or so that has mentioned Komatsu (maybe you were the first one, as well). That's one stock that I wished had options available

    Weyerhauser's perennial under-performance of the S&P 500 ended just as 2011 began. I hadn't owned it in years and started buying shares again less than 2 years ago.

    Among the reasons I like shares right now is that while no longer being a lagger, it has trailed the S&P 500 during this most recent bull run and I'm now looking at those kind of shares in the event of a market drop, assuming they won't fall quite as much while still being respectable if the market climbs.
    Jun 1 06:50 AM | Likes Like |Link to Comment
  • Who's Wagging Who? [View article]
    Could you state that in the form of a question, rather than simply placing a question mark at the end of a declarative?

    Your diagnostic skills clearly obviate the need for the new DMS-V, but fortunately my focus got diverted so I never made it to your second paragraph. (Well that, and the constant readjusting of my mouse on its pad)
    May 31 07:26 PM | 4 Likes Like |Link to Comment
  • Picking A Winner In The Pfizer-Zoetis Divorce [View article]
    No, not at the moment, especially if you have a small number of shares. Ultimately, I think that the real winner will be Pfizer.

    Not only is this a tax free spin off, but insiders received special permission freeing them from their usual lock-up periods.

    However, for Pfizer shareholders, this also means a reduction of float, which is the same as having had a share buyback on the order of about $12 Billion.

    Due to the number of shares that I hold, I may take the offer, but it's not likely. I think the negatives outweigh the hope of achieving a 7.52% gift.
    May 31 04:59 PM | Likes Like |Link to Comment
  • Picking A Winner In The Pfizer-Zoetis Divorce [View article]
    The prospectus indicates that it is a tax free spin off, except for cash received in lieu of fractional shares.

    I'm not convinced that there will be a better offer to come along, as only 6% of shares need to be tendered in order for Pfizer to swap out its entire 400 million shares of Zoetis.

    Ever since the immediate aftermath of the new spin-off announcement Pfizer shares have tumbled, after their initial pop. Zoetis, on the other hand had an initial decline and has been in the doldrums since.

    My anticipation, in the absence of unrelated macro-economic news, is that Pfizer shares will out-perform Zoetis during the period after the transfer of shares.
    May 31 02:52 PM | Likes Like |Link to Comment
  • Picking A Winner In The Pfizer-Zoetis Divorce [View article]
    You should have, or will shortly, receive a prospectus from your brokerage, if you already own shares of Pfizer.
    May 31 11:26 AM | Likes Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    I'll go with humble. No, I was suggesting that there was little that I would say in a response that would meet the goal of actually teaching something.
    May 28 07:25 AM | Likes Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    In general, if referring to the "Double DIp Dividend" strategy that seeks to have some of the decrease in stock price due to going ex-dividend, offset by an inefficiency in the pricing of the option premium, I like to select an in the money call such that the current price minus the dividend is below the strike price or near the strike price.

    The longer to go until the ex-dividend date the less likely the position will be exercised even if that difference is above the strike. However the more the difference is above the strike the more likely it will be assigned.

    However, if you want to have greater likelihood of both receiving the dividend and perhaps getting further capital gains you would use the out of the money strike.

    During periods of low volatility and resultant low out of the money premiums, as well as times when I believe that the market may be headed lower, I'm much more inclined to use in the money options following the guidelines above.

    More detail can be found in "Double Dipping Dividends" http://j.mp/MHiznC
    May 27 10:00 PM | Likes Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    Well, as long as your basic requirement is actually learning something, I may as well not even bother responding
    May 27 09:50 PM | Likes Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    I very much liked the sentiment "I focus on making money."

    That is far more important than debating nuances and differences in strategies or debating the relative merits between fundamentals and technical analyses.

    Everyone has an idea, but it all comes down to "show me the money."
    May 27 09:48 PM | Likes Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    I don't know if you read the article by Herb Greenberg that I referenced in this article, but there is some very sound and timeless advice.

    If I dispassionately sat back and looked at where we were 4 years ago and where we are today within the context of historical movements of the stock market, I would be very reluctant to get started right now, unless very young and even then I would proceed in aliquots only.

    With all of the speculation as to how much money is sitting on the sidelines, and how much is potentially available to further fuel a rally, I can't imagine very many jumping in now after having stayed away since before March 2009.
    May 27 04:43 PM | Likes Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    You're right that it's not the time to start, unless you have a good understanding of the use of derivatives as a potential tool to create income or protect assets. It is, however, a good time to learn about various strategies, especially if there's no compelling pressure to plunge forward. I spent years doing "what of" kind of scenarios on spreadsheets back when Visi-Calc was still pre-eminent.

    The fact that so many stocks have gone in a single direction does complicate the process. However, while the dividend paying stocks have fared very well, they certainly would be among the first that I would look at following some market retracement.
    May 27 03:48 PM | 1 Like Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    I've done the transition to cash over the past 2 months and enter tomorrow's trading with about 50% cash.

    My objective is to have approximately 40% cash in the event that there is a meaningful correction. (If there isn't, then simply admit having been wrong and move on). The difference between reality and the objective is the amount that I'm willing to invest this week.

    So the first question that I would ask of someone in cash is how much do you want to still have on hand in the event that some bargains pop up after an unexpected drop in the market? Certainly going all in at once is among the most risky of moves.

    But I still believe that even during downdrafts there is always something worthwhile. My expectation is that this week I will get my cash position down to 40% and will likely find something from this week's list or something else that has an unexpected and perhaps unwarranted drop during the coming week.

    There can be risk both to being in as well as to being out of the market at any moment in time. While I think the market has added risk at the moment, I still believe that the predominant risk is being completely out of the market.

    As long as having had this conversation begin with DCA, if you truly believe in the underlying merit of a stock and you make an initial purchase now, just prior to its descent with the rest of a falling market, that may be a perfect signal to add shares. I routinely do that as part of a covered call strategy when faced with a falling stock that is still part of a thesis that I continue to believe.
    May 27 02:55 PM | 1 Like Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    I don't recall the individual suggesting that he wasn't interested in learning about other strategies, nor that he didn't care for investing, as your horse racing analogy would suggest.

    Yet the fact that you dismiss other possibilities for why someone might be at the race track is emblematic of wearing blinders.

    I love going to the race track. What better place is there to do people watching and see all sorts of interesting characters and the full gamut of emotion? The horses are a side show.

    Yes, you're right, perhaps out-performing is a better word for you to have used, but the one you used to illustrate your method is "outthinking". The two are quite different and infer very different processes. Out-performance may be a result of a combination of factors, including having done your homework and some good old-fashioned luck. "Out-thinking" is quite arrogant and dismisses anything other than personal skills.

    That might be considered "bragging." The word is one that you used and not a distortion.

    With regard to diversification, again, it is your own words that you used as a template for your early "success".

    "...take a very large over-weighted position in silver...."

    I doubt that a value investor, such as Buffett would, with foresight call silver a compelling investment. Nor would he commit to a significant overweight position in what most people would agree is a speculative commodity, rather than an investible asset.

    Most of all Buffett is folksy, unpretentious, and grateful for what he describes as his good luck.
    May 27 02:39 PM | 1 Like Like |Link to Comment
  • That Was The Crash, Dummy [View article]
    When I first started using the covered call strategy I used the flow of premium income to purchase additional shares (and of course sell call options on the additional shares). My goal was to grow the portfolio in anticipation of reaching another stage, which was early retirement. I never wrote in down for myself, nor did I have a mission statement, but I knew what I had wanted and also had quantifiable objectives. The objective was based upon an estimate of how large of a portfolio I would need in order to generate enough option premium to serve as a salary source and allow me to retire from my primary profession.

    However, as I've "retired" from my previous profession I am now at that other stage. In that stage my option premiums are my income. However, I only use a portion of the premium income as "salary" and the remainder is reinvested, as in the first phase. Capital appreciation is still appreciated, but not as important.

    The final goal is at that phase of life that I can withdraw as needed without eating into principal and without eroding my kids' inheritance. The objective will remain the same; that is to beat the S&P 500.

    Above all, just like you've said, is discipline and not losing sight of the road map nor getting spooked or complacent as a result of vents around you.
    May 27 02:14 PM | Likes Like |Link to Comment
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