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Jeff Miller  

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  • How To Handle A Big Gain [View article]
    daro -- You definitely followed the rule. It is very relevant for investing. You can make excellent decisions and still lose in the short run. Most people do not understand that the short run is defined in number of decisions, not time.

    I need to figure out a way of communicating when I am on "vacation." I always expect to do some writing....

    Thanks,

    Jeff
    Apr 3, 2014. 09:11 PM | 1 Like Like |Link to Comment
  • How To Handle A Big Gain [View article]
    ron3637 -- Yes, you are correct. You need to estimate both the fair price and the odds. Nonetheless, the approach can give you an idea of the true value, perhaps warning you against just playing for the upside.

    Jeff
    Apr 3, 2014. 12:14 PM | 1 Like Like |Link to Comment
  • How To Handle A Big Gain [View article]
    DD -- Yes, I did choose the numbers in a way that showed there could still be an edge, but mostly I want to illustrate a method. The market often does not achieve accurate pricing for these situations.

    Another good example would be after a takeover has been announced, but the acquired company is not yet at the final price. Professional risk/arb traders take big positions while waiting for the gap to narrow. If the deal falls apart, there can be a big loss. It is almost always right for the individual investor to sell in these cases. Even anti-trust experts, for example, are sometimes wrong.

    The options approach can certainly work, but the prices are usually high, so you still need to calculate your edge.

    Jeff
    Apr 3, 2014. 12:13 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Yellen Takes The Stage [View article]
    dwdallam --- very good observations.

    Thanks for joining in.

    Jeff
    Mar 16, 2014. 05:11 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Yellen Takes The Stage [View article]
    GaltMachine -- Partly it is a matter of profit margins ( discussed here: http://bit.ly/Ol5BQ2) and partly share buybacks.

    As an investor, I think share buybacks are a legitimate approach, especially in companies where I am also enjoying dividends and selling some calls.

    It would not be right to adjust for inflation and then call it deflation, but I agree that revenue growth continues to disappoint. We have below trend economic growth -- a multi-year fact of life. Every time there is a little progress, something seems to happen to create a new "soft patch."

    As you know, I think we are still in the middle innings of this prolonged business cycle.

    You are raising a key point.

    Jeff
    Mar 16, 2014. 01:49 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Yellen Takes The Stage [View article]
    billcharlesdixon -- I stopped with the millionaires, but there are also more with over $100K, if you read the entire piece.

    We have to measure improvement somehow. The question of inequality is important for us as citizens, but I'm not sure about the investment relevance. Higher wealth and income is good for markets, so that is why I mention it.

    I take your point, and thanks for sharing.

    Jeff
    Mar 16, 2014. 11:42 AM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: More Clarity About Employment? [View article]
    Thanks, Young!

    You always bring something interesting to the comments.

    Jeff
    Mar 2, 2014. 01:54 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: More Clarity About Employment? [View article]
    Thanks richjoy403 ---

    I always do my prep work for the coming week, but I do not always feel like writing it. Knowing that people find it useful is encouraging.

    I appreciate the kind words from you, family investor, and others.

    Jeff
    Mar 2, 2014. 01:53 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Is The Correction Over? [View article]
    Captain --- I agree with your comment. I might have put "correction" in quotes for that reason.

    Jeff
    Feb 16, 2014. 09:20 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Is The Correction Over? [View article]
    Great Swami --

    Thanks for the kind words and especially about the comments. We have a good group of regulars who add value each week!

    Thanks for joining in.

    Jeff
    Feb 16, 2014. 09:18 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Will Yellen Signal A Policy Change? [View article]
    Thomas - The short end of the curve is currently the easiest if we believe the Fed forward guidance -- and I do. Mortgages have a duration of about 7 years, so the 10-year note is a fair guide (although affected also by Fed MBS purchases). If I could put you to a great source on the movement in the ten-year, we could all just get rich from that! Even the top bond managers often disagree.

    I look at a variety of forecasts to see the economic consensus, which is as good as anything --- meaning not so good. The expectation of higher rates has been a multi-year story. My personal conclusion about that part of the curve moving higher relates to my expectation for better economic growth. Ultimately, growth and inflation are the big factors.

    Junk bonds got caught up in the quest for yield -- people reaching without much regard to risk. It is always good to ask whether you might as well buy stocks if taking the greater risk involved.

    I realize that I am not really answering your question about a favorite source, since there is no single place. The best I can do is suggest how to think about the problem as your seek a conclusion.

    Thanks for the kind words and your question.

    Jeff
    Feb 10, 2014. 08:34 AM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Is The Economic Recovery Stalling Out? [View article]
    Betadog66 -- I'll investigate.

    Thanks,

    Jeff
    Feb 2, 2014. 03:42 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: What Is The Market Message? [View article]
    rebowley -- I was actually finished by 11 or so, but there is then a review process by SA Editors. They do a nice job of expediting that review for time-sensitive stories, something that I really appreciate.

    On weekends when I have some social engagements, I cannot follow my normal schedule of working all day Saturday on this article.

    But thanks for noticing:)

    Jeff
    Jan 27, 2014. 11:17 AM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: More 'Experts' Call The Market Top [View article]
    Canuck Economist --

    Thanks for the kind words and also the helpful suggestions -- several good ideas.

    Thanks for joining in!

    Jeff
    Jan 19, 2014. 10:18 PM | 1 Like Like |Link to Comment
  • Boost Your Dividend Yield [View article]
    libbyscotter -- OK and thanks. I don't mean to be testy.

    Let me offer a little on trading costs. One of the reasons for my choice of broker is low costs on commissions as well as fees for assignments on calls. It is something to watch.

    The bid/ask spread is a little different. Many of the stocks I use in this program have a one-cent spread. At the time we were putting on the position, the XOM spread was two cents.

    When I am backtesting or evaluating a trading system, I include slippage for buying on the offer and selling on the bid, as well as commissions. In this strategy we almost never repurchase an option, so it is merely a question of what price we get for the original sale.

    Since I am entering a reasonably large order, I can sometimes split the market a little. I did not go into this, since I am writing for the average investor. You have to expect to sell on the bid.

    Does this mean that you are leaving something on the table? The options market maker (my original employers back in the day) make their living from this spread. They are providing liquidity and taking risk, at least for a while. Sometimes the paper flows one way only. A few of my friends "blew out" because they could not accurately hedge option sales.

    As customers, we should not expect them to sell to us at their cost any more than we expect a merchant to sell a product at no markup.

    When I suggest the return an investor might make from the strategy, my estimate is based upon actual experience of more than two years and allowing for less expertise on the part of readers. Comments from Brad and others verify that this is possible.

    Anyway, that is why I was impatient about trading costs. I know how to include these effects and do so when appropriate.

    I hope you continue to read and to comment. Best of luck with your investments!

    Jeff
    Jan 19, 2014. 08:21 PM | 1 Like Like |Link to Comment
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