homerbart

Resolutions to Ensure a Smart Year of Investment

enhance the return by selling covered calls at a higher strike price and going a few months out to capture not only the dividend but the enormous option premium as well..


On Dec 29 11:58 AM Bob Lunn wrote:

> Good article. I would point out that the amount of risk you take
> is usually proportional to the amount of gain or pain that you will
> receive. I think a good starting position for investing is to invest
> in large cap, cash rich, good dividend companies.
>
> One example would be British Petroleum (BP). At a price of $44.7,
> it gives you a 7.5% return on your investment. Its not as safe as
> an FDIC insured 6 month CD, but its return is twice as high. As an
> investor you need to decide if the risk of BP going bankrupt is worth
> throwing away twice the amount of the return on the FDIC insured
> 6 month CD.
>
> Yes, if you loose your money, you may have not way to get it back,
> but the loss of potential gain going from a 100% no risk position
> to a 99% no risk position is usually very substantial. One thing
> you can be pretty sure of is that the bank offering that 100% zero
> risk investment is making a lot of money using your money. Its not
> necessary to go all in. Try it with a single share and see how it
> works. In the mean time pick up a few books on value or dividend
> investing. Knowledge is the key to investing. Always think along
> the lines of cutting out the middle men, particularly banks.