During the 8 months when the $ was in a no risk environment would it have earned the difference of nearly $32?
At first, I thought you were posing this question to be amusing, but after giving the question some serious thought, I realized that it is not trivial, and indeed addresses a serious investment question: What does one do with the cash while it's not tied up in Microsoft's stock?
With prevailing interest rates, cash or money markets offer no alternative. Other stocks MAY be a possibility, but taking this route requires finding the stock with a price profile and timeliness which matches your 'no MSFT' period(s). Next, consider an option strategy: could call writing fit your needs? If we assume the trader wrote calls covering the nine months of each year when full exposure to MSFT was not wanted, the premium collected would exceed the $32 which would need to be paid out as MSFT's stock appreciated. The question becomes: Is this an optimal trading strategy? I think it could be, depending on option premium levels, but it requires more courage than what I'm able to muster, since I'm looking back a decade to see my profits in hindsight and recognize that to act now I must see my profits ahead. I lack the conviction of the future I once had; this said, I feel that those who can trade profitably today and going forward are more than welcome to the rewards. They will earn it.
Cheers, PW. |
