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Strategies & Market Trends : Portfolio Protection + Money Management for the Long Term

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To: BDR who wrote (45)	4/20/2000 7:57:00 AM
From: Tom Trader	Read Replies (2) of 57

FWIW, I used the rally of the the last two days to liquidate a portion -about 30%- of my taxable portfolio. I did this with two objectives: First, there were some holdings that did not meet the profile of the type of stocks that I should own for the long haul; this is the effect of some of the gg strategy rubbing off on me:) The net effect of doing this was to realize some losses. Second, I sold of a small portion of certain holdings that I am not averse to owning -- but where I had significant positions and some decent profits; the net effect is that there is a taxable gain though, not a large one, since it is offset by losses in the first category. I replaced these with longer term calls in the stocks that I sold -- generally "at the money" strikes. In the event that the market/stocks keep heading up my gains will be decreased to the extent of the call premiums. However, part of the rationale for doing this is that I believe that we will head down again over the next month -- probably starting next week -- and I will be in a position to acquire stocks at a lower price. A judgement call -- and essentially market timing. This decision is to some extent linked to the move back into stocks in my retirement accounts which after being all cash are now almost 90% invested. As I posted on the g&k thread, I had been phasing back into stocks in my retirement accounts and was fortunate to be able to enter at some quite attractive prices. To the extent that I miss the boat -- on the positions that I liquidated in the past two days -- and we take off I believe that the stocks that I now own should do very well. The calls that I am long should also offer upside in the event of a continued rally. If, however, we head down again -- as I believe will occur -- I am in a position to add to my portfolio at attractive prices. If we do decline -- and I am able to buy stocks at more attractive prices -- I will then exit the calls that I went long this week or utilize other strategies to offset the cost of the calls. Not sure if all this is clear -- it is obviously based on several assumptions and judgement calls.

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