Hi JFH, That $0.70 Buy was brilliant and the quick profit probably didn't hurt too much either. If you think VTSS has a long term future, however, the idea of scaling is very attractive in both realizing profits and also for capping the amount of value at risk.
<ot> Glad you came across the 3rd edition. It's pretty complete even if a bit dated. Chapt. 6 is most important and could be considered the heart of the book. That and Chapt. 15 on Twinvest for those accumulating.
AIM is a form of scaling. It will keep your value at risk very constant in a rising environment. In fact, even of your favorite stock should rise 100 to 1, you'll still be invested in the company. Not as many shares, but at least as many dollars. It doesn't have a "sell all" mechanism in it, so that decision has to be made by the individual.
RE: Selling covered CALL contracts with AIM. Yes I've done it and it works nicely to improve total return. However, one has to understand that we're not trying to break AIM's back, but complement it. What I do is pre-calculate at what price I'll liberate round lots of the stock. Then I look for generous CALL contracts in the future at near those same price markers. If I can get $1.50 premium on a contract, then it's worth my effort even on one contract after commissions to sell it now and moth ball those shares in case they're called away. If not, I pocket the net, but if they are called away, it's that much sweeter for the total return.
Thanks for the note and interest. Please feel free to ask questions if you decide to take a shot at it for managing some of your equities. Remember that it is a long term investment model, so we need to pick companies that we expect to have long term positive futures. AIM'll handle the bumps along the way pretty well.
Best regards, Tom |
