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Joe, The answer is no on 1987. I was employed by a fund manager at
the time and could not trade my own account. Actually, I could, but
the restrictions were so severe that there is no way I could trade
with my style. I wasn't really managing any money at that time, but
the company was sending me around on the lecture circuit and
paying reasonably good money to
keep my name connected to the company, so I was still covered by the
pre-clearance rules. I do remember two equity fund managers who did
not buy puts in their funds,
they weren't allowed to, but did raise huge amounts of
cash in mid-1987. They were both fired before the crash hit. True
story. And both had multiple appearances on Forbes Honor Roll before
that time. So, you see one of the reasons fund managers like to follow
the herd. -G- I did buy puts in 1973 and man, were they expensive.
The options exchanges had not "invented" puts at that time, so I
had to buy over the counter from Marsh Block.
I also sold a ton of naked calls in
1973 and 1974. I still remember those premiums. 30 percent
for a nine month
call on RCA. I don't recommend naked call writing, but those returns
were exceptional. I remember one call I wrote on Gillette for 25 percent
for 9 months. The stock went a half a point in the money and somebody
exercized the call after I held it for 3 days. Man, talk about easy
money and not understanding the concept. -G-
I didn't do much short selling in 1973-1974
as I didn't have enough money
for most brokerage firms to take that chance and living in Europe, I
didn't have access to market info on a timely basis.
I still don't know why
they let a poor civil servant sell naked calls. I think it was
probably because they didn't understand the risk. Going back to
1987, everyone was calling for a 10 percent correction. Just like
today. But very few folks I knew
were shorting stocks or buying puts. The long
bull market had simply bankrupted too many short sellers. MB |
