Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Rock Fish who wrote (3661)	2/28/1998 4:59:00 PM
From: sea_biscuit	Read Replies (1) of 42834

I guess we owe it to ourselves to get the other side of the "4% story" too... A friend of mine had options to buy about 10,000 shares in COMS at an average price of 20. He could have bought (and sold) all of it towards the end of 1997, when it was at 80 or thereabouts. At that time, he bought a home for about $350K and financed it at 7% or so. However, he didn't put anything down on the house. As for the stock, he thought he will just let it ride. Then, of course, the stock plummeted to 20! My friend began lamenting that even if he had sold only half of his stocks and paid the taxman 40% of his gains, he could still have put 50% down on the house. (And to rub salt on his wounds, somebody asked him to imagine what that would have done to his monthly mortgage payments!) Well, even if he had gotten into the "no-brainer" Total Stock Market Index, he would have been UP 30% since. As I see it, there cannot be a better argument for the 4% rule than this real-life illustration. Dipy.

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