If you would like to spend your $9000 to buy 100 shares at $90, and later margin
50% of your stock at a risk of margin call if market reversed short term later, I would like to propose another safer strategy, i.e long leap, and buy the stock later.
The premium you pay for the leap is about the interest you pay for you margin borrow for 20 months, say the expiration is Jan, 2000.
If you really believe the win98 will fly and generate big revenue for MSFT in the next two years, the NT5.0 will release on time, direct TV will fly, every Auto starting from next year will implement one copy of software from MSFT, CE will be a big
winner for MSFT in the years to come, and all in all, MSFT will continue its growth in the next five to ten years, then you may use your $9000 buy 4 leaps , and buy the
stock when the leap expired at year 2000. At that time, you may end up with 1600 shares of MSFT stock with an investment of $50000 if everything goes as planned !!!!
Good Luck !!!!!!!!!!!!
PS: From Sep of 96 to today, the stock price of MSFT had appreciated 300%. Just
reviewed the historical chart. That is almost 20 months. So in the next 20 months if
MSFT follow the same path, then you know what your 4 leaps will worth at the
beginning of year 2000. So, just buy it and forget it, and convert the leap to stocks
in year 2000, and at year 2010, you will be very happy !!!!Hopefully at that time you are not over 70s, and still have a lot of time to enjoy the fruit from MSFT money tree !!!!! |
