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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Alan Bell who wrote (8020)	8/23/1999 1:11:00 PM
From: marc ultra	Respond to of 15132

I believe there is one factor in selling that Bob generally hasn't focused much on that should also enter the mix. If you defer capital gains by hedging you are obviously not deferring this capital gain forever but maintaining a large unrealized capital gain which unless you have made a decision in advance to leave to your estate(a decision most are not making) then you will have to pay this gain sooner or later if you want to use or re-allocate this money. I believe this does give you some functionally added liquidity since you otherwise are turning hard earned profits into a frozen asset. Maybe your tax bracket will be lower when you finally decide to sell, maybe not but if the gain is large enough it may push you into a higher bracket anyway. Obviously hedging puts you more in control of your fate in that you can then later liquidate in a manner you have control over such as spreading over several years, selling some in years you have losses in etc. Bottom line while you want to defer taxes as long as possible and let your asset compound there is rarely such thing as a free lunch and if you leave it to your estate you assumedly won't be able to eat then anyway. Marc

To: Alan Bell who wrote (8020)	8/23/1999 1:24:00 PM
From: Investor2	Respond to of 15132

RE: "It is easy to believe that the market has little upside. So to me shorting SPY or QQQ has minimal risk." Many people in Bob's audience think that a Spider is an eight-legged insect. I believe that you are probably much more familiar with the risk associated with shorting securities than much of his audience. Still, I don't think that I would call shorting SPY or QQQ a "minimal risk" strategy. Re: "But selling holdings with a negligible cost basis has a much larger risk. Let me propose the following hypothetical scenario - The market treads water at this level for a year or so. Maybe there will be short term corrections that are not buying opportunity. The rate cuts then take effect and slow the economy allowing the market to continue its bull run in a years time." 1. Bob would reply that his model is not designed to issue a sell signal for your hypothetical scenario. 2. I don't think I'd want to be short SPY or QQQ in a sideways market. Best wishes, I2