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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (9290)	10/31/1999 12:29:00 PM
From: gdichaz	Respond to of 54805

Uncle Frank: Hey I am a senior citizen. I must be conservative. Well, must admit that I do have a relatively high risk / reward ratio in my stock strategy. But it is a mix. So while I use and respect the GG, I am not tied to it completely and exclusively. It is just that I find that by concentrating on choosing technologies carefully in which to concentrate (wireless and fiberoptics), I am being careful overall. Within those technologies which I see as having a very good future in the real world, I pick leaders as best I can - and use the equivalent of the Russian army approach among them. And a gorilla such as the Q or a king such as JDSU receive special emphasis and money. In the internet, my strategy is to participate in the Godzillas in as conservative a manner as I can - so far I own only the nurturers - and SFE (the most conservative) has the heaviest weight (followed closely by its child the B2B pure play ICGE). So the mantle of conservatism fits me, no? Chuckle. Cha2

To: Uncle Frank who wrote (9290)	10/31/1999 4:23:00 PM
From: gdichaz	Respond to of 54805

Uncle Frank: Here is Voltaire's post on the Q thread re insurance. For those few who may not read it there: (BTW it is addressed to Chaz since that is my name there on the Q thread and has been for years. chaz here bears no responsibility, Cha2 does. Grin.) Talk : Communications : Qualcomm - Coming Into Buy Range To: gdichaz (46685 ) From: Voltaire Sunday, Oct 31 1999 4:04PM ET Reply # of 46708 Hi chaz, Yes, you are correct, it is Insurance. You were also correct about timing the market and I loved your statement " the game ain't worth the candle ". In dealing with people's investments, I learned a long time ago one of my basic principles " everyone has a Sleep Tolerance ", in other words, how many shares and how much money can you have exposed in the markets and still get a good night's sleep"! it varies with each individual. I found out with AOL what mine was and it was 18,000 shares. I could not sleep thinking about that possible 10 point decline and the loss of $180,000 a pop. I realized this the night before playing Golf. I walked into the Pro Shop the next morning, walked straight to the phone and sold the whole lot at $163. there were other reasons but that was the main, it was right before earnings and I was also wanting to exit. By employing the Covered Call Writing strategy there is nothing to really worry about. Now our counterparts are going to argue that by being Covered then we lose any opportunity to make any money past the premium we are paid on our calls, that is PURE BULLS---! Nothing bothers me more than to hear people on different threads tell people not to write Calls because any profit over and above their Call premium is locked out. Most people seem to think that the greatest thing that can happen when they write a Call is for the stock to sit there and not move until expiration. WRONG! WRONG! WRONG! The best thing that can happen is for the stock to Skyrocket, why? Because the DELTA ( the amount that the option's price will change for a corresponding one point change in the price of the stock) is not going to be LOCKSTEP! In other words, let's say that I wrote the NOV 225 ON THE MONEY CALLS for $18.00 on QCOM, and the stock jumped 30 points on the earnings report. If I have 10,000 shares my GROSS portfolio increases by what? Yes, $300,000. Now the price of the CALLS have gone up and I have to buy them back for say $30 per or $300,000. So what did do? 1. I protected myself from a possible decline of say maybe 30 pts. or a loss of $300,000 2. I created available cash of $180,000 and buying power of $360,000 3. Created a Short Term Tax Loss of $120,000 to offset my short term capital gain of $180,000. 4. So you can see, even though we were covered, the net on my portfolio is roughly $180,000 to the up side AND I NEVER SOLD MY STOCK! hope this helps, Voltaire