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To: Berney who wrote (7535)	1/19/2000 10:01:00 AM
From: MonsieurGonzo	Respond to of 11051

> core construct chew objective is Preservation of Capital... ENE = [ DD + XOM + BPA : SLB + HAL ] : [ ENE + DUK + TXUpI : UPS + FDX ] ...so, current CORE construct utilizes Cost of Energy and Cost of Capital as a "natural hedge". substitute "sector risk" for "specific risk"... ENE = [ 3 * XOI.X : 2 * OSX.X ] : [ 3 * DJU.X : 2 * DJT.X ] ...using OSX.X and DJT.X sectors as "implied leverage". TYX.X ==> DJU.X; so, substitute BOND equivalents for UTIL sector... ENE = [ 3 * XOI.X : 2 * OSX.X ] : [ 3 * TYX@7.5% : 2 * DJT.X ] TYX XXX 6.75% AAA XXXX 8.25% BBB XXX 10.25% MBS XX 11.25% junk X 13.25% ...where 7.5% APR is 10% Taxable Equivalent Yield in an IRA/401K. realize indices as distributed CALL options... ENE = [ 3 * XOI.X : 2 * OSX.X ] : [ 3 * TYX@7.5% : 2 * DJT.X ] OUT X XX TYX XXX 6.75% X nearOUT XX XXX AAA XXXX 8.25% XX AtMoney XXX XXXX BBB XXX 10.25% XXXX nearIN XXXX XX MBS XX 11.25% XX IN XX X junk X 13.25% X ...such that leverage effect is greater than 1 x underlying; and, 70% cash : 30% margin cost is offset by interest income. -Steve