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Strategies & Market Trends : Portfolio Protection + Money Management for the Long Term -- Ignore unavailable to you. Want to Upgrade?

To: BDR who wrote (26)	4/10/2000 10:56:00 AM
From: Tom Trader	Respond to of 57

Last Tuesday about mid-day my gains were taxed (or was that axed) on paper far more than I would have been taxed if I had sold earlier and paid the Feds their due I was affected the same way in my taxable accounts -- as I posted previously; this concern with the tax implications of liquidating positions is one that while valid can at times cause one to make questionable decisions. Although I am very much a subscriber to the ltb&h philosophy, I believe that there are times when one should be willing to take profits or limit ones potential upside with a synthetic short position. The reality is that every year -for the past several years -- there is at least one -- and sometimes two -- occasions when the market sells-off and stocks become available at fire-sale prices. So even if I dispose off my stock, I feel confident that I will be able to pick them up again at a lower price -- and if I am not able to do that I am willing to buy it/them back at a higher price. The crux of such a strategy is to be able to sell during a momentum driven escalation -- even if it means leaving some money on the table -- and then having a set level to re-enter the stock at a lower level. With the sector rotation that seems to be part and parcel of today's market such opportunities are always available. Achieving gargantuan rates of return are not something that I feel are an imperative for me. For anyone who wants to see the effect of compounding -- just look at what an above average -- but achievable rate of return can do to ones savings over 15-20 years. The numbers are mind-boggling!

To: BDR who wrote (26)	4/10/2000 2:53:00 PM
From: Tom Trader	Read Replies (1) \| Respond to of 57

A strategy for protecting portfolios Several weeks ago I had sent a pm to Iqbal Latif who is one of the more astute contributors on SI. I wanted him to offer his thoughts on how best to achieve portfolio protection. Iqbal has wide experience with global markets and has an almost uncanny sense of market direction and sector rotation. For example he was one of the very few people who went on record shortly before the tech stocks dived that the best risk/reward was in the old economy stocks. At other times he has been very aggressive in recommending tech stocks. He is not a gorilla gamer by any stretch. He has given me his permission to post his response -- and has indicated that he will be willing to clarify any questions that anyone may have. He usually posts on the following thread: Subject 14747 The following was his response in the pm that he sent me: SPH options in fast market on break of supports are the best. QQQ puts are good too, but one needs to establish the sensitivity of its exposure I would assume that SPH and QQQ together in tandem provides adequate cover.. In fast market dynamic hedging is the best strategy like buying 2 puts of SPH for every 100000 $ exposure, for 500000 $ 10 puts on SPH will give you good returns although the outlay is huge but possbilities and protection accorded is great. Out of money covered calls for near months and far months puts on indexes establishes a good nest of support strategy.. One can buy puts cheaper in a uptrending market and sell calls at higher premium, I will use this for some of the stocks that I will consider may have some time to move.. SOX PSE DOT are great indexes for protective puts, I use SPH as the first line of defense and these come when 1342 gets broken or we see a major reversal in sentiment of the market. I had sent you ealrier a detailed reply it was lost as I had not saved it I just sending you a summary of my earlier post..regards. Ike