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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Tapcon who wrote (89381)	2/10/2001 11:21:58 AM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Paul, Thomas's note referred to my articles on "The Internet Financial Connection," which seem to get trashed after two years or so. I have written on the 90/10 many times, but don't have the URLs. I can summarize it here: 1. Put a minimum of 90% of your money into money markets or short term interest bearing paper of the highest quality. Don't touch them for a year, except to add profits to the total. 2. Use up to 10% of your capital, in any one year, to purchase long put and/or call options. Since the 10% has to last you a year, it is smart not to place all your bets in January. You need to have some ammunition left later in the year. 3. I usually enter and exit the positions in thirds. For example, if a full position would be 15 contracts, I buy 5 now and 5 more later if the issue goes against me and the fundamentals remain intact. Then, 5 more even later if I can't hit the market in the head with a two by four. <g> 4. Shoot for quadruples as a minimum. That usually means playing volatile stocks and out of the money options. Why quadruples? You are going to lose more often than you win. The only antidote to that is winning much more each time you win. My trading usually looks like this: 55% total losers, 25% kiss your sister winners (less than quadruples and often much less) that I had to take off because of approaching expiration, and 20% homeruns of up to 2000%, but at least 300%. So, you are going to kiss a lot of frogs to get to the artist formerly known as Prince. <g> I had a couple of years last decade where I had more winners than losers, but those were pure luck. 5. I usually go out 2-4 months, though I have been known to use Leaps and, much more rarely, very near term options. 6. If you do not break rule #1, you cannot get hurt badly and you could make a huge amount of money. Most people do not fail at a 90/10 or, the even more conservative 95/5 because of bad option picking. Most fail because of overbetting and cutting profits too soon.