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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (3452)	5/5/2001 8:37:54 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hi MuchoMaas, What a few day makes! Spending one weekend in Honolulu, (plenty of sun, water, food, and lack of agenda) and the next in Yichang. Yup, there is a slight difference. I do not normally spend weekends away from home, but May will be busy, mirroring April’s relaxed agenda. My wife is studying for her CFA exam (June 3rd), and I have a nutty schedule that hopefully will result in a signature ready divestment deal and a success fee. <<… hypothetical person …>> Most SI posters fit somewhere along the continuum of making USD 50k to USD 150k, having a NAV between USD 250k to USD 10mm, and so I amend my example and lower the active income number to zero, as there are also many retired folks. << … hypothetical person … needs to find justification other than salary "backup" for portfolio volatility … probably needs justification other than "making ends meet" in order to work … association with the active salary seems rather arbitrary >> You are of course absolutely correct, (a) the hypothetical person needs (should have) a justification for working, and (b) the association of risk preference with active income seems arbitrary. On above (b), my two examples were meant to put a stake at two extreme ends of a continuum of active income that is relatively more certain vs. passive portfolio gain that is less certain, and then, coupling the continuum with the idea of an financial objective, explain why different folks may have different investment styles. <<… default to abject non-volatility…>> Two years ago, I had commented to a fellow poster on the Softbank thread that a strategy of selling puts, and buying stocks can easily (without stomach churning volatility) yield an annual return of 30+%. I commented so because I had achieved an 18 months track record of astounding brilliance in shamelessly amassing a 200+% gain on my wife’s portfolio over the course of her MBA studies. My wife was certainly astounded and happy. Of course, had she lost money, she would have asked me to make up the difference. During my period of brilliance in my wife’s eye, a possible 20% downside is hooked on a possible 200% upside. You remember the good old days … ICGE, VERT, RMBS, … whatever and every what … it just did not matter, and matter did not matter. It was like achieving massive multiple orgasm while soaking in a tub of Champaign. Well, times change. Now, to target the kind of returns folks are generally expecting (not folks on this thread, hopefully), unacceptable downside risk is the rule. I believe we are in a time where one can easily achieve a 10% return, but trying for 20% would entail accepting a possible 50% downside. This is a bad game to be playing, because there are no orgasmic possibilities without exposing oneself to possible danger of surgery of the unkind. Chugs, Jay