To: adairm who wrote (891 ) 6/3/2001 4:15:30 AM From: Uncle Frank Read Replies (1) | Respond to Adairm, thanks for sharing your thoughts about a model designed to produce a sturdy income stream while allowing for modest capital appreciation. It seems well constructed for the specific condition outlined in your assumption of a market where "stock prices rise about 12% per year over time", but vulnerable to capital losses during rapidly down trending periods and under performance during periods of strong upward movement. If you are willing to tolerate those periods of extremes and be consistent with your plan over the long term, it would seem to be a very reasonable approach. The crucial factor, however, is stock selection. From my observations, buy/write practitioners often make choices based on premiums and t/a rather than fundamental analysis, and it generally leads them in the direction of high risk plays. I seem to remember gstrf being favored by the Porchers for cc's when it first began its fall from the heights. A program such as you've described based on gstrf would have been disasterous.during specific favorable periods as icing on the cake, but cc potential is not a consideration in selecting my holdings.
