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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Steve Hallam who wrote (4219)	3/17/1998 2:10:00 PM
From: sea_biscuit	Respond to of 42834

Not only are they likely to sell stocks to live on but they may very well move from stocks to bonds BEFORE retirement to preserve principle. Well, they may also move to stocks that not only give good dividend income, but also steadily increase their dividends every year. Long-term capital gains are taxed at 18%, but to many people, a large part of their dividend income could be taxed at lower levels -- like 15%. So it might make less sense to sell stocks to live on. Besides, people tend not to sell stocks because psychologically, it would seem to them that they are "eating out of their principal". Income in the form of dividends would be more comforting. You can easily access info about stocks of such companies -- just look up "Moody's Handbook of Dividend Achievers" (which btw, is Peter Lynch's favorite bedtime reading material, per his own admission). Even if the scenario that I mentioned above doesn't materialize, this is still a very good strategy to follow. Lynch himself says that "one can hardly go wrong" by choosing stocks from the Handbook. Dipy.

To: Steve Hallam who wrote (4219)	3/17/1998 2:28:00 PM
From: Trebor	Read Replies (1) \| Respond to of 42834

>Can anyone explain puts and calls?< The folks at the Chicago Board of Options Exchange can. Their website is: cboe.com Click on Education

To: Steve Hallam who wrote (4219)	3/31/1998 6:49:00 PM
From: Steve Hallam	Read Replies (1) \| Respond to of 42834

Dollar cost averaging vs lump summing: It seems to me that the advantage of dollar cost averaging (DCA)comes in two types of markets: sideways markets and down markets. DCA really works some interesting mathematical magic in allowing one to achieve a low average price per share on purchases in a sideways market. In a down market DCA allows an ever lower price per share. DCA is clear winner in both markets. It also seems to me that lump summing should be advantageous in "up" markets, by getting in early you get the lowest price per share. Further, it would seem that there are more "up" markets than down or sideways markets (especially lately!!!!). Granted this might depend on the definition of up, sideways and down. Nevertheless, the average is something in the ball park of up 10% per year. Wouldn't this argue in favor of lump summing? The above assertion makes me uneasy for several reasons. First, it runs counter to Bob Brinker (counter with the exceptions of buying opportunities which I'll get to later). Second, from a subjective rather than objective view, DCA seems "prudent". Throwing a large sum of money at the market seems reckless. I would actually feel better if someone could show me that I'm wrong. Run some numbers. Compare say lump summing $12K on Jan. 1 VS the $1K per month over a year. Compare that over the last twenty years and see who wins. Has anyone ever seen that kind of analysis? A major monkey wrench in this analysis is Bob Brinker's spectacular "Buying Opportunities". A more complex analysis would include these times and throw in any left over money during a DCA year. Does the advantage of DCA depend on knowing about these buying opportunities? For those who can't count on hearing or reading about Bob Brinker's calls -- are they better off lump summing. Thoughts? By the way I DCA. Which proves I trust Bob Brinker more than I trust myself.