Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: jjs_ynot who wrote (2897)	12/27/1998 12:44:00 AM
From: James F. Hopkins	Read Replies (2) \| Respond to of 99985

Hi Dave; Forgive me but to answer that question I would have to tweak the program more than I am up to doing at this time. Maybe this will help. To start with if you stayed cap weighted you re-allocated via a computer on the fly, and you may not have lost $123.081045 As you are also playing futures and you sold enough futures at a profit to buy $81.88 worth of stocks per Dow unit, if not you bought them any way even on margin if you had to. <G> ---------- But Actually you own the entire portfolio on margin, and you sell it off when the value of futures drops below the fair value of margin cost, vs owning the DOW on margin..(plus cost of the trade.) You buy the futures at this time because it's cheaper to own the DOW via the futures than it is to pay the margin, If and when the Futures go up above fair value enough you sell them and buy the stocks back on margin. As you really own tons of bonds that pay more than the margin cost and just play this game to scalp the spread, and because you know in the long run the Dow will go up, and your so rich that you will never have to make a margin call. You will swap the Stocks for futures or the futures for stocks knowing full well that over time you will be as much or more on the up side as the down side, and it really cost you nothing to play, any way people are just throwing money at you, so these ups and downs just afford you more opportunities.. ------------------- You feel sorry for Jim and send him a check for a million dollars just to say Merry Christmas.. Jim PS the main theme is what LG said, with indexers and more indexers, the big caps get bought up more with any new money coming in, --and I added they don't sell off as hard in down drafts, for several reasons, one of which is TAX..