Edward Gardere: “Everyone has a theory and I am one who does not share specifics but will say that I look to technical analysis first to find potential stocks and then I use fundamentals to find value. Since February 1999 my portfolio on Marketplayer.com (name is holdenll) has a return of 130% vs the S&P return of 20%. This has been a method that has developed over time. You can see that by viewing a chart of my return vs the S&P which is also at this website. (NOTE: I have shorted stocks here but I would not do this in real life as I would use put options.) I use the puts because I believe you should be able to play downtrends as well as uptrends. My father asks if this is a ‘real’ money portfolio. I say no and he says ‘oh well, so what?’. Check out www.marketplayer.com. I have two portfolios. One is called holdenll…the other is excellent.”
☞ Well, at 130% a year, you should be able to run $2,000 in a Roth IRA into $43 million in 12 years, and to $2 trillion in 24. Sounds good to me. And please remember the little people — like your free web site providers — when you do. (And heck, that was with just one $2,000 IRA contribution.)
Dickson Pratt: ” When I was younger I tried all sorts of schemes (options!, futures!) and consistently lost money. My biggest gamble was on the stock of the biotech company I worked for but our clinical trials failed and the spectacular collapse of the stock brought down the whole biotech market for years to come (and with it my fortune, such as it was, as well as my retire at 40 dreams).
“Eventually, however, my ability to lose money was simply overwhelmed by my ability to save and live frugally (in the manner of “the Only Investment Guide…”). At one point I was saving 50% of my gross salary of $53,000, the most I ever made in my entire career so I wasn’t exactly raking it in. And with the serious money, the 401(k) and IRAs, I always chose a diversified mix of stock mutual funds, 100% invested all the time, and fiddled with them rarely although I tracked them frequently for the sport of it (I like to ‘race’ mutual funds).
“You know the result: I retired at 45 and continue to live frugally except that now instead of working for money my money works for me. The message is clear: slow patient investing for the long term works, beat the market schemes do not.”
Jerry Avillion: “I glad that losing $15k makes you so happy. I’d be more than willing to say ‘You were right’ for a mere $10k (ok, $8k but that’s my final offer).”
Keith Fette: “If I can’t turn your $10,000 into $15,000 in one year, you’ll hear those magic words [“you were right”] again. What the hell, here’s one on the house: Buy 100 shares of a solid tech stock, say, Adobe, and sell a barely out of the money call that expires in a month. When the call expires or is assigned, do it again. On a $12,000 investment, you generate about $900-1000 per month. But I must admit I share your guilt feelings over not suffering for the money.”
☞ “A solid tech stock” — need I say more?
Oh, well, I suppose I need to say a little more. I will try to cover the topic of covered calls again soon. For now, let me just suggest it’s not a bad thing to do, just not as good a thing as some people assume at first blush.
Dorf: “Mark Twain said in his autobiography (paraphrasing), ‘I have made hundreds of thousands of dollars in my lifetime. But the most glorious money I ever got was a $50 bill I found on the sidewalk in San Francisco.’ So much for money ‘earned’ being more satisfying!”
☞ Mark Twain got it exactly right, as usual. The hierarchy of money, from lowest to giddiest, runs: inherited, self-made, found.
Quote of the Day
It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty and ignorance restrict growth, while investments in education, infrastructure and scientific and technological research increase it, creating more good jobs and new wealth for all of us.~Bill Clinton
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