For your consideration, and with all the usual caveats – specifically, you could lose your money – I offer the long-term call options (LEAPS) that allow you to buy shares of Washington Mutual stock any time between now and January 16, 2010. The stock closed at $35.76 last night. The options to buy it at $30 were fetching $8.20. So if the stock in 2010 is below $38.20, you lose money (below $30, you lose everything). But if it’s $49, say, the options are worth $19 and you more than double your money with a lightly-taxed capital gain.
‘What are you doing?!’ I hear you cry. ‘You used to be the prudent guy! The index fund guy! The slow but steady guy.’
All true. But the context I envision here for the average reader is not one of wild speculation, but something more like this: You have amassed, say, $300,000 in long-term taxable funds you don’t need to touch any time soon, and from which you don’t need current income. So you have perhaps $250,000 of it split between a U.S. and an International index fund, but you have the remaining $50,000 split over a half dozen riskier (or in some cases all but reckless) things like FMD and AII+ and HAPNW and BOREF and, perhaps, WM January 2010 30 calls.
Let’s say that with those you have some total losses, as you will (remember my insane Google puts idea?), but also some nice winners (as, at least so far, we have had). Let’s say, further, that on balance you merely break even (although so far, knock wood, we are well ahead of that). The point I’ve made before: in this case, after tax, you actually come out ahead. Because you can use up to $3,000 in net losses each year to lower your taxable ordinary income; while using speculations in which you have long-term gains to fund whatever charitable giving you may from time to time do – through the convenience of Fidelity’s Charitable Gift Fund or Vanguard’s Charitable Endowment Fund.
GRAND CENTRAL PHONE
Jason: ‘Just in case you haven’t tried this already, it’s pretty interesting. Check out all the features.’
☞ Like putting a button on your own web page that lets people call you without knowing your phone number – and letting you listen to what they have to say before deciding whether or not to take the call.
WHAT HAVE WE DONE?
The Democratic Congress has not yet done everything we might want. In part this is because we don’t control the Executive branch; in part because we hold the Senate by the slimmest of margins – where for most things it is effectively 60 votes, not 51, that are needed for passage. Even so, in nine months we’ve done a lot. Take a look. And have a great weekend.
Quote of the Day
It was never my thinking that made me my money. It was my sitting.~Jesse Livermore
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