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If we have not reached the point of a free lunch every
day for the rest of our lives, we are close. Back in
the 20's. before my time. I understand the shoeshine
boys were giving stock tips. Most of us know the
parabolic curves in everything from tulip bulbs to
silver. What happened eventually? You all know. I
have a sell indicator that has not kicked in yet but is
close. It is a friend who does not have a car, has
managed to save a fair amount of money over the years.
He is so cheap, that he squeezes a nickel until the
buffalo s______. He knows I have been involved in the
market as long as I have know him which is over 10
years. All of his money went into CD'S. He finally
said "I should put my money into the market". Even if
it goes down it will eventually come back. I will
not worry, I will be a long term investor. I refuse to
advise him because if he looses money it will be my
fault.
Dennis's friend is as disaster waiting to happen, not
whether but when.
P>S> Alex: We will not have to worry about the children
suffering under the bridge. They would have been sold
long ago to meet the margin call,
which should not be meet. Under the old rule do not
meet a margin call, sell and admit you are wrong.
Norman E.
Alexander Levitin wrote:
>
> Dear Dennis:
>
> The call that will wake your friend up will be a margin call. I do not
> know if you could talk any sense to him before that, but try talk to his
> wife, maybe you can explain her consequences of homeless living under
> the freeway bridge with children.
>
> Yours, Alex.
>
> > "Dennis L. Conn" wrote:
> >
> > Hello all,
> >
> > I'd appreciate some input from those experienced in the strategy of
> > selling naked puts on stocks that are about to split. A friend of mine
> > is convinced that he can pursue this strategy with almost no risk to
> > his account - hey, it worked on paper, right? After all, stock splits
> > make the price go up, right? Apparently, this is the assumption on
> > which the premise is based - I can't seem to explain why a twelve-year
> > bull market (let's not quibble) might skew his back-testing.
> >
> > He has no experience in trading (naturally), and I've never done
> > stocks - so I can't seem to convince him that his idea of "rolling
> > out" to the next month's options and selling more, may entail not only
> > some risk, but possible account devastation, given a prolonged
> > downtrend.
> >
> > Now he's convinced himself to give up twenty-five years of building an
> > insurance business in order to daytrade his way to wealth by year's
> > end! At least he's using one of the better systems for online trading
> > that I've seen recommended here lately, but come on! Today he found
> > himself forced to roll out to June options, and tells me he never
> > loses! I remember when I thought the same way at first, and how
> > quickly retribution followed...
> >
> > Can someone please give me something I haven't thought to say that
> > might make him wake up? Or is this automatically going to fulfill his
> > widest get-rich-quick fantasies as he believes? I mean, hey, if it's
> > that easy, I'll give up commodities and sell a passel o' puts
> > tomorrow!
> >
> > What happens if the holders of those puts exercise them? I'm pretty
> > sure it's going to do the same thing to him as selling silver calls in
> > the Buffet rush did to me when I first tried writing options (duh).
> > Anyone out there with some practical advice they'd care to offer?
> >
> > Dennis C.
> > dlc@xxxxxxxxx
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