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If you did this covered call, you can now buy back your Jan 9 $7.50 calls for $.05. Would do that.
Stock is down, so what you can do is either roll down to collect more premium, roll out, or both.
You can write the Feb 09 $5 calls for $.45.
total would be $1.20 premium taken in.
OTM calls have been quite a bit cheaper past few days... calm before the storm?
Vix is down big from the high, and market is becoming a wound up spring in a very tight band (bollinger bands), but to be a breakout... weekly chart of SPX points up. Could be a VERY profitable Jan.
For my clients, the more conservative ones, that is exactly what we have been doing.
Picking up Verizon, Kraft, Target, Comcast, Home Depot bonds with an 8% plus yield. Heck, that is the long term return of the market.
If you want to go financials, you are getting in the 11 to 12% range.
ILFC (international lease finance) is paying over 20%.
gnw was paying 50% yields, now closed up to only 8% or so.
Cash at 18-Year High Makes Stocks a Buy at Leuthold (Update4)
Email | Print | A A A
By Eric Martin and Michael Tsang
Dec. 29 (Bloomberg) -- There's more cash available to buy shares than at any time in almost two decades, a sign to some of the most successful investors that equities will rebound after the worst year for U.S. stocks since the Great Depression.
The $8.85 trillion held in cash, bank deposits and money- market funds is equal to 74 percent of the market value of U.S. companies, the highest ratio since 1990, according to Federal Reserve data compiled by Leuthold Group and Bloomberg.
Leuthold, Invesco Aim Advisors Inc., Hennessy Advisors Inc. and BlackRock Inc., which together oversee almost $1.7 trillion, say that's a sign the Standard & Poor's 500 Index will rise after $1 trillion in credit losses sent the benchmark index for American equities to the biggest annual drop since 1931. The eight previous times that cash peaked compared with the market's capitalization the S&P 500 rose an average 24 percent in six months, data compiled by Bloomberg show.
"There is a store of cash out there that is able to take the market higher," said Eric Bjorgen, who helps oversee $3.4 billion at Leuthold in Minneapolis. "The same dollar you had last year buys you twice as much S&P 500 as it did a year ago."
Leuthold Group, whose Grizzly Short Fund returned 83 percent in 2008 thanks to bets against equities, said in its December bulletin to investors that stocks offer "one of the great buying opportunities of your lifetime."
Obama, Fed
The S&P 500 rose 16 percent from an 11-year low on Nov. 20 as the government rescued New York-based Citigroup Inc., President-elect Barack Obama pledged to stimulate growth with the biggest infrastructure investment since the 1950s, and the Fed cut interest rates to as low as zero percent to combat the worst financial crisis in seven decades.
U.S. stocks fell today as Dow Chemical Co. and Rohm & Haas Co. plunged after financing for their merger fell through, raising concern companies may be unable to complete deals. The S&P 500 slipped 0.4 percent.
The ratio of cash on hand to U.S. market capitalization jumped 86 percent in the first 11 months of the year, the biggest increase since the Fed began keeping records in 1959, as the U.S., Europe and Japan fell into the first simultaneous recessions since World War II.
So-called money of zero maturity, the central bank's measure of U.S. assets available for immediate spending, is mostly held by households, according to Richard G. Anderson, an economist at the Federal Reserve Bank of St. Louis.
‘Dry Powder'
"What the cash pile on the sidelines represents is dry powder," said Fritz Meyer, the Denver-based senior market strategist at Invesco Aim, which manages about $358 billion. The firm's $1.17 billion Aim Diversified Dividend Fund beat 96 percent of its competitors this year, and the $3.95 billion Aim Charter Fund topped 93 percent of similar mutual funds.
"Recovery in the second half of the year will probably play out," Meyer added.
Any recovery will depend on a rebound in corporate profits and the economy after $30 trillion was wiped out from world equities this year, according to Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
Jobless claims reached a 26-year high this month, while economists surveyed by Bloomberg estimate household spending will fall 1 percent next year, the most since the aftermath of the attack on Pearl Harbor. A 13 percent slump in the median home resale price in November from a year earlier was likely the largest since the 1930s, the National Association of Realtors said last week, damping speculation the housing market is close to a bottom.
‘Biggest Cannon'
Analysts estimate profits at S&P 500 companies will shrink 10.3 percent in the first three months of 2009 and 5.8 percent in the second quarter, bringing the stretch of earnings declines to a record eight quarters, Bloomberg data show. Gross domestic product will contract in the first half of the year before growth resumes in the third quarter, according to a Bloomberg survey of economists.
"The fuel supply is there, but people have to have a reason to use it," said Dickson, who helps oversee about $19 billion. "The Fed fired the shot out of the biggest cannon they know. Now the question is, will it hit the right mark?"
This year's slump has left S&P 500 companies valued at an average of 12.6 times operating profit, the cheapest since at least 1998, monthly data compiled by Bloomberg show.
Cash in interest-bearing checking accounts at U.S. banks earns less than 0.1 percent annually, minus inflation, according to national data compiled by Bankrate.com. Ten-year Treasury notes yield 1.03 percent after adjusting for the cost of living, and yields fell to the lowest level on record this month.
Benjamin Graham
Seth Klarman's Baupost Group LLC, which held 40 percent to 50 percent of the Boston-based hedge-fund firm's more than $14 billion in cash, reduced its hoard by half to take advantage of falling asset prices, according to the December issue of Harvard Business School's Alumni Bulletin.
The 51-year-old investor who seeks shares of companies trading at discounts to measures such as assets and cash flow was the lead editor for the sixth edition of Benjamin Graham and David L. Dodd's "Security Analysis," which laid out the principles of value investing followed by billionaire Warren Buffett.
Klarman has generated an annual compound return of 20 percent in the past 26 years, the Bulletin said. He declined to comment in an e-mailed response to Bloomberg News.
‘Same Scenario'
Cash holdings peaked one month before equities began to recover during the two longest recessions since World War II. In July 1982, money of zero maturity as a percentage of the U.S. stock market's value rose to 95 percent before a 20-month bear market ended and the S&P 500 began a six-month, 36 percent advance, data compiled by Bloomberg show.
Cash on hand reached $604.5 billion in September 1974, representing a record 1.21 times U.S. stock capitalization. That preceded a 31 percent gain in equities between October 1974 and March 1975, Bloomberg data show.
"If history tends to repeat itself, we're in the exact same scenario," said Neil Hennessy, who oversees $650 million as president of Hennessy Advisors in Novato, California. "Once the money starts to come back into the market, buying is going to beget more buying. People don't want to be left behind."
Hennessy's Focus 30 Fund beat 96 percent of its peers this year.
Lighting the Match
The last time cash accounted for a larger proportion of market value was 1990. The ratio peaked at 75 percent in October of that year, after the savings and loan industry collapsed, Drexel Burnham Lambert Inc. was forced into bankruptcy and the U.S. fell into a recession. The S&P 500 rallied 23 percent in six months and almost 30 percent in a year.
Robert Doll, the chief investment officer of global equities at BlackRock, has been buying stocks anticipating the S&P 500 may rise as much as 20 percent next year. The firm oversees $1.3 trillion.
"It's a mountain of cash," Doll, who is based in Plainsboro, New Jersey, said on Bloomberg Radio. "Somebody's just got to find the match and light it."
To contact the reporters on this story: Eric Martin in New York at emartin21@bloomberg.net; Michael Tsang in New York at mtsang1@bloomberg.net.
Cash at 18-Year High Makes Stocks a Buy at Leuthold (Update4)
Email | Print | A A A
By Eric Martin and Michael Tsang
Dec. 29 (Bloomberg) -- There's more cash available to buy shares than at any time in almost two decades, a sign to some of the most successful investors that equities will rebound after the worst year for U.S. stocks since the Great Depression.
The $8.85 trillion held in cash, bank deposits and money- market funds is equal to 74 percent of the market value of U.S. companies, the highest ratio since 1990, according to Federal Reserve data compiled by Leuthold Group and Bloomberg.
Leuthold, Invesco Aim Advisors Inc., Hennessy Advisors Inc. and BlackRock Inc., which together oversee almost $1.7 trillion, say that's a sign the Standard & Poor's 500 Index will rise after $1 trillion in credit losses sent the benchmark index for American equities to the biggest annual drop since 1931. The eight previous times that cash peaked compared with the market's capitalization the S&P 500 rose an average 24 percent in six months, data compiled by Bloomberg show.
"There is a store of cash out there that is able to take the market higher," said Eric Bjorgen, who helps oversee $3.4 billion at Leuthold in Minneapolis. "The same dollar you had last year buys you twice as much S&P 500 as it did a year ago."
Leuthold Group, whose Grizzly Short Fund returned 83 percent in 2008 thanks to bets against equities, said in its December bulletin to investors that stocks offer "one of the great buying opportunities of your lifetime."
Obama, Fed
The S&P 500 rose 16 percent from an 11-year low on Nov. 20 as the government rescued New York-based Citigroup Inc., President-elect Barack Obama pledged to stimulate growth with the biggest infrastructure investment since the 1950s, and the Fed cut interest rates to as low as zero percent to combat the worst financial crisis in seven decades.
U.S. stocks fell today as Dow Chemical Co. and Rohm & Haas Co. plunged after financing for their merger fell through, raising concern companies may be unable to complete deals. The S&P 500 slipped 0.4 percent.
The ratio of cash on hand to U.S. market capitalization jumped 86 percent in the first 11 months of the year, the biggest increase since the Fed began keeping records in 1959, as the U.S., Europe and Japan fell into the first simultaneous recessions since World War II.
So-called money of zero maturity, the central bank's measure of U.S. assets available for immediate spending, is mostly held by households, according to Richard G. Anderson, an economist at the Federal Reserve Bank of St. Louis.
‘Dry Powder'
"What the cash pile on the sidelines represents is dry powder," said Fritz Meyer, the Denver-based senior market strategist at Invesco Aim, which manages about $358 billion. The firm's $1.17 billion Aim Diversified Dividend Fund beat 96 percent of its competitors this year, and the $3.95 billion Aim Charter Fund topped 93 percent of similar mutual funds.
"Recovery in the second half of the year will probably play out," Meyer added.
Any recovery will depend on a rebound in corporate profits and the economy after $30 trillion was wiped out from world equities this year, according to Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
Jobless claims reached a 26-year high this month, while economists surveyed by Bloomberg estimate household spending will fall 1 percent next year, the most since the aftermath of the attack on Pearl Harbor. A 13 percent slump in the median home resale price in November from a year earlier was likely the largest since the 1930s, the National Association of Realtors said last week, damping speculation the housing market is close to a bottom.
‘Biggest Cannon'
Analysts estimate profits at S&P 500 companies will shrink 10.3 percent in the first three months of 2009 and 5.8 percent in the second quarter, bringing the stretch of earnings declines to a record eight quarters, Bloomberg data show. Gross domestic product will contract in the first half of the year before growth resumes in the third quarter, according to a Bloomberg survey of economists.
"The fuel supply is there, but people have to have a reason to use it," said Dickson, who helps oversee about $19 billion. "The Fed fired the shot out of the biggest cannon they know. Now the question is, will it hit the right mark?"
This year's slump has left S&P 500 companies valued at an average of 12.6 times operating profit, the cheapest since at least 1998, monthly data compiled by Bloomberg show.
Cash in interest-bearing checking accounts at U.S. banks earns less than 0.1 percent annually, minus inflation, according to national data compiled by Bankrate.com. Ten-year Treasury notes yield 1.03 percent after adjusting for the cost of living, and yields fell to the lowest level on record this month.
Benjamin Graham
Seth Klarman's Baupost Group LLC, which held 40 percent to 50 percent of the Boston-based hedge-fund firm's more than $14 billion in cash, reduced its hoard by half to take advantage of falling asset prices, according to the December issue of Harvard Business School's Alumni Bulletin.
The 51-year-old investor who seeks shares of companies trading at discounts to measures such as assets and cash flow was the lead editor for the sixth edition of Benjamin Graham and David L. Dodd's "Security Analysis," which laid out the principles of value investing followed by billionaire Warren Buffett.
Klarman has generated an annual compound return of 20 percent in the past 26 years, the Bulletin said. He declined to comment in an e-mailed response to Bloomberg News.
‘Same Scenario'
Cash holdings peaked one month before equities began to recover during the two longest recessions since World War II. In July 1982, money of zero maturity as a percentage of the U.S. stock market's value rose to 95 percent before a 20-month bear market ended and the S&P 500 began a six-month, 36 percent advance, data compiled by Bloomberg show.
Cash on hand reached $604.5 billion in September 1974, representing a record 1.21 times U.S. stock capitalization. That preceded a 31 percent gain in equities between October 1974 and March 1975, Bloomberg data show.
"If history tends to repeat itself, we're in the exact same scenario," said Neil Hennessy, who oversees $650 million as president of Hennessy Advisors in Novato, California. "Once the money starts to come back into the market, buying is going to beget more buying. People don't want to be left behind."
Hennessy's Focus 30 Fund beat 96 percent of its peers this year.
Lighting the Match
The last time cash accounted for a larger proportion of market value was 1990. The ratio peaked at 75 percent in October of that year, after the savings and loan industry collapsed, Drexel Burnham Lambert Inc. was forced into bankruptcy and the U.S. fell into a recession. The S&P 500 rallied 23 percent in six months and almost 30 percent in a year.
Robert Doll, the chief investment officer of global equities at BlackRock, has been buying stocks anticipating the S&P 500 may rise as much as 20 percent next year. The firm oversees $1.3 trillion.
"It's a mountain of cash," Doll, who is based in Plainsboro, New Jersey, said on Bloomberg Radio. "Somebody's just got to find the match and light it."
To contact the reporters on this story: Eric Martin in New York at emartin21@bloomberg.net; Michael Tsang in New York at mtsang1@bloomberg.net.
Cash at 18-Year High Makes Stocks a Buy at Leuthold (Update4)
Email | Print | A A A
By Eric Martin and Michael Tsang
Dec. 29 (Bloomberg) -- There's more cash available to buy shares than at any time in almost two decades, a sign to some of the most successful investors that equities will rebound after the worst year for U.S. stocks since the Great Depression.
The $8.85 trillion held in cash, bank deposits and money- market funds is equal to 74 percent of the market value of U.S. companies, the highest ratio since 1990, according to Federal Reserve data compiled by Leuthold Group and Bloomberg.
Leuthold, Invesco Aim Advisors Inc., Hennessy Advisors Inc. and BlackRock Inc., which together oversee almost $1.7 trillion, say that's a sign the Standard & Poor's 500 Index will rise after $1 trillion in credit losses sent the benchmark index for American equities to the biggest annual drop since 1931. The eight previous times that cash peaked compared with the market's capitalization the S&P 500 rose an average 24 percent in six months, data compiled by Bloomberg show.
"There is a store of cash out there that is able to take the market higher," said Eric Bjorgen, who helps oversee $3.4 billion at Leuthold in Minneapolis. "The same dollar you had last year buys you twice as much S&P 500 as it did a year ago."
Leuthold Group, whose Grizzly Short Fund returned 83 percent in 2008 thanks to bets against equities, said in its December bulletin to investors that stocks offer "one of the great buying opportunities of your lifetime."
Obama, Fed
The S&P 500 rose 16 percent from an 11-year low on Nov. 20 as the government rescued New York-based Citigroup Inc., President-elect Barack Obama pledged to stimulate growth with the biggest infrastructure investment since the 1950s, and the Fed cut interest rates to as low as zero percent to combat the worst financial crisis in seven decades.
U.S. stocks fell today as Dow Chemical Co. and Rohm & Haas Co. plunged after financing for their merger fell through, raising concern companies may be unable to complete deals. The S&P 500 slipped 0.4 percent.
The ratio of cash on hand to U.S. market capitalization jumped 86 percent in the first 11 months of the year, the biggest increase since the Fed began keeping records in 1959, as the U.S., Europe and Japan fell into the first simultaneous recessions since World War II.
So-called money of zero maturity, the central bank's measure of U.S. assets available for immediate spending, is mostly held by households, according to Richard G. Anderson, an economist at the Federal Reserve Bank of St. Louis.
‘Dry Powder'
"What the cash pile on the sidelines represents is dry powder," said Fritz Meyer, the Denver-based senior market strategist at Invesco Aim, which manages about $358 billion. The firm's $1.17 billion Aim Diversified Dividend Fund beat 96 percent of its competitors this year, and the $3.95 billion Aim Charter Fund topped 93 percent of similar mutual funds.
"Recovery in the second half of the year will probably play out," Meyer added.
Any recovery will depend on a rebound in corporate profits and the economy after $30 trillion was wiped out from world equities this year, according to Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
Jobless claims reached a 26-year high this month, while economists surveyed by Bloomberg estimate household spending will fall 1 percent next year, the most since the aftermath of the attack on Pearl Harbor. A 13 percent slump in the median home resale price in November from a year earlier was likely the largest since the 1930s, the National Association of Realtors said last week, damping speculation the housing market is close to a bottom.
‘Biggest Cannon'
Analysts estimate profits at S&P 500 companies will shrink 10.3 percent in the first three months of 2009 and 5.8 percent in the second quarter, bringing the stretch of earnings declines to a record eight quarters, Bloomberg data show. Gross domestic product will contract in the first half of the year before growth resumes in the third quarter, according to a Bloomberg survey of economists.
"The fuel supply is there, but people have to have a reason to use it," said Dickson, who helps oversee about $19 billion. "The Fed fired the shot out of the biggest cannon they know. Now the question is, will it hit the right mark?"
This year's slump has left S&P 500 companies valued at an average of 12.6 times operating profit, the cheapest since at least 1998, monthly data compiled by Bloomberg show.
Cash in interest-bearing checking accounts at U.S. banks earns less than 0.1 percent annually, minus inflation, according to national data compiled by Bankrate.com. Ten-year Treasury notes yield 1.03 percent after adjusting for the cost of living, and yields fell to the lowest level on record this month.
Benjamin Graham
Seth Klarman's Baupost Group LLC, which held 40 percent to 50 percent of the Boston-based hedge-fund firm's more than $14 billion in cash, reduced its hoard by half to take advantage of falling asset prices, according to the December issue of Harvard Business School's Alumni Bulletin.
The 51-year-old investor who seeks shares of companies trading at discounts to measures such as assets and cash flow was the lead editor for the sixth edition of Benjamin Graham and David L. Dodd's "Security Analysis," which laid out the principles of value investing followed by billionaire Warren Buffett.
Klarman has generated an annual compound return of 20 percent in the past 26 years, the Bulletin said. He declined to comment in an e-mailed response to Bloomberg News.
‘Same Scenario'
Cash holdings peaked one month before equities began to recover during the two longest recessions since World War II. In July 1982, money of zero maturity as a percentage of the U.S. stock market's value rose to 95 percent before a 20-month bear market ended and the S&P 500 began a six-month, 36 percent advance, data compiled by Bloomberg show.
Cash on hand reached $604.5 billion in September 1974, representing a record 1.21 times U.S. stock capitalization. That preceded a 31 percent gain in equities between October 1974 and March 1975, Bloomberg data show.
"If history tends to repeat itself, we're in the exact same scenario," said Neil Hennessy, who oversees $650 million as president of Hennessy Advisors in Novato, California. "Once the money starts to come back into the market, buying is going to beget more buying. People don't want to be left behind."
Hennessy's Focus 30 Fund beat 96 percent of its peers this year.
Lighting the Match
The last time cash accounted for a larger proportion of market value was 1990. The ratio peaked at 75 percent in October of that year, after the savings and loan industry collapsed, Drexel Burnham Lambert Inc. was forced into bankruptcy and the U.S. fell into a recession. The S&P 500 rallied 23 percent in six months and almost 30 percent in a year.
Robert Doll, the chief investment officer of global equities at BlackRock, has been buying stocks anticipating the S&P 500 may rise as much as 20 percent next year. The firm oversees $1.3 trillion.
"It's a mountain of cash," Doll, who is based in Plainsboro, New Jersey, said on Bloomberg Radio. "Somebody's just got to find the match and light it."
To contact the reporters on this story: Eric Martin in New York at emartin21@bloomberg.net; Michael Tsang in New York at mtsang1@bloomberg.net.
Cash at 18-Year High Makes Stocks a Buy at Leuthold (Update4)
Email | Print | A A A
By Eric Martin and Michael Tsang
Dec. 29 (Bloomberg) -- There's more cash available to buy shares than at any time in almost two decades, a sign to some of the most successful investors that equities will rebound after the worst year for U.S. stocks since the Great Depression.
The $8.85 trillion held in cash, bank deposits and money- market funds is equal to 74 percent of the market value of U.S. companies, the highest ratio since 1990, according to Federal Reserve data compiled by Leuthold Group and Bloomberg.
Leuthold, Invesco Aim Advisors Inc., Hennessy Advisors Inc. and BlackRock Inc., which together oversee almost $1.7 trillion, say that's a sign the Standard & Poor's 500 Index will rise after $1 trillion in credit losses sent the benchmark index for American equities to the biggest annual drop since 1931. The eight previous times that cash peaked compared with the market's capitalization the S&P 500 rose an average 24 percent in six months, data compiled by Bloomberg show.
"There is a store of cash out there that is able to take the market higher," said Eric Bjorgen, who helps oversee $3.4 billion at Leuthold in Minneapolis. "The same dollar you had last year buys you twice as much S&P 500 as it did a year ago."
Leuthold Group, whose Grizzly Short Fund returned 83 percent in 2008 thanks to bets against equities, said in its December bulletin to investors that stocks offer "one of the great buying opportunities of your lifetime."
Obama, Fed
The S&P 500 rose 16 percent from an 11-year low on Nov. 20 as the government rescued New York-based Citigroup Inc., President-elect Barack Obama pledged to stimulate growth with the biggest infrastructure investment since the 1950s, and the Fed cut interest rates to as low as zero percent to combat the worst financial crisis in seven decades.
U.S. stocks fell today as Dow Chemical Co. and Rohm & Haas Co. plunged after financing for their merger fell through, raising concern companies may be unable to complete deals. The S&P 500 slipped 0.4 percent.
The ratio of cash on hand to U.S. market capitalization jumped 86 percent in the first 11 months of the year, the biggest increase since the Fed began keeping records in 1959, as the U.S., Europe and Japan fell into the first simultaneous recessions since World War II.
So-called money of zero maturity, the central bank's measure of U.S. assets available for immediate spending, is mostly held by households, according to Richard G. Anderson, an economist at the Federal Reserve Bank of St. Louis.
‘Dry Powder'
"What the cash pile on the sidelines represents is dry powder," said Fritz Meyer, the Denver-based senior market strategist at Invesco Aim, which manages about $358 billion. The firm's $1.17 billion Aim Diversified Dividend Fund beat 96 percent of its competitors this year, and the $3.95 billion Aim Charter Fund topped 93 percent of similar mutual funds.
"Recovery in the second half of the year will probably play out," Meyer added.
Any recovery will depend on a rebound in corporate profits and the economy after $30 trillion was wiped out from world equities this year, according to Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
Jobless claims reached a 26-year high this month, while economists surveyed by Bloomberg estimate household spending will fall 1 percent next year, the most since the aftermath of the attack on Pearl Harbor. A 13 percent slump in the median home resale price in November from a year earlier was likely the largest since the 1930s, the National Association of Realtors said last week, damping speculation the housing market is close to a bottom.
‘Biggest Cannon'
Analysts estimate profits at S&P 500 companies will shrink 10.3 percent in the first three months of 2009 and 5.8 percent in the second quarter, bringing the stretch of earnings declines to a record eight quarters, Bloomberg data show. Gross domestic product will contract in the first half of the year before growth resumes in the third quarter, according to a Bloomberg survey of economists.
"The fuel supply is there, but people have to have a reason to use it," said Dickson, who helps oversee about $19 billion. "The Fed fired the shot out of the biggest cannon they know. Now the question is, will it hit the right mark?"
This year's slump has left S&P 500 companies valued at an average of 12.6 times operating profit, the cheapest since at least 1998, monthly data compiled by Bloomberg show.
Cash in interest-bearing checking accounts at U.S. banks earns less than 0.1 percent annually, minus inflation, according to national data compiled by Bankrate.com. Ten-year Treasury notes yield 1.03 percent after adjusting for the cost of living, and yields fell to the lowest level on record this month.
Benjamin Graham
Seth Klarman's Baupost Group LLC, which held 40 percent to 50 percent of the Boston-based hedge-fund firm's more than $14 billion in cash, reduced its hoard by half to take advantage of falling asset prices, according to the December issue of Harvard Business School's Alumni Bulletin.
The 51-year-old investor who seeks shares of companies trading at discounts to measures such as assets and cash flow was the lead editor for the sixth edition of Benjamin Graham and David L. Dodd's "Security Analysis," which laid out the principles of value investing followed by billionaire Warren Buffett.
Klarman has generated an annual compound return of 20 percent in the past 26 years, the Bulletin said. He declined to comment in an e-mailed response to Bloomberg News.
‘Same Scenario'
Cash holdings peaked one month before equities began to recover during the two longest recessions since World War II. In July 1982, money of zero maturity as a percentage of the U.S. stock market's value rose to 95 percent before a 20-month bear market ended and the S&P 500 began a six-month, 36 percent advance, data compiled by Bloomberg show.
Cash on hand reached $604.5 billion in September 1974, representing a record 1.21 times U.S. stock capitalization. That preceded a 31 percent gain in equities between October 1974 and March 1975, Bloomberg data show.
"If history tends to repeat itself, we're in the exact same scenario," said Neil Hennessy, who oversees $650 million as president of Hennessy Advisors in Novato, California. "Once the money starts to come back into the market, buying is going to beget more buying. People don't want to be left behind."
Hennessy's Focus 30 Fund beat 96 percent of its peers this year.
Lighting the Match
The last time cash accounted for a larger proportion of market value was 1990. The ratio peaked at 75 percent in October of that year, after the savings and loan industry collapsed, Drexel Burnham Lambert Inc. was forced into bankruptcy and the U.S. fell into a recession. The S&P 500 rallied 23 percent in six months and almost 30 percent in a year.
Robert Doll, the chief investment officer of global equities at BlackRock, has been buying stocks anticipating the S&P 500 may rise as much as 20 percent next year. The firm oversees $1.3 trillion.
"It's a mountain of cash," Doll, who is based in Plainsboro, New Jersey, said on Bloomberg Radio. "Somebody's just got to find the match and light it."
To contact the reporters on this story: Eric Martin in New York at emartin21@bloomberg.net; Michael Tsang in New York at mtsang1@bloomberg.net.
I like AUY over Rimm. or split up the ticket...
Bought my AUY 9 Calls. =P
I would say $1400 or so. reason is, we are still in a deflationary environment, however the printing presses are hard at work. If the economy was hot, and we were printing money, I would say 2k easy.
You havea few choices, either gold itself, or gold companies.
For gold, there is iau, and gld, both etf's.
also, there is ultra gold, UGL (2x up)
I like to play gold stock companies, auy is my choice. The chart is looking very good on a weekly basis.
I do agree, Gold may blow through here, esp if we have the post santa rally into the Obama rally.
from the reports I am getting, if Gold goes through and holds $855, it may have an explosive upside.
Went Long GE Jan 17.50 Calls today at $.24
Current Positions. (options, not including ira's etc holding UIT's)
10 UYG Jun $7 Calls (used for calendar spreads) Uncovered
10 F Jan 2010 $2.50 Calls @ $1
-10 F Mar $3 Calls @ $.34 ($.75 of premium paid for)
10 CY Jan $5 Calls @ $.30
20 AUY Jan $9 Calls @$.25
20 GE Jan $17.50 Calls @.24
I wouldnt usually have this much long calls, however things looking really good for Jan rally. Most of the premiums for long calls came from buy-writes from Ford and UYG calendar spreads.
GE, CY are green plays, AUY is a gold play. UYG is uncovered at this point as I think we will have a broad based rally, will write against it when UYG closer to $7 or $8, or near month premiums hit around $.70.
Merry Xmas to all my Non- Jewish Friends.
You are simply buying a stock, selling a call.
I think your firm is referring to some trades where you can specify that you want both trades to be completed at once, or not at all, hence why net credit or debit.
So for example...
Stock at 5, option to write at $.50, so net debit to your account is $4.50. So if you set it that way, it could end up being $4.95 for stock, $.45 for option, or $5.05 for stock and .55 for option.
Keep it simple. =) Unless you are getting a trade discount, enter it by self.
I emailed you the full options release from the OCC, can you post it somewhere for the others? I could of only email it to you. Thanks.
This news is neither good or bad... just options adjusted for cap gains distribution.
Below is a link to a press release from ProShares, announcing fourth quarter dividend and capital gains distributions for most, but not all, of the ETFs listed below. We are sharing this information with you because clients who hold positions in some of these ETFs may or may not be aware of the distributions, the subsequent adjustment to the respective ETF net assets, as well as any tax ramifications associated with the distributions.
http://media.proshares.com/documents/Distributions+4Q2008+REVISED+with+cap+gains+and+divs.pdf
Hehe, figured you guys would be panicked by this.
The options trading on Ultra Short, and Short ETF options trading was halted today due to X dividend date. Options will be adjusted today, and tomorrow you will have both the adjusted and new options symbols avail.
Proshares did make a statement, email me if you want the full release.
Hehe, figured you guys would be panicked by this.
The options trading on Ultra Short, and Short ETF options trading was halted today due to X dividend date. Options will be adjusted today, and tomorrow you will have both the adjusted and new options symbols avail.
Proshares did make a statement, email me if you want the full release.
Also, here is the new 2010 Fusion
http://www.motortrend.com/roadtests/sedans/112_0812_2010_ford_fusion_quick_drive/index.html
Add in the fact that the new Ford Focus (european model) is coming over, and new Ford Fiesta.... I think we are in the early stages of a come back.
I know for a fact that one of the fund family managers I spoke to, has said that there were discussions of adding even more to their Ford holdings.
The New Ford Taurus, 2010 model.
http://www.edmunds.com/insideline/do/News/articleId=138388#2
I am really liking the direction ford is going, which is making me more and more optimistic on the company. I am more than happy to be holding the 2010 Calls and writing near month options on them.
Also, here is a great looker from GM
http://image.motortrend.com/f/government/nhtsa-gives-automakers-a-break-postpones-crash-test-changes/12648439+w562+cr1+re0+ar1/2011-chevrolet-cruze.jpg>
Here is an idea for you all.
Sore as heck from skiing this weekend, however made it into the office. Got the volume spike report... and the biggest one of interest... LVS.
5times the normal options volume, including 70k calls traded today for Feb 09 - $10 strike. Chart looks better on it as macd trend reversing... if we get a rally in the market, could be explosive.
Here is an idea for you all.
Sore as heck from skiing this weekend, however made it into the office. Got the volume spike report... and the biggest one of interest... LVS.
5times the normal options volume, including 70k calls traded today for Feb 09 - $10 strike. Chart looks better on it as macd trend reversing... if we get a rally in the market, could be explosive.
Here is an idea for you all.
Sore as heck from skiing this weekend, however made it into the office. Got the volume spike report... and the biggest one of interest... LVS.
5times the normal options volume, including 70k calls traded today for Feb 09 - $10 strike. Chart looks better on it as macd trend reversing... if we get a rally in the market, could be explosive.
Skiing was AWESOME, took a bit to get used to the new skis.... going to bed now so lets hope will wake up refreshed. Otherwise, futures look good, and Japan up 100 points.
Quite welcome. going to go skiing tomorrow, monday will see about writing uyg calls, and or Ford, or if will just close them out.
When options are exercised, it does not mean that whoever bought them from you, takes your shares.... exercise is randomized.
But.... just worry about expiration.
If GNW is $3 Jan 16th, that mean your call that you wrote is $.50 in the money, so on the 16th, you can either let them be called away for $2.50, so you keep the $1 premium you wrote, plus get $2.50 a share.
Otherwise, you have a choice, on Friday the 16th, or even earlier, you can buy that call back, for say $.50 and keep the shares. Your total profit off of the call you wrote is $1 (that you got now) minus the cost to buy the call back.
So if on expiration GNW is $2.50 or less, your calls that you wrote will go worthless, and you get the premium free and clear, and next monday you can write another set of calls. (your calls would not be exercised if GNW is $2.49 and if exercised they would pay $2.50 plus fees. Starting recently, say you buy a call... and it is in the money by even 1 cent, your firm automatically exercises the call and buys them.
While it is in the money, there is a small chance it will be called away prior to expiration.
At expiration, if it is in the money, IT WILL BE called away if it is in the money by 1 cent or more. The threshold used to be more, but since then, the brokerage houses made it mandatory to exercise options that are in the money at expiration by 1 cent or more.
Since your GNW calls are in the money, prior to expiration, (american style options) can be exercised at ANY point in time, as opposed to European style, which can only be exercised at expiration.
However, most people do not exercise their calls, but rather just sell them back. 95% of all exercised calls, I would estimate, are exercised last day of options, or expire worthless.
If you have in the money calls (that you wrote), there is nothing you can do if they get called, as it is randomly assigned. If you do get called, prior to... good news. =) you get to keep the premiums sooner. If you really want to, you can just reestablish the trade, or go buy shares to deliver vs the call.
I did have a long only call go expire worhtless on me, GE $17.50's @ $.55. Could of take profits same day.... though it went against me. Will discuss this one more later.
Options Expiration Update...
Ford and UYG would of expire worthless today, for a nice premium. I bought back UYG 2 days ago for $.05, and bought back ford for $.02 today.
Usually what will happen is that right before expiration, market makers tend to push the stock closer to the strike price... ala today... Ford closed at $2.95 after being down below $3 most of the day. The issue is, had Ford closed at $3.01 or higher, the calls are automatically exercised, by the broker dealers. With runoffs and late pushes, it was too close, so I just decided to spend $30, and lock in my gains, bought back the calls for $.02.
the thing that most people dont know, is that even though the last day to close calls is Friday at 4pm, the call owner, can exercise as late as Saturday at 12PM.
What can happen, and has happened before, news comes out after close, causes stock to go up after hours, or say a takeover, and your shares get called over the weekend, even though they closed Friday below the strike.
For December, I made on Ford, 33.8% return on the call written on Dec 1, @ $.41, bought back for $.03 (fees rolled in), or 641% annualized. Not including the roughly $.25 cents I am up on my Jan 2010 Leap @ $2.50 strike.
Also, for this month, had UYG bought back, this is the second month for this one. Dec 9, wrote $7 calls for $.36, bought back Dec 18, for $.06 (fees rolled in). $.30 cents gain for 9 days. 11% gain vs my cost basis, or 440% annualized gain. Written against June 09 $7 call with cost basis of $2.54, total collected in 2 months... $1.05 in premiums net of fees.
You did a covered call on UYG? Expiring worthless or what?
For options, I trade at the brokerage where I am an advisor...
though, I love OptionsHouse. Low minimums to have accounts, and most importantly, easy interface, great tools to look for straddles, covered calls, etc. Trade prices are very low as well. reply with your email, will send you a link, sign up, try it out. They refund you any transfer fees.
Ideas and thoughts before expiration
So have Ford and UYG covered that are going to expire worthless this month. I have already bought back my UYG's for $.05, for a nice $.30 profit for all calls in 10 days or so.
Ford Dec $3 calls are on the edge with Ford now just dropping to slightly below $3.
So here are the ideas I am pondering, lets take them one at a time.
UYG was a covered call, against a Jun 09 $7 strike with a cost basis of $2.54, I have in 2 months collected $1.05 in premiums, and the Jun 09 is now trading at about $2. I can continue to write the Jan 09 $7 for $.55.... though my dream came true.
UYG now has 2010 and 2011 LEAPS. So what I am thinking of doing is selling my Jun 09 $7 for $2 or so... and buy into Jan 2010 $5 for about $3, or even better, get an extra year... for Jan 2011 $4 for $4.20, or $5 for $3.80.
The bid ask for Jan 2011 is just soooo expensive that it pays to spend a bit more to get protection. What are your thoughts?
For Ford... the next months, Jan 09 is lowest strike of $2.50 as opposed to Dec that were $3, so only 20 to 30 cents of time premium for a month. I have this covered call/calendar spread covered by a Jan 2010 $2.50, cost basis $1.12, trading now for $1.40 or so. I think I will just close this one out for a gain of $.41 on the Dec 08 $3 calls I wrote (pending it expires worthless), and a gain of $.38 on the Jan 2010 $2.50 call, all together $.79 gain, on $1.12 initial investment for 19 days.
What I am really looking into for next month may be MTL covered call, or GE.
Here is the news for tomorrow
$850 Billion in new printing... er stimulus package.
http://news.yahoo.com/s/ap/20081218/ap_on_go_pr_wh/obama_stimulus
Madam, my apologies. trully. =)
Wow, doesnt look good for you sir.
Hope it wasnt a big position.
The Dec calls was 10 contracts, so about $600 bucks all in with fees and all. Still would suck to lose it in 3 days. =P tomorrow on any pop, will probly get rid of most.
Good news, my CBI calls would pay for this loss if it indeed ends up one.
The good news, looks like my UYG $7 that i wrote will expire worthless, if not, have to buy back.
Ford $3 that I wrote will probly have to be bought back.
My Long AUY, CBI and CY calls were down today...
my biggest concern, or issue with myself is my GE 17.50 calls that I bought yesterday before the annual meeting, bought at $.55, could of sell at $.80 during meeting. argh, hope it rallies.
The rest of calls are Jan's.
Werent you in Puts? should of been good... cept those pesky DRYS puts.
There are a few closed end funds I like, trading at discounts near 25% to NAV that do just that. Best part... 20% yields that are safe.
Lol, FUG the market. =P Was supposed to go up.
Good news... had some winners today, locked in my gains on CBI calls. Got 2 days to pull out GE wins. =P
THE MOST FUGGED UP PART....
95% OF ALL UNIT IVESTMENT TRUSTS I recommend to clients... was UP today.
No.
Personaly, I would stay away from them. The reason why is you want you learn, or know why the "black box" systems are telling you to buy or sell.
Its like driving on cruise control, or relying on stability control, ABS, Dynamic Vehicle Control, Brake force distribution, radar cruise control. or wait...
BEST EXAMPLE.... the Lexus that parks itself.... its a nice tool, but it would be still wise to know how to parallel park your $100,000 lexus.