Dow Down 666 Points

I see wuqijun is ex-employee of AAPL, he will definitely hold that shares. His investments are based on CEO trusts like YELP, TWTR, FB and TSLA. These people are leaders in respective areas.

Based on this, I assume he fairly stating the correct details.

Back in fool.com days, one friend told me hold long and strong AAPL right from $470 (Pre-spilt), I did not listen (understand the concept).

It is a big mistake selling the appreciated stocks. I regret selling appreciated stocks esp dividend income ones.

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If I know next downturn, I will do it , but hard to predict the future !

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If it drops too much, and starts rising, you will have plenty of time to figure it out, no?

Yes, I agree that any big drop (>20%) is definitely a buying opportunity. However, it can drop much further before final turnaround so making leveraged bets at that timeframe could be dangerous because it can wipe you out.

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When market drops and we are fully invested in it, we will not have any money to buy ! We will be watching the market go down (Panic mode) !!

When real estate fell during 2008-2011, majority stayed away from market with fear. Those who bought the homes became wealthy. Everything we come to know after the fact, that is the issue.

The main issue is hold money (cash) before drop, for that we need to predict, which no one knows ahead !

This the main reason I hate Margin and options buying.

If we buy long years call option with all our money, downturn strikes, holder is forced to sell (or loose entire stake) or excise it. This will wipe entire amount while holding stocks will have some value and recover possible.

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Options are much more dangerous than margin because the leveraging can be infinitely higher. With margins, you can make a calculated bet as to how much to borrow. You can borrow up to 30% and not getting called if your assumption is that the stock will not fall more than 50%. That’s my 30-50 rule in using margin.

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With options you can limit downsize, you can buy out of the money puts to mitigate some drop in the market, which also limits the upside.

That’s yet another flaw with options.

I really do believe that the best strategy here is to do a buy and hold with margin to increase your upside potential. I have used this strategy for years and it has worked wonders so far. I’ll see how well it can tolerate the downside when the next recession hits.

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tomato is messing with you.

Long put doesn’t limit upside, may be backside :rofl: Upside is less premium of put that’s all.
Is size the cool way to spell side?

Ok my point is that one should not rely on options to strike it rich. That’s kind of like trying to get rich by playing poker at Vegas.

But some people did get rich playing pokers. :smile:

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But Jil, correct me if I am wrong. You told me insurance companies doing what you are doing was bad. :zipper_mouth_face:

Anyway, I believe it was because you can’t comprehend other venues of leveraging money. No harm. Hugs to you anyway. :wink::wink::wink::wink:

Me. I got rich on experiences.

When kid, I used to play poker every day after paycheck. The rascals I played with told me years later the sucker I was to not understand the signals they gave each other in order to strip me of all my hard earned money. :rofl::rofl::rofl::rofl::rofl:

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Ok in that case maybe I should try becoming a professional poker player… it’s more fun! :smile:

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There are plenty of ways to make money in stocks and options are one among them. Even in options, there are plenty of complex ways to handle which I do not even understand.

Insurance companies are almost like big institutions, they normally invest in companies and rarely play with options and other instruments.

On any case, Options are high risk play, if insurance uses options to grow, it is scary for me depend on insurance as they have higher risk of bankruptcy. Right from AIG bankruptcy 2008, I really lost faith with any insurance companies !

BTW: You know I do not like options and margins (again based on year 2000 and 2008 issues my friends faced).

Sorry to write this way, I am not against insurance business, but looks to me they are not dependable.

Sorry, that’s right. i wasn’t thinking straight.

Options are actually not that risky. It’s just a high power tool. Read that option bible I mentioned in some other post. It’s highly educational.

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Also, futures/options are normally risk-mitigating things. You can buy puts to limit your downside, for example. They exist for a reason.

In commodities, futures come close, and their purpose is to stabilize against price fluctuations, but you pay for it. Think airlines buying fuel futures.

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Insurance companies, I am told, use call options. They invest a couple of millions, nothing for them, whichever the amount, and if they win, they win.

By the way, they play with the fictitious money from the clients. Remember, clients use up to 80% of their premiums, and the other 80% left on the books is earning compound interests. It is like investing $20K to get the benefits of $80K.

Anyway, you do what’s best for you.

This morning, we visited a taqueria. Among our agents there’s a P&C agent. He lowered the taqueria from paying $130K in anual worker’s comps, to $60K. Guess what we are going to do with the other $70K? That’s right! An IUL !:smile:

Not everything is about life insurance but the famous “leverage of money”. . Wait! We are going to be merging with another big company, in the same category of those owning Farmers. We will offer life insurance (IUL) to companies. They put $35K through a line of credit, they own the death benefit while the employee works there, and, according to contract with the employer, the employee will receive easy, $100K, who cares if its $50K annually after 15-20 years for the rest of your life. Free money for the employee!

That insurance, is to keep key employees for longer than what they usually work at any company since in his valley, companies steal workers via giving more perks to other competitor’s employees. It happens!