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Investment Strategy – Your Advice Please

Posted on 2/13/09 at 10:29 am
Posted by Edge
nola
Member since Aug 2004
349 posts
Posted on 2/13/09 at 10:29 am
I understand that many on this board are very pessimistic on the future of the stock market.

However, let’s say that new market/economic factors would change your view and give you some level of confidence that the market will recover over the next 12 months and that now might be a good time to buy.

Given this more optimistic but uncertain view, how would you enter the market on your stock/index picks?
- Long buy?
- Buy the calls?
- Execute a Bull Call Spread?
- Other?
Posted by kfizzle85
Member since Dec 2005
22022 posts
Posted on 2/13/09 at 10:33 am to
That's pretty much 100% dependent on said factors changing.
Posted by Edge
nola
Member since Aug 2004
349 posts
Posted on 2/13/09 at 10:43 am to
These are the factors that are important to the individual investor given the stock/index under consideration.
Posted by Colonel Hapablap
Mostly Harmless
Member since Nov 2003
28791 posts
Posted on 2/13/09 at 10:45 am to
My strategy is different for retirement and taxable trading accounts.

For retirement, I just go between cash or some equivalent and total stock market index. Depending on the recovery this time, I'll probably be looking for some income generating stuff in the early stages, simply because I don't see a bunch of capital appreciation happening over the next 10 years.

For non-retirement, I'm basically a swing trader with a 6-12 month time horizon.
Posted by Edge
nola
Member since Aug 2004
349 posts
Posted on 2/13/09 at 11:06 am to
quote:

For retirement, I just go between cash or some equivalent and total stock market index.


This approach has worked well for me as well.

quote:

I don't see a bunch of capital appreciation happening over the next 10 years.


If your view on appreciation would change but you are still uncertain, do you think a Bull Call Spread would be a good way to test your pick?
Posted by Colonel Hapablap
Mostly Harmless
Member since Nov 2003
28791 posts
Posted on 2/13/09 at 11:11 am to
I don't do options in my retirement.
Posted by Edge
nola
Member since Aug 2004
349 posts
Posted on 2/13/09 at 11:19 am to
quote:

I don't do options in my retirement.


Would you consider this in your taxable account?

I'm not trying to challenge any position but only attempting to get additional opinions on the benefits of an option spread strategy versus a long buy strategy in this uncertain and volatile market.
Posted by Colonel Hapablap
Mostly Harmless
Member since Nov 2003
28791 posts
Posted on 2/13/09 at 11:21 am to
I wouldn't necessarily be opposed to anything in my taxable account. I've even given some consideration to selling Iron Condors after we finally bottom.
Posted by Edge
nola
Member since Aug 2004
349 posts
Posted on 2/13/09 at 11:29 am to
quote:

Iron Condors


Is ths your commodity play?
Posted by Colonel Hapablap
Mostly Harmless
Member since Nov 2003
28791 posts
Posted on 2/13/09 at 11:33 am to
not sure if that's a joke or not, so:
LINK
Posted by Edge
nola
Member since Aug 2004
349 posts
Posted on 2/13/09 at 12:44 pm to
quote:

not sure if that's a joke or not


Sorry for the weak attempt at humor.

I'm not too excited about this strategy for a few reasons including the mentioned high transaction costs, low upside for the risk, and the hope for low volatility in this market.

But, thanks for offering this suggestion.
Posted by Colonel Hapablap
Mostly Harmless
Member since Nov 2003
28791 posts
Posted on 2/13/09 at 1:06 pm to
meh, it depends how flat one expects the market to be. looking forward, I suspect my trading strategy will be a few ICs paired with a bunch of fixed income stuff.
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