ERICOPOLY

Maybe you could keep the current job and find outside happiness in a new hobby or social club. This takes pressure off of needing to find happiness from your career. I hesitate to recommend skateboarding.

Use GM to protect the downside from shorting? Use shorting to protect the downside of GM? Depends on point of view. I like puts on the name I hold because it's guaranteed to work and the cost of the hedge is well understood. Plus, shorting uses up my margin whereas puts increase it.

Well, perhaps sell for tax loss. Perhaps hold for future appreciation. Perhaps sell covered calls. Maybe curse and spit a little. Kick the dog.

A two hour commute each way was the biggest reason why I wanted to quit my job.

"Yes, drill sergeant!" If I had to choose one, it would be the one about swapping downside risk. Could you comment on that? Just trying to better understand the nuances of this strategy. I don't want it to bite me "right in the buttocks" if I see an opportunity to use it one day. Buy a put to hedge one of your positions. Write a put on a stock where you have no position. You've swapped risk. It's a diversification technique.

There are a lot of questions here. I don't think I operate with any disciplined measure of precision. I just got myself into the fight and started accumulating kills. To continue the Forrest Gump analogy, "I just started running."

Fallout is being felt: ”Everyone in manufacturing is smiling at the moment,” said the ISM’s Mr. Holcomb, because manufacturers benefit twice from cheaper oil. “It costs less to run the plant and input materials cost less.” http://online.wsj.com/articles/ism-manufacturing-index-slows-slightly-in-november-1417446885?mod=WSJ_hp_LEFTWhatsNewsCollection

Amazon has some xylitol sweetened bbq sauces. anyone tried any?

I've had the Big Green Egg XL running twice a week. Want to cut down on sugar. I just ordered some Scott's Carolina sauce. Vinegar based, no sugar. Ribs! Any other tips?

That's what I admire about your investment approach. Your theses are elegantly simple - like the perfect software coding solution. What's the nightmare scenario that could cause a huge loss using portfolio margin protected by puts? Just trying to better understand the risks. It seems too good to be true. Are there any books, articles or internet sites that you could recommend to get a better handle on options and portfolio margin? Real estate is similar -- non-recourse leverage doesn't mean you can't lose money. I'm sure there are scenarios that involve my broker reducing margin limits or something, at an inconvenient time. I'm aware it could happen. I also sleep with my door open most of the year. I figure I could recreate the position using calls and no margin, but the tax bill would be sobering.

All of those named had larger volatility premiums than FFH at the height of the 2009 panic. It was possible to be 100% long FFH while only being 1/3 exposed to RWT, and effectively keeping 2/3 of your money completely risk-free in unencumbered cash. That's not to say it's a good idea to do that. However I think about these things critically with some amusement when people say they keep 20% in cash or others claim they don't keep cash. Peering into their portfolios and looking at the options pricing could create for interesting debates. What if one person is saying he is 100% invested and another claims to be prudently holding 67% cash... they argue back and forth, but perhaps you could reconstruct a portfolio equivalency using options.

It's worth noting that if you are a better investor you can put together a basket of stocks with terrific upside and not mess around with options. So you'll never see a Buffett or Munger messing around with this stuff. I've used them as a crutch to cope with my pinpoint sized circle of competence.

In layman's terms I'm using options to spread downside risk into multiple names while concentrating upside into perhaps only one or two. The only reason for doing this is because of the obvious risk of concentrating the downside into one or two names. Other people just choose to hold a basket of stocks in order to achieve downside diversification, but in doing so they forfeit upside concentration. I'm in favor of getting upside concentration without the accompanying downside concentration, hence my approach.

I have a meaningful amount in GM -- the percentage is misleadingly low compared to where it would be if I didn't have money tied up in places where it is restricted. But I still view my understanding of investing as rather amateurish and don't let my record mislead you to believe otherwise. I first joined this board in 2004/2005 and asked a question about a company ACY that looked cheap based on assets, and the question was about some language that I couldn't even recognize as what one poster labeled as standard boilerplate poison pill. Well, I felt intimidated and had to then watch ACY shares soar a blistering amount from the sidelines. That's the only time I ever brought a completely new name to the board, and yet it was completely by accident. After that, I've just compiled a record from standing back and waiting for a crowd to gather, and investing if it seemed obvious even to me. I get the feeling that I would be tortured to death if Saddam were still around and was demanding that I articulate my GM thesis. He would be cutting off my fingers in disbelief that somebody with such a record could be explaining his investment ideas like Forest Gump.

There is so much wrong with my mental picture of this: 1) If my math is correct you are over 40. What are you going to do next - a few lines of coke and fall out of a tree. 2) Two legs = two skis (Not One). 3) Independent wealth is apparently bad for ones health. That Rhymes BTW. I last snowboarded when I was around 35. I was sore for two weeks from doing face plants from 8 feet (5 feet plus 3 feet of hill). Still ski though. Beat my nephew on a straight downhill speed race last year. Happy Thanksgiving! To all! LOL! I thought he meant a halfpipe in surfing, because I know he took up surfing several months ago. Now snowboarding! Then again, Eric is wrapping his broken thumb in $100 bills...that must numb the pain a little! :) Cheers! I had a 4' miniramp built for my kids only two weeks ago. A 12' wide,24' long, 4' tall halfpipe I was showing them how it's done. There would be fewer workplace accidents with demonstrations like that one.

There is so much wrong with my mental picture of this: 1) If my math is correct you are over 40. What are you going to do next - a few lines of coke and fall out of a tree. 2) Two legs = two skis (Not One). 3) Independent wealth is apparently bad for ones health. That Rhymes BTW. I last snowboarded when I was around 35. I was sore for two weeks from doing face plants from 8 feet (5 feet plus 3 feet of hill). Still ski though. Beat my nephew on a straight downhill speed race last year. Happy Thanksgiving! To all! I'm down to my last 3 percocet so I'm open minded to that and other exploratory drug ideas tonight.

Sunday, I fell on a halfpipe and dislocated my right thumb while tearing a ligament off the bone. I'm grateful that I underwent surgery without feeling the knife. Imagine the horrors of surgery without anesthetics.

No. I don't think the "The "non recourse" is effectively a put!". They are required to pay a hefty mortgage insurance premium upfront, and a monthly PMI. This PMI payment is the purchase of the put. Example, the value of the house drops 50%. Homeowner loses only 3.5% after walking away. There is an implicit put. They can literally put the house back to the lender.

It's all very unfair. A married couple can purchase a home with a non-recourse FHFA loan -- they only need 3.5% down payment. So they are effectively "going long" the value of the home but hedging all their risk at a strike price that is 3.5% below market price. The "non recourse" is effectively a put! They have only 3.5% of the value of the asset at risk (hardly anything, similar to an at-the-money married put), so does the IRS punish them by making their gains "short term"? Of course not, instead the tax code rewards them by making their first $500,000 completely tax free! It's crazy. So this gives me an idea... can we start a brokerage that makes "non-recourse" margin loans to investors (and the brokerage itself does the hedging on the loans). That way the individual investor knows nothing about the puts, and doesn't get his tax situation all bungled up.

I'm pretty sure a "constructive sale" can take a long term gain and turn it into a short term gain -- provided that you reverse the offsetting position prior to 30 days after the end of the year in which the gain was achieved. I believe this starts a new holding period -- so now the gain is short term..

I perhaps had a chance of becoming grid independent if I had covered my house in solar panels -- but then once my Tesla came home, any chance of that is permanently gone. Now, if my wife also had a Tesla it would be ridiculous how grid dependent we would be. Think about that... with two Teslas and each charging 85 kWh batteries, we'd be using over 200 kWh some days!!! There is absolutely NO CHANCE that we'll stop needing the grid if we all get Teslas. So what is that you were saying about Tesla investors? I misquoted. Meant to say Solar City, not Tesla. Elon Musk is great and all that but a big part of what goes on around him is the investment hype around his ideas. That same hype creating machine behind Tesla, the stock appears to be behind Solar City, rooftop solar, storage etc. To me at least. Ex. this idea of giant batteries sitting in everyone's yard, and very soon. Giant batteries are going to make RVs (and boats) really cool. No more noisy generators! Just silence. And think of those laborer guys who work jobs everyday with their pickup trucks -- they just run their power tools off of the truck. On houses like mine, they make a lot of sense. I will be the first customer -- it would pay for itself so quickly given my electric billing situation (9 cents per kWh to charge it at night, and then that stored energy offsets my daytime usage when I currently get charged 49 cents per kWh).

I perhaps had a chance of becoming grid independent if I had covered my house in solar panels -- but then once my Tesla came home, any chance of that is permanently gone. Now, if my wife also had a Tesla it would be ridiculous how grid dependent we would be. Think about that... with two Teslas and each charging 85 kWh batteries, we'd be using over 200 kWh some days!!! There is absolutely NO CHANCE that we'll stop needing the grid if we all get Teslas. So what is that you were saying about Tesla investors?

Compare it to the cost of using puts+margin (puts are LEAPS too). The $40 strike 2016 puts cost 1.75% a year. On top of that add the margin borrowing rate. Some people get their margin for only 50 bps, so 2.25% a year total. That's 1/2 the cost of the warrants. Risks are: 1) margin rates increase 2) stock plunges and the cost of rolling the puts goes higher (compared to the warrant holder who should see reduced decay if not a spike in the value of their premium if the stock goes much lower). Benefits are: 1) half the cost at current pricing 2) if JPM shoots up by 2016 expiry you will likely want to exit the trade, and the warrant holders will wind up with costs in excess of 4.5% a year. It might even cost them 10% over that year -- who knows. One method is much better than the other if the stock drops a lot, the other if it goes up a lot. And one method is better under status quo. The reason why the warrants look cheap is because the strike is so low as to be nearly meaningless. I guess people are much more afraid of the price drop on the way down to $42 rather than the odds of going much below $42. You might be using different prices, but if we use the current prices Stock $60.76 Warrant $19.37 Time Value is: $42.42 + $19.37 - $60.76 = $1.03 Dividend threshold: $1.52 So we are paying $2.55 to borrow $42.42 or 6% if time value goes to zero in a year. As long as time value does not become negative then the max borrowing cost for warrants is 6%. Am I missing something? Vinod You're correct.

From what I've read, this drought is caused by a high pressure ridge off the west coast that is pushing incoming moist storms to the north (Arctic Circle), that displaces frigid air that then gets pushed southward into the rest of the US. So this makes other regions in the US frigid and buried in snow, and we're 70 degrees and bone dry. I suppose I'd rather be warm and dry. http://coyot.es/slowwatermovement/2014/09/29/ridiculously-resilient-ridge-possibly-dismal-climate-scenario-for-california-and-beyond/

Compare it to the cost of using puts+margin (puts are LEAPS too). The $40 strike 2016 puts cost 1.75% a year. On top of that add the margin borrowing rate. Some people get their margin for only 50 bps, so 2.25% a year total. That's 1/2 the cost of the warrants. Risks are: 1) margin rates increase 2) stock plunges and the cost of rolling the puts goes higher (compared to the warrant holder who should see reduced decay if not a spike in the value of their premium if the stock goes much lower). Benefits are: 1) half the cost at current pricing 2) if JPM shoots up by 2016 expiry you will likely want to exit the trade, and the warrant holders will wind up with costs in excess of 4.5% a year. It might even cost them 10% over that year -- who knows. One method is much better than the other if the stock drops a lot, the other if it goes up a lot. And one method is better under status quo. The reason why the warrants look cheap is because the strike is so low as to be nearly meaningless. I guess people are much more afraid of the price drop on the way down to $42 rather than the odds of going much below $42.