This MUST be a sign we are nearing a market top! ;)

[boilermaker75]

 

 

I'm always writing puts. I am short puts for May 31, June 7, June 22, and July 20 expiration dates. At various strike prices I am short puts on CF, AAPL, INTC, EMC, BAC, NOV, DTV, CHKP, COH, ORCL, MDT, STRZA, HRS, DELL, and CSCO.

 

That is quite a collection of put shorts. :)

Do you not worry about missing the upside for these stocks?

 

It is a conservative approach. But I have found it is also a good way to enter positions. There have been few stocks I wanted to acquire where this did not work. Another negative is that if not put to, and thus reducing the cost basis of the position, the option premiums are taxed.

 

About 25% of my portfolio is BRK/B, I entered all those positions by writing puts. About 5% of my portfolio is WFC, again I entered all those positions by writing puts.

 

I also use a little effective margin each month using this approach. In other words if I get put to on everything I would be on margin, a little under 10% at this time.

 

My biggest mistake is not holding on to positions when I do get put to and instead writing covered calls losing the position. For instance I had some WDC that I was put to under $30 and I let it get called out because I wasn't confident enough about hard drives.

 

My approach keeps evolving. I know I need to keep more positions so as not to miss the upside and to delay taxation.

[rkbabang]

"We continue to expect strong overall equity returns throughout 2013 led by the world's largest stocks, i.e. mega-cap stocks. Further, we believe the bull market is likely far from over with the sweet spot for mega-cap stocks still ahead and though its peak...

 

The mix of optimism and skepticism is consistent with our view we're at the bull market's midpoint, with much more bull market yet to come. As legendary investor Sir John Templeton said, "Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria." In our view, investors still have one foot in skepticism and one in optimism."

 

"Fisher Investments - Stock Market Outlook"

 

[bmichaud]

http://www.forbes.com/forbes/2007/0917/210.html

 

http://www.forbes.com/forbes/2008/0225/108.html

 

http://www.forbes.com/forbes/2008/0421/242.html

 

http://www.forbes.com/forbes/2008/0929/110.html

 

 

 

 

[rkbabang]

Ouch.  He uses almost the same words.

[bmichaud]

Ya it's a pretty consistent perma-bull theme haha

[Parsad]

Ouch.  He uses almost the same words.

 

I always thought Fisher was riding on Daddy's coat-tails.  Not sure why people pay attention to him.  No different than any other large fund company.  Cheers!

[returnonmycapital]

S&P 500 stats:

 

2011 reported earnings = $86.95

2012 reported earnings = $86.51 (expectations for most of 2012 were for earnings of more than $100)

2013 reported earnings = $107.18 expected (this too is probably high)

 

2011 sales = $1052.83

2012 sales = $1092.38

2013 sales = $1108.77 my estimate based on 1.5% yoy growth

 

Net margins were historically high at 8% for 2011/12 and are now expected to increase to close to 10%. How likely is that with:

 

a) bond yields beginning to increase

b) taxes rates not declining

c) wage rates not declining

d) S&P offshore sales & profits (at least from Europe) not rising

 

Assume 8% margins on sales of $1110 and you get $89 of reported earnings. The S&P 500 is priced at about 1660 presently; offering an "expected" earnings yield of 5.4% - not value territory.

 

But then, there is no real competition for that yield today so up we go.

[Kraven]

Ouch.  He uses almost the same words.

 

I always thought Fisher was riding on Daddy's coat-tails.  Not sure why people pay attention to him.  No different than any other large fund company.  Cheers!

 

My recollection is that after a relatively brief time working with his dad, he chafed under his watchful eye and went his own way.  I think there was a time when he could have been considered an innovator.  He wrote Super Stocks, I think it was called, probably 30 years ago and tied valuation to p/s rather than other metrics.  Whether that was good or bad, at least it was considered new at the time and I think he did well and his shop grew.  Then like many, he became an asset grabber.  So while he is certainly a perma bull, I think it's more about asset gathering than anything else.  Someone who is a purveyor of mutual funds, etc isn't going to ring the bell by telling people to be careful.  I have to say that when I saw he is a billionaire it was one of the more shocking of those on that list I've seen.

[Parsad]

S&P 500 stats:

 

2011 reported earnings = $86.95

2012 reported earnings = $86.51 (expectations for most of 2012 were for earnings of more than $100)

2013 reported earnings = $107.18 expected (this too is probably high)

 

2011 sales = $1052.83

2012 sales = $1092.38

2013 sales = $1108.77 my estimate based on 1.5% yoy growth

 

Net margins were historically high at 8% for 2011/12 and are now expected to increase to close to 10%. How likely is that with:

 

a) bond yields beginning to increase

b) taxes rates not declining

c) wage rates not declining

d) S&P offshore sales & profits (at least from Europe) not rising

 

Assume 8% margins on sales of $1110 and you get $89 of reported earnings. The S&P 500 is priced at about 1660 presently; offering an "expected" earnings yield of 5.4% - not value territory.

 

But then, there is no real competition for that yield today so up we go.

 

S&P500 dividends are now below 2% again.  Not overly expensive relative to the 10-year risk free rate which is at 2%, but not cheap by any means either.  Any movement upwards, and you are getting into the territory where the risk premium is not even worth consideration relative to the risk...and that's excluding any macroeconomic factors.  Just common sense. 

 

When you consider the potential outliers from Europe, Japan and China, you have to be a masochist to consider risking your capital at current premiums.  The cash in the MPIC Funds continues to increase...we can't wait to put it to work at the right time...and if you've got more...send it our way!  Cheers!