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Topic: New Demo Club
Now let's go make us some money! <g>
 
Ira Smilovitz
 
In a message dated 10/10/2011 4:42:47 P.M. Eastern Daylight Time, laurie@bivio.biz writes:
To all who so graciously offered to be members of the bivio demo club,  thank you.

I've given you all generation X first names and have already started making you famous on the bivio help pages.

For example,

https://www.bivio.com/site-help/bp/Penny_Payments_Help

Let me know if you have any issues with your new personae.  Thank you again for your support of bivio!
  

--
Laurie Frederiksen
Invest with your friends!
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Become our Facebook friend!  www.facebook.com/bivio
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"On Mon, Oct 10, 2011 at 4:47 PM, <IraS1@aol.com> wrote:
Now let's go make us some money! <g>
Ira Smilovitz"

Sounds good to me Ira. We need some new investing ideas for the demo club. It is, however, interesting to look at how the original members have done. They appear to believe in Buy and Hold investing as they haven't changed their portfolio since 2005.

https://www.bivio.com/demo_club/accounting/investments

Despite this, their relative return since their club started is very impressive:

https://www.bivio.com/demo_club/accounting/reports/benchmark


Does everyone think they should keep what they have? Let me know if you have any suggestions for portfolio changes they might make. I'll be switching this club over to you "new" members soon.

--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
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I cannot believe the club has allowed one position to grow to be over 40% of the portfolio.  Very risky business!  And another is over 20%!  I would say it is time for some change.


On Oct 12, 2011, at 9:38 AM, Laurie Frederiksen wrote:

"On Mon, Oct 10, 2011 at 4:47 PM, <IraS1@aol.com> wrote:
Now let's go make us some money! <g>
 
Ira Smilovitz"
 
Sounds good to me Ira.  We need some new investing ideas for the demo club.  It is, however,  interesting to look at how the original members have done.  They appear to believe in Buy and Hold investing as they haven't changed their portfolio since 2005.

https://www.bivio.com/demo_club/accounting/investments

Despite this,  their relative return since their club started is very impressive:

https://www.bivio.com/demo_club/accounting/reports/benchmark


Does everyone think they should keep what they have?  Let me know if you have any suggestions for portfolio changes they might make.  I'll be switching this club over to you "new" members soon.

--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio

On Wed, Oct 12, 2011 at 11:49 AM, Paul Madison <madispa@gmail.com> wrote:
I cannot believe the club has allowed one position to grow to be over 40% of the portfolio. Very risky business! And another is over 20%! I would say it is time for some change.

Good point. I think being overweight in Apple is an issue (a nice problem) a lot of clubs are facing right now. The demo group were ahead of the crowd. Their average cost basis is 52.55.

It's an interesting topic. It's true that being overweight in any one company makes you more vulnerable. But what if it's a company that is doing really well? How much really is too much?

Any suggestions for changes?

Anybody got any ideas about a nice dividend stock? MCD? ABT? COP?

--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
Yes T & MO


From: "Laurie Frederiksen" <laurie@bivio.biz>
To: "club cafe" <club_cafe@bivio.com>
Sent: Wednesday, October 12, 2011 12:34:13 PM
Subject: Re: [club_cafe] New Demo Club

On Wed, Oct 12, 2011 at 11:49 AM, Paul Madison <madispa@gmail.com> wrote:
I cannot believe the club has allowed one position to grow to be over 40% of the portfolio.  Very risky business!  And another is over 20%!  I would say it is time for some change.

Good point.  I think being overweight in Apple is an issue (a nice problem) a lot of clubs are facing right now.   The demo group were ahead of the crowd.  Their average cost basis is 52.55.

It's an interesting topic.  It's true that being overweight in any one company makes you more vulnerable.  But what if it's a company that is doing really well?  How much really is too much?

Any suggestions for changes?

Anybody got any ideas about a nice dividend stock?  MCD?  ABT?  COP?

--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio
I agree that to date it is a nice problem, but it reminds me of when my old club owned SunMicro.  It went up like a sky rocket.  Fortunately, we sold 30% before the dotcom crash, but that decision was not unanimous.  It certainly was a great learning experience - let your winners run, but at a certain point cut back.

I am re-evaluating my portfolio and don’t any replacement suggestions right now.  Sorry.

">Roy Chastain


“Good judgment comes from experience, and a lot of that comes from bad judgment.”  

Will Rogers



--- On Wed, 10/12/11, Laurie Frederiksen <laurie@bivio.biz> wrote:

From: Laurie Frederiksen <laurie@bivio.biz>
Subject: Re: [club_cafe] New Demo Club
To: club_cafe@bivio.com
Date: Wednesday, October 12, 2011, 9:34 AM

On Wed, Oct 12, 2011 at 11:49 AM, Paul Madison <madispa@gmail.com> wrote:
I cannot believe the club has allowed one position to grow to be over 40% of the portfolio.  Very risky business!  And another is over 20%!  I would say it is time for some change.

Good point.  I think being overweight in Apple is an issue (a nice problem) a lot of clubs are facing right now.   The demo group were ahead of the crowd.  Their average cost basis is 52.55.

It's an interesting topic.  It's true that being overweight in any one company makes you more vulnerable.  But what if it's a company that is doing really well?  How much really is too much?

Any suggestions for changes?

Anybody got any ideas about a nice dividend stock?  MCD?  ABT?  COP?

--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio
> It's true that being overweight in any one company makes you more vulnerable. 
> But what if it's a company that is doing really well?  How much really is too much?
 
I'd hope you would agree that 100% in one company is too much, even if that company was Apple since 2009.
 
If you'd had an overweighted position in Apple since Dec 2007 would you have been perfectly happy a year later (with a 50% unrealized loss on that investment) to maintain that position?
 
IMO, "what if it's a company that is doing really well?" can never be anything but a backward looking question.  A more relevent question would be, what if it's a company that you expect to (hope will) do really well.  The reason you diversity is that you can't be certain in advance that what you expect (hope for) will actually happen.  You can't know in advance when you will be wrong, but you *will* be wrong sometimes.
 
It's safer to have your money allocated (I'd say more or less equally) among a variety of companies you expect to do well so you don't have to worry about having most of your money in one company that turns out to be a mistake.  The more money you have in one stock, the easier it is to lose most of your money by being wrong just once.
 
"And as we all learned in third grade and some relearned in 2008 any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero." - Warren Buffett http://www.berkshirehathaway.com/letters/2010ltr.pdf (pg 22)
 
Do you expect to be wrong (about individual companies) on a regular basis?  I think you should expect that to be the case.  A diversified portfolio makes it OK to be wrong on a regular basis.
 
-Jim Thomas
 

On Oct 12, 2011, at 12:26 PM, Roy Chastain wrote:

I agree that to date it is a nice problem, but it reminds me of when my old club owned SunMicro.  It went up like a sky rocket.  Fortunately, we sold 30% before the dotcom crash, but that decision was not unanimous.  It certainly was a great learning experience - let your winners run, but at a certain point cut back.

One could enter a stop loss instead of cutting back.  I do understand that stop losses do not guarantee your exit point.  Not cutting back and buying a put option would be a better choice in my opinion.
Barry

"A diversified portfolio makes it OK to be wrong on a regular basis."
-Jim Thomas

Great quote Jim. It's really interesting to think about the fact that you can have a successful portfolio even if all your stocks don't perform as you expect.

--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
On Wed, Oct 12, 2011 at 2:23 PM, Barry Detloff wrote:

One could enter a stop loss instead of cutting back. I do understand that stop losses do not guarantee your exit point. Not cutting back and buying a put option would be a better choice in my opinion.
Barry

Interesting thought.

Barry, can you give us a few more specifics on what you might do if you were the demo club?

https://www.bivio.com/demo_club/accounting/investments



--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
I think the bargain sale on dividend stocks was last week -EMR is up5% in that time. AGL is a nice alternative to the limited partnerships with a really good yield. AFL has it's share of problems with foreign securities, but still makes the numbers quarter after quarter. I don't like COPdue to the changes about to take place -spin-off into drilling & refining coinciding with the CEO retirement. Sounds like an opportunity totake the money & run.
Mark Eckman
On Wed, Oct 12, 2011 at 11:34 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
On Wed, Oct 12, 2011 at 11:49 AM, Paul Madison <madispa@gmail.com> wrote:
I cannot believe the club has allowed one position to grow to be over 40% of the portfolio. Very risky business! And another is over 20%! I would say it is time for some change.

Good point. I think being overweight in Apple is an issue (a nice problem) a lot of clubs are facing right now. The demo group were ahead of the crowd. Their average cost basis is 52.55.

It's an interesting topic. It's true that being overweight in any one company makes you more vulnerable. But what if it's a company that is doing really well? How much really is too much?

Any suggestions for changes?

Anybody got any ideas about a nice dividend stock? MCD? ABT? COP?

--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio


On Oct 12, 2011, at 1:58 PM, Laurie Frederiksen wrote:

On Wed, Oct 12, 2011 at 2:23 PM, Barry Detloff  wrote:

One could enter a stop loss instead of cutting back.  I do understand that stop losses do not guarantee your exit point.  Not cutting back and buying a put option would be a better choice in my opinion.
Barry

 
Interesting thought.

Barry,  can you give us a few more specifics on what you might do if you were the demo club?

https://www.bivio.com/demo_club/accounting/investments


The Demo Club has 95 shares of AAPL.
AAPL is currently at $402.19
1) I would buy 5 more shares now.
2) I would buy the Jan 2012 390 Put for $26.10/share
3) I would sell the Nov 2011 425 Call for $10.15/share 
(need to have 100 shares for one option contract that is why I would buy 5 more shares)
If AAPL is at or above 425.01 at expiration in November then this company will be called away from me (I would need to sell all).
If AAPL is at or below 425 at expiration in November then I keep the company (I always keep the premium received).
4) If AAPL is not called away then I would sell another out of the money Call (actually it is a Covered Call) that expires in December.
5) If AAPL is not called away in December then I would sell another out of the money Call that expires in January.

AAPL can drop to zero any time before January expiration and I still can sell my 100 shares for $390/share.
The premiums from the three calls will help pay for the put protection ($26.10/share) and maybe even give me extra income.
In January near expiration (3rd Friday of the month), I can sell my January put protection for at least some money (not much) and then buy another put contract 3 months out (April) below the then current price and repeat the covered call procedure.
That is what I would do. - Barry
PS. The above prices for the Put and Call example change as stock price changes.  Those are the prices as of this writing.
> One could enter a stop loss instead of cutting back.  
> I do understand that stop losses do not guarantee your exit point.  
> Not cutting back and buying a put option would be a better choice in my opinion.
 
On the other hand, a trailing stop loss order costs nothing and doesn't require ongoing monitoring.  Purchasing protective puts is an ongoing expense and requires ongoing monitoring.
 
 
 
-Jim Thomas
 

On Oct 12, 2011, at 4:32 PM, Jim Thomas wrote:

> One could enter a stop loss instead of cutting back.  
> I do understand that stop losses do not guarantee your exit point.  
> Not cutting back and buying a put option would be a better choice in my opinion.
 
On the other hand, a trailing stop loss order costs nothing and doesn't require ongoing monitoring.  Purchasing protective puts is an ongoing expense and requires ongoing monitoring.
 
 
 
-Jim Thomas

Any stop loss order won't guarantee your exit point.
The stock could gap much lower and continue down before you do get out.
NFLX might be a good recent example.
A protective put does guarantee your exit price.
Covered calls can "pay" for this protection.
This only works for lots (contracts) of multiples of 100 shares (100, 200, 300 shares and so on).
Yes it is more intensive management and not for everyone.
Thanks for commenting Jim and for supplying the links.
Barry


Take a look at Southern (SO). Dividend yield is 4.9% and it is trading at a 52 week high. One helluva stock. I own 550 shares in my own account - our Club got out of the stock - and I should have bought more.
 
Best regards,
 
Leo


From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Mark Eckman
Sent: Wednesday, October 12, 2011 3:42 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] New Demo Club

I think the bargain sale on dividend stocks was last week -�EMR is up�5% in that time. AGL is a nice alternative to the limited partnerships with a really good yield.� AFL has it's share of problems with foreign securities, but still makes the numbers quarter after quarter.� I don't like COP�due to the changes about to take place -�spin-off into drilling & refining coinciding with the CEO retirement.� Sounds like an opportunity to�take the money & run.
Mark Eckman
On Wed, Oct 12, 2011 at 11:34 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
On Wed, Oct 12, 2011 at 11:49 AM, Paul Madison <madispa@gmail.com> wrote:
I cannot believe the club has allowed one position to grow to be over 40% of the portfolio. �Very risky business! �And another is over 20%! �I would say it is time for some change.

Good point.� I think being overweight in Apple is an issue (a nice problem) a lot of clubs are facing right now. � The demo group were ahead of the crowd.� Their average cost basis is 52.55.

It's an interesting topic.� It's true that being overweight in any one company makes you more vulnerable.� But what if it's a company that is doing really well?� How much really is too much?

Any suggestions for changes?

Anybody got any ideas about a nice dividend stock?� MCD?� ABT?� COP?

--
Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! �www.facebook.com/bivio
Follow us on twitter!� www.twitter.com/bivio