by Glenn Busch
February 21, 2013
The enhanced part is strategically using covered calls to generate extra return. This is not a buy-write strategy. We will sell a covered call when we see an opportunity. It could be during a period of high volatility when option premiums are high and/or when a position has become over-extended in the short-run. We will usually only have a few options in the portfolio at a time and it is very possible that certain positions will not have call options ever written against them.
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by Glenn Busch
February 20, 2013
As we enter 2013, we thought it would be a good idea to review our core investing principles. These are truly big picture items that every investor should remember when investing in the capital markets, regardless of time horizon or risk tolerance. Most investors have a longer‐term ʺend gameʺ for their investment, whether it is to fund a more comfortable retirement, a charitable cause, a college education, a big ticket purchase, leaving money to heirs, etc. Yet, too often, we find the investment decision making process muddied by short‐term news and issues completely out of our control. We believe the following core investing principles ring true in any market or economic climate and should help all investors successfully navigate the financial markets and improve the odds of achieving their long‐term goals.
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Expected Real Returns as Warren Buffett’s Favorite Valuation Metric Rises Above 100%
by Glenn Busch February 14, 2013For the first time since the recovery began, Warren Buffett’s favorite valuation metric has breached the 100% level. That, of course, is the Wilshire 5,000 total market cap index relative to GNP. See the chart below for historical reference.
I only point this out because it’s a rather unusual occurrence and the recent move has been fairly sizable. It happened during the stock market bubble of the late 90′s, but then occurred again just briefly during the 2006-2007 period when the valuation broke the 100% range in Q3 2006 and stayed above that range for about a year. We all know what followed the 2007 peak in stock prices.