25% to 30% in a 401k is fairly easy to accomplish

Most 401k plans use mutual funds.

So you find the stock based funds that follow the dow industrial average like a puppy.

Get 5 years worth of graphs from your mutual fund manager.

1 graph for each year.

Then compare these graphs to the dow movement for the same 5 year period.

I have found the dow to be at a high from late july to mid aug and late dec to around 5 jan.

I have seen consistant drops between 20 sept to 10 oct and 10 jan to 30 jan.

Ibm is a bellweather stock of the dow 30 and a stock I use as an indicator.

its 31 jan 08. Today ibm hit a high of 107 and closed at 105 and change.

Ibm was 97 about 10 days ago. this drop and run up is caused by its specialist accumulating stock for the next ex dividend day.

That should occur around 8 feb 08, as the last ex div day was almost 3 months ago on the 7th or 8th of the month I believe.

The specialist is running up the stock price to shaft the dividend reinvestment people.

Look at feb 02 I believe or feb 01 when Ibm hit 120. It still aint got back there.

Back to 30% on mutual funds.

If your stock based fund was 10 bucks a unit around 3 jan and you converted it to money market mutual funds, on that day, at no commision because its a 401k.

Every 100 units turned into 1000 bucks in money market.

Now if that stock based fund dropped 25% like the dow did from 3 jan to 20 jan this year.

The fund was probably 7 bucks a unit in cost.

So you 1k now buys 140 units.

If you go back to money market at 8 bucks a unit you just made 12.5% return. 140 bucks profit.

If you only buy back in to the stock fund in oct at 7 again.

And you sell at 8 bucks a unit again.

You make another 12.5 return on almost 160 units ,as you had 1120 to buy with,plus the money market interest you accumulated.

If you push for 9 and get it thats 25% return.


12.5% from you jan sale plus 12.5% from your next jan sale is 25% min profit for that year

Push to 9 on the second sale and its 37%.

The 5 years of graphs will give a fair consistant average rise.

This is how you judge when to go back into money market funds.

Good luck

Covered calls vs Short against the box

I was asked whether you could buy a stock and short it at the same time.

This is my answer from All Experts.com,as it was a private question so my answer was not available to the public.


Your theory is called shorting against the box.

You are simply hedging your long position by selling against it.

The bad thing is that if you hold through a dividend period

You will have to pay the dividend on your short position.

The advantage of 1 account is money,if you plan to sell short,most bokerages require you have the cash to cover the entire price.

Now my prefered way is to do a covered call.

Using a leap call option thats simply a call option good for 2 years.
Recently I could have sold a covered call on some hpq.

If I had when the stock was 50,

I would have pulled out 50 cents on the dollar when the market crashed

If i had bought leap puts with the procedes from the sale of the covered calls.

I would have made 1.12 for each buck the stock dropped and had no worries about paying any dividends on my short/covered position,since its a stock option

It has been my experience that a leap put goes up amost 62 cents on the dollar,when a stock is falling.

While the leap call goes down 50cents on the dollar.

Since you sold the call as a covered position,you must buy it back to close the position.

So as the option devalues as the stock drops,you make a profit,
and the put goes up in value thus further increasing your profit.

So its your choice.

Short against the box or simply sell a covered call.

My preferance is the covered call.

My best reason to cover is this. Say you want to buy a 5k of stock and you only have 3500,you now have a 1500 margin call or loan if you choose to borrow.

If you cover the position, the procedes from the option sale will be applied against the margin balance.

I once bought 4k of stock for 3k and covered 5 bucks out of the money.

ie For a 20 buck stock 200 shares cost 4k.

I sold 2 calls that were 25 buck strike for 1k and spent 3 k of my money.

When the options expired 2 years later the stock was 35 a share and i was exercised.

I received 5k for my sale plus the 1k I had received for the leap calls I covered with.

So i made 6k total return on a 3k investment

ie I made 100% return in 2 years or 50% return a year.

Thats my kind of trade.

HOW TO MAKE 120 A YEAR BY SIMPLY PAYING YOUR BILLS

Most people pay bills by check or by online payment.

This requires them to keep a check record/bill record.

When you pay bills by check you usually enter the amount of the bill andthen subtract it from your bank balance,and enter the result.

NOW to make your 120 a year you simply have to do 3 extra things.

1.YOU must be willing to use a credit card,THat has a 1% cashback feature.

2 You must pay that credit card bill in full each month, with that payment arriving at the credit card company,at least 5 days prior to the due date.

3 In your check record you must do the extra work of putting a star next to the amouts you pay with your credit card.

The reason you use the star on that amount, is that its still in your bank account.

This is a bill you would normally pay in cash, so you simply are leaving the cash in the bank to gain bank interest.

When the credit card bill comes, it can be paid in full because you only paid bills you would pay cash for anyway and thats why you placed a star next to the amounts you paid with the credit card.

The star is how you can easily see what you have to pay the credit card bill with.

The star also indicates that this money IS NOT available to use for something else.

Now the fun part, the money. Your credit card pays 1% cashback on all charges,Bills or purchases do not make a difference.

MOST people pay at least 1000 in reoccuring bills every month.

1% of 1000 dollars is 10 dollars.

10 dollars times 12 months is 120 dollars CHRISTMAS MONEY.

AND ALL YOU DID WAS PAY THE BILLS YOU HAVE TO PAY ANYWAY.