Hello AFB!

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    Posted: 26 July 2011 03:12 PM #16

    Hi everyone,

    Looks like this thread is bringing a number of new people out. I’m also a longtime lurker. Never felt like I would be able to contribute much insight to the board.

    Also have a background in physics (2 years) before getting a BSc in Electrical Engineering. At 40, I work as a full time software developer and part-time professional musician and recording studio operator.

    Started investing in AAPL in 1997 and have accumulated and held right up until selling a small block last year. Thrilled that my holdings have just entered 7 figures, but after following this board for as long as I have, feel like I missed the boat by not having a better understanding of LEAPS and options. Still can’t complain too much can I smile

    This board is a daily read for me. Very much enjoy all the knowledge and insight being passed around. Certainly helps to motivate me to learn more… one day when I have more time.

    Cam

    [ Edited: 26 July 2011 03:18 PM by cambrose ]

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    Long AAPL Short ME 5’3

         
  • Posted: 26 July 2011 04:09 PM #17

    cambrose - 26 July 2011 06:12 PM

    Hi everyone,

    Looks like this thread is bringing a number of new people out. I’m also a longtime lurker.

    Welcome to you, Cam, and to all you lurkers out there. I think you’d all be surprised at how much your experience and your insights could add to this board. And paradoxically, there’s no better way to learn than to share what you know. Ask any teacher.

         
  • Posted: 28 August 2011 08:41 PM #18

    Thank you all for the warm welcome and your invaluable advice! I am also glad that other readers used this thread to introduce themselves.

    As for the option trading, I do plan to start small. I will probably start around 10% of my portfolio in OTM LEAPS and see how it goes. I am aware of the risk involved in it, specially with the macro-situation going on these days.

    Regarding some questions/remarks directed to me (sorry for the late response):

    @sleepygeek
    If you are interested in a textbook, I recommend Fundamental Neuroscience third edition (http://www.amazon.com/Neuroscience-Textbook-Set-Fundamental-Squire/dp/0123740193), or for a more basic level Neuroscience Exploring the Brain third edition (http://www.amazon.com/Neuroscience-Exploring-Mark-F-Bear/dp/0781760038/ref=pd_sim_b_2). If you prefer a popular science book, I don’t know a good general one. Only some in specific topics like consciousness, learning, music and so on. Is there any topic that you are particularly keen on?

    @ JonathonU
    I guess it was exactly because of that, that I decided to change completely. When I was considering doing an MBA (funded by my former employer), I had a glimpse of what my life would have been if I had gone that way. It was that moment that I started considering going back to studying science.

         
  • Posted: 28 August 2011 10:22 PM #19

    Welcome Tiago and all the other new folks.  I’m looking forward to your contributions.  My degree is in psych, but my career has been in systems and statistics.  I started buying AAPL at $7.50.  I’m about to retire this year.  The more varied the input the better we will all do.

         
  • Posted: 29 August 2011 02:14 AM #20

    redge - 29 August 2011 03:03 AM

    I’d like to suggest that you trade options on paper for several months before you invest real money in them. You will learn a great deal, including things that are not apparent no matter how much time you spend reading books on options trading.

    Unfortunately, AFB does have a few folks who are more intent on self-agrandizement than contributing anything of value.  There is, however, some good advice in this last paragraph.

         
  • Posted: 29 August 2011 02:58 AM #21

    Tiago

    Thanks for your book recommendations; they will keep me quiet for a while! Exactly what I was looking for. I like hard science; thus neurology not psychology. Up to now, my knowledge has just been from Oliver Sachs, and TV documentaries about people with various brain / nervous system damages (e.g. proprioception destroyed by infection).

    The perfect neurology textbook for me would be like Guyton’s “Textbook of Medical Physiology”, which Arthur Guyton apparently originally dictated without notes, so familiar was he with the subject. It reads like a story book, yet is dense with facts.

         
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    Posted: 29 August 2011 03:01 AM #22

    Just to be an ass, but wouldn’t 10 % of 150 shares be $5700. Let him buy (2) Jan 13, 480’s. I agree with not being invested in one company, to risky for me.

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  • Posted: 29 August 2011 03:48 AM #23

    Thanks for your advice!

    redge - 29 August 2011 03:03 AM

    Tiago,

    I also have the sense that you are interested in buying out of the money LEAPs, not because it is a thought out strategy, but because 10% of your capital is about $4000, which means that it is impossible for you to buy in the money LEAPS.


    Actually, no. The reason I am interested in OTM LEAPs is because that is exactly the kind of investment that I am interested in. I am very long in Apple and I would just like to take advantage of the leverage that options give me.

    redge - 29 August 2011 03:03 AM

    Tiago,

    Right now, $4000 would buy you one January 2013 contract with a strike price of $440 and a break-even price of $480. That means that if you hold the options to expiry, the stock has to rise over 25% in the next 16 months just for you to break even. In my respectful view, there are more attractive investments.

    Do you think that given Apple’s current valuation and the months that will follow, a 25% increase in stock price is that much? By Jan 13 I am expecting Apple to be trading, at least, around $600. If I hold stock I get a little more than 50%, which is not bad, but if I do the play that you used for the example I get 300%!

    redge - 29 August 2011 03:03 AM

    Tiago,

    Also, I hope that you know that many people would question whether investing 100% of one’s savings in a single company is clever. It’s a pretty safe bet that Apple’s own executives don’t have 100% of their savings invested in Apple.

    I know the risks I am taking. I wouldn’t like loosing this money, but it’s not my retirement plan we are talking about. I started buying stocks Jan 10. I had this money I had saved while working for consulting for 2 years and realized that it would be nice to see it grow since now I am on a very low income job (PhD student).

    This was 2 months before the sovereign debt crisis it Portugal pretty badly. Portuguese banks were at historical minimums and I thought that they were a good investment. However, some months later, due to my interest in the technology industry I decided to buy AAPL and GOOG. Back to the present, the two banks where I started investing are between 30% and 40% of what they were worth. I lost a bit in them (I never had a significant part of my portfolio into them but it still hurt). I made some money in GOOG (I sold at $620) and have progressively been increasing Apple while selling everything else. Why? It’s not because Apple historically has been completely destroying any other company when it gets to growth. It’s because it’s the only company that I understand.

    Although I have some business training, the banking business is still not that clear to me. I don’t know where their profits come from (breakdown by sectors) and I clearly cannot predict their outlook.

    Even Google is strange to me. Although, Google might seem a technology company, it is basically a camouflaged one. They don’t get their money from selling technology, they get it from selling ads, which makes it an advertisement company. And advertisement is something that I couldn’t know less about (and even care for it - I hate publicity).

    The reason why I like Apple is because I think I can understand it (at least slightly). I know all their products and the amount of income they generate. I know the markets where they operate and I think I understand their drives. For me, Apple at this moment is trading at a huge discount. This doesn’t mean that it always will. But I think I will be able to see the right time to jump out of the boat. The same cannot be said about other companies.

         
  • Posted: 29 August 2011 05:11 AM #24

    Just to finnish my idea. The reason I am 100% in Apple (not truly 100% since I always keep some cash ~ 10%) is because it is the only investment I understand and that I believe will give me the return I am looking for. It is not because of a fanboyism emotional impulse (though I am an Apple user), it is just due to reasoning. For me to buy another stock at this moment it has to fulfill 3 requirements:
    1 - I have to know its business
    2 - It has to have good looking growth prospects
    3 - It has to be reasonably safe (I am not planning on investing on a stock with stupidly high ratios - not looking for a bubble)

    If I find one that seems a good alternative to diversify my portfolio, I will go for it. But as I said, at this moment I don’t see any!

    Finally, I am willing to take risks. I am young, I have a job, I have no debts and I have no expensive tastes (maybe photography and my girlfriend - I hope she never sees this).

    Now, if only I found a broker that allows me to trade options with my low income…