Zero (IN)Tolerance
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About this ebook
Many readers, even those who have a basic knowledge of the stock market, are unfamiliar with options. since the Zero (IN)Tolerance strategy involves these, one has to measure risk versus reward, as compared to negative interest rates, after income taxes, inflation and a weakening dollar.This widens the gap between the rich, who can take on risk, and the prudent middle and lower classes and seniors, who are on a glide path to poverty -especially when inflation kicks in.
DITM covered calls is based on the same strategy. one can buy a quality stock that pays a 3% or more dividend, sell a lower call option at the same time (called a buy/write), just before the stock goes ex-dividend -the date each quarter that the stock is "without" the dividend.Testing several hundred thousands of dollars over 2 years time has returned the historic norm for the past 100 years, approximately an annualized 10% - this with the added safety net. In over two years and a hundred trades, it has only experienced 3 losses - including BP.
Comparing this to a 6-month CD of less than 1%, it makes sense to investigate this plan with a portion of one's assets. More information about the strategy, book, and blog with actual trades can be found at: brentleonard.com.
Most of you, like me, have only been investing since the largest bull market in history of 1982 started -lasting its usual 18 years. Since 2000 we've seen the Lost Decade and more but still do not invest defensively.
After we go through school and raise a family, we usually have only 20-30 years to really provide for retirement - so far, this is the down cycle!
Brent Leonard
Brent L. Leonard has led a full and varied life to date, starting with acceptance to Stanford University on a basketball scholarship, then earning a teaching credential from the University of Pacific in Stockton. This resulted in a brief career as a high school band director, whereupon the magnetic attraction of San Francisco led to a 2 decade career as the proprietor of a popular bar/restaurant.Finally selling the business and requiring investment knowledge, Brent moved to San Diego and gained his brokerage license, just in time for the 1987 meltdown. Moving back to San Francisco, he joined the Charles Schwab Co. as Senior Options Principal and RIA, retiring after another 2 decades' career as the millennium turned.Brent still lives in the beautiful S.F.Marina district, after a stint as Adjunct Professor of Technical Analysis at Golden Gate University, and is still active in the Technical Securities' Analysts Assoc. (TSAASF) where he is past President, Board member and Editor of the Review. He also is active in the SF Bay Area Options Group, and plays trombone with various bands - two of which have recorded CDs recently. He is an active investor, manages family finances, and writes a blog on Sentiment - the topic on which he earned his Chartered Market Technician designation from the MTA.
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Book preview
Zero (IN)Tolerance - Brent Leonard
ZERO (IN)TOLERANCE
A Low-Risk Alternative to Current Zero-Interest Rates
by
Brent L. Leonard
Smashwords Edition
* * * * *
Published on Smashwords by:
Brent L. Leonard
Zero (IN)Tolerance
Copyright 2010 by Brent L. Leonard
ISBN:978-1-4524-7531-8
All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise) without the prior written permission of both the copyright owner and the above publisher of this book.
Smashwords Edition License Notes
This ebook is licensed for your personal use only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person you share it with. If you are reading this book and did not purchase it, or it was not purchased for your use only, then you should return to Smashwords.com and purchase your own copy. Thank you for respecting the author’s work.
The author has a website that can be visited for more information: www.brentleonard.com
The author also writes a blog on Stock Market Sentiment at www.mktsentiment.blogspot.com and Deep In The Money at www.ditmcalls.blogspot.com
The author can be reached by email for questions and comments at: brentleonard59@gmail.com
Examples of securities are not recommendations; there are risks in trading options and stocks, especially in rare cases of dramatic downturns.
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F O R E W O R D
The purpose of this book is to suggest an alternative to the current zero interest rates that are being offered in riskless investments such as CDs, short term Treasuries, and Money Market Funds—securities that prudent investors, such as seniors, low wage earners, etc. depend on for retirement.
Because of the profligate excesses of the recent past, responsible for the deflationary Recession that we find ourselves in, the Federal Reserve Bank has artificially lowered borrowing rates to save
the financial system, as well as the American and global economies via the Invisible Hand of Adam Smith. Unfortunately, these riskless investors have gotten the back of the Hand, as they try to survive on rates that dropped from 6% to zero over a couple years—forcing them into more risky investments, such as stocks and bonds, which as we have seen this decade could wipe out their savings. This low rate becomes negative when income taxes, Inflation and a weakening Dollar are factored in. Other alternatives, such as gold, copper, and commodities, could also reach bubble status by the time the smart money has fully entered the markets.
Whether it was necessary or not, lowering rates too low too long, this situation appears to be with us for an extended period
, leaving it up to us to select