Richard Eldon Dies at 85
The name Richard Eldon won’t be familiar to 99% of my readers, but the concepts that he invented to invest money most likely are used by the same percentage. He was a reporter early in his career and in 1953 as a student of Northwestern he was invited to participate in a tour of Russia. That three-week tour changed his life and also the lives of many investors.
When he returned from Russia he took a job as a Chicago newspaper reporter and he was involved in the investment part of the business. He gradually grew tired of covering the markets and decided that he wanted to be a part of them. He went back to school and earned his M.B.A. from the University of Chicago. After honing his skills at A.G. Becker, he decided to go out on his own and in 1971 he formed his own hedge fund, a firm now called GCM Grosvenor. The firm was a one man show when he started and it managed over $13 billion when he retired in 2005.
While at A.G. Becker he came across a work called “Beat the Market”. It was written by Edward O. Thorpe (the scourge of casinos for his book on beating blackjack) and Sheen T. Kassouf. The book concentrated on the use of options, mergers and distressed debt as diversified tools to increase yield in a portfolio.
Eldon’s idea was to be the first to create the concept called ‘Trading the Fund of Funds’. He looked for investors that wanted to diversify their investments among a number of products but didn’t want to have their funds placed with too many money managers. They wanted to have one manager distribute their funds in line with the portfolio concerns that they had laid out. He figured out that “cross investing” gave the investor the greatest diversification. Eldon’s vision is now considered to be a great way to invest. One manger uses his expertise to pick the managers in diverse products to protect their portfolio in any type of market. Eldon was a man ahead of his time.
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions here with a short paragraph.
What is a collar and how does it protect my portfolio?
A collar can be used in many ways. The most popular use it to avoid paying taxes in a current period for a stock position that has a large profit. Basically, it can be used for any purpose where you want to keep a stock position and have no market risk. The collar is put in place by selling a call above the current market price of the stock and buying a put below the price. As an example, you own 100 shares of TSLA that you bought last year at $150. The stock is now trading $300 but you don’t want to sell it. To put the collar in place, you would sell the $305 call and buy the $295 put. They both will have the same amount of premium so whatever you lose in the call you make in the put and vice versa. You have collared the stock and locked in its value at $300. When you want the stock to trade freely again, you can either let the options expire if they are both out of the money or you can buy back the collar if one or the other is in the money. In either case you have protected your investment for the time involved with the option serial that you used.
The Wise Guy Report: The View From The Floor
Each week I talk about how the Wise Guys (floor traders) find the soft spots in the market and take advantage of price dislocation in three major commodity markets: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). On the equity side, I cover MSS which is the Mister Seifert Sez Composite Index. This is a proprietary index that I created which measures the dollar flow of the four major indexes (S&P 500, Nasdaq 100, Russell 2000 and the Dow Jones Industrials) on an unweighted basis. Let’s take look at last’s week price action in Crude Oil.
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The option trades and strategies offered by The Optionomics Group are very unique in that they all have limited risk while creating great leverage. Our basic BL – BR Credit Spread Strategy (and all of the others) let you control 100 shares of a $200 stock ($200*100 = $20,000) for only $500 (the spread differential) or 40:1 leverage with your risk limited to only $500. Plus our strategies produce winning transactions in four out of five possible outcomes.
The Optionomics strategies let you become the casino whereby you have a mathematical edge that lets you grind out consistent returns in any kind of market environment. These strategies are designed to produce good returns over a short to intermediate term time frame. It is an approach to the stock market which will be hot, cold or average over time, but the end result should be very good in any type of market environment.
I offer a FREE Two-Week trial to the various subscription services with no cost or strings attached. Each strategy is explained in a 5-7 page booklet which includes sample recommendations and model portfolios. I doubt that you have ever seen anything like this. During your FREE trial, you can paper trade the various strategies and get a feel for the deal without risking a penny. Simply click on the appropriate tab on the Optionomics’ Home page to access the informative booklets and then sign up for one or all of the weekly subscriptions.
- The Bullish – Bearish Credit Spread Strategy: The basic strategy of trading weekly credit spreads.
- The 21st Century Covered Calls Strategy: A modern day alternative to the old fashioned covered call strategy.
- The Low Cost Put Hedge Strategy: Sleep at night knowing your portfolio is protected for little or no cost.
- The Earnings Trade: Get in on potential big movers with little or no downside risk.
- The One Day Wonder Trade: Get ready for some real action. A one day trade with great potential.
- The Blow Off Top – Bottom Trade: A lot of action and big moves too.
Each Monday morning by 11:00 EST, the plays for the upcoming week plus updated model portfolios for each strategy are posted on the site. The prices in the reports are Monday morning’s opening prices. In addition, I have a webinar on Thursday afternoon where I discuss various option strategies, what is happening on the floor and answer any questions that you may have. Don’t worry if you miss the show. They are archived on the site. Sound Good? Good! You can subscribe to one or more of the subscriptions for only $19.95 each per month on a month to month basis with no contract or strings attached. If you subscribe to three, it is only $49.95 per month while you can subscribe to all six for only $79.95 per month, a 33% discount. I think you will agree that this is a super offer so give it a try. Click on www.optionomicsgroup.com to access the Optionomics Group web site and get started today doing what the pros do –
“Don’t Buy Them – Sell Them”.
Mr. Seifert