UnThreaded | Threaded | Whole Thread (19) | Ignore Thread Prev | Next
Author: Hawkwin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75888  
Subject: Re: May want to re-think traditional allocations Date: 9/26/2012 4:04 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 4
2-leg re-set indexing does it. This company calls it 'Integrated Options Portfolio.' http://desertrosecapital.com/

I saw you post this on another board and was interested, since I had never heard of the 2-leg re-set term before.

From the above link, there are quite a few assumptions that are questionable, to say the least:

By not owning the shares of “ABC” Fund, we will not have any shareholder rights (no dividends, voting, etc.), unless we decide to actually purchase the shares . In this case, the dividends are 1%/year.

That is quite a lowball div to help their performance. SPY yields twice as much. Failure #1.

We will not have to pay the “ABC” Fund expense fees which will save us 1.25%/year, but Desert Rose will charge a 1% fee to implement and manage the IOP.

Why would you pay fund expenses of 1.25%??? Most institutional shares are well below that and of course index funds are a fraction of that. Additionally, why use funds at all if they are going to compare it to buying calls, why not simply compare to the underlying stock or index? Failure #2.

We will also assume that the fixed income money ($43,500) was put into a short-term, high quality bond fund (“RST” Fund) that is yielding 5%/year. There is much more that we do in this area to yield more than this, but let’s keep it simple for now with what we believe is a conservative assumption of 5%. Also for simplicity, we will also assume for now that the “RST” bond fund price will remain constant.

Failure #3 and #4. One need not even comment on how bad both those assumptions are.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (19) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement