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Investment Analysis Clubs / The BMW Method


Subject:  Re: A learning curve Date:  9/12/2012  1:27 AM
Author:  captainccs Number:  40713 of 42233

if you're making the money-is-fungible argument


But one difference between collecting dividends and making capital gains is that you have to sell in order to collect capital gains.

In practice this is not an issue if you normally have some cash in the portfolio. You pay your expenses from the cash reserve and your ordinary trading keeps the cash at adequate levels. In other words, the selling and the spending don't need to be synchronous. The cash is the buffer. If you don't have cash, you can use margin making sure you pay it off ASAP.

My point is that each position should maximize CAGR and you need a cash management program. I pay things with my credit card and each month I do an ACH transfer from my broker to the credit card account. This gives me the frequent flyer miles and a 15 day interest free float. For expenses that can't be paid by CC, use the broker's checking privileges.

Denny Schlesinger
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