No. of Recommendations: 1
Hi Ray,

I'll assume that you hadn't read my post# 73041 when you wrote this
Actually, I saw it & thought it was just stream of thought...
Let's have a look...

Jan-73 to Jan-13
$15K initial, $150/mo
IUL fee: 22 bps 5.5% loan rate
S&P: 9 bps 50/50 asset allocation, monthly rebalance

Unsure what you mean by asset allocation, you've only named one market.
Are you saying 50% to S&P, 50% to cash?

BTW, you use a lot of non-standard terminology, and that sometimes makes it hard to understand just what you are saying. For example, you keep saying "naked S&P500", but the standard terminology in the investment world is "long". Doesn't matter what wikipedia page you can find that appears to have that definiton of "naked", that is NOT the way the investors use it. You're doing what those Chinenglish instruction manual translatore do, looking up a word in the dictionary and assuming that any of the definitions can be used, without realising that connotation and standard usage is important.
Nope... but I do acknowledge your point & I've previously explained... will do again;

I didn't learn market finance (and its language) from books, I learned it from professional traders (both off the floor, and on the floor at various Chicago exchanges.) The language of naked positions refers to unhedged, uni-directional bets. Its reflective of its speculative risk by nature.

I could (and sometime do) try to de-professionalize, de-jargonize... sometimes I am more successful at catching myself. Usually I'm in a rush to get as much complete concepts out as possible, and don't finely edit & boil down everything to basic retail investor language.

Sincerely... sorry about that.

Dave, I think I know what's going on. I suspect that you (and CC) think that I think & feel the same way about volatility that you do. Therefore you think I'm being obstreperous about dismissing it as of being of minor importance.
But it's truly true. I don't. I don't feel the same way about volatility as you do.

yeah, I buy that you don't take the risks as seriously as I do... but you *DO* understand them, and I'm disappointed that you refuse to run a comparison assuming a respect of that risk.

You don't *have* to... you're the one carrying the mail & doing the heavy Excel lifting. I'm only proficient enough to take forever building it out, so I've trusted you to do so (and still have every respect of your computational integrity.)

You *DO*, however, understand the issue... and its disappointing you won't simply show a run with both carrying equal risk of principal loss from a forced liquidation during a market drawdown.

CC thought I was deliberately lying when I shrugged off the fact that I had lived through TWO times when my portfolio had a 50% drawdown.
I do not doubt this is the factual truth for one miillisecond!

HOWEVER... you had non-risked safety reserves that allowed you to do so (including your aggregate future earnings, which during the drawdowns had to be employed for recovery, not net growth.)

With a Fixed Reset Indexing strategy (like an IUL) 100% of your risk capital *AND* your backup reserves could have been compounding at every step from day one.

The odds cannot be escaped.

Respect, my friend... I appreciate you!
Dave Donhoff
Leverage Planner
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