Jas Jain's MarketThoughts

» Jas_Jain - A Speculative Tip -- A Probable Ten-Bager

February 09, 2008

NOTE: It is a free tip. NO INQUIRIES PLEASE.

A Speculative Tip -- A Probable Ten-Bager

The last time that I offered a similar tip -- to buy CSCO puts for a potential ten-bager -- was six years ago in February of 2000. That tip bagged ten times in lot less than two years that I thought it might take (it took six months or so).

Anyway, the tip is to buy WCYMC (CSCO Jan'08 15 Put) at $0.50-0.60 for a ten-bager within 23 months (when the option expires). I expect the Scam to hit at least the 2002 low of $8.12. That would be more than a ten-bager for the put.

Those who take the tip and bag ten times are encouraged to send 10% of the profits to the tipper. Voluntarily, of course.

No promises. I have bought plenty yesterday and today in the family-and-friends’ accounts that I manage. I always put my own money where my mouth is.

Jas

-- posted by Jas_Jain

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» SteveT - Opinion please

Jas, I would like your opinion on something. If someone (not you personally) were planning on buying bonds for the income and wasn’t concerned about principal would you buy 30-year US treasuries? You could buy the two-year and get similar yield. Course then you would have to reinvest in two years.

-- posted by SteveT

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» Jas_Jain - Free Tip On Bnds -- Re: Opinion please

In response to Opinion please posted by SteveT:

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Hello Steve,

Buy the UST STRIPS that yield the highest. As I have said elsewhere, these are mostly 20-25 year maturity. When the yields go down over the next 2-4 years their price will soar. Don't be surprised if they double in less than 3 years.

Jas

-- posted by Jas_Jain

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» Kirk - Re: Free Tip On Bnds -- Re: Opinion please

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NEW: My two recommended newsletter core portfolios can be fully replicated with seven ETFs bought from a discount broker. Details in the next issue!

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In response to Free Tip On Bnds -- Re: Opinion please posted by Jas_Jain:

I bought this strip fund for my newsletter portfolio in late 1999 and more in early 2000 at an average price of $24.52. I also rolled some personal profit taking dollars out of tech into that fund back then.

<img src=http://chart.bigcharts.com/bc3/intchart/...>

I got out too early in 2003 and 2004 (top sell was at $44.51 for a nice 81.5% gain) when I thought the easy money had been made. I was wrong as long term rates kept falling as the Fed raised the short term rates.

Bought $25,000 at $24.77 on 10/14/99 (30 yr. @ 6.3%)
Bought $25,000 at $24.26 on 01/13/00 (30 yr. @ 6.7%)
(Average price Paid = $24.52)
Sold $10,384 @ $30.56 on 08/10/00 (30 yr. @ 5.67%, gain = 25.0%)
Sold $12,988 @ $32.47 on 12/07/00 (30 yr. @ 5.50%, gain = 33.0%)
Sold $21,723 @ $33.42 on 03/01/01 (30 yr. @ 5.50%, gain = 36.3%)
Sold $13,890 @ $37.04 on 11/01/01 (30 yr. @ 4.95%, gain = 51.1%)
Sold  $5,940 @ $39.60 on 03/13/03 (30 yr. @ 4.72%, gain = 61.5%)
Sold  $5,000 @ $44.51 on 05/20/03 (30 yr. @ 4.36%, gain = 81.5%)
Sold    $450 @ $37.48 on 05/21/04 (30 yr. @ 5.46%, gain = 52.9%)

These are up about 11% since 1/1/05 but my newsletter explore portfolio is up about 15% over the same period...

I might have been too quick to take profits at 25 to 50% but my newsletter portfolio is up more since then and what I was buying in 2001 and 2002 with the profits is up much more (CACS and GGR were up over 10x on some of the shares I bought while LRCX and UTEK shares are up 2 to 3 times for some buys using the money from selling the strip zero fund after "decent" gains.)

I could have done better, but I'm happy enough.

Now, it sure seems the risk is high... and it seems most of the World is buying long term bonds with all their excess liquidity because they fear investing in the stock market. I find it hard to believe so many are correct.

I own bonds in my core portfolio which gives me deflation protection. I also own TIPs and I BONDs for inflation protection and Cash for whatever happens. It seems an equal amount in all three has your bases covered to take profits when one goes up and buy whatever is down... as I feel rates now are about normal and could go down a bit in the long term..... but a stock market rally will take money from bonds to buy equities so we'd get a spike up in Bonds which would THEN be a good time to buy.

I guess what I'm saying is the interest rate risk in these long bonds at low rates is huge. Have you calculated what would happen if the long rates went up 2% to give us a more normal yield curve? Even if temporary, can you handle that level of decline in your net asset value?

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For 2005, "Kirk's Newsletter Explore Portfolio" was Up 13.2% vs. QQQQ up 1.2% vs. DJIA down 0.6% vs. S&P500 Up 4.8%

As of 12/31/05 the Total Return for "Kirk's Newsletter Explore Portfolio" since 12/31/98 is Up 197% while the S&P500 only up 12%!!! & NASDAQ only up 1%!!! (my explore portfolio beta is about 1.5)

What should be quite clear is a “buy and forget” market strategy using the DOW, S&P500 or NASDAQ would have under performed holding money funds over the past seven years while my newsletter “explore” portfolio nearly tripled every dollar invested!

Key to my success is I pay attention to Garp. GARP stands for “Growth At a Reasonable Price.”

Make sure you read my latest article: NanoViricides, Inc. [NNVC] (01/09/06) where it seems I’ve had the good fortune to highlight a stock just before it took off to more than double!

-- posted by Kirk

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» Kirk - Re: Link for U.S. Treasury Auction Calendar

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In response to Link for U.S. Treasury Auction Calendar posted by Jas_Jain:

Thanks for sending me this useful link at Vanguard
http://flagship5.vanguard.com/VGApp/hnw/...

I've been using bond funds, but I wonder if now it would be cheaper to buy the bonds directly.
Does Vanguard charge a commission when you buy from the government for your Vanguard accounts?
Most of my bond money is in IRAs where I don't use Treasury Direct like I do for my I BONDs.
BTW, My I bonds are paying me now between 6.73% and 6.83% due to the high CPI on the last period. I expect this to drop in the next year so I may cash them in and buy something else.

Should we call you "Mr Bond?"

,

-- posted by Kirk

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» Jas_Jain - Re: Link for U.S. Treasury Auction Calendar

In response to Re: Link for U.S. Treasury Auction Calendar posted by Kirk:

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Hello Kirk,

I am not a Vanguard client, Brown (now owned by E*Trade) charges $45 for new Bond/Bill and $10 to rollover an existing Bill. I am assuming that most brokers are in that ballpark.

Safest and cheapest way to do is with an account at US Treasury Direct, but don't expect good service with the govt. This is great for long-term money where you don't need any service other than to buy initially and then rollover.

"Should we call you "Mr Bond?""

As pleases you. I am happy to share what I know on the subject.

Most of my trades/positions in long Treasury bonds are in the Futures market and there I sell lot of out-of-money puts (I have been betting on 10-year not going above 5% and making 40%+ a year returns).

Jas

-- posted by Jas_Jain

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» Joanie22 - A Speculative Tip -- A Probable Ten-Bager

In response to A Speculative Tip -- A Probable Ten-Bager posted by Jas_Jain:

Thanks for the tip - I'll check it out! I rec'd one about molybdenum. www.321gold.com and gold-eagle.com. Look for articles by Ken Reser on moly. Companies IGMI and AUA.V.

I am new to the stock market (Sept.05) After reading your "top crook" post I would like to add pumpers & dumpers. When you hear what I did you will know that I have little skill in trading. I recently bought 60 shares of CHK (a nat.gas co) at $31+ and it went over $35 a few days later & regretably did not sell. It is now $29+ & I don't know where its going b/c I don't know T.A. I could have plunked it on moly or in gold/silver. Am I a classic example of buying into a sector too late? My feeling is sell & I regret spending so much $ to gain only 60 shares. Any thoughts?

Re: IBonds. I too bought some in Aug05 & again Dec. 05. But I read your post that mentioned STRIPS. Is one's money tied up for any great length? Or can they be redeemed like IBonds (after a yr. you would lose only 3mo. interest).

Re: IRA's. I had a small (3k)IRA that I used to make stock purchases - now I'm wondering about taxes, something I should have thought about before but I didn't, as I bought a stock that pays a dividend. I read that holding stocks in a tax deferred act. could turn long-term cap.gains (taxed @15%) into retirement act. distributions(taxed 35%). If this was a wrong move would you know how I could fix this?
Thanks for your time. I enjoy your posts.
Joni

-- posted by Joanie22

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» Jas_Jain - A Speculative Tip -- A Probable Ten-Bager

In response to A Speculative Tip -- A Probable Ten-Bager posted by Joanie22:

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Hello Joni,

My advice to all that have little experience is to put money in safe places -- iBonds, CDs, etc. In an IRA, see if you can buy some low-cost highest quality bond fund. Since I am a speculator I don't have a good bond fund to recommend. Maybe, Kirk, or someone else, has a recommendation.

Please think of safety first. Save as much as you can and put the savings in safe places. No need to speculate. It requires years of esperience, including losing money, to get good at speculation or trading. After you have $100,000 in savings in safe places then you can speculate with small amounts.

Best of luck.

Jas

-- posted by Jas_Jain

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» Kirk - A Speculative Tip -- A Probable Ten-Bager

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NEW: My two recommended newsletter core portfolios can be fully replicated with seven ETFs bought from a discount broker. Details in the next issue!

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In response to A Speculative Tip -- A Probable Ten-Bager posted by Jas_Jain:

My advice to all that have little experience is to put money in safe places -- iBonds, CDs, etc. In an IRA, see if you can buy some low-cost highest quality bond fund. Since I am a speculator I don't have a good bond fund to recommend. Maybe, Kirk, or someone else, has a recommendation.

That is great advice Jas. Unlike you, I believe people should buy stocks as part of a core investment portfolio. If you take 20 to 40 years to dollar cost average into an investment portfolio while you are working, you get to buy some when the markets are down which more than makes up for buying when they are up.

I have a very simple, easy to follow two fund portfolio in this article Asset Allocation Review: Jan 2005 which shows how asset allocation smoothes portfolio returns in up and down markets. This is also a good article to read and understand “Using Asset Allocation to make money in a Flat Market.” If you want to be really conservative, then just put your money in the low cost bond fund I use in that article. It is cheaper than buying bonds by themselves or buying the equivalent ETF.

No need to speculate. It requires years of esperience, including losing money, to get good at speculation or trading. After you have $100,000 in savings in safe places then you can speculate with small amounts.

That too is excellent advice. I recommend 5 to 20% for “exploring.”

Since beating the market is hard for most to do, I recommend a "Core and Explore" approach to investing. Core means place 80 to 99% of your money into a CORE, buy-and-hold, no load, mutual fund portfolio and then EXPLORE with the remainder. To build your core portfolio, I suggest a diversified basket of index funds such as one of the two Vanguard index fund portfolios I recommend in "Kirk's Newsletter ." (The equity positions for my two recommended newsletter core portfolios can be fully replicated with six ETFs bought from a discount broker.) For the remainder, I recommend Kirk's Newsletter Explore Portfolio.

Through Jan 1, 2006, these two core portfolios, composed of seven different Vanguard Index funds, have beaten the S&P500 over the past five and seven years by over 20% using no market timing and only rebalancing once a year. These index fund portfolios include US equities, international equities and an REIT index fund.

As of 12/31/05 the Total Return for "Kirk's Newsletter Explore Portfolio" since 12/31/98 is Up 197% while the S&P500 only up 12%!!! & NASDAQ only up 1%!!! (My explore portfolio beta is about 1.5)

-- posted by Kirk

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» sherakee - A Speculative Tip -- A Probable Ten-Bager

I've been reading this thread singularly because of the honesty and intelligence put forth by Dr. Jain....I can't help but notice that Captain Kirk Lindstrom catches the coat tails of everyting Dr. Jain has to offer....I wonder if anyone ever reads what he has to say, much less the propaganda offered on all the advertisements he crams into his commentaries. I'm thinking if all of his responses and comments were removed (by himself) if it would make it a much better read. Of course he should leave his bitter remarks to give it kick, Dr. Jains responses of NO response speak highly for themselves. It's very obvious Dr. Jain needs no such advertisement and has a far greater following...oh well, American commercialism reigns true...so, GO Captain Kirks newsletter! hahahah , luck to ya.
I can't wait to see if this is deleted...
Sherry Attaway

-- posted by sherakee

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