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I am reading Jonah Lehrer's book called "How we Decide".Third chapter has an interesting discussion on loss aversion and stocks. picking. He says the only people "who are immune to this mistake are neurologically impaired patients who can't feel any emotion at all" . Great read for seeing how we invest and why we do what we do as investors.

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Thanks for the recommendation, Ted. Will pick it up. I have read books by Nassim Taleb (The Black Swan) and Peter Bernstein (Against the Gods), among others, and found them most enlightening from a trading and investment perspective. Seems Lehrer's book will be of great interest.
I have read Mr. Bernstein's book 1 1/2 news and mostly was left confused with the never ending detail. I have found it most effective to hedge most everything. To date it has proven an efficient and relatively simple expedient methodology berift to of formuli and equations. The book reviews of Black Swan pointed to a heaviness in academic theory. Now to get a copy of the Lehrer-so much to read and learn so little time to soak it all in and use it.

Too bad about your opinion of the Bernstein book. It is generally regarded as a great book. But, such as it is, your post comes at a sad moment, I guess, since I learned that Peter Bernstein died recently at the ripe old age of 90. An obituary in the Wall Street Journal.

I know you hedge a lot, so I figure you are pretty much hard-wired to know the inherent risks of trading. A couple of members here are working hard at their risk-reducing strategies. I like what Brian is presenting and also John Manley, whose in-the-money covered call portfolio trading strategy I find interesting. His article in May issue of Technical Analysis of Stocks & Commodities was compelling. Maybe I can get a reprint here.
What Mr. Manley proposes is another of the tactics that make option trading so interesting and rewarding. I have a postion on EWZ that is similarly hedged but with "out of the money puts" and "out of the money calls" a totally credit position based on time decay.This position does need to be tweeked, on occassion, as some elements of it are not long term.

Being familiar with the Mr. Manley's position I would state that it too will need adjusting. Any suggestion that you can just walk away leaving it to the fates would be a mistake. Dependent on the volitilty of the components parts a long write can do a lot of traveling.

I dislike having large amounts of capital in equity shares a 2% dividend for, say a, $20000.00 ivestment seems illogical. Buying call options as stock replacement instead; at a much lower capital outlay seems logical.The money not employed could be used to add to your call position or otherwise employed. The position could also be enhenced by writing short term puts either "out of the money or at the money. Great Stuff with low risk!





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