Wow, what can I say other than this is just more rediculous stuff for Duc.
1. He banged on about CZZ having a bit of bank debt, yet now says highly leveraged speculative strategies makes for a margin of safety.
To compare this to the position CZZ was in, and say it has a margin of safety but czz didn’t is nuts.
2. Keep in mind my ten bagger result with czz was achieved without adding any leverage to it with options, even margin loans weren’t available against czz st the time.
3. So you may achieve you goal, but if you do kick the goal, it will be the result of speculation, far in excess of any speculation needed for czz to work as an investment.
Good luck, you will need it.
1. The leverage employed by AMZA is 20% - 30%. Now that is not insignificant, but if used well [correctly] will enhance returns. Of course the converse is also true, if used badly [incorrectly] will hurt returns. The derivatives position is 1.5% of assets. This is insignificant. No different to CZZ using futures contracts to hedge currency fluctuations.
2. Your 10x was largely made up of:
(a) luck that nothing serious blew-up in the stock, when there were risks barely under control; and
(b) that a merger happened; and
(c) a bull market.
Re. AMZA, [and my] running a covered call/covered put operation [which isn't really viable yet] hardly qualifies as 'leverage'. Leverage would be buying an outright position in derivatives. So you are incorrect.
Whether a margin loan was available or not, that is not how I will calculate the returns. The starting capital is $10K. The ending result is by the value of that starting $10K. Again, your argument is without merit.
3. Early on in the DK's thread 'Education...' I said to you that intelligent 'timing' of the market will beat 'time-in-the-market', unless a stock just goes straight up. Stocks that go straight up are rare. To get one is lucky. I don't anticipate getting that lucky. I don't need to get any more lucky than the stock:
(a) doesn't blow itself up; and
(b) fluctuates with the market and its underlying assets.
This choice splits very evenly down the middle.
(a) we have an active management, plying a number of strategies, to date, with varying success; and
(b) an underlying portfolio of [pretty good] businesses.
(a) is speculative. I cannot control or predict what management will/will not do. I can keep an eye on what they say they will do and see if they follow through.
(b) is where the margin of safety resides. Here you have underlying assets that have been beaten down and now have prices that reflect a margin of safety in the businesses that they represent. There could well be an upset, hence a portfolio, rather than a single stock. A portfolio provides a buffer against calamity in a single stock.
Since you are a man with lots of time, far more than me at any rate, if you wish, we can go through a stock or stocks held by AMZA and assess just how good bad the stock is. As I am now returning to my wage slavery I will not be able to do this every day, but we will get through them over a 5yr period I'm sure.
We can also debate AMZA's performance directly via their financial statements if you prefer [certainly less work].
Therefore my strategy is to trade around managements decisions, anticipating a 50/50 outcome [some good, some bad] which should cause the stock to fluctuate.
I will also benefit if the underlying assets exit their bear market and enter a neutral period of consolidation and possibly even a bull market. This will also cause fluctuations.
However if you wish to call that speculation, I'm fine with it.
jog on
duc