{"id":36171,"date":"2013-02-13T12:20:50","date_gmt":"2013-02-13T17:20:50","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=36171"},"modified":"2013-02-13T12:20:50","modified_gmt":"2013-02-13T17:20:50","slug":"up-500-and-safer-than-stocks","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/02\/13\/up-500-and-safer-than-stocks\/","title":{"rendered":"Up 500% And Safer Than Stocks"},"content":{"rendered":"

By Justice Litle<\/strong><\/p>\n

Joel Greenblatt has one of the best investment track records in
\nhistory. His hedge fund, Gotham Capital, is on record with average
\n50%-plus annual returns for more than a decade<\/a><\/strong>.<\/p>\n

Those returns are even more impressive because Greenblatt didn\u2019t earn
\nthem by using fast-paced trading or leverage. Instead, he is a
\ndyed-in-the-wool value investor<\/a><\/strong>.<\/p>\n

In his book You Can Be a Stock Market Genius<\/em>,Greenblatt lays
\nout some of the strategies he used to generate these extraordinary
\nreturns. One of those strategies is using LEAPS, which stands for
\n\u201clong-term equity anticipation securities.\u201d<\/p>\n

Put simply, LEAPS are a special type of call option with a long-term
\nshelf life. (Puts are also available.) LEAPS are available on hundreds
\nof securities and can extend out as far as 30 years.<\/p>\n

A big advantage of LEAPS is that they allow you to benefit from price
\nmovements of a large amount of stock with a modest amount of capital.
\nInstead of buying $10,000 worth of shares, for example, it is possible
\nto buy just a few hundred dollars worth of LEAPS and still have similar
\nprofit potential.<\/p>\n

Better still, this smaller amount becomes the maximum amount of money you can lose if your investment goes against you. <\/strong><\/p>\n

So if investor \u201cA\u201d buys $10,000 worth of stock — tying up a large
\nportion of capital and exposing himself to downside risk on the entire
\namount — investor \u201cB\u201d can use LEAPS to enjoy comparable upside
\npotential with a fraction of the capital and a fraction of the downside
\nrisk.<\/p>\n

Greenblatt describes how he used LEAPS to profit from a bullish
\ninvestment situation in the early 1990s. Wells Fargo, the mortgage
\nbehemoth, was trading for $77 per share, having suffered through one of
\nthe worst real estate recessions since the 1930s.<\/p>\n

In fact, in 1992, things were so bad in the commercial real estate
\nmarket that investors were wondering whether Wells Fargo would survive
\nthe downturn. Even if it could have rebounded modestly, Wells Fargo
\nstock was so depressed that the share price could have easily doubled
\nover the course of a year or two.<\/p>\n

There was just one problem. What if some hidden risk lurked on the
\nbalance sheet? What if the depressed share price was justified? How
\ncould Greenblatt protect his downside, while still capturing a big
\nupside move?<\/p>\n

Greenblatt decided to invest using LEAPS\u2026<\/p>\n

He later described the Wells Fargo LEAPS investment as \u201ca great
\nchance for a double with a remote possibility of disaster.\u201d LEAPS
\nallowed him to catch the upside if he were right. But even if he were wrong, the risk of the LEAPS position was limited to the cost of his purchased options. <\/strong><\/p>\n

As it happens, Greenblatt was right about Wells Fargo. And his LEAPS
\ninvestment was a home run. Wells Fargo shares more than doubled. But
\nGreenblatt\u2019s LEAPS did even better. They returned in the neighborhood of
\n500%.<\/p>\n

Not all LEAPS will deliver these kinds of returns<\/a><\/strong>. But they are an excellent way to lower your capital costs, reduce your risk and boost profit potential.<\/p>\n

In Strategic Wealth Report,<\/em> this is exactly what we strive
\nto do. I use the power of LEAPS to exploit compelling investment ideas
\nand major long-term trends.<\/p>\n

If you would like to find out more about LEAPS, look for my special report on the subject (coming soon).<\/p>\n

Carpe Divitiae,<\/p>\n

Justice<\/p>\n

http:\/\/www.insideinvestingdaily.com\/<\/a><\/span><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Justice Litle Joel Greenblatt has one of the best investment track records in history. His hedge fund, Gotham Capital, is on record with average 50%-plus annual returns for more than a decade. Those returns are even more impressive because Greenblatt didn\u2019t earn them by using fast-paced trading or leverage. Instead, he is a dyed-in-the-wool … <\/p>\n

Continue reading “Up 500% And Safer Than Stocks”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-36171","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/36171","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=36171"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/36171\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=36171"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=36171"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=36171"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}