patrick.net

Ok, the Bitcoin trade is officially over.

https://patrick.net/post/1344089?offset=160#comment-1838336

[ the entire text is the first posting ]

Now, given the fact that the blue chips, like Proctor & Gamble, are mainly overpriced so that dividend reinvestment (DRIP) is basically overpaying for those shares, it's better to simply bank whatever P&G gives you every quarter, henceforth, until the next market correction.

But sure, I have my Rio Tinto, Altria, & British-American Tobacco on DRIP mode, as they're properly priced with high dividends, so any market correction will result in a huge no of reinvested shares.

Ok, so the last dance is Carl Icahn Enterprises, IEP. IEP is basically a high dividend stock, 15+%, but with poor fundamentals. In other words, if anything happens to Carl's health (he's in his 80s) or one or more of his deals go south, the company may cut dividends and see its price go into the toilet. And his heir apparent is his son, which doesn't give me much confidence ... just look at George W Bush or any other organization where nepotism is the way of the land.



So with this stock, the idea is to use those P&G dividends to mastermind the trade. In other words, use guaranteed dividend income to pay for a risky trade. And in this case, given the fact that 1) Icahn could fail with its stock pricing plunging or 2) the market could tank which could easily take IEP down with it, one should pay for a LEAP put option on the downside and then, sell (re-claiming half the value) at the mid-term, & re-purchase that put, for a latter expiration time to maintain a level of insurance while also adapting the pricing for the present stock ticker for IEP. So far, I'm predicting that the ~15% dividend would cost some 5-7% per annum in terms of the downside protection which nets one a 7-10% yield on their investment.