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      10-12-2012, 03:44 PM   #27
wcinvest
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Drives: BMW X1 (awaiting delivery)
Join Date: Sep 2012
Location: San Francisco Bay area

Posts: 26
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Quote:
Originally Posted by Monterra View Post
Wow, lot going there. Lot of assumptions/projections being made that I do hope work out for you but just one question:
How did you get 349/mo including 8.75% tax with 12k/yr when its advertised at 399 with 10k/yr BEFORE tax and including a loyalty rebate you didn't get? What was your msrp? What was your refundable/non-refundable down payment? PM me about your low risk 7%
My fully refundable security deposit was $2450 and that lowered my interest rate/money factor. Invoice price on Euro delivery cars is perhaps around 8% lower then US invoice and you do not have to pay MACO or training fees on Euro delivery cars so you have to factor that in. And the advertised leases on US delivery cars aren't even the best deals you can get since they typically are a couple of thousands dollars over US delivery invoice and a bit more based upon MSRP prices...nevermind Euro delivery invoice. When you factor in that I won't have to pay my second lease payment thanks to the increased money factor on Euro delivery cars to cover the car while its being shipped from Europe, the total I put down that I won't be getting back was between $1500 to $2000. I don't want to give all my exact numbers since I told my car advisor that I wouldn't.

As for my rather low risk -- certainly not no risk -- 6 or 7%, I buy a couple of different stable stocks that pay decent very sustainable dividends -- usually around 3% -- but I write somewhat deep covered calls against the underlying stock for 1 plus year into the future which dramatically limits my upside to usually only around 6-9% of my initial investment but it also does a great job limiting my downside especially considering I only buy stocks that I wouldn't mind owning long term. For giving someone the right to purchase my shares at a set price which is below the price I paid for the shares, I get paid a premium for it so that is how my return ends up higher then the 3-4% dividend rate. I can honestly state that I have never lost when trying this approach but I fully recognize the risks involved and that I would (probably) lose in the short term if the stock market crashed like it did in 2008.

A company that I could recommend doing this approach right now is perhaps Microsoft. Microsoft's revenue is very stable and not heavily dependent upon a single product. With Microsoft even if you somehow lost on the buying the stock and writing covered calls over the next 1-2 years and were left holding the stock after it crashed to say $20 a share in a massive stock market correction, it is a sound enough long term investment with a fortress balance sheet that I'm incredibly confident you will make your money back.

I know quite a bit about software and the IT industry and let me state, the chances of Microsoft Windows being replaced on corporate desktops within the next 10 years is very close to 0%. They have already owned this market for over 30 years. This desktop business that includes Microsoft Office and some related businesses like Sharepoint and SQL Server are a huge cash cow for Microsoft and it allows them to continue to make lots of money even when they fail in some other areas.

Even though I still own some shares, I could not recommend Apple in a covered call strategy since their revenue is too dependent on one product, the iPhone which realistically could continue to lose market share over the next 5 years to Android devices.
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