I have some BRKB at $66.21 a share. That position had sold covered call $65 Dec 17. If nothing dramatic happen, it will get called away. So, i am building a new position to replace it.
When i shop around today, i was debating between AMZN, AAPL. Amazon is a company that i love the most. And i know its has room for long term growth. PLUS, the management is setup the company to capture long term growth. (they don't care about short term profitability) I admire that a lot. I know first hand that this company will have at least another 5 years of high growth. HOWEVER, current valuation is way too high. PE at 111. Downside risk is too high. I have to control my emotion and not invest in this company.
AAPL is a company with solid performance. It is losing steam recently. Price drop from 426 to $385. I think the earning power is still there. their future sales growth might not be as strong as before. But their pipeline can support them to turn out few more years of good profit. They do have enough time to develop new exciting products. Best of all, the stock price is not expensive at all. What stop me from putting significant amount of money in it is the uncertainty.
Berkshire (BRKB) on other hand is at a solid ground. I feel confident to invest in it and leave it alone for next 5 years. Plus, the covered call premium is above average. AND, they are buying back their own stock. Which set a floor of the stock at around $70. So, downside risk is minimal.
11/10/2011 Action:
Bought 2,000 shares at $75.6/share
Sold Jan 2012 $75 call for $4.40
that translate to invest $151,200 for 72 days. If success, then, earning will be 5.03%. Or annualized 25%
Buffett is holding a lot of cash and he can use them in the volatile market. The long term view of Berkshire is very positive.
Result 1/20/2012 :-- Success !
