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Discussion of Positions
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| ZigZag Society |
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| ***All will have access to the disocunt brokerage site to see positions and value*** |
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****All will have access to the E*Trade site for portfolio positions and value.***** ZIGZAG INVESTMENT CLUB www.maxpages.com/zigzagsociety.com 1. Mission Statement 2. Objective 3. Investment Vehicles 4. Position 5. Membership Information 6. Trading Guidelines for Period One MISSION STATEMENT: · To learn and educate through active investment in "highly-speculative" investment vehicles consisting primarily of ``Put and Call`` options and small capitalization “companies”. OBJECTIVE: · To aggressively pursue above average market gains. High risk-return profile. Period 1: * (Period one defined as: reaching either 0$ or $40,000 USD) Grow the capital through a more conservative approach. Initial investment will not be in an underlying security with lawsuits, poor fundamentals, or decreasing market share. We will seek industry leaders and anticipate upward momentum often entering a position before anticipated momentum has been confirmed. For example: 1) Ford Motor has been knocked down 5$ on the Firestone Tire issue. That is 8$ Billion of market capitalization evaporated. However, the entire recall is going to cost them a fraction of that. 2) 5 Billion US$ stock buy back program is about to be intiated 3) Ford Motor has ceased talks with Daewoo to acquire it and its losses and projected losses going forward. FORD Fact: About 50,000 Explorers shipped monthly. Opinion: Bounce to 30 likely currently 25. 1 year horizon. Low Volatility on the options. Action (example): Buy 5 call option contracts @ 2.5 (USD)/ January 2002 expiry/ Strike = 30$/ Example 2: Bell Canada. It has a network where content is easily disseminated. It will likely acquire content providers illustrated by the CTV deal. Action: Identify content providers such as cable firms and wait for the consolidation. INVESTMENT VEHICLES: · Put and Call options (and option strategies). · Small cap stocks with a maximum market cap under 1 million at time of initial purchase. · NO vehicles that can incur debt. · NO buying on margin · NO short selling · NO coins or commodities or options for either · NO foreign exchange transactions POSITIONS: Active members: Dave, Charles, Peter. Silent members: Barb, Brian, Paul, Jean, Sean, Paddy, Luc. -All active members must vote or defer their vote for each transaction. -All members will vote on any issues to affect the club. IE: new entrants, distributions etc. · Trader: Charles Executes trade Research Selling power without confirmation from other members. IE: A falling position that requires immediate action upon Chuck’s discretion. · Bookkeeper: Peter and David -records all trades -Shareholder information -Keep track of gains and losses and total value of the portfolio. MEMBERSHIP INFORMATION: Share value: 1 share = $200 US Initial investment: $2000 US. Each share carries one vote. Inception Date. Friday October 31st, 2000. No withdrawal may be made within the first year unless we dissolve with a balance (Oct 31, 2000 to Oct. 31, 2001.) If you do, you will incur a 20% penalty. If all are in favor through unanimous vote, a distribution may be made equally to all shareholders. Example: We are hugely successful and would all be in favor of a 50$ US per share distribution. No new members will be accepted after inception. FINANCIAL STATEMENTS AND DISTRIBUTION POLICY: · A financial statement will be distributed to all members by the end of February of every year, showing position of previous calendar year. · By April 30th of every year, a cash distribution of 1/3 of capital gains realized in the previous year will be given to every member to cover taxes incurred from these capital gains. TRADING GUIDELINES FOR PERIOD ONE: · Must hold a 15%-25% cash position at all times. Buy side: No one position can be weighted at more than 33.3% of entire portfolio. Sell side: Decision time Absolute Sell time Options: Upside 50% 100% Downside 30% 50% Strategy: Home Run: 100% + Standing Triple: 80% -100% Sliding Triple: 50% - 80% Double: 30%-50% Single: 0% (Break Even) to 30% Strike Out: 0% to 30% loss Felch: greater than 30% loss. Although it would be ideal to hit a string of triples, the strategy may be more to hit as many singles and doubles as possible. There will be high turnover in the portfolio yet perhaps more consistent returns. |
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