You can see the first year’s performance here.

Dan Loomis: I could have sworn that was already on my bookshelf, but I can’t find it. I just ordered it – thanks!

Ryan: In my opinion, it depends on how market correlated the portfolio is. If a 20% drop in the markets results in a 20% drop in the portfolio, I’d look at 15%, knowing that would slice roughly 50% of the returns off on the ups and downs. If the portfolio is not correlated to the markets, I might not use it at all.

The important thing to remember is the 2:1 relationship. I wouldn’t go too heavy in SDS because its returns are magnified by leverage. If you went long 50% and SDS 50%, you are effectively taking a net short position.

g: It’s always the time to buy a stock when the business is great and its price is attractive. I said that in a radio interview yesterday – an interview that I’ll post here when I get a copy of the clip.

Rene: The second I find myself with nothing to do… ☺

- More leverage. The 15 month strike 600 options provide a reverse leverage of about 3.6x.

- Asymmetric leverage. The yield curve on a put option is steeper as the underlying security price goes down. This means less of a penalty as the S&P goes up compared to a reverse ETF.

But put options are not without their problems.

- Options expire, generally worthless. You have to keep rolling over for continuous protection.

- Currently you are paying a high time premium.

- Bid/Ask spreads are large, so your transaction costs are also.

My entry is one of these two, maybe I can get some help deciding which is the better company. Both are down beaten (what isn’t these days) steel makers.

SYM PE PB ROE Debt/EQ OpCF FCF YIELD/Ratio

NUE 5.68 1.27 26.52 .413 2.03B 768M 4.70/40

MT 3.07 .64 24.38 .60 16.36B 6.47B 4.70/14

I usually don’t look at this kind of company because of the high debt. However, all the other numbers scream bargain at me. The cash flows seem to make the debt more palatable. Everyone out there is mentioning NUE, but I think MT is the better buy by far. I’m I way off base? Any steel experts out there? Any number crunchers besides Joe? What are you looking at?

http://www.nytimes.com/20…;ref=opinion&oref=slogin

Third- although we’ve been all over the map, the last decade really has been a flat market. About 6500 Dow points of trading range. the WSJ had a pretty good article a while back called the lost decade.

Full Disclosure – I am a business investor (not a value investor like those big mouths Nygren and Davis) but now a days it is a part of what I do. It’s not the whole. I have no ideological binds when it comes to the market. None whatsoever. I used to be. I try to be the best that I can be, and to develop what works best for me – not some hugely successful guy that I read about. My goal is to make a living not follow ideology. I do a lot of dancing in and out of stocks. To me they are pieces of paper that will break your heart if you give them the chance. (Even though the Sage from the west and his side kick says that ain’t cool) And I’m a pretty fast dancer – In fact, I’ve got one of the fastest right index fingers this side of Wall Street. It’s called tape reading. I don’t give a dang about transaction costs and I want to pay taxes. It beats the alternative.

Please don’t hold that against me. This is my full time job and I’ve had 2 decades experience to realize business (value) investing works well in limited situations, like now!! It’s poor in a rising runaway market. When the market is going crazy to the upside that’s when I kick into momentum mode. (a crime to some ideologists).

I just believe that people who are really interested in investing should have an open mind and to consider other possibilities. It’s Ok. Even if the investing God (you know who) doesn’t bless it.

Nevertheless I think Joe’s approach is about the best I’ve seen on the net when it comes to business investing. Much better than the, hyped, so called experts.

At the risk of pushing my luck, I don’t agree that we are going to see a flat market anytime soon, I think we are going lower. However, as you point out we shouldn’t care about the market but about individual businesses and I’m still looking to buy specific companies all the way down to S&P 700 or whatever. This is going to be a market for stock pickers and no one should be “diversified” or in a broad index fund unless you are very, very young and are investing through dollar cost averaging.

I’m actually having a lot of fun with so many great companies, selling at almost give away prices, to examine. What is not so much fun, is knowing what a rough time a lot of people are going to have for a long time and in some cases permanently. Unfortunately, human nature is such, that rationality, logic and facts don’t convince very many of anything, only a two-by-four between the eyes seems to do the job.

Good to see the site up again and hey, thanks for putting the accent on the last e of my name, I’m so lame I can’t figure out how to do it!

Your “1965 to 1982″ flat market really resonated with me, if nothing else because I read “Active Value Investing: Making Money in Range-Bound Markets” this time last year and it appears we’re going down that path according to plan. If you haven’t already I suggest reading it…it fits in pretty well with your philosophy.

http://www.amazon.com/Act…;s=books&qid=1224196207&sr=8-1