Starting point - 100,000 on 11/17/04 with the stock at $27.99. Low-water mark was $31,650 with the stock at a 98-month closing low of $20.60 on 12/9/05. The high point before this calendar year was $181,645 with the stock at $28.47 on 9/20/06.
For 2007 to date, the investment is down by 14.2% ($18,285) on a 2.1% decrease in the stock price including two 29-cent dividends.
This investment is highly-leveraged to the point where I earn about six times what a buy-and-hold investor does up to $27.50. Between $27.51 and $30, I earn about three-and-a-half times what a buy-and-hold investor does. However, I still earn a decent return if the stock does nothing at all (20 to 25% earned per year) and I only get hurt somewhat should the stock really tank. In that case, I would lose over time something like two-and-a-half times that of a buy-and-hold investor. That would be on paper. In order to truly be saddled with that loss, the stock would have to stay down for over a year.
My current breakeven is down to $24.45. Every point between $25.00 and $27.50 means about 40K over time. Over $27.50, every point means about 24K.
With the stock at the same closing price as it is now ($24.78) at January options expiration, I would be able to cash out for 117K.
If Pfizer is $27.50 at January expiration, I would likely be able to cash out for 226K factoring in the effects of remaining rollovers.
If Pfizer is $30 at January expiration, the cashout value would grow to 286K.
If Pfizer is $31 in mid-January 2009, I will be able to cash out for at least 350K.
************************************************* Re: Milo, your bet's looking good! Already 65% of the way 13-Jun-07 08:25 pm
There's no "traditionally" about it. The past three years it just so happens there were major travesties the second half (adverse Celebrex test in 2004, the yanking of estimates in 2005 and Torcetrapib failure in 2006).
There's nothing apparent in the way of travesties in 2007. No optimistic forecasts and no huge drugs under development that could fail. Any travesty this year would have to come completely out of the blue. There would be little reason for an investor to expect any such thing.
You saw the lows this year on March 5 with the $24.70 close. Nothing resembling that will be seen. EVER!