Post #19474 by mungofitch on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)

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...but with the addition of an options strategy that targets 15% annual income...

What is the likely long run outcome of an investment strategy that attempts to throw off 15%/year income from an underlying investment which is returning (say) inflation + 7%/year?

Only two outcomes spring to mind. A blowup from using too much leverage, or a steadily evaporating NAV. Those piles of free money on the floors of options trading exchanges are notoriously scarce.

That's not to say success at their goal is definitely impossible, just unlikely in the extreme, especially in a corporate/fund environment. My Berkshire portfolio threw off well over 20%/year for over 20 years, though only on average. I conservatively assume that there is a blowup out there that has long had its eye on me.

Jim

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