Chapter 22
How to Use LEAPs in a Severe Bear Market
It's now the end of January 2008. The stock market has had a pretty severe bear market for the past half year or more. And this bear market has severely affected our model LEAP portfolio. I have found that LEAPs react quite severely in a bear market. Also LEAPs react quite strongly when a stock becomes a dog that isn't going to recover. Based on actual real world experience, I am writing this chapter to see what we can do about severe bear markets that will improve the performance of our LEAPs. Also what can we do to prevent ourselves from being stuck with the dog that offers little or no hope of a recovery. I will start off by showing you two examples of what we want to prevent. Below are the spreadsheets again in the Adobe Acrobat free version showing how Advanced Micro Devices (AMD) and Starbucks have done in the current bear market.
