Portfolio Strategy w Conservative Options
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Portfolio Strategy w Conservative Options
I'm turning 50 next year. AARP has my email,
address and phone already, so I'm being spammed on three fronts. I have 17 years before I cash in on that golden goose of Social Security. I've been looking at restructuring my modest portfolio to align it with those brilliant and ever inspiring retirement calculators - shift more risk and assets into bonds. Bonds are a huge market. I remember one stat that they were a bazillion bond dollars vs a couple dozen trillion in stocks, its huge and moves like anything huge - slowly and steady. I also know that you only make money in bonds when the rates are high, trending flat or decreasing. Not when prices are in the toilet where the only future for rates is up. I'm no expert, but when squat is promised, I don't buy squat. So... what to do? Follow the herd into Dividend Investing. Dividend stocks have always been a part of my portfolio. But here's the rub -- a 3% dividend is nice, but if you only have 100 shares, it is just a reminder that you have very little indeed. Yeah, my $16.00 check came but gas went to $4.25/gal and I buy gas every week not every three months. So the only way to really achieve substantial dividend investment returns is have a boat load of shares - 1,000 shares or 10,000 shares in a 3% dividend paying company. And, that is pretty much a non starter... 1000 shares of FAST paying 1.94% is $43,000 or RMD paying 1.67% would be $41,620... and that means a annual dividends of $840 or $680, respectively. Oooh... retirement in sunny Hawaii is still a bit out of reach. On the other hand, most every site I review says you should invest in stocks that show great potential in growth and if it pays a dividend, then you're collecting some extra. Once it appreciates to a determined valuation, sell. Great... no brainer... can't complain... But... Every educated economic site tells us that if you trade the market, you'll loose over the long run - market timing isn't for the faint of heart nor is it for part time investors, in my opinion. And how do you build up a 10,000 share position when you sell? How do I develop a large segment of my portfolio that pays me to suck air and cash checks if I'm just going to turn and burn stocks all the live long day? Lets face it, that golden goose is going to lay very, very small eggs and if I'm going to replace my income with income from the market when gas is $15.00/gal and an MRI on my back requires an equity loan --- Lucy, youz got a lot of 'splaining to do! I turned to Conservative option selling to increase my annual dividends on positions I already have, and to cost efficiently increase my current positions or start new positions. So far, it has been entertaining and pretty profitable (Sierra is in therapy for her spinal condition thanks to advice from COOL Club and a couple lucky trades - http://nnvbr.chipin.com/sierra [unapologetic solicitation]). I will continue to trade conservative options as part of my investing strategy and believe it will add to my earnings very nicely with limited risk. Anyone else up against this conundrum? Am I so off base in my echo chamber that I'm nuts? What strategies are you using? Malcolm Apologies and understanding if this topic is too far in the weeds for COOL Club.
Cool Dudes and Dudettes, Disclaimer: I do NOT support Ayn Rand's philosophy. I have not studied her works enough to support or dispute her dogma. I do not offer her quote here for political discussion. I first read the quote some time ago and immediately thought of my beliefs and then, more pertinent to me, how I invest. I recently have had good reason to revisit the quote. The internet is still a new frontier - it has glorious promise, tragic consequences and, like all frontiers, is vast and intimidating to the explorer. The flood of information available to the user is so incredible and incomprehensible in its volume that it can paralyze an unprepared or insecure individual much like the Donner Party was stalled out in the Sierras (it is snowing as I write and Donner lake is thirty miles away). Prepared, intelligent and resourceful individuals can succeed in using the internet to their advantage much like Jeremiah Johnson and the Native Tribes of America. Bear Claw Chris Lapp: You've come far pilgrim. I'm somewhere north of a Greenhorn but recently feel like I'm struggling. Why? Because, as a recent economic retiree, I began to take a more active role in my investments with Conservative Option Trading. And what I thought was a sound (well, comfortable at least) investment philosophy got ruptured by a whole new frontier of investing in which I lacked any fundamental knowledge (admittedly, by choice). I was able to quickly grasp the concepts presented by the COOL Club and to effectively use the COOL Tools to my distinct (albeit very lucky, IMO) advantage. Thank you again Paul - I value the wisdom greater than the gold. Cool Club, Motley Fool, NAIC, IClub, Manifest Investing, Morningstar, Schwab, Seeking Alpha, The Options Council, FINVIZ, Blue Collar Investor, MSNBC, CNN, etc, etc, etc. The information PIPE is huge and it flows with a CONSTANT stream of data. I don't say information, because data has to be sent and received (ie. comprehended and useful) to be informative. Its like drinking from a fire hose - funny to some, but not very efficient for the thirsty. I don't think I'm alone. Bear Claw Chris Lapp: You're the same dumb pilgrim that I been hearin' for twenty days, and smellin' for three! I have read Lynn's Trading Plan maybe a dozen times with the intention of writing down my own. I agree that a plan needs to be created and implemented by any and every investor! Part of my plan is: Limit my information feeds to those sources that challenge my intellect and provide me with foundational guidelines to refine my investment philosophy and practice. ... and if that ain't a two-bit, class A line of BS, I don't know what is! But it is my BS and will be something that I can use to fertilize my plan. I will continue to be involved with COOL Club (just not an mouse eared Clubbie, really Dude?!), monitor carefully selected authors and sectors of Seeking Alpha, NAIC, iClub and InvestEd. I also believe I need to structure my exposure to these resource much like a school class schedule - a day and time period. I won't ignore the other feeds that come to me automatically, but I'll not be overwhelmed and distracted by them either. I am also revisiting those books that started me on my path some twenty-eight years ago: George Clason's "The Richest Man in Babylon" (Amazon, ebook, $4 BTW) (chapter on Luck); Peter Lynch's "One Up on Wall Street"; and, apologetically, for real this time, Benjamin Graham's "The Intelligent Investor" and Philip Fisher's "Common Stocks and Uncommon Profits" as I didn't get through them the first go around. My new reading is to continue digesting the Demystified books by Paul Kadavy and "Getting Started in Chart Patterns" by Tomas Bulkowski (from a friend who is a hyper active trader). So now that the Universe knows my intentions, What's your plan Pilgrim? Malcolm Bear Claw Chris Lapp: Watch your top knot. Bear Claw Chris Lapp: You have done well to keep so much hair... On Sat, Nov 10, 2012 at 2:21 PM, Malcolm Myles <malcolm@mmyles.com> wrote:
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