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Gene:

Something else that I do in a "separate" IRA account (no tax consequences) is to sell "covered calls" on SPY. I sell whatever looks like low lying fruit. SPY has multiple weekly expiring options so it is easy to sell. 90% of the time the options expire worthless to the buyer. 10% of the time they go in the money., so I either buy them back at a loss, or let them call the stock. So what? Transactions costs are low and I buy another SPY lot and sell calls.

The returns are VG and the strategy is simple (like the solid lifter cams we ran for years and they never busted, but that was a long time ago)

To simplify this for people not familiar with the above. Basically you act as the house/dealer in the casino instead of the gambler.

Your thoughts?

Alex
 

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Gene, I sincerely appreciate your generous offer but I've already decided to sit tight. I don't need to sell anything and have about 30% in cash now.
30% sounds about right! Sounds like you're fine.
see, that was simple easy! :)
 

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Gene:

Something else that I do in a "separate" IRA account (no tax consequences) is to sell "covered calls" on SPY. I sell whatever looks like low lying fruit. SPY has multiple weekly expiring options so it is easy to sell. 90% of the time the options expire worthless to the buyer. 10% of the time they go in the money, so I either buy them back at a loss, or let them call the stock. So what? Transactions costs are low and I buy another SPY lot and sell calls.

The returns are VG and the strategy is simple (like the solid lifter cams we ran for years and they never busted, but that was a long time ago)

To simplify this for people not familiar with the above. Basically you act as the house/dealer in the casino instead of the gambler.

Your thoughts?

Alex


Hahaha.... my favorite victims are LUMN, CAR ( which I'm about to lose on JAN33s ), INFY.... but yes, certainly using an index is just as "modestly profitable , but very repeatable " as any well done covered call strategy can be.

Its a bit more dynamic with individual names, and I think more profitable, but I have no proof to that. Once in a while you lose shares you dont want to. Both CAR and SPG will cough out of my IRA tomorrow. Sort of bummed, but its all profitable and you can always execute a "buy/write" with the proceeds of the assignment and start afresh.

I'm getting used it now as I will use covered writing as one of my "hobbies in retirement". An 83 yr old client got me into it a few years ago. Sent me that Wade Cook book he learned from, which seemed basic enough. I don't do it for many clients other than him, as its rather time intensive as compared to normal buy and hold!

The pros tell me the real "juice" is in combination strategies, where generally you are selling and buying, so playing long shots with house money in essence. I'm not 100% up to speed on those yet.

Covered writes are easy to understand and execute for me. i dont mind being long individual names, yet if I owned a good dollup of SP500 or SP100, as I gather you do, I 'd certainly use that as my box or covered position.

Many decent income funds like JH Patriot Dividend fund employ the strategy to get their yields to near "junk" levels w/o using any junk, just covered writes.

Good stuff for income, to be sure! Some old farts play bridge to stay sharp. I hope to have enough brain left to make my "card game" a bit more profitable.
 

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My fiduciary financial experts say we are looking at a very strong year of recovery. First COVID will subside and Biden will support more money into the economy to get it moving. My account is structured to be stable and cautious but I am sitting with less than 20% cash today and fully invested worldwide in a balanced portfolio. Since Biden won the election my account has done very well and I am hopeful as my experts say it will continue through 2021.
 

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Good discussion.

Question - my advisor feels a large correction is going to happen and suggests I put a chunk of my money in a Variable Indexed annuity. Downside is protected 10%, unlimited upside. No fees. The con is that I have to tie the money up for 6 years. Any thoughts? I know annuities get a bad rap but this is more of an investment and the term "annuity" is a bit of a misnomer in this case.

Thanks!!!!!!!!!!!!!!!!!!!!
 

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Most indexed annuities are commissioned products so pure RIAs don't use them. "no fees" eh? Read the fine print. Most indexed annuities have decent internal fees, which "cap" your upside as well as limit the downside. You may end up making something like the returns on intermediate term corporate bonds. Also there are traded vehicles that do the same thing.

Why not simply own a good dividend payer like MLPX? Rhetorically asked.

PS Its not a market correction that looms, its the math of valuations. Sure corrections alter valuations quickly, but from a general perspective, the higher the level of the market is, the less potential forward return.

The SP500 posted 19% last year, and now sits at 18.5-19 X forward earnings, at the top of its historic valuation range. Therefore a professional assessment may be sub par returns going forward from these levels, not neccessarily a "crash". So way less than 19% in 2021 is almost a guarantee, in the stock market world of no guarantees.

Maybe there will be a "large correction", but most pros look at it as modest returns from lofty levels is more like it.
 

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Mr. 68-CHVL

I have looked at annuities and did not like the "hidden fees". Also do not want to tie my money with them. I guess there are many different products. As mentioned, I like and have done well with Vanguard funds. I shy away from stocks as I do not trust or believe the accounting of any firm. Remember GE, the granddaddy of "safe" investments? the accounting was painted, and stock tanked from 40's to 6 (or so), and they cut the dividend. I don't want to be there. Index funds offer automatic diversification as if one or a few issues go south it won't hurt you.

Also be careful with the yields advertised, many do not generate enough money to pay the dividend, they return your money or borrow $ = eventually they go bust.

ex: NLY is a mortgage backed security, yields 10.7%. But has no earnings. On the surface it looks good, but it is not.

This is my non professional take based on 40 years of investing. I keep things simple.

Be well

Alex
 

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Gene:

Something else that I do in a "separate" IRA account (no tax consequences) is to sell "covered calls" on SPY. I sell whatever looks like low lying fruit. SPY has multiple weekly expiring options so it is easy to sell. 90% of the time the options expire worthless to the buyer. 10% of the time they go in the money., so I either buy them back at a loss, or let them call the stock. So what? Transactions costs are low and I buy another SPY lot and sell calls.

The returns are VG and the strategy is simple (like the solid lifter cams we ran for years and they never busted, but that was a long time ago)

To simplify this for people not familiar with the above. Basically you act as the house/dealer in the casino instead of the gambler.

Your thoughts?

Alex
Agreed! Selling covered calls is almost like squeezing money out of thin air! Also agreed that most annuities have hidden fees, someone claiming "no fees" may not have your best interest in mind.
 

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Like the article. Time, discipline (dollar cost averaging) is key to this. I invested more when the market got hit hard (noone can pick the exact day) but don't have to. 10 year charts show the pivots clearly.

Something else to remember is when markets go down by 50%, it takes 100% rebound to break even, and can take 10-20 years as indicated here:

 

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I am loath to sell anything. I am not worried about the market, but I do keep an eye on valuations of my individual stocks and I will on occasion sell some things if I think it has more downside than up. A lot of stocks have had a huge upside recently - DE, HON, COF, DIS - but they’re all great companies so I really hesitate to sell. But if the market starts to look shaky I might sell half or all but keep it on the radar screen.
 

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Alex, staying in your comfort zone on investment vehicles allows good discipline.

Andy, selling too soon is what hurts me most it seems. KEEP HOLDING ON! ;)
 

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Alex, staying in your comfort zone on investment vehicles allows good discipline.

Andy, selling too soon is what hurts me most it seems. KEEP HOLDING ON! ;)
The biggest lesson I have learned in 25 years of investing is that if there is doubt, much more often than not you are way better off keeping than selling. I can point to at least a dozen stocks I sold over the years for various reasons that I wish I had kept. This is why I hate to sell. Barring a company so bad it goes bankrupt, if I err on the side of keeping, I know I will be much better off in the long term by keeping.

Even if you DO end up owning something so bad it goes bankrupt, your winners will more than offset the loss.
 

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Discussion Starter #34
How will the upcoming dem controlled Congress and President affect the stock market?
 

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You know Von, I feel that folks ALWAYS give the White House way more credit for these things than ought be given. At least that's my observation over the years. Started with the Ds giving all the credit for the economic boom of the mid 90's to Bill Clinton, when it was pure raw demographics - America was "minting" more 50 yr old males back them than ever before. Bill Clinton was utterly irrelevant. Many TC members were NOT however, as they fit that demographic.

However, maybe this admin will finally take on fakebook's monopoly? The last admin really didnt have any traction on any of that. No leadership at all on that front.

The new President bending to his party's will is what I am watching for, as well as Nancy P dragging ol DT through the impeachment mud for no valid reason. Sort of the same thing. None of that can be good for the markets, its depressing shit no matter how you cut it. ( DT ought act like an adult MAN and resign - I agree with Karl Rove. )

While the Democrats have completely abandoned US labor, just as the REPS have given up on any sense of fiscal prudence ( except where it isnt warranted - DOH!) . somehow I think Joe will try and reestablish the D's as the party of American Labor. Not that I have any angle on how to play that in investments. Yet I suspect the Trump China policy will be maintained to some extent by Biden; its natually a Democratic plank. ( The Clintons sold us out to the Chnese back in the late 90's , if y'all remember).

What most of us expect is a continued broadening of the market from those lofty tech names to more gritty companies that have been overlooked, and lie mainly amongst the smaller guys. A few names like Olin, VISTA Outdoors, MKS Instruments, BUNGE or in index terms the mid and small cap value indexes ought start to shine a bit more. They've been dull for years while ZOOM and SHOP have been hot as $2 pistols.

Most of that is natural market rotation as we move past the pandemic woes and into the 3rd and 4th quarters of this year when things maybe be more "back to normal".

AS any good market observer will tell you, most of the stimulus and recovery is already being discounted by the market. This is why some of us arent so bullish anymore, again, not much to do with politics and the right wingnuts insurrection, but everything to do wth the economic cycle, which has been totally subverted by covid.

And maybe this! :


"Be fearful when others are greedy. Be greedy when others are fearful". W. Buffet
 

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I think the market is totally disconnected from reality of what is happening on the ground.

It likes the massive (trillions) of $'s being created out of thin air, and that money is being pumped into the market as it has nowhere else to go.

I see TESLA is worth more than all German companies combined. Why? It is not even a well built car.

Going to stick to what has worked well for me.
 

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Still digging data on this lil " Canadian Flyer", called EXRO Tech. EXROF. Not in any index. Speculative grade. Coil switching tech making electrics more efficient and/or powerful. I'm not an EE to know if it's another NKLA marketing scam, ( which the arrogant boneheads at GM bought into) or if its the real deal. Certainly seems for real.

Also, as the market caps of the big tech boys gets BLOATED, they'll be looking for more and more acquisitions, which will bolster the mid, small and even micro-cap spaces. It happening already. Cheap money, eh?

Alex, I've mentioned this before here at TC, its not a stock I own , but take a look at good ol DANA's website..... the future is here folks.....https://www.dana.com/

Looks like TSLA will have some stiff competition coming on soon from the majors, at least judging by how the component manufacturers have rushed into the space. That space isn't like Fakebook gobbling up all the competition ex YouTube and Twitter. Nor do I think TSLA will become the next Sinclair computer. They will no doubt be out of "first adopter" phase in a few years.

Boy, off topic, but am I the ONLY person in America that wishes we had a national nuke program to clean energize the grid for these cars?
 
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