Protect Your Nest Eggs With a Bond Ladder

On Wednesday, Federal Reserve Chair Janet Yellen said that interest rates could be raised next month depending on a wide range of factors that can show whether or not the nation’s economy is improving.

In the meantime, investors continue to look for the best ways to spend their money, especially people who are tucking away money for their retirements. While stocks are the most popular investment, especially when it comes to making fast money, if you have patience to watch your nest egg grow, consider bonds.

For this article, I’ll go over bond ladders. I’ll discuss the details of putting them together as an investment strategy. But of course, as with all strategies, check with your financial advisor about whether this is best for you. Stock investments can be tricky, but bond ladders can be particularly tricky, especially for novice investors.

 · What’s in a name?


Yellen’s announcement gave a better, sooner indication idea of when interest rates may rise, but it is clear that there is a lot of uncertainty surrounding the future of interest rates and the outlook for bonds. That’s one reason to consider a bond ladder.

As noted by Charles Schwab, “investors often build bond ladders to help generate predictable cash flow and help reduce some of the volatility resulting from rising or falling interest rates.”

Bond ladder portfolios contain bonds with different maturities bonds and coupon payments. They can be reinvested according to the “rungs” that make up the ladder. For example, bonds that are reinvested in the longest rung of the ladder offer higher yields than those bonds that are reinvested in the shorter rungs.

For example, if you had $50,000 to invest in bonds, you could use the bond ladder like this: Buy five different bonds each with a face value of $10,000. In the bond ladder approach, each bond would have a different maturity. One bond may mature in five years, and another may mature in 10 years, but each bond would represent a different rung on the ladder.
Here are some tips to build your bond ladder

 · Dealing with falling interest rates


As you know, when interest rates rise, bond prices fall, and when they fall, bond prices rise. So you may wonder how this could affect a bond ladder. In this case, you wouldn’t make as much income as before with the same amount invested.

A bond ladder gives you a framework in which to balance the reinvestment opportunities of short-term bonds with the potentially higher yields that longer-term bonds typically offer, says Richard Carter, Fidelity vice president of fixed income products and services.

And consider this. By using the bond ladder approach and staggering the maturity dates, you won’t be locked into one particular bond for a long duration. A problem that can arise when you lock yourself into a bond for a long duration you can’t protect yourself from interest rate risk, notes Investopedia.


 · Here are some tips to build your bond ladder

Try to include only callable bonds
Avoid the highest-yielding bonds; at any given credit rating
Include high credit bonds; avoid junk bonds
Build your ladder with high-credit-quality bonds


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Posted by TwillyD May 18, 2016
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What’s Old is New Again; Nokia Hopes So

Remember when the hottest cellphones in the market were made by Nokia (NYSE: NOK). We watched it go by way of so many others in the wake of the iPhone made by Apple (NASDAQ:APPL) and devices powered by Android from Google (NASDAQ: GOOG).
(Google is now Alphabet and its ticker is GOOGL)

Well, you may be seeing Nokia devices back in the market, thanks to an agreement announced on Wednesday. Through a strategic brand and intellectual property licensing agreement, HMD global will be allowed to create a new generation of Nokia-branded mobile phones and tablets.

HMD global is a newly founded company based in Finland that is charged with providing the focus Nokia needs to start making devices again. Under the agreement, Microsoft (NASDAQ: MSFT) is selling the low end phone unit for $350 million. In 2014, Nokia was acquired by Microsoft for $7.2 billion. It took just a year for Microsoft to write Nokia off of its books, costing it to take a $7.6 billion charge.

The change is expected to be complete this year. HMD intends to invest more than $500 million over the next three years to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business. Nokia will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights.

Nokia will need this help. While it dominated the smartphone market in the 1990s, it began to lose steam with the introduction of the iPhone and Android devices.

However, its troubles ran deeper than that, especially with rolling out products that consumers were not attracted to. Also, it failed recognize the importance of software, such as apps that run phones. It also didn’t accurately estimate how dominant smartphones would eventually become. While smartphones with apps were growing in demand, Nokia seemed to want to stick to developing phones with touchscreens, which were all the rage, was best. We see where that got the company.

Nokia was only cleared to enter the smartphone business at the beginning of the year. At that time, it answered rumors that it would deliver a smartphone this year through a brand-licensing model. It noted that the right path back to mobile phones was to allow that partner to manufacture and provide customer support for a product.

The question now becomes whether this deal will pay off for Nokia. Of course it boils down to whether HMD can actually pull off devices consumers will like? Consumers are so enamored with the mobile device leaders, it may be difficult.

For its latest quarter, Q1, Nokia reported an 8% year-on-year net sales decrease.
In reporting those earnings, it was that while the revenue decline was disappointing, the shortfall was largely driven by Mobile Networks, where the challenging environment is not a surprise. The company noted in its Q4 2015 earnings release that it expected some market headwinds in 2016 in the wireless sector.

After the announcement on yesterday, during intraday trading, Microsoft’s stock was up about .5%, while Nokia’s stock was up roughly 3.52%.


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Regenerative Medicine Company Faces NASDAQ Delisting

After being given roughly a month to show that it had gotten its financials in order, Osiris Therapeutics (NASDAQ: OSIR) has failed and faces a real chance of being delisted.

On Monday, the company provided an update regarding the status of its compliance with the Listing Rules of the NASDAQ.

In March, Osiris received a notification from NASDAQ indicating that, as a result of the company not timely filing with the Securities and Exchange Commission (SEC) its Annual Report on Form 10-K for the year ended December 2015 Osiris had failed to comply with the periodic filing requirements.

On May 12, the company received an anticipated letter from NASDAQ noting that it had still filed its quarterly report for the quarter ended March 31.

Osiris has submitted to the NASDAQ listing qualifications staff a plan to regain compliance with NASDAQ’s continued listing requirements. The NASDAQ staff has discretion to grant up to 180 calendar days. That would put the maximum date at Sept. 12, 2016.

The question is whether Osiris work to complete its previously announced accounting reviews, restatements of prior period financial statements, transition to a new independent registered public accounting firm and 2015 audit will be enough to put it in a position to bring its SEC filings up to date.

Founded in 1992, the medical device company managed to carve out market share and a strong reputation for its research, development, manufacturing, marketing and distribution of several regenerative medicine products. Those products, Grafix, which are cryopreserved placental membranes that are used to treat hard-to-treat acute and chronic wounds. Grafix and its two other products, Cartiform and Bio4, have helped it grow its revenues; and they helped it go public in 2006. Back then Osiris’ stock opened for its first public trade around $10. It peaked at $23 last year, and now it is trading just under $6 and faces delisting.

Then there was some bad publicity that the company faced that raised some eyebrows surrounding its hiring of Todd Clawson, who was the head of the company’s national sales department. Prior to going to Osiris, he worked at Advance Bio Healing. Federal prosecutors are now looking at him over his work while at Advance Bio due to allegations that he gave doctors several perks in exchange for them doing business with Advance Bio.

There has been no evidence presented that Clawson did anything corrupt while at Osiris. Clawson was credited with the company’s sales jumping substantially when he was hired. Sales went to $60 million in 2014 from $24 million in 2013.

So as we wait for the final outcome for Osiris and its NASDAQ possible delisting, I advise to stay away from this stock.


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The DOL Fiduciary Rule is Here; Now What for Advisors and Insurers

If you invest in variable or fixed annuities, you will see some changes in the commission costs soon. That’s due to the Department of Labor’s new fiduciary rule that will begin taking effect over the coming months.

The investment advisors who sell the products and the insurance companies that employ them are all on alert about how much of an effect, or difference will make.

 · The need for the rule

 The thought behind the rule is that many advisors have promoted products with high commissions knowing full well that the product may not be needed by the client. This has especially been the case for annuity products, which are notorious for being complex for the average client. The rule is hoped to discourage advisors from pushing these high commissioned, products, and promote products that will best suit their client’s news, not just supply the advisor with high commissions.

That’s great for the client, but for advisors, it may lead to less money for them, and less money for the companies they work for. The chief of enforcement for Finra, the securities industry watchdog, has noted that variable annuities are complex and expensive products that are routinely pitched to vulnerable investors as a key component of their retirement planning.

Over the past few years, Finra has stepped in when clients were charged on an annual basis for holdings that would have been free of the trade costs.

For example, in 2005, Finra fined Morgan Stanley a reported $1.5 million and ordered it to pay $4.6 million in restitution to clients to make up for inadequately supervising its fee-based brokerage business.

Two years later Finra fined Wachovia Securities $2 million for a similar violation. Baird, SunTrust and Raymond James were also dinged by Finra for poor oversight of their clients’ fee accounts. So there was a need for the rule. Annuities are offered as variable or fixed in a client’s retirement account.

Generally, variable annuities charge explicit fees, while fixed annuities tend to embed their costs in the interest rate or income payout amount, according to Fidelity Investments. Under the new rule, advisors are expected to scale back their offerings of variable annuities, which can have high upfront commissions.

Annuity providers are expected to find ways to deliver products that meet both client needs and the new DOL standards. Some advisers are thinking about changing their account minimums, presenting new investment solutions to their clients, or transitioning appropriate clients from brokerage to advisory under the rule.

 · Choices for Advisors

What is clear is that if you provide advice pertaining to retirement savings, qualified plans, IRAs or IRA rollovers, this issue will affect you, and you will likely need help.

According to a study called “The Economics of Change,” the majority of advisers surveyed currently recommend annuity products in retirement accounts — nearly two-thirds use variable annuities, and two-thirds also claimed to use fixed annuities — products that, due to cost and complexity, will be thrown into flux in the coming years.

While researching the choices advisors have under the rule, I found the following from Think Advisor.

They can serve as a fiduciary under the Employee Retirement Income Security Act (ERISA) without conflicts. While serving as an ERISA fiduciary is the more restrictive of the two options, it is also the clearest as to what is allowed and what is not. I predict that many advisors will take this more conservative route.

The advisor can serve as an ERISA fiduciary with conflicts under the Best Interests Contract Exemption (BICE).

The contract exemption, while allowing advisors to make relatively minimal changes to their existing business model, comes with many uncertainties. Questions such as what is “reasonable” compensation, what fees must be disclosed and how, and what other forms of payment must be disclosed will be debated by every financial institution. I suspect many of the answers to these questions will not be known until the lawsuits are filed after the next bear market.

 · The Insurers

Among the affected companies are MetLife (NYSE:MET), AIG (NYSE: AIG) and Prudential Financial (NYSE: PRU).

In December 2015, those companies were among those in the annuity industry that authored an opinion editorial, claiming the DOL’s proposed rule would have a “potentially devastating impact” on Americans’ access to annuity products, particularly for low and middle-income earners.

The sum includes a $20 million fine and $5 million to be paid to customers for “negligent” misrepresentation and omissions, according to Finra. It has among those who have been increasing scrutiny of variable annuities, which can combine securities investments with guaranteed income, an arrangement that may generate attractive fees for insurers.

 · In Conclusion

Now, variable annuities and fixed indexed annuities have lost their coveted exemption. Advisors and insurers are now subject to the requirements of BICE. Compliance risks come into play, which means litigation could come into play. That should be considered if you decide to invest in a distributor of annuities.


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Posted by Martin May 17, 2016


Rolling in the money puts to repair a trade

Repair manYou know it. You sell a put option and the trade goes busted next day. If you have never experienced this, then you are still going to. That I can guarantee.

In the past, I tried to predict the market/stock direction so I could be on the right side of the trade.

Today, I laugh at such effort. It’s futile and you will never be right. At most, you may get 50% chance to be right. But that 50% is nothing to spend an effort for.

TD Ameritrade has on its website a tool called “Predict Wall Street”. If you decide to play it, you will find out that the community is 40% right (sometimes even 55%). My score of predicting stock movement is 50%.

I can flip the coin and get the same result.

So, don’t bother predicting stocks or the market.

Rather, learn techniques which help you when you are wrong.

When you sell a naked put and the trade heads south you have two ways how to react:

1) You are still bullish on the original trade and you consider the price drop just temporary.
2) You doubt your first assessment (you are probably no longer bullish) and want to improve your odds right away.

Next, I try to describe several situations which may happen and how I would react to them based on the above mentioned classifications.

Continue reading >>>



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Posted by Barney Whistance May 12, 2016
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Investing for higher returns in peer to peer lending platforms

People who are new to investing often prefer to invest in one of the savings products offered by banks, but investing in a bank is never a profitable exercise. Interest rates are at an all-time low – plus banks never have been one to share their “fortunes”.
These days anybody who is into investing must have heard of Peer to Peer (P2P) lending. It has gained a lot of popularity in recent years.
Peer to Peer lending is not something new. P2P started in 2005 with the launch of Zopa, the first peer to peer lending service. Though Peer to Peer lending was the signal of the financial revolution, it was the 2008 recession and the ensuing “credit shortage” that showed the chinks in the bank’s armours and pushed peer to peer lending into the limelight.
At its inception, peer to peer lending was quite simple. The P2P platforms were simply a place for borrowers who were looking to refinance existing high-cost debt facilities and on the other hand were people who wanted to earn higher interest on their savings.
Peer to peer lending has now grown into a worldwide industry. The size and number of lending platforms have rapidly grown. P2P platforms have now evolved and do not just offer loans for consumer lending. Peer to peer lending platforms is giving banks a run for their money by offering tailored products for home financing, students loans, franchise financing and loans to SMEs to name a few.

What are the risks of investing in peer to peer lending platforms?

No business is without risks and the same holds true for banks and peer to peer lending. The 2008 crash made it very clear that even giants can fall, however having said that, it is important to remember that reducing risk to acceptable levels is one of the prime objectives of any successful business.
So is peer-to-peer lending a risky business? Should you invest your savings in peer-to-peer lending?
There are many platforms for investing in Peer-to-peer lending. Each platform has its own way of conducting business and therefore a different approach to managing and mitigating risk.
Let us delve into greater detail of how risk is managed with examples.


Zopa lends money for personal loans to “reliable investors”. Zopa checks all of its investors by checking their credit histories, personal income and Zopa also has a requirement, making it mandatory that the borrower should have had a UK address for a minimum of three years. This is the first stage in risk minimization. Lend money to people who are very likely to pay back.
The second stage of risk minimization is figuring out how to minimize the impact of a bad debt.
Firstly, any investment made is divided into microloans and only a maximum of 2% of investment is lent to one single borrower. This ensures that a bad debt will not wipe out a major chunk of investment.
Secondly, what happens if a major default does occur? Firstly it is Zopa’s responsibility to chase down bad debts. The bad debts are assigned to “Safeguard trust”. First priority is to chase down bad debts. If the debts are truly irrecoverable then Safeguard maintains a fund to cover bad debts. The fund is generated by contributions from members. Currently, Zopa’s fund has a 10% buffer meaning the fund has 10% more money than what Zopa expects to pay out.
Investing in Zopa is quite low risk. Their actual bad debts have always stayed lower than their predicted percentages. And it is not that the predictions have a buffer built in them. For 2015, Zopa estimated 2.88% of the loan value to go into default, however, the actual percentage was only 1.01%.

Rebuilding Society

Rebuilding Society is at the other end of the spectrum from Zopa. Rebuilding society lends out to businesses. Rebuilding society does not have a provision fund. However, to cover risk it has two operational policies in place. They are:

  • All loans are to be backed by securities. Businesses applying for loans under $50,000 have to give a personal guarantee. Loans at $50,000 or above are secured against assets.

  • You cannot provide more than $2,000 to one business.


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Oracle Making Strong Entry Into Cloud; Is It Too Late to Grab Market Share

“What the Hell is Cloud Computing?”

That was the question posed by Oracle founder Larry Ellison about eight years ago when he spoke to a gathering of financial analysts.

Since then, it seems Ellison, now chief technology officer, of Oracle (NASDAQ: ORCL) has been enlightened. That, or Ellison has adopted the policy of, “if you can’t beat them, join them.” This is reflected in the company’s recent spending spree in buying small cloud computing businesses.

For investors, if Oracle’s acquisition efforts can help it carve out a significant portion of the cloud computing market share, this is great news. So far this year, the worldwide public cloud services market is projected to reach $204 billion, according to Gartner. That represents a 16.5% increase over last year’s market size of $175 billion.

Gaining market share in the cloud services business won’t be easy and breezy for Oracle. Despite its dominance as a tech player, the cloud business has some pretty dominant players. That includes Salesforce (NASDAQ: CRM), Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN).

 · So what is cloud computing; think layers

Back in 2008, when Ellison questioned cloud computing, he said this:
“I don’t understand what [Oracle] will do differently in the light of cloud computing, other than change the wording on some of our ads.”

If you share Ellison’ questions about what is cloud computing, to put it simply, cloud computing is a kind of Internet-based computing. It entails applications, servers and storage services that are accessed via the Internet by a company’s computers and devices that employees use, such as their smartphones.
Cloud computing consists of three segments, or layers: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS).

IaaS allows businesses to eliminate the costs associated with buying and maintaining servers in house. Instead, they outsource such needs to cloud providers. This allows businesses the ability to run their applications and access their data anytime on devices connected to the Internet.

With PaaS, businesses use a platform to develop, run and manage applications without having to build the infrastructure used to develop and launch applications. Google’s App Engine, Microsoft’s Azure and Saleforce’s, are examples of PaaS platforms.

SaaS allows businesses to eliminate the costs and time of installing and maintaining software. Businesses can access that software via the Internet. Among the companies that use SaaS applications are ADP, Citrix (Go To Meeting) and Cisco (WebEx).

 · Acquisitions paying off

Considering Oracle is a relative newcomer to the cloud services business that is already dominated by some pretty strong competitors, it is good that it set out on acquiring smaller businesses that already offer the services. It now provides all of the platforms explained above.

The following is a list of Oracle’s most recent acquisitions:
Maxymiser; August 2015; undisclosed amount
StackEngine; December 2015; undisclosed amount
AddThis; January 2016; $200 million
Ravello Systems; February 2016; $500 million
Textura; April 2016; $663 million
Crosswise; April 2016; $50 million
Opower; May 2016; $532 million

The acquisitions made during prior to the end of Oracle’s third quarter of 2016 seemed to have contributed positively to the company’s revenues. SaaS, PaaS and IaaS totaled $737 million, which represented a 43% increase from last year. Also, the Q3 gross margin for SaaS and PaaS was 51%, up from 43% last quarter. The company expects to see further improvement in Q4. After that, Oracle will be targeting 80% over time.

This is positive news, but Oracle should give as much focus as possible to its IaaS segment. That’s because the IaaS segment is, and is expected to remain, the fastest-growing segment in 2016. According to Gartner, IaaS is projected to grow 38.4% this year.

Gartner pointed out that the growth in the IaaS’s segment is due to enterprises moving away from data center build-outs and moving their infrastructure needs to the public cloud. Furthermore, it would behoove companies like Oracle to focus on differentiating their products because several market leaders have built a significant lead in this segment already.

Oracle is on the right track, expecting IaaS revenue to grow from negative 1% to positive 3% for Q4. However, Oracle CEO Safra Catz said the company’s IaaS revenue growth will be more moderate for now as it is currently dominated by its hosting business.

Also on guidance, Catz said, “Looking further out for Q1, SaaS and PaaS revenue growth should be higher than the 59% midpoint of my Q4 guidance. SaaS and PaaS gross margin are expected to be higher than Q4 gross margins. Q1 non-GAAP EPS growth should be very solid. I will revisit Q1 with you as part of the Q4 earnings call in June.”

We’ll see how Oracle has continued to grow its revenues from cloud computing in June when it reports earnings for Q4 and the full year. Oracle’s commitment to the cloud through the acquisitions, and its ability to embrace it despite the early on misgivings of its founder are positives. Consider Oracle as a long-term investment play.


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April 2016 trading, investing, and dividends results

April 2016 was a positive month to me. Both account – trading account and my ROTH IRA dividend account grew well and nice.

Surprisingly nice! There are a few patterns I start seeing which makes me happy.

I hope, that it will stay like this in the coming month although last day of trading in Wall Street put a little blow to my trading account.

Nevertheless, my options trading account ended up 32.60% in April and I made collected $938.00 dollars in premiums.

My dividend investing was slower than that (but I do not expect any fast and huge profits) yet it ended up by amazing 7.96% and I collected nice $84.49 dollars in dividends.

I also do options trading in my ROTH account and I collected additional $90 dollars premium.

Let’s take a look at the details!


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 · April 2016 trading results

April trading ended great with nice profits. I traded options against dividend stocks and I traded aggressively selling ATM puts collecting premiums. This aggressive trading put a few stocks in a heat.

I accepted assignment of Ensco (ESV). I didn’t have to and I could roll the option, but I wanted to accept it and keep the stock and trade against it. I continue selling puts and covered calls. Hopefuly, I will also collect dividends.

The biggest heat I got was from STX. What at first looked like a good trade ended bad. First, the company lowered its outlook and the stock tanked making my puts in the money. Then it started recovering and you could see the short selling squeeze. The stock rallied and I decided to cover my naked calls by buying shares of the stock.

I also sold a few more puts. Then earnings blew the stock out of the water and it tanked 20%. Another over-reaction from the market. I think we need to get used to it that investors and traders will react like this. It will be a reaction from one extreme to another.

But the most important thing is, that if something like this happen a trader must know what to do and not to panic. Always have a plan. Always have a plan for every situation in the market. Always know what steps you want to take to mitigate the loss or eliminate it.

To my STX trade such plan is to stay the course, roll the puts lower and continue selling more calls and puts. I opened my first trade at 33 strike. I could lower it down to 32 strike and I plan lowering it more down to 31, 30, and so on. And if I get assigned early, I’ll take the stock, keep it, collect dividends, and continue selling covered calls.


Here is my trading result for the month:


April 2016 options trading income: $938.00 (36.93%)
2016 portfolio Net-Liq: $3,039.46 (32.60%)
2016 portfolio Cash Value: $429.69 (-87.47%)
2016 overall trading account result: 19.68%


My cash value dropped because of purchasing equity. I was assigned to ESV and purchased STX this month. That’s what the cash was used for.

Here are the results of my options trading:

Options Income
(Click to enlarge)

Here are the results of my options strategy:

Options Income
(Click to enlarge)

The table above shows a good strike of winning trades in the first quarter. I hope my next quarter will be as good as the last one.

My average trade holding time is currently 19 days, average P/L 3.11% and 111.27% annualized return.

Not bad results for only two months of trading after I returned back to this strategy.

I knew trading SPX spreads wasn’t for me and I should have stayed with my original strategy (this strategy) in the first place. I could have been a lot further ahead, closer to my retirement. But we are human, we make mistakes and we are here to correct them, start over, and move on.

Here are results of the individual trades:


Options Income
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Options Income
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Options Income
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Options Income
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Options Income
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Options Income
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Options Income
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Options Income
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Options Income
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Options Income
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Options Income
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If you like these trades and want to be informed when I place them and trade them in real time, you can join our closed Facebook Group. The group is a closed group and there are other traders posting their trade ideas too. We learn from each other, eventually ask questions, get answers, but most importantly you can see what we trade and how. You can follow those trades.

Here is the entire account value from the beginning of tracking it up to today:

TD Account Value



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 · April 2016 dividend investing results

After dividend cuts my portfolio stabilized and is steadily growing again. I liked a lot seeing my DRIP purchasing, seeing that I am purchasing more and more shares and those shares are producing more and more dividends every month.

Just recently I was looking at some of my holdings and I saw them bringing in more dividends. It is most visible in monthly paying stocks that every month I get slightly more dividends. And I can see this process speeding up significantly.

What do you think?

To me, this is very motivating to continue building my dividend portfolio although I am more into options rather than being passive, working hard, putting money into my account and waiting.

I want options trading doing this job. I want to trade options, take all proceeds and invest them into dividend stocks. Then I do not have to work hard skip vacations because I am saving money.

I am lazy, and I want my money not to be lazy.

For this reason I created three sub-accounts in my ROTH account.

Those accounts are mental accounts. Physically they do not exist.

I keep it only in my spreadsheet and keep track of it.

So I created a “fund” of a “great opportunity”, a fund for “options trading” and a “stock purchase” fund. As of now, I plan to keep $2,000 for trading options (and slowly increasing this “account”, $1,000 dollars for great opportunity (if any good stock suffers from an irrational selloff, I want to have some cash ready for this event), and stock purchasing “account” will be an account which I will use to buy stocks out right. Once filled with cash, I use it right away to buy a stock of my interest and then continue saving new money.

And guess which account would make money for those two other accounts?

You got it, it is my options trading account. Here is a picture of my ROTH IRA account spreadsheet I keep track of these sub-accounts. Now I am in a re-filling or building those sub-accounts:


Options Income
(Click to enlarge)

As you can see, my “options trading account” is almost funded. Once funded, I will continue trading options using this money, but all proceeds will be allocated into “great opportunity” fund. After that fund is funded, I will be allocating all proceeds and savings to “stock purchasing fund”.

I will also be increasing goals in those funds as my options trading will be growing.


Options Income
(Click to enlarge)

My annual dividend income this month is up from $887.98 to $897.17.

Dividend stocks added or removed from portfolio:


April 2016 dividend stock buys: none
April 2016 dividend stock sells: none


To purchase stocks I use trailing stock order strategy OTO trade order (one triggers other) and I described this strategy in my post about purchasing stocks in falling markets.

I also invest into dividend paying stocks using Motif investing which allows me to buy all 30 stocks I want in one purchase using fractional investing, similar to a mutual fund.

You can actually build your own mutual fund with Motif investing.

Here is my Motif Investing account you can review:



I continue reinvesting my dividends using DRIP program. I love how my holdings grow when reinvesting the dividends and when the stock prices are going lower. As I believe we are heading into a recession I will be able buying more shares for a lot cheaper.


Dividend stocks DRIP:


April 2016 DRIP: Reynolds American Inc. (RAI)
PPL Corporation (PPL)
American Capital Agency Corp. (AGNC)
Realty Income Corporation (O)
Prospect Capital Corporation (PSEC)


Here are my ROTH IRA trading/investing results:


April 2016 dividend income: $84.49
April 2016 options income: $90.00
2016 portfolio value: $19,156.99 (7.96%)
2016 overall dividend account result: 26.53%


The account grew by 7.96% from last month, overall I am up 26.53%. Dividend income was also up from last month. All dividends were reinvested back to the companies which generated them.

Here is my dividend income:

ROTH IRA account value

Annual dividends since the beginning:

ROTH IRA account value

Here is the entire account value from the beginning of tracking it up to today:

ROTH IRA account value



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Below is my dividend income review for the entire year:

Dividend Income
My ROTH IRA dividend income breakdown per month and per company.

 · All accounts

Besides trading and dividend accounts I also have 401k account, emergency savings account, etc., which I do not report in detail. You can review those accounts in my “All Accounts Value” table at the bottom of My Trades & Income page.

My accounts increased from previous month and are making 16.58% (up 5.69% from previous month) for the year.

Remember, if you like trading options and want to have trade ideas for free, join my Facebook closed group and follow my put selling trade ideas in real time, comment, ask questions, and interact with other members. Other members of the group can also post their trades so you can learn from them too.



What do you think?

How about your investing or trading results?

Do you have any question? Need help to start trading or investing? Shoot me an email or let me know below in comments how I can help you.



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Herbalife, Still Trying to Shake Bill Ackman, Could Beat on Q1 Earnings

The much put upon Herbalife (NYSE: HLF) will post its earnings for the first quarter of fiscal 2016 on Thursday, and I’m going to go out on a limb and anticipate it will meet analysts’ estimates, if not beat them.

When I say “much put upon,” and “going out on a limb,” I’m referring to hedge fund manager and activist Bill Ackman who took controversial steps to run the company out of business. Claiming that Herbalife is a pyramid scheme, he shorted the supplier of weight management and nutrition supplements by $1 billion in 2012.

Ackman is convinced that Herbalife preys on minority communities who reap little in financial gains for being distributors of Herbalife products. Through extensive lobbying efforts, hours-long Power Point presentations, Ackman has managed to convince some lawmakers to join his cause in getting federal regulators to investigate and shut down Herbalife.

Although Ackman’s cause seems notable, on the surface, beneath it smacks the type of greed that could lead even the most well-intentioned causes failing to bear fruit.

 · Smooth sailing until Ackman

Prior to Ackman’s crusade to shut it down, Herbalife had posted 12 straight quarters of record earnings. It had enjoyed 12 straight record quarters and was trading around $52 in 2011, which was before Ackman’s billion-dollar short announcement.

Shortly after Ackman made his short position public in December 2012, Herbalife fell almost 50% in one day to close at $27.27. Over the course of 2013, and amidst volatile trading of its stock, the price slowly, but steadily, rose. It even hit an all-time high of $81.81 in January 2014. It closed Friday at $57.95.

 · Traders vs. investors

The volatility that Herbalife has experienced since Ackman’s attacks started make the company’s stock attractive to traders who can watch the stock’s movements like hawks and profit from them. After all, volatility is a trader’s best friend because of the potential for huge profits.

Volatility is not so good for long-term investors. It has a five-year beta of 1.4, which means it’s roughly 40% more volatile than the stock market. So long-term investors may want to shy away from Herbalife right now; at least there is some kind of resolution of squashing of Ackman’s allegations.

Interesting about analysts’ views on Herbalife are their reports. Since December 2012, there have been only two analyst downgrades. The others were reiterations, and there was even an upgrade. There have been mostly “buy” recommendations over that period.

 · When Wall Street meets Capitol Hill meets The Feds

In pursuing his effort to run Herbalife out of business, Ackman has called on community leaders, especially those that represent Hispanics and African-Americans, to join his cause. Many agreed to write lawmakers to urge the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC) to investigate Herbalife. Ackman has also called on a slew of lobbying groups.

He’s been accused of assembling his supporters based on false information. Fortune magazine highlighted the tactic of astroturfing, in which “a client’s agenda is made to look like a grassroots movement. In the context of a short-selling campaign, however, such conduct began to resemble securities fraud. The SEC has held that if you make claims about a company you’re trading in and then falsely publish them under someone else’s name, that can be market manipulation, even if you believe the claims to be true.”

There are reports that some of those who signed these letters don’t recall doing so.

So far, other heavy weight hedge fund managers have been unpersuaded by Ackman’s findings. Take notary hedge fund manager Carl Icahn, for example. After Ackman presented his exhausting presentations about the legitimacy of Herbalife’s business model, Icahn took a long position in Herbalife. Another reputable investor, George Soros, also revealed a large stake in Herbalife after Ackman began lambasting the company.

For the sake of investors, small and large, I hope that The Feds do help resolve this issue. In the short-term, the market this week will get another chance to see how Herbalife has weathered the Ackman-generated turmoil that has wreaked havoc on its stock. As I noted above, the company reports earnings for the first quarter of fiscal 2016 on Thursday. Estimates are that it will report earnings of $1.07 per share; and $1.07 billion in revenue.


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Don’t Count These Apple Suppliers Out Based on Slowed iPhone Sales

The disappointing earnings Apple (NASDAQ: AAPL) posted lastweek caused its stock to tank. We saw investors not only flee their positions in the iPhone maker, but we also saw them fleeing companies that supply the parts that Apple uses to build its smartphones, iPads and other devices.

The knee jerk reaction to this decline for many investors has been to get out of Apple and its suppliers in the short-term, or even the long-term. However, it may be worthwhile to hang in there for the long term when it comes to the suppliers.

Among Apple’s elves (suppliers) are Cirrus Logic (NASDAQ: CRUS) and Jabil Circuit (NASDAQ: JBL).I found that although these suppliers face repercussions from Apple’s sales’ downturn, they have individual strengths that have nothing to do with Apple. Those strengths include diverse product offerings that contribute significantly to their revenue growth. Their strengths contribute to their positive cash flows and attractive valuations.


 · The softening Apple


Apple reported shipping about 51 million iPhones during its second quarter of fiscal 2016, which represented a 16% decline compared to the same quarter in fiscal 2015. The numbers represented the first ever year-over-year decline in iPhone sales.

The softening partly reflects the slowing of smartphone sales throughout the world. Observers note that that the second quarter was the first time global shipments of the iPhone declined on an annualized basis since it was introduced. China’s smartphone market is maturing, which is a major market for smartphone makers.


 · Strong, but still Apple dependent


Cirrus Logic, which is a fabless semiconductor company that develops analog and mixed-signal integrated circuits, derives about a third of its revenue from Apple. It provides the audio chip to iPhones. Since warning flags began being raised at the end of 2015 about Apple’s shrinking iPhone sales, Cirrus Logic has been singled out as likely experience the worst ramifications of Apple’s declines.

Last week the company shared its quarterly Shareholder Letter that highlighted its financial results for the fourth quarter and full fiscal year 2016, which ended Mar. 26. Its revenue for fiscal 2016 was up 28% to $1.2 billion. That was higher than analysts’ estimates of $1.16 billion.

While its sales climbed 31%, its earnings per share fell 10% to $2.40. Cirrus also showed the company’s outlook, in which the company guided to fiscal Q1 revenues of $220 million to $250 million, which short of consensus estimates of roughly $256 million.

To stay viable as an investment opportunity, Cirrus must continue this kind of revenue growth. It must also continue to improve the median net profit margins so that it has operating leverage.

This is especially important if the company’s contribution to the upcoming iPhone 7 does not pan out. Apple is thought to be in the process of replacing its analog headphone jack for the iPhone 7 to add another speaker for stereo audio output. Rumors have abounded that Apple is working with Cirrus to change the audio chipset so that it works with the iPhone’s Lightning port.

The problem with this switch is that since the new iPhone may not have that standard audio port, the company’s current Ear Pod headphones will be incompatible. That could discourage buyers from purchasing the new iPhone.

No matter, if Apple does not make this audio port change, Apple’s need for Cirrus may be quashed. This means Cirrus must have a fallback.

Investors can take some comfort in the company’s supply chain teams being heavily engaged in new product ramps, take outs and design activity. Company officials stressed this during its earnings conference call last week in which it also noted that it has ramped a new flagship, multi-core smart codec with a key customer.

These products combine audio analog-to- digital converters (ADCs) and digital-to- analog converters (DACs) into single integrated circuits designed to provide maximum flexibility, features and performance.

Cirrus has also begun shipping a new boosted amplifier at another tier 1 smartphone customer, but it did not identify the customer during the conference call.


 · Then there’s Jabil Circuit


When Jabil Circuit reported its earnings, it noted that 24% of its total revenue came from Apple during its second quarter of fiscal 2016. Jabil Circuit slightly missed expectations for its Q2 fiscal 2016 reporting earnings per share of $.57 cents on sales of $4.4 billion, versus analyst expectations of $.60 in EPS and $4.5 billion of sales.

That is disconcerting, but I point to the company’s balance sheet as an example of its potential to grow steadily over the long term.

Another fallback that could take up the slack from less than stellar earnings related to Apple is the company’s Nypro healthcare business. The company has begun “leaning hard” into that business, according to its CEO Mark Mondello.

Nypro provides manufactured precision plastic products for customers in the healthcare, packaging and consumer electronics industries. It was acquired by Jabil Circuit in 2013. The company is expecting Nypro to be a healthy cash generator due to the hardware platforms it offers customers.

Jabil Circuit is also a leading provider of outsourced electronics manufacturing services (NYSE:EMS). This arm produces parts for consumer electronics, such as computers and smartphones. Jabil Circuit is banking on the scale and broad diversification of this business to provide “a stable, predictable, foundational backbone to our core business,” according to Mondello. He noted that the core operating income from EMS will grow 15% to 20% year-on-year, and core operating margins are hoped to grow beyond 3%.

When it reported its earnings, Jabil Circuit noted that 24% of its total revenue came from Apple during its second quarter of fiscal 2016. Jabil Circuit slightly missed expectations for its fiscal 2016 Q2, which ended Feb. 29. It reported earnings per share of 57 cents on sales of $4.4 billion, vs. analyst expectations of 60 cents EPS and $4.5 billion in sales.

Many observers are banking on Apple improving its financials after it rolls out another version of the iPhone later this year. This, in turn, could boost the earnings of its suppliers. On the other hand, the saturation of the smartphone market cannot be ignored; investors must take into account that the record profits Apple derived from iPhone sales in the past are over. The Apple suppliers that recognize this and who are able to shift gears to maintain, and improve their financials over the long term should be able to weather the Apple downturn.


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