I like volatility!

Yes, you can make a lot of money if you trade carefully, have enough money to navigate through trades which turn bad (the worst thing which can happen to you is not having enough cash and get a margin call) and trade. No pain (risk), no gain.

March was so far the best month making money trading the volatile market down (in February) and up (in March).

In the first 9 days of March, we made $9,710 dollars.

However, I still need to seriously work on reducing our accounts exposure, meaning that they are over-invested (over traded). that means, that I am not going to be opening more new trades but only manage the existing ones. We have made enough money in the first 9 days of March to stay aside and do not trade. The only exception to this is our IRA account where we have enough buying power to trade, although in this account we will also slow down the trading activity to raise cash in preparation of future troubles. I still believe, this bull market has about 2 years left.

 · Trading activity today

On Friday the markets rallied hard and I took advantage of it. We rolled a few trades and opened a bunch of trades against SPX riding this bull up. The market rallied more than 40 points up creating new highs for the week. This brought nice cash.
 

A summary of opening and closing trades.
(balance + $905.00)

This was an outstanding month so far. We made money pretty much every day. I hope we will be able to keep this trend in the upcoming week.

 · Dividend stocks to buy

Out of our watch list of 36 dividend stocks the following ones are a good buy at today’s prices (03/09/2018):
 

AGNC
AWK
CVX
HD
KMB
MCD
OXY
PG
XOM
 

Last week, we made nice cash and it is our plan to use 50% of the options trading proceeds to buy dividend growth stocks from our watch list.
 

On Monday, we will be buying the following stocks using the strategy mentioned above:
 

American Water Works Company, Inc. (AWK)
The Home Depot, Inc. (HD)
Occidental Petroleum Corporation (OXY)
 

Disclaimer: The list above is based on calculated fair value and 52wk high offset valuation. The values are subjective to our calculations and opinion and may differ from your own. If you decide to trade or buy these stocks, do so on your own risk and do your own homework. The list is not our recommendation to you.

 · Market outlook

1) From the long term outlook the market is still bullish. We do not expect a bear market to start in 2018.

The high yield spread is flat and has been since 2017 (at around 10% range). We need to see the spread going up to see the beginning of an end of this bull.

2) Trump’s tariffs are now behind us and they will no longer pose threat to this market short term.

Now that we have a clear way, we can have an effect of the economy to influence the markets. We are still expanding although slowing down. This means we may see the market to make new all time highs before we loose steam. Bear markets do not start at the high trend momentum. We need to see the momentum to lose first. It is not yet happening.

3) We are still below now above 50 DMA which serves as a resistance and that may pose some short term difficulties.

We now need to confirm the Friday’s breakthrough above the 50 DMA which I expect to happen next week. If so, the path to new ATH is open.

4) Investors’ sentiment is still very bullish (source AAII).

5) Based on historical market behavior I believe, this bull market has about 2 years in life ahead in front of us.

What do you think? Are we nearing the end of this bull market?
 

Today, Trump announced his new steel and aluminum tariffs policy. And all I heard people saying was that he imposed tariffs on countries from which the US doesn’t trade steel nor aluminum, all others will be exempt or can apply for exemption. Or he imposed tariffs on everyone and them exempted everyone.

But markets liked it.

After almost of whole day of doing nothing, the markets popped about 12 point. That was it. A big humbug for nothing. Now that the news of tariffs-no-tariffs are out, we have to wait for something new to spook the markets. Don’t worry. Trump and his cronies will come up with something.
 

Until then, we need to trade cautiously and wait. I am raising cash and closing as many trades as possible to overcome any drops of the market should they occur.

So far, it seems we created a new higher low and we might be going higher.

Some fellow investors also asked why was the market so calm today and it spiked only at the end of the day? As you can see the chart above has the answer. Investors were out staying aside and waiting for Trump. No one wanted an exposure to this uncertainty. That’s my take.

And I decided to do the same and closed some positions, which were almost worthless anyway to reduce my exposure should the tariffs news be bad and market would tank.

 · Trading activity today

A summary of opening and closing trades.
(balance + $82.00)

 · Dividend stocks to buy

Out of our watch list of 36 dividend stocks the following ones are a good buy at today’s prices (03/08/2018):
 

AGNC
AWK
CVX
HD
KMB
MCD
OXY
PG
XOM
 

Disclaimer: The list above is based on calculated fair value and 52wk high offset valuation. The values are subjective to our calculations and opinion and may differ from your own. If you decide to trade or buy these stocks, do so on your own risk and do your own homework. The list is not our recommendation to you.

 · Market outlook

1) From the long term outlook the market is still bullish.
2) Trump’s tariffs are now behind us and they will no longer pose threat to this market short term.
3) We are still below 50 DMA which serves as a resistance and that may pose some short term difficulties.
4) Investors’ sentiment is still very bullish (source AAII).

5) Based on historical market behavior I believe, this bull market has about 2 years in life ahead in front of us.
6) According to JPMorgan the Global Manufacturing Growth and PMI has been falling (economic slowdown) and they expect it to fall throughout 2018. That corresponds with my expectation of 2 years remaining in this bull before we see a serious bear market or deep correction. But, you know me. I do not have a crystal ball and this may be just a bias. Don’t bet a penny on this. This is not a prediction.

What do you think? Are we nearing the end of this bull market?
 

Another nice and interesting ride today in the stock market. After resignation of Gary Cohn from Trump’s administration which was announced yesterday at 5:30 ET the futures at S&P and Dow dropped 32.25 points and 400 points respectively.

S&P 500 was losing 1.41% and all our trades looked very gloomy.

Although I kept saying to myself that Trump’s ongoing tariff threats are just over reaction and only a short term bearish factor for the stock, it is difficult to stay calm when you are facing trades with expiration round the corner and deep in the money.

As a dividend investor it is easy to stay calm. Of course, you must train your mind set to be like that. It take training, it takes patience, maybe even guidance by someone experienced, and it takes a lot of guts to stay calm. I can proclaim that I am already there and these volatile days do not derail me a bit. I actually welcome these days as they allow me to add more great dividend aristocrats to our portfolio. And we can buy cheap!

Two great investors and billionaires Warren Buffett and Ray Dalio came out with a great advice for long term investors. Something you have probably heard many times:

But for the average person, shifts in the market, even ones as dramatic as the ones we’ve seen this year, shouldn’t be cause for panic. During times of volatility, seasoned investors Warren Buffett and Ray Dalio agree that it’s best to stay calm and stick to the basics.

“Don’t watch the market closely,” Buffett told CNBC in 2016 amid wild market fluctuations. “If they’re trying to buy and sell stocks, and worry when they go down a little bit … and think they should maybe sell them when they go up, they’re not going to have very good results.” (Source USA Today)

You may say, “it is easy to say than to do”. True, sort of. But that’s when training comes handy. I trained my mind the similar way as Ben Graham says in his book Intelligent Investor:

Look at the prices of the stock when they go down as that they are on sale. Imagine, that a CNBC commentator or talking head exclaims “Stocks on Sale! AAPL is now 4% cheaper! Never before at this price! And we hope that this promotional sale will continue tomorrow and we get the stocks even cheaper tomorrow! Great stock liquidation prices!”

How many times we go shopping and look for lower prices; comparing prices on internet who sells goods cheaper?

And why we do not do the same when purchasing stocks?

Warren Buffett says that “If [you] buy good companies, buy them over time, they’re going to do fine 10, 20, 30 years from now.”

And that is exactly how I look at them. I do not buy dividend aristocrats to trade the, I buy them to hold them. And hold them means forever. There is only one exception to this rule when I decide to sell. And that is when the dividend aristocrat cuts the dividend.

However, I also trade!

And if you trade, your mindset needs to be a bit different than that one of a long term dividend investor. You cannot open a trade and walk away. Those trades need constant watch (or at least a watch when you are nearing to a decision point of that trade, so it also depends, what you trade and what is your time horizon).

When I approached stock market for the very first time in 1996 I wanted to learn trading to generate cash which can be invested.

Sad thing is, it took me so long to learn it. True, I lost money, lost interest in stock market and quit. I got back in 2006 and decided to learn again. Another 10 years of a college and doctorate of investing before I can say, I finally learned the topic and now make enough money trading to spend 50% of all my proceeds to invest into dividend aristocrats.

Yet, there is still a lot to learn – consistency. But I am getting there!

 · Trading activity today

Before the trading ended today, the market recovered all losses from the morning. It was something I didn’t imagine nor envision. I was ready and prepared for another catastrophic selling. What was surprising though that the market seemed very lazy the entire morning. First the futures recovered from the lows and the market opened down only approx. 15 – 20 points and moved nowhere the entire morning. It was the time when I lost faith in this market and decided to roll my SPX puts into the next expiration to avoid troubles should the market suddenly collapse.

Then, rumors about possible tariffs exemptions came up and the market shot up and at one moment it was in green. We closed only 1.32 points down!

This indicates that we are really in a bull market and Trump’s economic extempore has no long term impact on the bull. I am expecting the market to be in its bullish mode for the next year or two but there are some so called experts who predict this bull to last for the next 20 years! I wonder what kind of crystal ball are they looking at.

Out of nervousness that the market may crash by the end of the trading day I decided to do some adjustments on my existing trades:

 
A summary of opening and closing trades.
(balance + $375.00)

Today, I also purchased OHI stock which is not included in the balance (income/expense) report above.

 · Dividend stocks to buy

Out of our watch list of 36 dividend stocks the following ones are a good buy at today’s prices (03/07/2018):
 

AGNC
AWK
CVX
HD
KMB
MCD
OXY
PG
XOM
 

Disclaimer: The list above is based on calculated fair value and 52wk high offset valuation. The values are subjective to our calculations and opinion and may differ from your own. If you decide to trade or buy these stocks, do so on your own risk and do your own homework. The list is not our recommendation to you.