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Posted by Martin January 06, 2020
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Is this investment strategy good:

Is this investment strategy good: allocate 75% in savings account with high APY(~2%), 20% in long term re-investing dividend stocks and 5% in short to mid term high risk stocks (kind of a swing trade)?


How old are you? If you are close to retirement or retired, and inherited a large sum of money, this may be acceptable (although not for me either). If you had saved enough throughout your life, it still would be a bad idea.

If you are young, let’s say 20’s then this is an incredibly bad idea. If you can invest money for the next 40 years then there is no better allocation than stocks. On top of that, if you have really 40 years time frame, you should go extremely aggressive (use leverage and as you age start deleveraging your account). A good book on this topic is Lifecycle investing by Ayres & Nalebuff.

So, if you have time, invest 100% in high quality dividend growth stocks, reinvest dividends, and use options to leverage your investments (as described in the book for example, or use a “Wheel strategy” – sell puts as long as you get assigned, then hold the stock, collect dividends, and sell covered calls as long as you get assigned).

Just look at the 40 years S&P performance and compare it to a 40 years savings account performance and try to convince me again why would you waste 75% of your money in savings accounts for the next 40 years.

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Posted by Martin January 05, 2020


How should I invest $100 per month in stocks?

I bet many people will tell you that you can’t because of diversification and other myths and misconceptions what all sorts of advisers tell general public to cover their backs and lack of deeper knowledge.

I started like that myself and built up a nice portfolio. It is difficult at first but doable, mainly today when you can trade commission free. That is a key. You must choose a broker which will allow you to buy a single share and charge you nothing for it.

The next thing is to choose a high quality dividend growth stocks (dividend aristocrats) to boost your income from your holdings, and reinvest that income. At first, use DRIP, later on I would recommend buying more stocks different than those which generated the income.

At first, choose only about 5 to 10 stocks and start buying them and accumulate.

Here is my portfolio I opened in April 2019 to do exactly what I preach. As you can see, even though the portfolio is small and generates small income, but it is growing. And given the size of the portfolio it is still sufficiently diversified as the point is not in owning hundreds and thousands of stocks but stocks which can hedge each other. So you can have only 5 stocks and achieve the exact same or even better diversification than someone who is buying hundreds of stocks.


Note, the stocks above are my holdings and not a recommendation or solicitation. If you decide to buy them, do so on your own risk and you must do your own due diligence and be aware that you may lose money.

Also, my broker charges me zero commissions so I can buy a single share and it cost me nothing. Before, when the brokers charged commissions I first had to save at least $600 dollars to buy a few shares to mitigate impact of the commissions so I was buying shares every 6 months. Today, you do not have to wait and you can start buying a few shares every month and slowly accumulate.

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Posted by Martin January 04, 2020
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What are the best companies to invest money in the US in 2020?

If you have a plan and know what you are doing, you should have a watch list of companies you want to invest in. These companies should be great to buy any time, not just in 2020.

But without knowing your objectives, goals, strategy, risk tolerance, time horizon, or amount of money you want to invest, there is no way to tell you invest in this stock or that stock to make tons of money in 2020. No one knows the future and what is a great company today, may be a bad company tomorrow.

Investing in someone else’s tips and recommendations is a sure way to lose money. A person giving you a tip may have a totally different goal, strategy, and knowledge than you. And if the stock or market conditions change, they will adjust their position or get out (usually without tell you), so you will be the one losing money. Not them…

So, do your own homework rather than looking for a miraculous stock, a holy grail, which will make you rich over night.

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Posted by Martin January 04, 2020
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Is investing in stock market a bad idea at retirement age?

Not at all. However, your strategy will depend on a few important factors. For example, are you starting at retirement from scratch, meaning you have nothing saved? Or you have a significant amount saved and invested elsewhere and just thinking or re-allocating it?

Generally, it is never late to start in the stock market but as in investor a young person starting investing has a lot of time on his/her side and time is your friend. If you are already in retirement, you do not have much time – but that also depends where are you ate retirement – just retired or in mid retirement? If you just retired, it is still good as you may have another 10 to 20 years in front of you. And that is a good time to start and invest. However, I personally would look for safe but aggressive methods to boost your income from your investment and reinvest it unless you need it to pay your bills.

A good way is to use cash secured puts and covered calls to generate additional income on your holdings. Do not listen to people telling you that options are risky. It is not true. The risk is in underlying stock, not options. So whether you use options or not, you still have the same risk but options offer you a better protection compared to holding just stocks.

For example, when you sell cash secured puts, you always have money to buy the stock. And if you sell puts against a stock you want to buy anyway, then you have nothing to lose but buy cheaper than when buying a stock out right.

Example: Trade A and B want to buy a stock ABC at $30 a share. A trader A buys 100 shares of the stock immediately at $30 a share. Trader B sells 1 contract of cash secured put with 28 strike price and collects $40 income from selling the put.

The stock dipped to 26 a share at expiration.

The trader A is sitting on a loss $400 dollars ($30 – $26 = $4 * 100 = $400) , while trader B just bought in 100 shares by being assigned at 28 a share. His loss is only $160 a share ($28 assignment – 0.40 received premium = $27.60 cost base – $26 = $1.60 * 100 shares = $160). And once you get assigned, you can start selling covered calls and generate more income.

So, as you can see, it is not the options which carry the risk, it is the stock. Options can actually help you to lower that risk.
And if you choose high quality dividend growth stocks, you can achieve triple income from your investments: dividends, puts premiums, and calls premiums.
And it is never late for this to implement.

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Posted by Martin January 03, 2020
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Will investing in stocks be a good way to use a lump sum of money?

A study was made (sorry no longer remember who did it and link to the source, but I may try to find it if I have time), indicating that investing smaller portions but regularly outperforms a lump sump investment long term.

So, if you have a large sump, identify stocks you want to invest the money to and then divide the sum by number of the stocks. Then divide each number by at least 3 payments (if your sum is large to divide by more, do so). Then invest those amounts in monthly intervals, usually on drops of the price.

If you want, you may use put options to buy those stocks. In that case, make sure, you divide the amount for each individual stock in a way that each purchase will allow buying 100 shares. The sell at the money cash secured put. If the stock moves away from you, the put become worthless (you can roll it higher to trail the stock price while collecting premiums). If the stock dips below the put strike, you will buy 100 shares at a lower price. Then sell another put for the next cycle.

So, for example, you have $500,000 lump sum and you want to invest to 10 stocks. That means, you can invest $50,000 to each stock. Then let’s say one of your selected stock is Apple (AAPL). Currently it trades at $298.54. In order to buy 100 shares in a cash account (not margin), you will need $29,854 sum. That means, you can sell 1 put to buy in the first 100 shares (for the rest, you will not have enough cash, so you will be buying out right.

Then you can sell 1 AAPL January 17, 2020, 295 strike put and collect 4.35 or $435 dollars premium. If the stock stays above 295 by January 17, 2020, the option expires worthless, you keep the premium (you can immediately reinvest it), and you can sell new February 21, 2020 put. If the stock dips below 295, you will be forced to buy 100 shares of Apple at 295 a share.
Do this with all other stocks until you are fully invested. Then you can start selling covered calls to collect even more premiums. I recommend investing in high quality dividend stocks as with them you can afford to sit on them through any market, collect dividends which are increased every year, collect premiums from covered calls and cash secured puts, so in fact, you will hit triple income with one stock. If you have 30 years (for example) in front of you till retirement, you do not have to worry about any risk in stocks whatsoever. No bear market or recession takes longer than 2 years and it always recover. Just look at previous recessions and today’s market. The 2008 recovered in 3 or 4 years and from there we just rallied and rallied, and rallied. And during that 30 years, you will be collecting dividends (note that many high quality dividend growth stocks increased dividends in 2008 when everybody was panicking, selling everything, screaming, running for cover, and predicting end of the world).

If you stick to the plan, you will never be forced to sell a single share of your holdings and just live off of the income it will generate. As of today, per my own personal experience, you can expect 30% annual return +/- on this triple income strategy. Note, this may vary based on selected stocks and other market factors. But over the long run, you will not lose (unless you foolishly sell in the next bear market worried about your money like many investors out there end up doing and they ultimately end up selling low and buying back high, losing money.

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Posted by Martin January 03, 2020
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How will the US air strike on Iran impact the world’s stock markets?

I don’t think there will be any impact at all. There may be some dip and overreaction of the markets as is typical these days, but then the markets return back to their normal behavior. If you look at the overnight US futures and market opening we were about 1.22% negative (when I saw it, I think we dipped even further down) and as of this writing we are down only 0.62% so we literally recovered half of the losses intraday. In a few days, we will be back up, reflecting the US economy rather than some overreaction.

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Posted by Martin January 02, 2020


What is the easiest way to make small profits on the stock market?

There is no straight answer to your question. It all depends on many factors:

  1. How much money you have
  2. What is your risk tolerance
  3. How much time you have to stay invested
  4. What is your knowledge about investing in the stock market
  5. What is your “profit” expectations
  6. What would you do if your investment loses 50% of its value during your investment holding period?
  7. What do you expect from your holdings – regular income? Growth? Or some speculative swing trade income?

Based on these answers and many more you can set up a strategy. Many will recommend you mutual funds. I do not like mutual funds as these outperform the overall market grossly (most of them). I am a strong believer in individual stocks. However, overall, in the stock market, there is no easy way to make money. It would be similar as to asking what is the easiest way to perform a brain surgery.

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Posted by Martin January 01, 2020


What are some tips you would give to someone who has never invested in stock or shares? What are some things they must know and learn to get started?

First you need to answer and set a goal. You want to invest – why? What do you expect? What do you want to achieve?

Once you know answers to it, you can start learning what investing or trading strategy can get you there and focus on that. If you do not know what you want from your investments, it will be difficult to figure out where to start and what to learn. There is tons of information out there but not everything is suitable for everyone.

Another question you need to know answer to is how much time you have to dedicate to your investing management (there are types of investments where you can pay a very little attention to over time – but also expect lesser returns, and investment which may need daily monitoring – more aggressive and profitable). So you need to choose this too before you commit money.

Then you need to see how much money you have to invest as your strategy will be different if you can invest $50 a month or $2000 a month.

Next, what if your age and time horizon. If you are in 20’s and have 40 years in front of you, then your strategy should be very aggressive than if you are in 50’s.

Once you know these answers, you can set a strategy, pick the right books, read, save money, ans start slowly allocating your cash into the selected stocks.

Here is an example I did myself:

I wanted an investment strategy which would generate income no matter what the stocks are doing – in other words, generating income even though we are in a recession and panic, so I do not have to sell the stocks in order to pay my bills and thus incur a loss (when selling assets in a recession). What kind of stock can do this? Well, dividend stocks. But not all dividend stocks are being created equal. Some are good and some bad and actually lose you money. So how do you find out which dividend stocks are good stocks and which are trash? To find out, I recommend you one of the best books ever written on this topic – The Single Best Investment by Lowell Miller. Read it if you are interested. It tells you you need about dividend investing.

Later on, once you gain some confidence, you may adopt a more aggressive strategy (yet still extremely safe and in my opinion safer than buying stocks out right) – options. Options will help you to boost your income which can be reinvested. You will be collecting dividends AND premiums from the option and you will be effectively lowering your cost basis. For example: you want to buy 100 shares of a stock which currently trades at $30 a share. Instead, you sell a cash secured put (or if you are in a margin account you can do a partially secured put – meaning securing it only by a margin requirement). You sell a put with 26 strike price and receive 0.40 or $40 premium. If the stock stays above $26, the option expires worthless and you keep the premium and do the same again. If the stocks drops to $26 or below, you buy 100 shares of the stock at $26 a share. If you bought a stock out right at $30 a share, you will be sitting on a $4 a share loss by now. If you bought via a put option, your cost basis is $26 minus premium received – total $25.6 a share in lieu of $30 a share. Now you have 100 shares, start collecting dividends, reinvest dividends, and start selling covered calls for more premium (overwriting the account). For this strategy I recommend you reading books by Alan Ellman. With this strategy, some call it a “Wheel strategy” you can boost your revenue to 30% annually.

But, this is what I do and learned to do. you need to define first what you want to do. It all starts there.

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Posted by Martin December 21, 2019
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Last two weeks I was quite busy over the weekends and had no time to write my overview and expectations. Today, I am going to catch up on this deficit. My goal is to have these reviews on regular basis, if possible.

Let’s review the market

Two weeks ago, I posted my expectation of a measured move of the market and where we may go ①. Fast forward two weeks, and we are right there already.
When we broke from a base, my expectations were that we may reach 3225 level. This Friday, the market reached 3221 level (note, the numbers are not an exact science and it can be a number in its vicinity). I think, we reached the level as expected.


But, looking at the chart ① I must admit, I no longer like it. I think, we are over-extended and due for a serious pullback. Now the question is, how deep a pullback and when will it happen?

Before I get to my expectation, let’s take a look at SPY chart ②. The trend would be OK if it wasn’t accompanied by a HUGE VOLUME. We may be experiencing a bull trend capitulation and if so, we are due for a serious pullback here.


Where can we go?

There are a few possible levels – an obvious one is a 50 day MA at 3100 level. Or we can go and retest the breakout level at 3030 level.

Personally, I think, we will see the large pullback early next year (possibly March 2020) and minor pullback either next week or in the first two weeks in January. I do not have a crystal ball so we have to sit and wait to see when it really happens and how deep. Nevertheless, it will be a great opportunity for sure. So, when trading these few weeks, trade cautiously and do not over-extend your trades.

There is one thing which may come into play and cancel all this pullback thinking. If you look at the longer time frame of the chart ③ you will see that for the last two years (since 2018 which started with a large selloff) the market went nowhere. It was pretty much flat.


We had a breakout in July but that breakout failed and we went sideways for another 3 months before we finally broke up in October and rallied since then to the level where we are today.

When we look at the previous decline, we can see, that the market went from 2942 and dropped to 2399 level, a 543 points drop. If we use a measured move again, then from the breakout level at 3030 our next move expectation would be at 3573 level, see chart ④. This is my expectation for the move until possibly in March 2020 (or maybe sooner, maybe later). This is also why we decided to place our SPY trade (details here: https://tinyurl.com/wco3pyl) to take advantage of this move. After that we expect a pullback or a bear market to hit us. Thus, I expect only a minor pullback in the coming two to three weeks, possibly to 3100 level only.


Open trades:

#46 – IWM long strangle – https://tinyurl.com/vq8gtcs
#48 – OXY bull put spread – https://tinyurl.com/v4nq6n5
#49 – DHI bull put spread – https://tinyurl.com/uuxl9bh
#50 – SPY calendar call spread – https://tinyurl.com/up4vxo4
#52 – SPY long call butterfly – https://tinyurl.com/wco3pyl

During last two weeks we opened a few new trades. You can review them one by one above. Also make sure to follow the comments under each trade as we post our adjustments, comments, and reviews for each trade. You can also review those trades in our spreadsheet ( https://tinyurl.com/y2lzx5vs ) which contains a link back to the Facebook page listings.

Last Friday (December 20th) was expiration Friday and we had two of our trades expiring that day – PBCT ( https://tinyurl.com/sajds2z ), and PPL ( https://tinyurl.com/r6u4xjw ). Both trades expired worthless for a full profit. Both companies report earnings in January, therefore we will not be re-entering those trades at this time and wait for after earnings reports.

We also closed our IWM long call trade ( https://tinyurl.com/yx6ae54e ) for a profit. Although the stock seems to be in a good trend move to the expected level of 170 and possibly to the previous 175 high, see chart ⑤, I think we are extended to re-enter the trade now. We will wait for a pullback to re-enter a bullish trade.


Stock holdings:

3 HP (+1)
3 PPL (+2)
4 OXY (+3)


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Posted by Martin December 04, 2019
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Stocks watch list December 2019

Here are the dividend paying stocks we will be reinvesting dividends, options profits, and trade options (exceptions apply) in December 2019:

Helmerich & Payne Inc. (HP)
Meredith Corp. (MDP)
Mercury General Corp. (MCY)
Weyco Group Inc. (WEYS)
3M Company (MMM)
Consolidated Edison (ED)
Archer Daniels Midland (ADM)
Sonoco Products Co. (SON)
Johnson & Johnson (JNJ)
Automatic Data Proc. (ADP)

Stocks added:
Mercury General Corp. (MCY)

Stocks removed:
People’s United Financial (PBCT)

Monhtly dividend stocks:

EPR Properties (EPR)
Gladstone Investment Corp. (GAIN)
Gladstone Land Corp. (LAND)
Main Street Capital Corp. (MAIN)
STAG Industrial Inc. (STAG)

The first batch of stocks above are dividend champions (aristocrats) which meet our screening criteria for this month. The second batch are stocks which increase dividends regularly but are no necessarily champions. The reason I pick them is that they pay dividends monthly and they are on the list of dividend growth stocks.

Next month, we will update this list and stop buying stocks which do not make it to the list, however, we keep them if they stay in a CCC list, (see the link for the CCC list). We sell these stocks if they do not make it to our narrower list but are also removed from the CCC list.

We will be selling naked puts against these stocks (although if opportunity occurs we may take a different stock too, such as SPY, IWM, MSFT, etc.).

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