Investing into Stocks - Hello Suckers!

Posted by Martin February 10, 2021
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How to buy great companies that are expensive: Valuation still matter

Many investors these days forgot valuations and started chasing companies that have no revenue, no income, and that are burning cash every quarter. Yet they are hot and their prices are skyrocketing.

There are plenty of companies that are great and valuable but they trade at a premium to their intrinsic value. For many years I argued that if you look for valuations and buy only undervalued companies then there will be certain stocks that you would never be able to buy or you would have to wait for 10 or more years for a major market crash that would make these companies valued properly.

One example can be Coca Cola (KO). A great business. I love the stock and I want it in my portfolio. But that company is terribly overvalued. Since the 2008 crash, it always traded at a premium to its value:

Another example in this category of great but overvalued companies is Apple (AAPL). For many years, AAPL traded near its intrinsic value, tracking it closely. Until September 2019. That month, the stock skyrocketed and continued rallying since then. Even a 40% crash of the market in March 2020 didn’t correct the stock valuation.

And it may take years for this stock to drop. And it may never drop. It may start trading sideways for many years until the valuation catches up with the price of the stock. And you (and I) will be sitting on the sidelines for years.

If you are like me, you want these companies. I want them. I want to own AAPL and AMZN, or SNOW. But how do you buy them so you don’t burn your cash that may be lost in the future if the market finally corrects?

The secret is in the cost basis. If I can lower the cost basis of the stock, it is like buying it cheaper.

There are a few investors I have seen who do not believe in cost basis and its lowering. They say it is an artificial maneuver and in reality, you do not lower your cost basis at all. But that is a way of the view you are looking at income and cost basis of a stock.

Some people view dividends and other income generated by the stock or your trading as an income that is added on top of your capital gains. Others use the income and subtract it from a purchase price, refer to a book “Generate Thousands in Cash on your Stocks Before Buying or Selling Them” by Samir Elias. I am in that category. I believe, that if you can manage that the stock returns all your invested dollars back to you (as Warren Buffett also looks for in his investments), you end up owning the stock for free.

What income can help you to lower the cost basis?

dividends
options premiums

And so, I started to track my desired cost basis and adjusted my prices to take into account options premiums to lower my cost basis.

Now I can see my income adjusted cost basis of a stock and compare it to my intrinsic value of a stock. My goal is now to keep reducing the cost basis until I reach the minimum (or go significantly below it). For example, AAPL is trading for $135.39 a share. My unadjusted cost basis is $130.95 per share but my income adjusted cost basis is $122.49 a share. However, I need to lower it to $60.14 a share.

For that reason, I will keep selling options and collect premiums to further lower my cost basis. Then, when my cost basis will be below the intrinsic value of a stock, I can be buying expensive stocks and not worry about valuations.

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Posted by Martin February 06, 2021
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2021 Week 5 results

The first week of February was slow in trading. I didn’t have much time to trade and thus it was mostly maintaining the existing trades. However, some of our holdings (those speculative ones) jumped up significantly and boosted our net liquidating value beyond my expectations. I think I sorted out better, what I want to do next with our fund.

I still will be accumulating dividend aristocrats according to our plan but I will be also adding some of the innovative and disruptive stocks from industries such as renewable energy, biochemical industry, electric vehicles, 5G research and innovations, 3D printing, and cannabis. But I will also do some speculative trading on a small scale using momentum trading.

I created a Finviz screener that searches for stocks with unusual volume activity (plus some other technical indicators) that helps me to find stocks that may spike up significantly on a new buying interest. I will buy such stock (and if a stock is optionable and offers good premiums and strikes to trade, I will also sell puts against the stock) and ride the momentum. I will also use stop loss to protect the trade from losses.

Currently, the screener selected the following tickers: NESR and CSWC. We purchased a few shares of NESR and we bought a call option on CSWC that we could offset by selling a naked put against it. Both trades are profitable so far.

For the next week our screener chose the following symbols that we may (or may not) trade next week: CUTR, NOG, PRCH, NBLX, FLNT, and REKR. Some stocks are on our watch list already, such as CUTR, others we need to wait for a breakout to invest. Lets see what the next week brings.

Last week, we continued accumulating our dividend aristocrats Altria (MO) and saving cash in the ICSH fund to have our savings up to date in case of a serious market correction. We increased our MO holdings to 45 shares and our goal is to reach 100 shares. After we reach the goal, our next accumulation goal will be Aflac (AFL).

In our “innovative and disruptive” category, we will be accumulating RESN, this company develops 5G network components and radio/cell phone filters and some other stuff; I expect this company to be a significant player once the US wireless carriers kick in their 5G networks in 2022; DDD, and XONE, both companies are involved in 3D printing and they have a good potential of large returns in the next 3 years; PACB in biochemical industry, developing genetic sequencing systems; and ISR a company researching cancer treatments, technologies and medical equipment.

We are also interested in the following stocks:

Virgin Galactic Holdings, Inc. (SPCE)
Social Capital Hedosophia Holdings Corp. V (IPOE)
Canadian Solar Inc. (CSIQ)
Plug Power Inc. (PLUG)
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
iShares Self-Driving EV and Tech ETF (IDRV)
The AES Corporation (AES)
Omnicom Group Inc. (OMC)

It will take us some time before we will be able to accumulate these stocks as our cash is limited. That is also one reason for aggressive options trading to generate enough cash that can be used to buy these stocks of our interest.

We post our trades and more details in our MeWe group. I strongly recommend you to join the group if you are interested in following our trades more in detail. We also post trades on a MeWe page as I do not like Facebook anymore and I participate on Facebook very sporadically.

But now, let’s jump to our trading results:

Account Value:	$30,468.65	$5,190.52	+20.53%
Options Premiums Received:	$467.00
January 2021 Options:	$4,209.00	+16.65%
February 2021 Options:	$467.00	+1.53%
Options Premiums YTD:	$4,676.00	+15.35%
Dividends Received:	$36.79
January 2021 Dividends:	$53.04
February 2021 Dividends:	$36.79
Dividends YTD:	$89.83
Portfolio Yield:	3.57%
Portfolio Dividend Growth:	5.91%
Portfolio Alpha:	8.88%
Portfolio Weighted Beta:	0.60
2021 Portfolio Value Goal:	$42,344.06	71.95%

Last week we received $467.00 in premiums trading options against our holdings and shares we want to own. Our options trading delivered a 1.53% monthly ROI, totaling a 15.35% ROI. Also, our net-liq increased significantly as the volatility dropped after the GME frenzy saga faded away and the stock market recovered all last week’s losses.

With this recovery, our account jumped up to 48.10% YTD growth. We are very happy with this result.

Last week we had to sell some shares in ICSH, VGSH, GBIL, and MO to release some buying power (BP) as we were getting hit by margin calls. This week, we bought all these shares back and added more. I see this as a good achievement as well.

The table above shows our current holdings and gains on those holdings. Adjusted columns indicate how options help to boost (or ruin) our stock holdings appreciation, or in other words, lowering the cost basis. Without options, our holdings would be up 7.32% with options, our holdings are up 12.06% (from inception on 4/1/2019). The SPX is up 34.36% since inception. Our stock holdings do not beat the market. We beat the market because of trading options and generating additional income. The market gained 4.52% YTD, our portfolio stock holdings grew by 5.08% (note this includes stock holdings adjusted by options trading, not the entire portfolio).

We are still in an accumulation mode accumulating Altria (MO). Our next target will be accumulating Aflac (AFL), and Abbvie (ABBV). After that I will proceed to other stocks as per the chart I posted in my previous article.

We also want to expose our portfolio to some growth stocks in the new technologies and industries such as electric vehicles, nanotechnologies, fintech industry, cannabis, and renewable and clean energy. I will be purchasing individual stocks as well as ETFs investing in these industries. That’s why you may see me buying stocks like NIO, NNDM, SNOW, CUTR, CSIQ, ISR, DDD, XONE, IPOE, PACB, SPCE, RESN, or ETFs such as MSOS, RNRG, or IDRV.

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Posted by Martin January 30, 2021
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2021 Week 4 results

The last week of January 2021 is over and it was a hectic week. It was a week that woke up many investors from the lethargy of easy gains. As Danny DeVito says in Other Peoples money: “Easy come, easy go”. The previous three weeks were the “easy come”, the last week was “easy go”.

A lot has happened last week. Some online brokers halted GME trading, and the most exposed broker, Robinhood, made the uneducated bunch of 17 years old WSB boys mad, and they decided to sue Robinhood because their friend’s uncle said that they may have a good chance. No one bothered to see why Robinhood, Interactive Brokers, TD Ameritrade, or Tasty Works actually did it. A reason no longer applies in the stock market. One may ask when it ever had?

Besides the daily GME broadcasting from new millionaires the markets started being nervous. Was it a Robinhood trading halt that spilled over into the regular markets? Were other greedy investors wanting to jump on the late bandwagon and started selling everything to make their own millions too? One can only speculate. The reality is that the markets went to a selling pressured spree. Monday and Tuesday of the last week were good. Wednesday… all went nuts.

On Thursday it all looked like a dip but dip buyers failed to step in and buy the dip. They probably went to buy GME which skyrocketed another 150% as soon as Robinhood secured the funds to meet the required cash deposits with their clearinghouse and renewed GME trading. The angry mob at WSB calmed down and resumed their HOLD or buy more cheering. It will be interesting to see how many end up holding the bag cheering themselves into more holding.

S&P 500 lost -4.6% this week and VIX jumped to 37.5 which was last seen in September 2020 (as a reminder, the market sold off by 10.6% that month).

This craziness had an impact on our trading. As the markets got into a frenzy and later this week into a selloff, brokers raised the margin requirements, and I got into a “cash squeeze.” I had saved cash in my ICSH “savings account” ETF but it showed up as not enough to meet all my collateral obligations.

A great example was a strangle against BB (the infamous Blackberry). When I opened the trade the margin requirements were only $150 per contract. Piece of cake. Well, when this frenzy with GME, AMC, NOK, and BB started the brokers (TW as well) suspended margins for these stocks so suddenly, out of blue, I had to come up with an additional $2,500 in collateral. With other options contracts and their inflated volatility (vega), I had more margin obligations to come up with. And I suddenly was short on cash. Another example was my very recent Boeing (BA) strangle. When I opened the trade, I needed a $2.4k margin, later, I need $3.9k…

So I had to liquidate my ICSH fund to raise capital but I also had to sell some shares in MO. That infuriated me a lot. Fortunately, some of my options contracts expired worthless today so, on Monday, I will start re-establishing my MO and ICSH positions.

Lesson: I need to hold more money in cash for situations like this. My goal was to have 20% in cash reserves. I was under-capitalized on this goal, I only had 7% saved. I might increase the reserves to 25% and make sure to be always fully capitalized (save the required cash) when the markets are at ATH.

This had an impact on our Net-Liq which went down. It didn’t go down because we lost money, not at all. We made more money than before, but it went down due to increased volatility, larger margin requirements, and lower stock holdings valuation when the markets sold off. Since I expect selling to continue next week, the Net-liq may go lower.

But now, let’s jump to our trading results:

Account Value:	$25,278.13	– $789.07	– 3.03%
Options Premiums Received:	$1,994.00
January 2021 Options:	$4,209.00	+16.65%
Options Premiums YTD:	$4,209.00	+16.65%
Dividends Received:	$11.46
January 2021 Dividends:	$53.04
Dividends YTD:	$53.04
Portfolio Yield:	3.70%
Portfolio Dividend Growth:	5.91%
2021 Portfolio Value Goal:	$42,344.06	59.70%

Last week we received $additional $1,994.00 in premiums trading options against our holdings and shares we want to own making January 2021 a good month on options income, closing with a good $4,209.00 options income. That is 16.65% monthly ROI. Most of that income was however swallowed by increased margin requirements and it didn’t get reflected in our net-liq. I assume, when the market craziness ends, not only our Net-Liq will increase, but also our buying power (BP) will go up significantly.

Even with this market frenzy, our account is up by 22.87% YTD.

I only regret selling Altria (MO) shares to release margin (not all of them though). But as I mentioned above, some of my options expired this Friday, which has released additional buying power, and on Monday, I will buy MO back. And since I expect more selling, I might even buy cheaper. Long live the wash sale rule!

The table above shows our current holdings and gains on those holdings. Adjusted columns indicate how options help to boost (or ruin) our stock holdings appreciation, or in other words, lowering the cost basis. Without options, our holdings would be up 6.01% with options, our holdings are up 10.36% (from inception on 4/1/2019). The SPX is up 28.40% since inception. Our stock holdings do not beat the market. We beat the market because of trading options and generating additional income. The market lost -1.45% YTD, our portfolio stock holdings grew by 3.38% (note this includes stock holdings adjusted by options trading, not the entire portfolio).

January 2021 went well. Even though the end of the month sold off, our portfolio is still up nicely and I expect it to grow further. I still will strive to be purchasing dividend aristocrats as our main goal in 2021. I will be purchasing them in a manner to create a weekly dividend income. And I will keep trading options around these positions as well as around the stocks I want to own in the future.

As of today, I am in an accumulation mode accumulating Altria (MO). My next target will be accumulating Aflac (AFL), and Abbvie (ABBV). After that I will proceed to other stocks as per the chart I posted in my previous article.

I also want to expose our portfolio to some growth stocks in the new technologies and industries such as electric vehicles, nanotechnologies, fintech industry, cannabis, and renewable and clean energy. I will be purchasing individual stocks as well as ETFs investing in these industries. That’s why you may see me buying stocks like NIO, NNDM, SNOW, or ETFs such as MSOS, YLCO, or IDRV.

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Posted by Martin January 23, 2021
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2021 Week 3 results

Another week of 2021 is over and it is time to post the results of our trading. But before I proceed to list my achievements of this past week, I want to share an idea of creating a weekly dividend income.

A fellow investor on social media, where I posted my weekly dividend calendar asked me why I decided to do a weekly payout calendar and not just a monthly one because the weekly calendar seems too complicated to track. I disagree with this conclusion. I am accumulating our portfolios one stock at a time and it was easy to create the calendar and keep track of each stock being accumulated.

But I got into this idea when evaluating my account #3. I wanted to grow this account faster and reinvest the dividends but when I finally decided on the plan there were no dividends coming in. In November 2020, I have received tons of dividends that allowed me to finish accumulating AT&T in that account and since then I was painstakingly waiting for the next payout. And I only received a few dollars here and there. It was frustrating, given that in this account, I had approx. 40 different companies. So I checked their payout days and found out that the majority of them pay dividends in February and most of them in the second week of February (and subsequent months). So, I receive dividends in February, May, August, and November. In other months I get just a few pennies or a few dollars only. I wait dry with nothing to do. And that was an eye-opener that I have decided to select stocks I like to own in a manner to create more even dividend distribution across all months and weeks. And, since I try to trade weekly options, I decided to accumulate my stocks to get weekly dividends too.

But now, let’s jump to our trading results:

Account Value:	$26,067.20	+$3,420.71	+15.10%
Options Premiums Received:	$305.00
January 2021 Options:	$2,215.00	+9.78%
Options Premiums YTD:	$2,215.00
Dividends Received:	$0.00
January 2021 Dividends:	$41.58
Dividends YTD:	$41.58
Portfolio Yield:	3.59%
Portfolio Dividend Growth:	5.91%
2021 Portfolio Value Goal:	$42,344.06

This week we received $305.00 in premiums, a total of $2,215.00 for the entire month so far. That is a 9.78% return on investment for January 2021.
I also started depositing $1,000 a month to our portfolio. That was also my goal to grow the portfolio faster. The goal value of $42,344.06 above includes the deposits of $12,000 per year. I am still paying off my personal debt and once that is paid off, I will be depositing another $1,000 per month. But, that is the future.

The table above shows our current holdings and gains on those holdings. Adjusted columns indicate how options help to boost (or ruining) our stock holdings appreciation, or in other words, lowering the cost basis. Without options, our holdings would be up 7.60% with options, our holdings are up 10.65% (from inception on 4/1/2019). The SPX is up 32.80% since inception. So our stock holdings do not beat the market. We still beat the market thanks to trading options and generating additional income as you can see below. The market grew 2.95% YTD, our portfolio stock holdings grew by 3.67% (note this includes stock holdings adjusted by options trading, not the entire portfolio).

January 2021 started well so far and we are on track to meet and exceed our goal. My anxiety over this market is growing, however. I am happy with the market’s growth and our stocks going higher, but I can also see a lot of irrational behavior from investors out there. I stopped understanding these investors, mostly young guys, and sorry to say, mostly completely ignorant about what they are doing. Just go to YouTube or other social media channels and you will see tons of your guys boasting about their investments chasing pretty much worthless stocks or companies that make absolutely no money, no revenue, no product. They just buy these companies out of their pure existence. That’s it. Traditional values of investing, buying high-quality companies that create something and generate value are gone. Nowadays, chasing bankrupted companies such as Hertz (HTZ), Chesapeake Energy (CHK), or penny stocks that serious investors wouldn’t touch with a ten-foot-long pole are in. The funny part of all this is that many of these gamblers became rich overnight chasing these strategies and many of them became extremely cocky trying to arrogantly explain to you that your approach is stupid and that you should invest in bitcoin, or some unheard of penny stock and become rich overnight too. That is why I stepped down from social media lately (I am still present in there but very little compared to what I used to de before). I can’t stand these gamblers and their ramblings.

It will come to an end one day.

There are a few exceptions though. One of them is Daniel Pronk. I think, his insights make sense and he is looking at investing from traditional, rational evaluation of investments before deploying money. His recent video about the irrational behavior of this market and the market’s participants is exactly what I tried to describe above. We do not know whether the market would crash in 2021, no one knows, even Daniel acknowledges it, but his reasons for this bubble-like market are extremely valid.

That is the reason why I am still raising cash (investing it into the ICSH fund) for rainy days in the stock market and a potential bubble burst. That is why most of my premiums and dividends will be parked in the ICSH fund to sustain the crash should it happen. The market shows weakness and I want to have enough cash to cover naked trades (making them cash-secured). We are still seeing a Christmas rally momentum but it is weakening and if we look back in history, we may expect up to four corrections a year. I want to be able to survive that correction without forced losses.

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Posted by Martin January 22, 2021
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Why am I rolling options and not letting them assign?

A primary goal in my wheel strategy is to generate income, not to get assigned. So, simply, if I can roll the option trade away and adjust my strikes for credit, I roll. Of course, I still have to account for the eventuality that I get assigned. A stock may drop suddenly, I get an early assignment, or I won’t be nearby my computer to be able to adjust a trade that in the morning looked great but in the afternoon went south, for example.

That’s why I am creating my cash reserves to handle any assignments should they occur but I try to avoid them.

I have two main approaches to my portfolio wealth-building – one approach is to accumulate shares of the dividend growth stocks and then, the second approach is to trade the strangles around those positions. The shares generate income from dividends and on top of that, I receive premiums. And if the trade goes against me on the call side, my 100 shares cover it. If the put side goes against me, I have cash reserves to eventually buy another 100 shares of the stock. But if I can roll such strangle away in time and adjust the strikes up or down as needed and all that for a credit, I go for it and roll.

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Posted by Martin January 22, 2021
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Creating passive income with weekly dividends

Besides trading options against my positions, I am also interested in weekly dividend payments, so I added all stocks I like to own into a calendar per week, and now I am accumulating these stocks to achieve weekly dividends. I only enter stocks where I own 100 shares in this calendar (I own many other shares but not all of them are in 100 shares lots yet)…

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Posted by Martin January 21, 2021
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My 2021 additions to our portfolio

We have successfully accumulated 100 shares of AT&T (T) and now we are moving towards accumulating our next company – Altria (MO).

We want to invest conservatively, no more risky trades in our portfolio. Thus I consider myself, as a CIO, a reasonably conservative investor. But I also would like to add some new technologies and new sectors to my portfolio.

One sector or industry we would like to start accumulating in some shares would be the cannabis industry.

In the past, I avoided investing in cannabis stocks mostly because they are traded on the OTC market and to me, they are difficult to analyze and research.

But recently, the Biden administration published their intent to decriminalize marijuana and allow medical marijuana nationwide. This would support this sector/industry growth beyond the current levels. Moreover, many good cannabis companies can up-list away from the OTC to any regulated market. And if that happens, big institutional investors such as mutual funds and ETFs will be allowed to invest in these companies. And with more money pouring in, there is huge growth potential.

But, I am unable to analyze these stocks on my own and I do not want to gamble and guess what the stock may do next. So I decided to start investing in a cannabis ETF. My candidate for accumulating in the cannabis industry is AdvisorShares Pure US Cannabis ETF (MSOS).

This ETF is also optionable and therefore I plan on selling strangles around this position.

Our next industry to enter is renewable energy. With the current government policy, the US will be heading towards clean, renewable energy. Thus, I expect growth in the next 4 years (and maybe beyond).

But again, I do not know which stock to pick and which stock would benefit from this trend. Therefore, I will be again investing in an ETF which is specializing in the renewable energy industry.

In 2021, I will be accumulating shares of Global X YieldCo & Renewable Energy Income ETF (YLCO). And the good thing here is, that this stock also pays a nice 3% dividend. Unfortunately, it is not optionable, so I will hold this ETF to participate in renewable energy growth and receive dividends while waiting for the stock appreciation.

Another company in the renewable energy industry I am looking at to accumulate is Brookfield Renewable Corporation (BEPC). Currently, it pays a 1.16 dividend that translates to a 1.94% yield, and the stock is optionable. Our goal in 2021 will be to accumulate 100 shares of each mentioned company or ETF.

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Posted by Martin January 16, 2021
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2021 Week 2 results

The second week of 2021 is over and below are the results of our trading.

Account Value:	$22,646.49	+$187.81	+0.84%
Options Premiums Received:	$678.00
January 2021 Options:	$1,910.00
Options Premiums YTD:	$1,910.00
Dividends Received:	$0.08
January 2021 Dividends:	$41.58
Dividends YTD:	$41.58
Portfolio Yield:	3.46%
Portfolio Dividend Growth:	6.11%

In the second week of January 2021, we have received $678.00 in options credits income. It is a good income for a week. But I have to note that although I am mostly a premium seller I from time to time buy options, for example, LEAPS. When LEAPS are purchased, it will be shown as debit and reduces credits received. It may look like a loss but it is not. I am looking for easy ways to separate these purchases from accounting and include them only after a trade is closed. Since I use data downloaded from my trading account and do not do this manually, I need to figure out how to do it automatically. Doing this manually would not be feasible for me.

The table above shows our current holdings and gains on those holdings. Adjusted columns indicate how options help to boost (or ruining) our stock holdings appreciation, or in other words, lowering the cost basis. Without options, our holdings would be up 8.05% with options, our holdings are up 10.83% (from inception on 4/1/2019). The SPX is up 31.49% since inception. So our stock holdings do not beat the market. We beat the market thanks to trading options and generating additional income.

The first week of 2021 started well. Let’s hope, it will continue that way.

I am still raising cash (investing it into the ICSH fund) for rainy days in the stock market. I was also trading less this week and most of the credits went toward cash reserves. The market shows weakness and I want to have enough cash to cover naked trades (making them cash-secured). We are still seeing a Christmas rally momentum but it is weakening and if we look back in history, we may expect up to four corrections a year. I want to be able to survive that correction without forced losses.

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Posted by Martin January 09, 2021
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2021 Week 1 results

I used to post weekly results about my trading. It is a time-consuming effort but my goal is to show other investors and traders who are learning that it can be done. I will strive to keep posting throughout the entire year every week no matter what the results will be. My goal is to show my screw-ups as well as my successes in trading options.

Account Value:	$22,458.68	+$1,886.33	+9.17%
Options Premiums Received:	$1,232.00
January 2021 Options:	$1,232.00
Options Premiums YTD:	$1,232.00
Dividends Received:	$41.50
January 2021 Dividends:	$41.50
Dividends YTD:	$41.50
Portfolio Yield:	3.36%
Portfolio Dividend Growth:	5.77%

In January we have received $1,232.00 in options credits income. It is a good income for a week. But I have to note that although I am mostly a premium seller I from time to time buy options, for example, LEAPS. When LEAPS are purchased, it will be shown as debit and reduces credits received. It may look like a loss but it is not. I am looking for easy ways to separate these purchases from accounting and include them only after a trade is closed. Since I use data downloaded from my trading account and do not do this manually, I need to figure out how to do it automatically. Doing this manually would not be feasible for me.

The table above shows our current holdings and gains on those holdings. Adjusted columns indicate how options help to boost (or ruining) our stock holdings appreciation, or in other words, lowering the cost basis. Without options, our holdings would be up 8.05% with options, our holdings are up 10.83% (from inception on 4/1/2019). The SPX is up 31.49% since inception. So our stock holdings do not beat the market. We beat the market thanks to trading options and generating additional income.

The first week of 2021 started well. Let’s hope, it will continue that way.

However, I am now raising cash (investing it into the ICSH fund). The reason behind it is that I am expecting a correction in the market. I do not know when it happens but it will. We have about two to four corrections a year every year. The only exception was 2017 when we had none. If that happens, I want to have cash on hand to survive potential assignments (although I believe I should be able to roll my positions as needed, just in case I won’t be). But most importantly, to be able to buy more shares when they will be on sale when everybody else is panicking.

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Posted by Martin January 04, 2021
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Is investing and trading in the stock market a passive income?

The simple answer is NO, it is not. Investing in the stock market could be considered a passive income, trading is not passive at all.

So, why investing is not a passive income?

Although you may reach the fruits of investing and create a passive income in investing, it is only a small portion of the entire business that can be considered passive. The rest is hard work. Why?

First, if you invest in the growth companies, then there is nothing passive in it. If you invest in dividend stocks, only the final part of your work will be passive. Everything before that – again, hard work.

Just look around in Facebook, MeWe, or other discussion forums and all you find is people asking what to do, how to start investing. They have no clue. But they are willing to learn. And the process of learning, trying, avoiding mistakes, tracking their portfolios, learning about the stocks, learning about dividends, all that is not an easy job. And you will agree with me on that if you try to remember when was the last time you tried to learn something you had absolutely no clue about and many times you wanted to give because it was too complicated.

But if you think that you learned everything, found the perfect stocks, and bought them that your job is over and now you will only have the passive income and nothing else (besides a yacht, helicopter, and ten-bedroom house), you will be disappointed. There is nothing “buy and forget” in the stock market. You can buy stocks, forget them, and one day open your account and find out you have nothing left. Unless you buy index funds and settle with it.

But if you want to own individual stocks, by buying them your job doesn’t end. You need to watch them, read about them, and make sure they still meet your original criteria why you decided to invest in them in the first place. And if you do not know why you invested in them, you should have stayed away from the market too.

None of it looks like an easy job and passive income to me. It still is hard work. But, if you know the ropes, it is fun work.

And trading?

Multiply everything I just said ten times.

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