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Posted by Martin February 14, 2020
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Are all the trading mentors scam?


I must admit, majority of all sorts of gurus, mentors, sellers of all sorts of magical formulas which would make you rich overnight are scam. It is sad but this trading industry is full of charlatans and pure thieves who just go unscrupulously after your money. They are not there to help you. There are there to help themselves.

There may be a few who are honest and really want to help and teach but it is difficult to find them. Maybe because they are not aggressive in advertising their trading magic.

I myself was looking for mentors in the past, as well as for ways how to raise capital by either borrow or trade for a prop firm. The results were saddening. So, my ruling?
 

YOU ARE ON YOUR OWN out there.
 

Unfortunately, it is difficult to find anyone willing to help. Lately, you may be lucky to find people on Facebook who might be willing to teach.

Thus, you need to rely on books, free Youtube videos, and other social media to get help by asking questions and put together all the pieces of the trading puzzle you can collect out there by yourself.

Overtime, I found a good website, which writes reviews of these trading mentors and signal sellers. When browsing through the list of all the charlatans out there I could recognize many of them which are still filling out my junk box of my email although I unsubscribed. So, if you are thinking to subscribe to a service selling miracles and predictions of the future, check the Tradinchschools.org website first to see if you find your future sorcerer listed on that website and if so, what rating was “assigned” to that magician. Mostly, if you find him or her on the website, run away as fast as you can.

I found some of the charlatans I was once considering to subscribe such as Jason Bond Pick. He even has two funny reviews on the website. It was amusing to read how this guru made $26,000,000 dollars trading penny stocks and yet he needs to peddle his scam and fake Harvard University speech invitation. I found the Harvard fake invitation story especially entertaining.

Or another joker, magician, and trading savior listed on the website Teeka Tiwari. I remember, I once watched his promotional video (I no longer remember what actually it was about). Fortunately, he made is so boring and long, that I stopped watching it soon after it started wondering who actually has guts and time wasting it with this loser.

The website was created by a former scammer himself, Emmett Moore, who engaged in a similar fraud as Jordan Belfort (Wolf of Wall Street) and was convicted and went to prison. After he was released, he started his blog doing his reviews (and if you want you can submit your own request to have him review your potential magical road to riches provider too).

Funny part, which makes me feel Moore is legit is that some of the reviewed scammers (Day Trade Academy) started a website with Emmett Moore’s name in the domain name saying:
 

“Emmett Moore saw the success Day Trade Academy was having and knew he’d be able to extort them out of money. In turn, Moore wrote a fake and defamatory blog post about the trading program, where he lies non stop about individual people’s personal history.”
 

This is so laughable and in fact proving that Moore was right exposing Day Trading Academy as scam because if someone’s bad review forces you to use the accuser’s name in the domain and whine about it all on the website, and how damaging the report was, instead of providing enough evidence and proof to the accuser proving him or her wrong and explaining the matter on your own website makes me (using common sense) to think that the exposed scammer shouts out laud now, something like a thief crying: “Thief, catch the thief!”

It is similar that if this poor blog, Hello Suckers, writes something about Wall Street Journal and Wall Street Journal gets offended and starts a new website named hellosuckersscammabout usthewallstreetjournal.com and asks everyone to join them with a class action. My guts still hurt laughing.
 

And now, since you know that all the scammers out there, you can contact me for my magical formula to get rich in 5 days trading options. I will send you my bank account immediately.




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Posted by Martin February 07, 2020
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What are good resources to start learning about investing and personal finance if you know nothing about it?


Even if you know absolutely nothing, you need to know what you want from investing (and or trading). Investing is such a broad industry, so to speak, that you will not be able to read everything and learn. You will start jumping from one topic to another and soon get confused and lost.

So, first, you need to narrow this topic to the part of investing you want to learn and then focus on that only and ignore everything else. And by ignore, I really mean deliberately ignoring it no matter who tells you what and what CNBC is currently broadcasting about it.

You need to start with yourself and ask and do the following:
 

  1. Set your goal – that means, think about what you want your investments to do for you. Do you want income? Or do you want growth? Do you want speculation or save investing which will grow but also reward you for waiting for appreciation?

  2. Next, you need to look at how much money you have available. Do you have a large sum or just started? If you just started how much can you invest? Is it $100 a month or $2000 a month? Or you inherited $350,000 or sold your old house and rent?

  3. Next, look at the time horizon you are willing to give your money machine to churn some money for you. Will it be 1 year, or you can let it run for the next 30 years?

  4. Be as specific as possible. Write it down. Think about it, think about what you want your money machine to do for you, with how much money you are available to pour in it to multiply and how long it can run before you turn off the switch.

 

All that is really important to know before you jump in because all that will determine the strategy you want to adopt and based on that strategy you will narrow your learning path (unless you want to start an investing University and learn everything – and for that you may need the rest of your life).

Once you have your narrative and answers to what you want, use the Internet to look for investment types which can provide you with that result. Once you have it, here is your topic to study. Then go to Youtube and find people who post about that topic, watch their videos, evaluate, and eventually subscribe to their vlogs. Buy or rent books (I rent with Kindle Unlimited and if I like the book and want to have it, I buy it). Find blogs, there are many investors who blog about their investments and portfolios, find them and follow their posts. You can also ask them questions. Many will gladly answer and help you to direct you toward more resources. Join Facebook groups with the same topic you want to learn about, find people you like their views and follow them (this may be tricky, if you join a group of investors which is 10,000 members large, you won’t be able to follow them all, so pick one or two members and follow just them).

Here is an example of what I did myself many years ago. I wanted an investment, which would help me to generate income. I didn’t care how the income was generated, I just wanted a monthly income which I could take and invest to grow my portfolio.

But I also wanted an income, which would pour into my account no matter what the stock do. I was aware that during crisis and bear markets stocks may lose 50% or more of their value. If you are a growth investor relaying on selling some of your shares to generate income and you happen to need to sell during panic (like the one in 2008) in order to pay your bills, well you have a problem (that’s why I didn’t like the 4% rule investing).

So, what kind of investment will provide you with decent return, good “interest rate” and safe, continuously growing income even if you do absolutely nothing about it, or every night when you sleep?

I won’t answer the question this time. I leave it up to you to find the answer. It is however easy. Once you have the answer, then go and rent or buy a few books about this type of investment. As you read them, they will point you to more resources and you will be reading, and reading, and reading…




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Posted by Martin January 31, 2020
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Is investing in 20-25 stocks really the best form of diversification?


Yes. You can be well diversified even with less stocks. Owning hundreds of stocks will not protect you against systemic risk. If there is a recession and panic, everybody sells everything, then it really doesn’t matter how many stocks you own. And if you want to be protected against a failure of one stocks vs. the others, just make sure you pay attention to the proper stock correlation so your positions can hedge each other. That means, you need to look for companies which act in opposite way, for example, if oil companies go down, which companies are correlated in the opposite manner and go up? And then of course, you want to pick good businesses and know them and monitor them. If you do this right (and bad news is that very few know what to do in lieu of blatantly buying everything and thinking that they are diversified) then you can be literally diversified with only 2 stocks. But, that would mean to learn a lot about hedging.

I myself own in one portfolio only about 10 companies. One went bankrupt (it was a speculative oil company and I stupidly let it go instead of ditching it as soon as I saw troubles), yet my portfolio is significantly up.

William O’Neil wrote about diversification I think back in 2006-ish (I really no longer remember) and concluded that owning many companies not only will not protect you but it will also be difficult to monitor them and watch them that they still meet your criteria. In my IRA account I have a lot more companies and it is really hard to follow them all. So do not bury yourself in a huge portfolio and get lost in it. Pick only a few and familiarize yourself with them and know them in and out as if they were your businesses.




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Posted by Martin January 24, 2020
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As we approach 2020, are you bullish or bearish on U.S. stocks for dividend growth investors?


Definitely bullish. I expect this market to go a lot higher. However, there will be corrections on the way up. By “a lot higher” I am referring to the secular bull market which in my opinion will last for the next 15 to 18 years and delivers substantial gains.

However, it will not be a straight shot up. There will be corrections and bear markets along the way. In a secular bull market stocks tend to raise every year but they can have large corrections (4% to 6% drops) or even bear markets (20% drops) which do not disrupt overall trend and the market recovers fairly quickly and continues up.

This table indicates corrections larger than 5% we have had since 2009 recovery:

 
Market Corrections
 

As you can see, we can expect to have in average two corrections every year. And you can expect a bear market (by a definition of 20%+ drop) approx. 7 years. Again, these are not an in stone set rules but possibilities.

Nevertheless, although we have had these corrections and even two bear markets such as one in 2011 and in 2018, these didn’t disrupt the overall secular market. In fact, these corrections actually WILL benefit this bull market to consolidate its gains and allow it to go higher.

Here is the chart of a 100 year market which will allow you to identify the big picture market. And as you can see, we had three periods of extremely difficult markets (which were painful and the market pretty much got nowhere in a decade or more) and periods of easy markets (secular bull market). We broke from the difficult market in 2013:

 
Market Corrections
 

We are lucky today as we are at the beginning of a great bull market (unlike our predecessors who lived and invested in the “lost decade” 2000 – 2009, for example). But if you correctly identify what type of market you are in, you can tailor your investing strategy for that particular market. If we get hit with another “difficult market” period (which I do not think it would happen anytime soon), your strategy needs to be adjusted and you need to be able to weight your positions carefully.

And that is one of the reasons why I am investing in dividend stocks – high quality dividend growth stocks – so I do not have to worry about these periods and do not have to weight my positions in and out of the stocks as that is extremely difficult to do. If the cycles above are correct and we really will see another 18 years of a bull market, I will be retiring when the secular markets ends. By then, I want my portfolio to generate enough income regardless its value, market fluctuations, panics, losses, and all sorts of craziness out there. With constant and growing dividend income, I do not have to worry if the market enters another decade or two decades long difficult market cycle.




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Posted by Martin January 19, 2020
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2019 trading and investing results and 2020 goal


It took me a lot of time to kick myself into writing this report. I wanted to be regular in doing so, but it was hard lately. I was busy at work, and also busy at studying trading qand investing. Although I have 14 years experience in investing in stocks and 10 years in trading options, there is still a lot to learn.

It is hard to see that since I decided to go aggressive in trading options – trading SPX spreads – in 2014 I must admit, I got nowhere. I studied a lot and I thought I knew a lot and I could beat the market. I must admit, I failed.

And that admission is painful. It is hard to admit, that for last 5 years I was going in circles and I was, in fact, in a boom-bust type of trading. A wave of great optimism was replaced with a wave of pessimism and vice versa.

And why I did it? Why did I want to be aggressive and trade like a pro all sorts of trades from short term to long term Iron Condors, bull put spreads, or call spreads? Well, I was greedy, I wanted to get rich with limited capital really fast. And being under-capitalized can be very costly. One small mistake and all your gains are wiped out.

And here is the effort of trying to be rich quick:

 
boom-bust trading
 

And this ridiculous performance got me to abandon this kind of trading and go back to what I was doing before – selling puts against dividend stock until I got assigned, then hold the stock, collect dividends, and sell covered calls.

It is slow and small at first, but it can speed up fast. Before, my annual average portfolio returns were around 30% – 45%, compared to 300%+. But what good does it make when I triple my portfolio in a year when I give it all up the very next one? None. And I am becoming too old to keep experimenting. If I was still in my 20s, I wouldn’t mind playing more and figuring out how to trade and not lose.

And here is the post published in October 2019, when I finally decided to return back to the roots. But first, I wanted to consolidate my accounts which after Trump’s reckless trade wars got hit by volatility and I decided to keep the bad trades open rather than closing them.

If I have closed, them, I would have realized all the loses. And I didn’t want that. I knew, that I could fix those trades but it would take time to do so (and I am glad I did it, in fact), because as of today, my accounts are recovering fast – also thanks to the extremely bullish markets.

 

 · 2019 Options Trading Results

 

In 2019 we made the following income from selling options:
 

Business account: $13,548.00
ROTH IRA account: -$5,549.00
IRA account: $1,467.00
 

Overall, the income was not bad. But, what was the problem is that this income was delivered with trades which later on got busted and I started rolling them away to keep them alive. If I closed them, the income would vanish along with the cash and net liquidation value of the accounts.

Here is the cash of each account at the beginning of the 2019 year and the end:

 
boom-bust trading
 

Net liquidation value of the accounts:

 
boom-bust trading
 

 
IRA Equity:

IRA account equity
 

ROTH Equity:

ROTH account equity
 

Business Equity:

TD account equity

 

 

 · Dividend stock investing

 

Dividend investing was doing great. In 2019 we had dividend stocks only in ROTH and IRA accounts holding for the whole year. In our Business account we started buying our dividend stocks at the very end of the year, so the impact was not as visible as in the ROTH and IRA.

The great feature of dividend buying was that the brokers I use for trading went also “commission free”, so I could start buying single shares. That is very helpful in reinvesting dividends and profits from options.

We re-invest all dividends as if we would participate in DRIP but this time, we can choose which stocks to buy, unlike with DRIP where the dividend is automatically re-invested into the same company which paid the dividend.

In 2019 we stopped trading options in our ROTH account (it was too much to manage) and we now engage in dividend investing only. later we may add some small options trading but not at this point.
 

In 2019, we made the following income from dividends:
 

Business account: $2.27
ROTH IRA account: $902.91
IRA account: $1,393.00
 

 

 · Dividend stock holdings

 

Here is a review of our accounts stock holdings:

 
Traditional IRA
Trading Results
 

ROTH IRA
Trading Results
 

Business account
Trading Results
 

So, what happened to our 5 year plan? Well, you guessed it. The plan went down the toilet. As of now, I am grossly behind and without aggressive trading, it might not be possible to actually reach the plan.

Here is the plan as of today:

 
Trading Results
 

As you can see, going into year 2 of the plan, the account was supposed to be $42,062 in net liquidation value. It ended with $3,972.70. so, this was a disaster. at least, I will not have to pay those taxes. And in January 2020, I am pretty much where I started. The nice jump in net liquidation value in January 2020 was due to the fact that I could successfully liquidate and close some of the bad trades which either expired worthless or I could close them for a small debit. This is encouraging because now I have a free capital to trade. I wish I could say that in 2019.

 

 · 2020 Goal

 

Our goal for 2020 year is simple:
 

Business account:

1) Keep fixing the bad trades to get out of them by year end.
2) Keep trading options against dividend stocks (see CCC list) using cash secured puts and covered calls, trade around existing positions or buy new positions if assigned.
3) Time to time when opportunity occurs, it would be OK to use spreads against SPX and SPY, for example butterflies, debit spreads, or single long options. At this time, we will not engage in credit spreads unless hedged otherwise.
4) Free the remaining bad SPX trades and free the rest of the net-liq. That would mean, that my net-liq should go back to the cash equivalent of $25,000.
5) Deposit $12,000 dollars to the account this year.
6) Hit 50% gain on the portfolio growth. That would end the portfolio net liquidation value to be $55,000 at the end of 2020.
7) Invest in dividend stocks, re-invest dividends, and options proceeds and make $2,000 in dividend income in 2020.
8) Accumulate high dividend yield aristocrats with 6% + yield (see CCC list). after we reach 100 shares, we start focusing on other stocks to accumulate.

 

IRA account:

1) Keep fixing the bad trades to get out of them by year end.

No other plans at this point.

 

ROTH account:

1) Keep reinvesting all dividends to high quality dividend growth stocks (see CCC list).
2) Select high yield stock to boost dividend income, for example, in the CCC list, there are a few aristocrats with 6% + yield. accumulate these stocks first as long as we reach 100 shares of each stock. Then focus on other stocks.

No other plans at this point.

Good luck all in 2020 investing year. Let’s see how this year goes and what results it brings.
 
 




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Posted by Martin January 18, 2020
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AGNC – Time to say goodbye


I have been invested in AGNC since 2008 and I liked this company. But it is time to depart from this investment as it no longer meets my requirements for dividend investing. I wish, it was. But it isn’t.

At first, the company looked great. They started increasing dividend every year, although the very first increase in 2009 from 2.51 annual dividend a share to 5.15 was large and raised many questions but the company earnings and cash flow could cover the payout. So, why not. I liked it.

Then, in 2010, the company increased the dividend again to 5.60 a share Earnings and cash flow covered the payout well above. And that was the last increase investors ever saw. Two years later, as earnings started deteriorating, the company went on a path of 6 consecutive years of dividend cut.

 
AGNC dividends
 

At first, I believed in the company, and I loved them (a thing a true dividend growth investor should never ever do!) and provided excuses to myself and everybody who asked for the company, that “this is just a temporary, it is to protect the company’s ability to make money and improve”, and all sorts of other excuses. And when the company changed into monthly dividend paying company I loved them even more because I thought, I would be making money faster by re-investing the dividends.

There are better companies than this.

So I am selling all AGNC shares from all my portfolios and re-allocating to Helmerich & Payne Inc (HP) which is a dividend champion, increasing dividends every year since 1973 for 46 years. Their current dividend yield is 6.29%, and annual dividend growth 1.4%.




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Posted by Martin January 16, 2020
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How can I invest in stocks? My income is $2,000 and I left with $400 after all my spending


If $400 is money you can invest, then you have more than 45% of Americans.

The best strategy would be, in my opinion, to invest in high quality dividend stocks – dividend aristocrats. Here is a list of all high quality dividend stocks – champions (aristocrats), challengers, and contenders, Dividend Growth Stocks CCC list go there, review the stocks, pick few, and familiarize yourself with those companies – what do they do, how they make money, how they performed during the 2008 recession, what are their threats which can eventually put them out of business, etc.

Pick 5 to 10 stocks (later on you may start adding more shares, but for the start 5 companies is plenty). And start buying those shares. Slowly, every month, little by little, a few shares by a few shares.

Pick a broker, which charges zero commissions so it will cost you nothing to buy a single stock.

Apply dividend reinvesting program (DRIP) – so you choose a broker which has this program. This will automatically reinvest all dividends and buy you more shares.

Once your stocks start paying you let’s say $30 or more in dividends every month, you can eventually remove DRIP and start reinvesting your dividends manually into other companies.

In the meantime, educate yourself on dividend growth investing. A good book is The Simple Best Investment by Lowell Miller. It will tell you everything you need to know to pick high quality dividend growth stocks.

Do this regularly for the next 25 years, and your account will grow to over $380,000 paying you approx. $57,000 annually in dividends (calculations based on $400 starting value, $400 monthly contributions, 25 years duration, 8% annual return, 15% dividend YOC, and compounded monthly, so note that the result may be different, but in the above calculated proximity).




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Posted by Martin January 15, 2020
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Is there a sure-fire dividend stock to invest in for an uneducated investor?


No, there is no sure-fire stock for uneducated, unless uneducated are OK to lose money.

Educate yourself first before you commit your hard earned money. Or, would you be OK to go to a doctor to get a brain surgery and be OK with just uneducated but sure fire doctor?

What makes you think people that a stock market is a place where you can show no effort, no knowledge, no willingness to learn and just throw your money at it and hope you won’t lose them. You are the exact sort of people who after they lose their savings go around and spread the myth that investing in stocks is risky.

With your attitude, you will have a better chance of sure fire money in casino.




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Posted by Martin January 14, 2020
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What is the best way to enter stock trading with a limited budget for beginners in 2020?


Are you referring to “stock trading” or “stock investing”? Because there is a huge difference between the two.

If you really mean “trading” then unfortunately you I have bad news for you. You won’t get rich quick. You won’t be able to trade successfully in a small account. You may have some success but long term, you probably will experience a boom bust trading – making money, losing them, making them again, losing them… etc.

Many people overestimate their short term abilities and think they can make it trading while being undercapitalized. But, trust me, I tried myself many times, until I gave up and got back to more decent, conservative investing style.

So, I use trading and options (love options) to monetize my stock holding but I no longer use them as trading only. If you want to trade, you really need capital, if you do not have the capital, fees, commissions, rules and regulation (such as PDT) will ruin you. Plus, a small mistake will cost you a lot. If you make a trade with $500 risk in a $5,000 account vs. $500,000 account, the pain will be very different and very real… And with that a fear will enter your mind and that fear will make you causing more mistakes and more losses.

And, if anyone tells you that they are making money consistently winning all the time, they are certainly lying or not revealing everything. More over, we are in a strong bull market and in a bull market, everyone is a genius.

But if you mean “investing”, building your wealth slowly over time on a limited budget, then it is achievable. Open an account with a broker who charges no commissions so you can be buying as little as one share of a company and all that for free and start depositing your deposits every month and start buying share by share and build up your portfolio. Start buying up to 5 companies and accumulate until you reach 100 shares of each. Once you reach 100 shares of each company, you can start using options. You can start selling covered calls to generate even more income. And if your calls get assigned you just start selling cash secured puts… Sounds easy, right? Well, not necessarily. It is not a quick rich scheme so you still will have to work hard.




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Posted by Martin January 13, 2020
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Do you prefer trading options over stocks even though options are riskier?


Options are not riskier, in fact, they are safer than stocks.

Here is an example:

Trader A buys 100 shares of a stock ABC for $30 a share.
Trader B sells a put contract of underlying ABC with 26 strike and collects 0.31 credit.

Stock drops to $24 a share.

Trader A is sitting at $600 loss.

Trader B is forced to buy 100 shares of ABC stock for $26 a share with a cost basis of $25.69 and sitting on a loss of $169.

Trade A losing $600, trade B losing $169…

So which instrument is riskier? Stocks or options?

Yes, you can lose money with options if you do not know how to use them, but you can lose money with stocks too, and in fact even more. If you trade options on margin for example, and you are undercapitalized, then yes, you will lose money.

For example, you have only $5,000 dollar account and you sell a put spread against Amazon stock which is 10 dollars wide. Your broker takes $1000 collateral. But then a stock drops and you get assigned. Suddenly, you need 92,500 (in a margin account) or 186,000 (in a cash account) and you are forced to sell your position for a loss because you get a margin call.

And where is the risk? In the options you traded or your recklessness trading options with underlying for which you didn’t have enough capital because you were greedy and wanted that juicy premium?

So, options are not riskier. Stocks are riskier. But an investor with lack of knowledge is the most risky to himself/herself.




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