Saturday, August 19, 2017

How Millenials can get RICH

If you can: How Millenials can get rich slowly by William Bernstein

Just read this booklet and it outlines five pitfalls for young people:

1 failure to save
2 ignorance of financial theory
3 unawareness of financial history
4 dysfunctional psychology
5 the rapacity of the investment industry

So to counteract, he advises to max out retirement, study finance, know your history so you won't repeat it, know yourself, and protect yourself from the investment industry.

He goes into greater detail and forces you to do your own research, but overall a great read for Millennials who want to get started with investing.  

Remember start early and COMPOUND ON!

Thursday, July 13, 2017

Trading Earnings Report

I've been testing a new strategy in my investment portfolio.  Currently up 30% for the year.  Not bad since I started in late March.  I added up my closing trades since that time and have calculated a 48% win rate, meaning half my trades are closed as winners and half are losers.

So how can I be up 30%?   Well I was able to close the losers early and make more on the winners.  So what's the strategy?

I've been testing this out for a couple years now.  In 2015, I traded using a basic strategy by buying a stock X number of days before earnings.

Earnings reports provide a known time at which the stock would self-correct either upward or downward.   

So how can you profit off this information?

This video provided a simple "straddle" option strategy.  You open six days before earnings and sell right before earnings.

It doesn't work with every stock, but it does work for some stocks.

I have a table of over 70 stocks that I'm looking at and instead of opening a straddle (buying a put and call at the same strike price), I just go for the call option.  And instead of 6 days out, I increased the length to 2-4 weeks prior to earnings report.  Over the past couple months I realize the big moves isn't just right after earnings report, there's a certain run-up right before earnings and it happens pretty gradually as the bulls and bears vie for position.

Like I said, I'm only 48% win rate and only 30% profitable this past quarter.  Earnings period is coming up fast and I'm ready to test this strategy again.  I'm hoping to up my gains by another 30%.

Note: I sell before earnings, so I don't take earnings risk which is just a coin flip.

Happy investing!

Tuesday, June 6, 2017

Update June 2016 Net Worth

Here's the latest update on our net worth.  Since 2015 we had another child, sold our old house, bought a new house, lost a bunch in investments, made a bunch in investments, the kids transitioned from home school to private school, and expecting kid#5 in the fall.

That's a lot of changes and hence the lack of posts.  But wishing you the best in your life, career, and finances.

So teach us to number our days that we may get a heart of wisdom. Psalm 90:12

Tuesday, March 17, 2015

Updated Visual Budget for 2015

2014 went by like a blur and now with an extra child and more expenses, as well as higher income, I just wanted to update what my budget would be in terms of days at work.

At my current income level and current house, it takes about 4 days of work to pay the mortgage, about 4 days for retirement, 2.5 days for food and about 4 days left over for savings.  Up in our budget is our expense for kids activities.  One day of work covers that for the month.  

This coming year, we are looking to buy a house as well as send one of our girls to private school.  A new house at our price range would be about 9 days worth of work or an increase of 5 days.  Private school is another two days of work (and that is just for my eldest child).  If all things remain equal, I would have to cut back considerably in my retirement savings as well as my miscellaneous spending. Or just work more overtime.  But I will think about that later.

Wednesday, February 20, 2013

Level 3 options enabled

I have done covered call investing for a while. This is offering someone insurance to buy your stock if it sky rockets... Or offering your seat on a filled airplane... If the plane is full, your seat is worth lots of money... On the other hand, if the plane is relatively empty, you can offer up your seat, but no one will want it.

That's how covered calls work. You own a stock and offer to sell it at a certain price, in exchange you get a small premium for your efforts.

In a similar manner, there is another investment strategy called cash secured puts. It does the exact same thing except you don't own the stock. Instead you offer to buy that stock at a lower price... or insuring the seller in case the stock tanks. Using my plane analogy, you are offering to buy a ticket at a lower price... If the plane is full, you move on and wait for the next flight, but if it had room, you can buy the seat at a lower rate, and get a small premium for your efforts.

Just make sure you want to go to where ever the plane is headed. In like manner, make sure you like the underlying stock you are writing the cash secured put for. In any case, happy investing.