Writing just out-of-the-money covered calls on Novavax (NVAX) every Monday, expiry date on Friday of the same week,  our fearless, intrepid investor lost $US10,990.00 in her “fun” portfolio over the course of about one year. She bought 1,100 shares at $US300 a share for a total of $US330,000.00. Last Friday, September 30, NVAX closed at $US18.20! Her shares would have had a market value of$US20,020.00 ($US18.20 times 1,100) but she got out earlier plus she did earn something from the weekly premium income that she received reducing her losses to the $US10,990.00  mentioned above.

Mistakes are practice shots if we learn something from them. What did she learn from her NVAX experience?

“The market can stay illogical longer than investors can stay solvent.” (John Maynard Keynes) Is NVAX an example?

Instead of writing just out-of-the-money covered calls on any security, she decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month or slightly more. That would significantly reduce the possibility of being assigned!

She likes Intuitive Surgical (ISRG), so she bought 300 shares at $243.7592 per share for a total of $US73,127.76. ISRG will continue to generate premium income even when it declines in the short term. In. The. Short. Term.

Indeed, last Friday, September 30, ISRG dropped to $US187.44 per share giving them a value of $US56,232.00 ($US187.44 times 300) for a total loss of $US16,895.76 in her “fun” portfolio. ($US73,127.76 minus $US56,232.00).

Intelligent investors ignore short-term fluctuations. She likes ISRG and is happy to hold long-term.

What will she do when the NYSE opens at 9:30 AM today?

On September 28, 2022, from an Aurora, Ontario dentist

As a Canadian investor, would you suggest I purchase something like “XUS” instead of “IVV”?

On  September 28, the S&P 500 was down 19.51% year-to-date and the Toronto Stock Exchange was down 10.08%. Both are up from September 27 but still in bargain territory and far from profit-taking territory.

Year to date is short-term. Intelligent investors think long-term.

Over the last decade, the Canadian market is up 129.13%. The US market is up 214.03%.

When will we get to profit-taking territory?

No one knows.

“I don’t know” is the correct answer to a vast number of investing questions. Nevertheless, many seldom-right-but-never-in-doubt gurus will voice their opinions. Read what they say for amusement only. Better yet, don’t read them at all.

Intelligent investors know that profit-taking levels will arrive someday. They don’t invest any money they will need for necessities in the next few years.

Luck hardly matters with the habits of the Monday Morning Program.

Good luck!

Writing just out-of-the-money covered calls on Novavax (NVAX) every Monday, expiry date on Friday of the same week,  our fearless, intrepid investor lost $US10,990.00 in her “fun” portfolio over the course of about one year. She bought 1,100 shares at $US300 a share for a total of $US330,000.00. Last Friday, September 16, NVAX closed at $US30.41! Her shares would have had a market value of$US9,123.00 ($US30.41 times 1,100) but she got out earlier plus she did earn something from the weekly premium income that she received reducing her losses to the $US10,990.00  mentioned above.

Mistakes are practice shots if we learn something from them. What did she learn from her NVAX experience?

Instead of writing just out-of-the-money covered calls on any security, she decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month. That would significantly reduce the possibility of being assigned!

She likes Intuitive Surgical (ISRG), so she bought 300 shares at $243.7592 per share for a total of $US73,127.76. ISRG will continue to generate premium income even when it declines in the short term. In. The. Short. Term.

Indeed, last Friday, September 23, ISRG dropped to $US190.52 per share giving them a value of $US57,156.00 ($US190.50 times 300) for a total loss of $US15,971.76 in her “fun” portfolio. ($US73,127.76 minus $US57,156.00).

Intelligent investors ignore short-term fluctuations. She likes ISRG and is happy to hold long-term.

What will she do when the NYSE opens at 9:30 AM today?

Year-to-date, last Friday, September 23, the Toronto Stock exchange index (TSX) was down nearly 13% and the US market is represented by the S&P 500, was down almost 22%.

Markets go through at least one big pullback every year and one massive one every decade. Get used to it. It’s just what they do. We wrote about that previously.

Without cherry-picking, the US market has been the best place to invest for some 200 years. To deal with the expected massive fluctuations, any money which we will need within the next few years should not be in the market. Also, we should maintain at all times an asset allocation a large part of which is cash or near cash.

60/40 is common, as is 50/50 and similar allocations. The differences are minor. The length of time in the market is major.

What can we expect the markets to do now?

Without a doubt, they will recover and hit new highs. Nobody knows when that will happen but intelligent investors know it will happen.

And what should investors do at this time?

Reviewing our Jan 21, 2019 post add this time would be helpful.

The review will show you what to do.

Luck hardly matters with the habits of the Monday Morning program.

Good luck!

The Monday Morning Millionaire Program will show you how to outperform more than 90% of professionally actively managed funds, guaranteed.  At the same time, over an investing lifetime, you can save a year’s income by avoiding adviser fees. Investors can do that by buying and holding a US market index-tracking exchange traded fund (ETF).  For a detailed step by step description, join the Monday Morning Millionaire Program.

Step 1. Open a brokerage account.

There are many stock brokers who would be glad for your business. Adam Smith’s “unseen hand” operates among them; their services and fees are similar. Choosing one at random would hardly make a difference in the long run.

Step 2. Save and invest.

Starting early in life, deposit 10% of your annual income regularly (say monthly) and buy board lots (100 shares) of a very low-cost S&P 500 index exchange traded fund (ETF).  If you start saving later in life, you will need to save a larger percentage. Donald Trump would be richer today had he taken his inheritance, invested it this way and sat in a rocking chair.

There are thousands of ETFs. The key wording here is to buy an ETF which represents the US economy such as a broadly-based index fund. Review Chapter 4 in Monday Morning Millionaire.

The best ETFs to track the S&P 500 are:

1. iShares Core S&P 500 ETF (IVV)
2. Vanguard S&P 500 ETF (VOO)
3. SPDR S&P 500 ETF Trust (SPY)
4. Schwab U.S. Large-Cap ETF (SCHX)
5. iShares S&P 500 Growth ETF (IVW)
6. Guggenheim S&P 500 Equal Weight ETF (symbol RSP)

Each is an excellent approximation of the U.S. economy, the strongest economy in history.

Keep buying board lots regularly. Over a working lifetime, this approach will produce a fund large enough to maintain you in comfortable retirement. Furthermore, you will be dollar cost averaging, the only guaranteed way to beat the market. Follow

https://www.investopedia.com/terms/d/dollarcostaveraging.asp

This core portfolio will allow you to outperform over 90% of professionally managed funds, guaranteed, in addition to saving you a year’s income in fees.

Divide your ETF holdings and cash savings in a ratio that is in line your risk tolerance.

A 50/50 ratio works well for most investors, however, market/cash ratios needs to be individualized.

Step 3.

In retirement, withdraw 1% quarterly from your core portfolio or 2% semiannually or 4% annually and live happily ever after and your portfolio will likely grow. You will never run out of money but you will have to accept a smaller income during the guaranteed occasional market drops.

Writing just out-of-the-money covered calls on Novavax (NVAX) every Monday, expiry date on Friday of the same week,  our fearless, intrepid investor lost $US10,990.00 in her “fun” portfolio over the course of about one year. She bought 1,100 shares at $US300 a share for a total of $US330,000.00. Last Friday, September 16, NVAX closed at $US30.41! Her shares would have had a market value of$US9,123.00 ($US30.41 times 1,100) but she got out earlier plus she did earn something from the weekly premium income that she received reducing her losses to the $US10,990.00  mentioned above.

Mistakes are practice shots if we learn something from them. What did she learn from her NVAX experience?

Instead of writing just out-of-the-money covered calls on any security, she decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month. That would significantly reduce the possibility of being assigned!

She likes Intuitive Surgical (ISRG), so she bought 300 shares at $243.7592 per share for a total of $US73,127.76. ISRG will continue to generate premium income even when it declines in the short term.

Indeed, last Friday, ISRG dropped to $US206.28 per share giving them a value of $US61,884.00 for a total loss of $US11,243.76 ($US73,127.76 minus $US61,884.00).

Intelligent investors ignore short-term fluctuations. She likes ISRG and is happy to hold long-term.

What will she do when the NYSE opens at 9:30 AM today?

1. There are 60 stock exchanges in the world. Most have thousands of listed companies. Most get most investors burned.
2. Sixteen of these exchanges have a market capitalization of more than $1 trillion and account for nearly 90% of global market capitalization.
3. The New York Stock Exchange and NASDAQ have more market cap between them than the rest of these exchanges combined.
4. The New York Stock Exchange is the most heavily regulated, protecting investors from con artists.
5. Nevertheless, the average investor trails the New York Stock Exchange, as represented by S&P 500,  by 40%!

Finally, unrelated to the above, please note that we offer a free half-hour discussion to allow you to see if our one-on-one coaching program ($C300.00  including taxes) interests you. We show how to equal the New York Stock Exchange and how to outperform over 95% of portfolios over a market cycle (peak to trough to peak). Contact me at milan@drmilan.com.

As we frequently state, historically, 1.) over the long term, 2.) properly selected US market index exchange-traded funds, 3.) held in tax-advantaged accounts, 4.) in an appropriate asset allocation, have been the investors best way for growing savings and are likely to remain so for many years.

Note that talk about the US market Index. Year-to-date as of today, it is down 18.80%. If you have not bought into this bargain territory yet, consider it. The Canadian market is down by less than half of that percentage but the Monday Morning position discourages investing in the Canadian market. The reason for that? Look at the chart below.

At the beginning of 2005 and at the end of 2012, the New York Stock Exchange in the Toronto Stock  Exchange performance was at the same level. However, during that entire eight-year period, the Toronto Stock Exchange was ahead the whole time. The Toronto Stock Exchange!

Trying to time the markets to take advantage of the better performing one is a fool’s errand. Market-timing does not work most of the time. The Monday Morning program discourages it.

With the habits of the Monday morning program, luck hardly matters. Good luck!

First, a thank you to all who gifted a membership or a one-on-one zoom meeting to friends and relatives. We think that they make ideal gifts. Consider it.

And now, our sincere gratitude to all members who took the time to respond to our Friday, September 9 survey about investing in companies that are not environmentally, socially and governance (ESG) compliant.

Time is an irreplaceable resource. We appreciate your involvement.

This is the first time that we have had 100% of our respondents agree with one of the choices offered. We are happy to see such response to the Monday Morning method of investing.

You can see our survey results below.

And below, you can see members’ comments.