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April 2000                                            April 2024

Gold is being heavily promoted. “Smart investors hold gold,” they say.

The 117-year real return from gold is just above half a percent annually. Unlike most stocks, gold holds its value. Today, a given weight of gold buys the same amount of barley, wheat, or any other staple as it did 5000 years ago.

The chart above shows gold (yellow line) versus SPY  (black line) over four years.

Here is what we should do.

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This is unrelated to investing, but you will find it helpful.

Twenty of us were at our place yesterday to celebrate Christmas. Rosi gave me a pair of insoles that you can see above.

FABULOUS!

I can’t recommend them too highly,

Follow https://www.google.com/search?q=currex+insoles+canada+&sca_esv=cc24cf703c2872c1&sxsrf=ADLYWIJGE2uKRUjxHmWKs0s4RKggNP9VKw%3A1734871478593&ei=tgloZ57qI73ewN4Pyvn5mAk&ved=0ahUKEwiendnxs7uKAxU9L9AFHcp8HpMQ4dUDCBI&uact=5&oq=currex+insoles+canada+&gs_lp=Egxnd3Mtd2l6LXNlcnAiFmN1cnJleCBpbnNvbGVzIGNhbmFkYSAyBhAAGBYYHjIGEAAYFhgeMgsQABiABBiGAxiKBTILEAAYgAQYhgMYigUyCxAAGIAEGIYDGIoFMgsQABiABBiGAxiKBTIIEAAYgAQYogQyCBAAGIAEGKIEMggQABiABBiiBEjeT1DZL1iCSXAHeAGQAQCYAV6gAV6qAQExuAEDyAEA-AEBmAIIoAJ9wgIKEAAYsAMY1gQYR5gDAIgGAZAGCJIHATigB6gF&sclient=gws-wiz-serp

Consider getting a pair for all the shoes you have.

Compliments of the season and best wishes not just for the season but for every day.

Milan 😃

 

Call me if you want to discuss this. (705-441-4566)

The market is tanking, but we know it will recover and continue to rise.

Yesterday, Rosi and I made $358.48 per contract selling coverage calls on SPY. That is the most we ever made. Most of our income comes from selling derivatives.

Here is how to do it.

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Congratulations to us for investing in SPY, which is in American dollars!

The chart above shows that one American dollar buys $1.425 Canadian dollars.

In most countries, sovereign wealth funds are in American dollars.

We frequently state that we should only sell covered calls and cash-secured puts using SPY (an exchange-traded fund tracking the S&P 500, which is the American economy as a whole) and never buy them.

Who does buy them?

By buying call options on SPY, investors can control shares for a fraction of the cost of buying SPY. If SPY rises, investors benefit as if they owned SPY. If SPY drops, investors lose 100% of their money, but they will get to keep the premium income regardless.

If they owned SPY instead of options, they would only lose the same percentage of money as the drop in SPY, knowing that it would recover and continue to rise.

Buying put options on SPY investors hope that it declines. That is similar to selling SPY short. If SPY rises, investors lose 100% of their money.

Investors who sell SPY short hope to profit from its decline. They borrow SPY shares and hope to repurchase them for less money. The big risk of short selling is that if investors guess wrong and SPY rises, they will suffer infinite losses.

Don’t go there. Only sell covered calls and cash-secured puts and keep the premium income.

My income and Rosi’s primarily comes from doing that.

 

 

 

 

 

 

We want to sell derivatives (only sell and never buy). We should be either in cash or in SPY. Selling derivatives has safely produced a 16% annual return for over 100 years.

Americans can do that in tax-advantaged accounts. Canadian investors need to have a margin account.

Here is what to do.

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The market is significantly overpriced now and could become even more overpriced. However, that is sure to reverse someday.

Apple has enough cash to buy Disney and Coca-Cola outright. Apple was recently named the best-managed company. Warren Buffett also has a lot of cash. They are waiting for that inevitable correction.

Goldman Sachs and Bank of America are saying that we will soon look at a 0% to 1% return on our money for a decade or longer. At that point, we will need to live using our cash.

What can we do?

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Call me if you want to discuss this. (705–441–4566)

The market dropped on December 12. That means those who wrote covered calls on SPY (as we should be doing) will not be assigned.

The fact that the market dropped is irrelevant. We know it will recover and continue to rise for a while (but not forever).

Writing covered calls on SPY will earn investors about US$100 per contract in less than five minutes when the market opens at 9:30 a.m.

In over 50 years of investing, I have found that selling derivatives has been the best investment method.

 

 

 

Call me if you want to discuss this. (705–441–4566)

Over the last month, the market rose 5.97%. Rosi and I earned 7.22% during that time.

How can you do that?

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Call me if you want to discuss this. (705–441–4566)

On December 6, as soon as the NYSE opened at 9:30 AM, we wrote covered calls on the SPY shares we have in three portfolios, expiry date at the end of the same day. The strike price was $US 607. That earned $US 127.00 for every hundred shares for SPY. We own enough shares of SPY to be able to live comfortably on that income.

Rosi and I do this every day, Monday through Friday, that is not a market holiday. In over 50 years of investing, I have found this to yield the best results.

The only way to do better is to do something illegal. Crime pays unless you get caught.

How risky is it?

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