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Like most “fun” portfolios, hers has not been much fun lately. But, she is smart enough to keep it under 10% of her stock market investments.

Her average cost for her Novavax (NVAX) shares was $US71.26. On Friday, August 5, NVAX closed at $60.27. She has 1000 shares of NVAX. Therefore, her overall loss adds up to $US10,990.00 ($US71.26 minus $US60.27 times 1000). That is somewhat offset by the NVAX premium income of $US1,200.00 that week, but it still hurts!

On Friday, August 5, the $60.27 NVAX price was above her strike price and she was assigned. She received $US83,250.49.

She discussed various possibilities with knowledgeable friends about how to continue with selling covered calls and this is what she will do when the market opens at 9:30 AM today,

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1. There are tens of thousands of professional money managers. Statistically, a handful of them have been successful by pure chance. Which ones? I don’t know, but I bet a few are famous.

2. On that note, some investors who we call “legendary” have barely, if at all, beaten an index fund over their careers. On Wall Street, big wealth isn’t indicative of big returns.

3. During recessions, elections, and Federal Reserve policy meetings, people become unshakably certain about things they know nothing about.

4. The more comfortable an investment feels, the more likely you are to be slaughtered.

5. Time-saving tip: Instead of trading penny stocks, just light your money on fire. Same for leveraged ETFs.

Finally, unrelated to the above, please note that we offer a free half-hour discussion with you to allow you to see whether our one-on-one coaching program ($C300.00  including taxes) suits your investing needs. Contact me at milan@drmilan.com.

Yesterday, one of our seasoned investor members wrote: “Marcho Partners is a tech-focused fund founded by a onetime tech investor Chamath Palihapitiya. The London-based fund, which had over $1 billion in assets under management at its peak, was down nearly 84% through June 30, according to a summary Marcho sent to its investors, marking one of the worst-known performances for a hedge fund so far in 2022.

Behind the dismal results: a leveraged bet on a relatively small number of highflying growth stocks that have plummeted in value, such as Shopify and British online used-car retailer Cazoo Group.”

A little earlier this year, another one of our seasoned investor members wrote: “BlackRock, $BLK, just lost the largest amount of money lost by a single firm over a six-month period evaporating $1.7 trillion of clients’ money. Blackrock has invested in many passive ETFs. I will be curious to see whether active managers suffered similar losses.”

There are more than three times as many ETFs today as there are individual companies listed on the New York Stock Exchange. Most are passive, that is, other than selecting the securities which they will hold, there is no effort to run them.

Several hundred ETFs are actively managed, which means that management fees are a part of ongoing ownership costs.

We have previously written that the security we use needs to be an ETF that mirrors the S&P 500 which, in turn, mirrors the American economy. That means no stock picking. Picking stocks could result in investing in a company that declines and never recovers. Penn Central Transportation Company,  Enron,  WorldCom,  Lehman Bros. — the list of corporate collapses is long.

The most reliable way to protect against that possible outcome

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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, July 29 survey about the the amount of cash you have on hand. Time is an irreplaceable resource. We appreciate your involvement.

You can see our survey results below. By and large, our members and subscribers are intelligent investors.

How much cash do you keep on hand?
I am not sure but it is very little.	4.9%
I have about $100 in cash readily available.	14.6%
I have about $500 or more in cash readily available.	80.5%

You can you read some worthwhile comments below.

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Like most “fun” portfolios, hers has not been much fun lately. But, she is smart enough to keep it under 10% of her stock market investments.

Her average cost for her Novavax (NVAX) shares was $US71.26. On Friday, July 29, NVAX closed at $US54.51. She has 1000 shares of NVAX. Therefore, her overall loss adds up to $US16,750.00 ($US71.26 minus $US54.51 times 1000). That is somewhat offset by the NVAX premium income of $US950.00 that week, but it still hurts!

Luck hardly matters with the habits of the Monday Morning Program. It certainly matters when writing covered calls.

And what are her plans today when the market opens at 9:30 AM?

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1. Saying “I’ll be greedy when others are fearful” is much easier than actually doing it.

2. The gulf between a great company and a great investment can be extraordinary.

3. 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.

4. There is virtually no accountability in the financial pundit arena. People who have been wrong about everything for years still draw crowds.

5. As Erik Falkenstein says: “In expert tennis, 80% of the points are won, while in amateur tennis, 80% are lost. The same is true for wrestling, chess, and investing: Beginners should focus on avoiding mistakes, experts on making great moves.”

Finally, unrelated to the above, please note that we offer a free half-hour discussion with you to allow you to see whether our one-on-one coaching program ($C300.00  including taxes) suits your investing needs. Contact me at milan@drmilan.com.

Remember that we should write covered calls only in our “fun” portfolio. This portfolio should add up to no more than 10% of our market holdings overall. If we lose it entirely, it should make no difference to the way we live.

No one needs a “fun” portfolio; relying on the habits of the Monday Morning Program, investors can do very well without one. However, occasionally, investors can stumble across a situation that is safe and effective. They can take a position in that situation to some extent in the core portfolio.

One of our members with a degree in economics as well as an MBA uses the approach we describe below to manage his covered calls position when assigned, the underlying security is called away from him and he is in cash.

Depending on how this affects his asset allocation, he sees two choices.

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At the end of Friday, July 22, the US market, as represented by the S&P 500, was up 1.28% for the month. The Toronto Stock exchange (TSX) was down 0.42%.

Our fearless, intrepid investor’s core portfolio was up +5.76% for the month!

Her core portfolio performance arose from the fact that when the S&P 500 dropped by 20% from its January 3 high, she bought more  bargain-level SPY, which tracks the S&P 500 precisely.

Her “fun” portfolio is a different story. Like most “fun” portfolios, it has not been much fun lately. However, she is smart enough to keep it under 10% of her stock market investments overall.

Her average cost for her Novavax (NVAX) shares was $71.26. On Friday, July 22, NVAX closed at $54.85. She has 1000 shares of NVAX. Therefore, her overall loss adds up to $16,410.00 ($71.26 minus $54.85 times 1000). That is somewhat offset by the NVAX premium income of $1,080.00 that week, but it still hurts!

Luck hardly matters with the habits of the Monday Morning Program. It certainly matters when writing covered calls.

And what are her plans today when the market opens at 9:30 AM?

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The American Dental Association estimates that 96% of dentists cannot retire at age 65 and maintain their lifestyle. Why is that?

In no particular order – too much car, too much house, divorce. Been there, done that.

My family once had five drivers, and I owned five brand new cars. I live in a small town and was concerned about what would people say about Dr. Somborac driving a used car?

Today, I would ask what could be a greater economic disaster?

Well, I had the answer to that one also. I built an architect-designed and supervised 5,000 square-foot house with a 20′ x 40′ in-ground swimming pool and a tennis court. Maintaining a home costs about a dollar per square foot per year.

Except for the greater municipal taxes connected with owning a large property, it costs nothing to maintain a tennis court.

Maintaining and operating a 20′ x 40′ swimming pool is different. It comes to about $5,000 annually.

Most other professionals and most self-employed people probably are similarly unable to retire at age 65 and maintain their lifestyle.

This post will deal with car ownership.

In a perfect world, all cars are electric, and all electricity is generated by nuclear fusion.

Electric cars are here now and many governments have mandated the end of the internal combustion engine car production within the next few years. Nuclear fusion may not be here in our lifetimes, but someday, it will be in place.

So what to do now?

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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, July 15 survey about the impact of inflation in their lives. Time is an irreplaceable resource. We appreciate your involvement.

Recently, The Economist reported the worst business conditions in Great Britain in 300 years! Yet, 64.3% of our members report that their income is the same or better than before.

You can see our survey results below.

How has inflation affected your practice/business/retirement?
Compared to previous years, income is down a little.	10.7%
Compared to previous years, income is down over 10%.	25.0%
Compared to previous years, income is about the same.	39.3%
Compared to previous years, income is up.	25.0%

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