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.

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.

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. Intelligent investors ignore short-term fluctuations.

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

One day’s cost of wherever you are going for your holidays or business equals the cost of business-class travel, more or less.

You could start your holidays one day earlier, in your city of departure, by travelling business class.  First to board, first to get off.

Consider it. 

I have done it several times a year for over 50 years.

Milan

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.

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. Safe, decent and guaranteed with a significantly reduced 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. Intelligent investors ignore short-term fluctuations.

Indeed, by the closing bell last Friday, September 2, ISRG dropped to $203.67 per share, giving her a total loss on the security of  $120.27 ($243.7592 minus $203.67 times 3). The growth which she was hoping for did not take place last week.

What will she do when the NYSE opens at 9:30 AM tomorrow? (North American stock exchanges are closed today.)

The S&P 500 is down over 17% year-to-date. Bargain territory! If you have not re-balanced your core portfolio to take advantage of the bargain, consider doing so.

The Muppets are running for the doors. The same people who look for bargains when buying their groceries or clothes for the children or airplane tickets or looking for parking spots are ignoring this bargain.

Muppets (stupid and ineffectual people)? The second largest investment bank, Goldman Sachs, uses the term to describe its clients.

From Greg Smith’s Why I Am Leaving Goldman Sachs: “I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them.”

Investment banks are not our friends. We need to be aware of that even though we do need them to execute our buy/sell orders.

Don’t be fooled by the fact that year-to-date, the Toronto Stock exchange has declined less than the S&P 500. Intelligent investors think long-term. Note the 10-year chart below.

With the habits of the Monday Morning Program, luck hardly matters. Good luck!

Over 99% of species that ever lived are extinct. Every species becomes extinct sooner or later and that will include homo sapiens, some day. We will be the first to cause our own extinction. Let us make it later rather than sooner.

Glance at Generation Carbon which an almanac for children. Share it with anyone between the ages of 5 and 18 that you care about.

Sincerely, from all of us at Monday Morning

Our fearless, intrepid investor was on holiday yesterday, so she did not post anything about her derivatives experience.

Writing just out-of-the-money covered calls on Novavax (NVAX) every Monday, expiry date on Friday of the same week,  she lost $US10,990.00 in her “fun” portfolio over the course of about one year.

Mistakes are practice shots if we learn something from them.

She decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month. Safe, decent and guaranteed with a significantly reduced possibility of being assigned!

She also decided to write (sell) covered calls on a security that she would like to own long-term. After discussing the issue with knowledgable investors, she decided that she likes Intuitive Surgical (ISRG) and she bought 300 shares for a total of $US73,119.00. ISRG will continue to generate premium income even when it declines in the short term. Intelligent investors ignore short-term fluctuations.

Indeed, ISRG dropped by an extent greater than the premium income – a short-term loss.  Morningstar quants and analysts both recommend ISRG as a buy over the long term.  So yes, she earned her one percent a month premium income while waiting for ISRG to rise in price.

What did she do yesterday when the market opened at 9:30 AM?

1. Professional investors have better information and faster computers than you do. You will never beat them short-term trading. Don’t even try.

2. The decline of trading costs is one of the worst things to happen to investors, as it made frequent trading possible. High transaction costs used to cause people to think hard before they acted.

3. Professional investing is one of the hardest careers to succeed at, but it has low barriers to entry and requires no credentials. That creates legions of “experts” who have no idea what they are doing. People forget this because it doesn’t apply to many other fields.

4. Most IPOs will burn you. People with more information than you have want to sell. Think about that.

5. When someone mentions charts, moving averages, head-and-shoulders patterns, or resistance levels, walk away.

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.

Like most “fun” portfolios, hers has not been much fun lately. That is true of most core portfolios as well. The majority of investors earn lower returns compared to the market’s average return. The Monday Morning approach to investing equals the market’s average return.

She is smart enough to keep her “fun” portfolio to under 10% of her stock market investments.

Writing covered calls on Novavax (NVAX), she lost $US10,990.00.

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

She learned not to write (sell) covered calls at a just out-of-the-money strike price. That does produce the greatest premium income but with a 50% chance of being assigned on the Friday of that week.

She decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month. Safe, decent and guaranteed!

She also decided to write (sell) covered calls on a security which she would like to own long-term. After discussing the issue with knowledgable investors she decided that she likes Intuitive Surgical (ISRG).

The selected security will continue to generate premium income even when it declines in the short term. Intelligent investors ignore short-term fluctuations.

On Friday, August 5, she was assigned on her NVAX holdings and received $US83,250.49 in cash.

Using that cash, she bought 300 shares of Intuitive Surgical (ISRG) at an average cost of $243.76 per share for a total cost of $73,128.00 ($243.76 times 300).

She now writes (sells) covered calls on ISRG as you can see below.

What are her plans for today when the market opens at 9:30 AM?

We are familiar with Mark Twain’s book Adventures of Tom Sawyer, published in 1879. Tom stumbles upon a box of gold which the adults invest for him while giving him an allowance of one dollar a day. One dollar today buys 3.6% of what Tom’s dollar bought in 1876.

The average inflation rate  since that time has been 2.3% a year. We are looking at compounding here, a phenomenon that Albert Einstein called the the world’s eighth wonder.

We first wrote about inflation on May 21, 2018 and showed how best to deal with it. With the average annual inflation rate of 2.3% since 1876, we have prospered more than any comparable period in history.

The current inflation rate is much closer to 8% than to 2.3% per year. At that rate of inflation, money loses half its purchasing power in nine years! Most people will be retired for much longer. The same ways of dealing with inflation continue to apply.

The critical thing to note here is that saving alone will not provide a comfortable retirement. We need to invest.  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. Warren Buffett wants to have the money he is leaving his wife to be invested that way. If it is good enough for Buffett, it is good enough for us.

Now, decency.

In 1894, Mark Twain declared bankruptcy. Over time, he repaid all his creditors fully. Repaying them was not a legal requirement. It was an issue of moral requirement. Decency!

Do you think that Wall Street bankers understand that?