1. Warren Buffett’s best returns were achieved when markets were much less competitive. It’s doubtful anyone will ever match his 50-year record.

2. The majority of market news is not only useless, but also harmful to your financial health.

3. The more someone is on TV, the less likely his or her predictions are to come true. (U.C. Berkeley psychologist Phil Tetlock has data on this).

4. Related: Trust no one who is on CNBC more than twice a week.

5. The market doesn’t care how much you paid for a stock. Or your house. Or what you think is a “fair” price.

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.

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, August 12 survey about whether or not Trump should go to jail. Time is an irreplaceable resource. We appreciate your involvement.

Michael Conway, a long-time trial lawyer who started his career as counsel for the House Judiciary Committee during the impeachment inquiry into Richard Nixon in 1974, and who now teaches ethics and the law at Northwestern University, recently stated: “It’s no longer premature to say that Trump could end up in prison. It’s a winnable case.”

You can see our survey results below.

And below, you can see members’ comments.

As you all know, I am calendar-challenged. My wife Rosi is our fearless intrepid investor and I place the covered call sell orders on her behalf.

She had yesterday’s request denied because the covered call sales that we placed the previous week had a two-week expiry date and were still in place.

Nevertheless, for those of you who have not bought  Intuitive Surgical (ISRG) shares to allow you to sell covered calls on them, the approach we described yesterday still makes sense and you might want to consider it.

Next Monday, August 22, we will report how she did for the week ending on Friday, August 19, and her plans are for the week of August 22 to August 26.

I apologize.

Milan

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.

But she is smart enough to keep it 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 was writing (selling) covered calls on NVAX on Mondays of each week with the expiry dates on Fridays of the same week and 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. When assigned, the option seller is required to sell the related security at below market price. In order to stay in the game, the option seller now has to buy that security at an ever higher price.

As the market price of any security rises, intelligent investors are taking profits and selling rather than buying at higher prices.

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 then sold three covered call contracts, strike price $250.00, expiry date August 12. (C 12AUG22 250.00)

ISRG declined to $238.36 per share by  Friday, August 12, giving her a loss of $5.40  ($243.76 minus $238.36) per share for a total of $1,620.00 ($5.4o times 300).

She earned  $0.50 per share premium income for a total of $150.00 ($0.50 times 300) and she was not assigned. The percentage return works out to 0.002%($150.00 divided by $73,128.00) per week or 0.82% per month (0.002% times 4).

So, the annualized return is 9.85% (0.82% times 12). Safe, decent and guaranteed!

Yes, she did lose $1,470.00 ($1,620.00  minus the premium income of $150.00) but ISRG is a strong company regardless of the short-term fluctuations which will always be there.

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

1. Not a single person in the world knows what the market will do in the short run. End of story.

2. The analyst who talks about his mistakes is the guy you want to listen to. Avoid the guy who doesn’t — his are much bigger.

3. You don’t understand a big bank’s balance sheet. The people running the place and their accountants don’t, either.

4. There will be seven to 10 recessions over the next 50 years. Don’t act surprised when they come.

5. Thirty years ago, there was one hour of market TV per day. Today there’s upwards of 18 hours. What changed isn’t the volume of news, but the volume of drivel.

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.

Some investors whom 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.

How well do you understand one billion?

If you had one billion dollars and you spent $1,000 each day ($1,000 is a figure that most people understand), how many years would it take you to go through the billion?

The answer: a little over 2,700 years!

Chase Coleman and Chamath Palihapitiya are billionaires. Smart guys, right?

Three of the funds that they run, lost hundreds of millions of dollars since the beginning of this year. Expressed as percentages, the figures are 50%, 63% and 84% respectively.

During that time, the market dropped 20%. Losing more than twice as much, more than three times as much and more than four times as much as the market, takes special talent.

My 8-year old grandson could learn how to equal the market. (Buy and hold an exchange-traded fund which tracks S&P 500. SPY is a good example.)

Chase Coleman and Chamath Palihapitiya remain billionaires. Their clients lost the money, not them. In fact, they got paid for running these funds. Smart guys, alright.

How much education, training, access to tools and to company executives do Coleman and Palihapitiya have? More than my grandson or you and me.

Can you think of a greater example of irony?

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,

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

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.

You can you read some worthwhile comments below.