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?

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.

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?

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?

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.

At the end of Friday, July 15, the US market, as represented by the S&P 500, was up 5.22% for the month. The Toronto Stock exchange (TSX) was down 4.11%.

Our fearless, intrepid investor’s core portfolio was up +8.44% 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 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.

On Friday, July 8, she was assigned and to stay in the game, on Monday, July 11, she bought 1000 shares of Novavax (NVAX) at $71.2567 per share for a total cost of $71,256.70. On Friday, July 15, NVAX closed at $54.43, giving her shares a market value of $54,430.00. That is a loss of $16,826.70 ($71,256.70-$54,430.00). Her premium income was $1.0696 per share for a total of $1,070.00. That took some of the sting out of the overall loss in this venture but certainly, not enough.

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

Investors could easily spend the whole day listening to financial talking heads (not to be confused with the American rock band using that name). Financial talking heads rarely offer actionable suggestions.

Investors’ portfolio results would be no further ahead.

Having said that, I have joined Sasha Starr’s financial talking heads, at Sasha’s invitation. I am doing it primarily to draw attention to Monday Morning Millionaire and to present our investment philosophy.

If you care to watch the Wednesday, October 12 show, follow https://youtu.be/ay3B3XCcqkw.

On Tuesday, July 5, we promised to report on Monday, July 11, how our fearless, intrepid investor did in her “fun” portfolio for the week ending on Friday, July 8, and her plans for the week of July 11 to July 15.

Instead, we published a post about investing in derivatives safely and effectively.

Here is how she made out so far this month.

At the end of Friday, July 8, the market was down 7.6% for the month.

Her portfolios are up for the month, overall!

That resulted of her buying 200 shares of Novavax (NVAX) in her core portfolio as NVAX became a greater bargain last week. She already held 2,300 shares in her “fun” portfolio. Her NVAX shares rose last week by more than the market dropped.

That is an unsustainable result entirely arising from luck and not skill.

And what did she do yesterday?

We should only sell (only sell and never buy) derivatives (puts and calls) in our “fun” portfolio. Doing so invites a level of risk inappropriate for our core portfolio.

Social Sciences Research Network (SSRN)  is an outstanding source of academic, evidence-based information. The SSRN economic papers are difficult for the layperson to understand, but the abstracts are manageable.

Some examples follow.

Covered Calls Uncovered