Who would drive knowing that there is a 50% chance of an accident?

Investors buying or selling an individual security, face exactly that.

If the security goes up in value, the buyer is right and the seller is wrong. If the security drops in value, the buyer is wrong and the seller is right. They cannot both be right.

In any investment transaction, past or future, investors face a 50% chance of being wrong.

That is why the Monday Morning Program recommends buying shares of the entire US economy as represented by an exchange-traded fund which tracks the S&P 500. The latter is an excellent approximation of the US economy, one of the strongest in history. No stock-picking (except in your “fun” portfolio).

All the mistakes that any investor ever made or will make in the future arise from ignoring one or more of the six habits which we promote.

Don’t go there (except in your “fun” portfolio).

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

Good luck!

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.

Next, yesterday it was a market holiday so, for yesterday’s post, go here.

And now, our sincere gratitude to all members who took the time to respond to our Friday, June 17, survey about the effect of climate change on health. Time is an irreplaceable resource. We appreciate your involvement.

You can see our survey results below.

You can you read some worthwhile comments below.

For several weeks now, NVAX has dropped by more than the premium income she received for an overall loss in her “fun” portfolio.

As we frequently state, with the habits of the Monday Morning Program, luck hardly matters. Writing covered calls does require luck. Last week, she was lucky! NVAX rose to $40.24 and she collected $US8,050.00 ($US3.50 times 2,300) from NVAX growth in addition to the $US2,309.03 in premium income for a total of $US10,359.03 ($US8,050.00  plus $US2,309.03).

When she was in practice, she would have considered that to be an exceptionally good week’s income. Writing the 23 covered call contract on NVAX, she earned that before breakfast last Monday morning, June 13.

Of course, she was assigned having written the 23 covered call contract at a strike price of $US.40.00.

So, what are her plans for today when the market opens at 9:30 AM?

What is the worst that can happen?

What is the best that can happen?

From yesterday’s Wall Street Journal:

“Had you been able to sink $100 into U.S. stocks in each of the 199 months from February 1966 through the end of August 1982, your $19,900 in cumulative investments would have left you with $18,520 after inflation, according to Morningstar.”

Hard to ignore.

However…

…history shows that investors who bought an exchange-traded fund that tracks the S&P 500 when it got into a bear market (a drop of 20%) made 22.7% in the next 12 months.

That too is hard to ignore.

With the habits of the Monday morning program, luck hardly matters.

Good luck!

Recently, The Globe and Mail, The Wall Street Journal, and The New York Times  published close to 4,000 words on cryptocurrencies. That does not take into account what Barron’s, The Washington Post, Forbes, the British The Times and other high-impact papers had to say on the subject. Add to that the hours and hours that talking heads dealt with the issue recently; you could spend the rest of the year going over the material.

Practical wisdom is the right way to do the right thing. You would gain no practical wisdom from the above.

If investors cannot explain a security to a 12-year-old they should not buy into it. (Habit number six – avoid complexity.)

Avoiding cryptocurrencies and all that is stated about them is practical wisdom.

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

Good luck!

Until the beginning of last week (June 6, 2022), our fearless, intrepid investor averaged 14% annually in her “fun” portfolio writing 10 covered call contracts on Novavax (NVAX) on Mondays, expiry dates on Fridays of the same week.  To lower the risk of being assigned, she wrote those $10 out of the money instead of the usual just out-of-the-money sale, as she did in the past. For details, go here.

Using the premium income she received plus some cash that she had in her “fun” portfolio, she bought another 1200 shares of NVAX. She now owned 2300 shares.

Until the beginning of last week….

Then what happened? The market went down the following day but our fearless investor’s “fun” portfolio rose $C4,913.76!  Thank you, NVAX!

Well, the fastest way to make a buck can also be the fastest way to lose a buck! From here on, NVAX continued to decline and by the end of the week, our fearless investor’s “fun” stopped being fun. The worst that could happen did happen. The price of NVAX shares dropped below the premium income she received resulting in an overall total loss.

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

Your answer to holding only the S&P 500 index in your portfolio was good. Thanks Milan.

When being bombarded with financial services marketing the average investor needs to be reminded of the MMM philosophy.

From Danny Rain DDS, Sudbury ON, Canada

When you place an order for any security before the market opens on Monday mornings, is it a “Market or Limit” order?

Ben Carlson

On June 3, 2022, from Lance McIntosh DDS, Prescott ON, Canada

You provided a link to Ben Carlson’s blog last year and I have been enjoying his site and podcasts since then.  Thanks for that.

The link below will take you to his latest post.  It challenges the idea of holding only the S&P 500 index in your portfolio and makes a case for more diversification.  Thoughts?

https://awealthofcommonsense.com/2022/06/what-if-this-is-a-big-regime-shift-in-the-markets/

Our answer

Investors can get a lot of useful information from Ben Carlson’s blogs.

Keep in mind that Carlson’s ultimate objective is to get clients whose portfolios his company, Wealth Simple, can manage.

Without question, there is a legitimate place for professional money management for investors not interested in doing it themselves, for widows and orphans, for those who are afraid to look after a large sum they might get from selling a business, and so on.

Investors don’t need to look very far to find a great many posts dealing with the negative side of passive index investing. All of these posts are designed to get investors to connect with a manager.

SPIVA has convincingly shown that over 90% of actively managed funds have underperformed the S&P 500 over a market cycle.

Warren Buffett, one of the most successful investors ever, wants the money that he is leaving to his widow to be invested in a passive index fund and cash or near-cash.

If that approach to investing is good enough f0r Buffett, should it not be good enough for any of us?

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

Good luck!