9/11 REMEMBERED

Today is a sad, yet memorable day in so many ways. I was so stunned and saddened while the towers fell. But now, upon reflection, I see America at its best.
I saw America’s First Responders running towards the buildings, not away—many of those also gave their lives.
I see and hear the annual reading of the victim’s names and rehear many of the events of that day.
I see all of America still respectful of people and events—people who truly love this country.
I see now that we are linked together in our love of freedom and each other.
WE ARE AMERICA.

PROJECTED HINDSIGHT

My motivational seminars—which are few and far between—bring up the topic of making better choices now based on what you will wish you had done in a year or so.

I call it Projected Hindsight. Here’s how it works. Say you’re thinking of going into business, or choosing a stock, or getting married. Project out one year or even five years and ask yourself, “At that time, what will I wish I had done?” Project out and look back, and try to ascertain what you would like to say.

For example, there are many great companies in this country. You query yourself: Should I by Facebook? Or Microsoft? It sure is high right now, you think.

Okay, now project out 3 years or so. Put yourself there and think back. What will you wish you would have done. Looking back 3 years may be helpful, but it is a past tense viewpoint.

Here are a few helpful hints.

  1. Start with what you would consider a good decision today.
  2. Now, do the opposite of what you area contemplating. For example, ask yourself the opposite: “If I owned Microsoft or Google, would I sell it now.
  3. This focuses your thoughts on a good question. Don’t rush. The stock will be there tomorrow or next week.
  4. Now, here’s an important thought. Facebook is $168. You are looking for a better time to get the stock. It goes to $248 or $310 as that’s the trend it’s on. Will you really care whether you paid $162 or $182?
  5. Do I want to use this stock as a long-term hold? Or, do I want to use it for generating income?—say in Writing Covered Calls.
  6. Are there others ways of capitalizing on the future of this stock—say, using options?

Where are you going? What type of investments do you want to own? This means you have to ask some subsequent questions.

  1. Is this stock in a comfortable field—for you? How much do you know?
  2. What kind of problems do you like to solve? Does this company have the kind of problems that you are familiar with?
  3. What is your purpose for buying this stock? Are you going to use it just to hold? What is your exit strategy. Even it you’re not sure of the exact exit price, you can get a good idea entrenched in your brain.
  4. Then be ready to ask yourself the opposite question given above: At a time you’re thinking of selling, ask: would I buy this stock now—as compared to, should I sell the stock here? Check the storyline—including earnings growth, debt, competition, etc.

You can tell from these words that I like reversing the thought process. Anything we can do to stimulate our brain. Good answers come from ask appropriate and far-reaching questions.

You can always figure out the what, when you know the why. Focus on WHY questions.

TAXATION AND LIFE

THOUGHTS ON TAXATION AND LIFE.
Tax talk is all the rage. So much talk, so little thought.
We all agree that the government needs money. That’s about where our agreement ends.
1. We don’t need more and more government.
2. We don’t need government in every aspect of our lives.
3. We don’t need intrusive and obstructionist government bureaucrats.
The Left and Right, to me, can be defined this way:
THE LEFT love government. They see government as their way to social engineer our lives. They mean well. They call it, “Activist Government.” They get good at the machinations of government. They use the power derived there to accomplish their goals.
THE RIGHT love individual liberty, free from government interference. They want to reduce taxes, reduce regulations, and allow people the liberty they have as their God-given right to raise their families, run their businesses and build their lives.
I believe the following statement says what is in my heart: “The bigger the government, the smaller the man.”
“Government is not the answer, Government is the problem,” so said Ronald Reagan.
I started this article with a comment about taxes. Let’s get back to that and show you the real-world difference between the two.
1. The Left believes in Targeted and Temporary Tax Cuts.
2. The Right believes in Permanent and Broad-Based Tax Cuts.
Said another way: The Left wants to use taxes for Social Engineering, therefore they get a complicated Tax Code. The Right wants to simplify the Code and not use government to choose winners and losers.
© 2018 Wade B. Cook. All Rights Reserved.

THANK YOU, SMWS

It’s now the day after our first new Stock Market Workshop. It’s been several years since I taught an event, an I was a bit rusty.

Anyway, I want to thank all who attended. I was able to meet some really sharp people and also renew some old friendships. A special thank you to my wife and the whole staff who helped arrange and put on this event. You are awesome.

 

 

TICKER SYMBOLS

Here’s a quick thought for beginners. A Ticker Symbol is just a computer symbol to be used to look up info on a particular stock.
Some of them are creative, some cute, others don’t make any sense at all.
Here are a few we look up all of the time:
AMD, an acronym for Advanced Micro Devices.
CHK, a short form of Chesapeake Energy.
AKS, AK Steel.
MSFT, Microsoft.
GOOGL, there are two Google stocks. The one with the L is the main stock—now renamed Alphabet, which I think is a stupid move. There 2:1 stock split was done in a myopic way—all for the benefit of control.
FB, Facebook.
Information that may be useful. Stocks with one letter in the symbol are on the NYSE, New York Stock Exchange. In fact, all one, two and three letter symbols are usually on the NYSE. Yes, there are exceptions.
Four letter and five letter symbols are on Nasdaq.
Here’s your homework. Find, Mauna Loa Nut Co. Now, Winnebago. US Steel. The symbol. Many companies what to be a one letter symbol—like many older/prominent companies.

WHAT MAKES A GOOD COVERED CALL STOCK

PART ONE: The Deal.

I have written on topic many times before. On wadecookblog.com you will find many postings on this topic and others dealing with many cash flow strategies. Look around.

Picking up on the word, “cash flow,” I’ll remind you that that strategy is quite different than the standard wisdom being touted in the media stock market marketplace.

So, let me give here a basic covered call strategy. Remember, to me, it’s about getting assets to produce income. To do so, we must seek out income from a third-party, outside source. In this case the income will come from the options market.

In short, we buy a stock and then sell an call option—giving someone the right to buy our stock at a set price, on or before a date certain, called the expiration date. To be sure we don’t really want to sell our stock, and with the incredible BUY-BACK, we can keep the stock. We’re dong this trade to generate income from selling the call option.

An example would help. I’ll put here a fairly good stock for this type of trade. CHK, or Chesapeake Energy is good, but maybe not the best.

The stock is at $4.34. 1,000 shares would cost $4,340, or $2,170 on margin, where you only put up one half of the money. There are a few concerns with margin, but space is short. You can read about it elsewhere.

We normally sell the options out a month or so, using the 3rd Friday options as our benchmark. It’s August 20th, so we’ll look at the September 21st $4 or $4.50 calls. 50¢ incremental strike prices open up many possibilities. The $4.50 strike price is 19¢ X 20¢. The bid and ask. We sell at the bid, or 19¢. We can also place a limit order, and try to get more.

19¢, means $190. That is money in your account in one day. You take in $190, minus commissions. That is your money to leave alone, use it to buy more stocks, or take out and go to a dinner and a movie.

What do you think about that? $190 based on $4,340, or $2,170. It’s a nice one month return. Oh, yes we always have to worry about the stock going down in price. In Writing Covered Calls, this is our one major concern. But, if the stock goes up and we get called out, meaning we sell the stock which will happen if the stock goes above $4.50, we would take in another 16¢, or $160. That is the gain for selling the stock. Our total income would be $350.

PART TWO: What makes this work.

I want to rush on to PART Three which will use this same stock and trade to generate weekly profits. I’ll give the punch line here. It would be about $300, not just $190. A little more work, but a lot more profits.

Okay, to the matter at hand. How do we find and choose a stock for Writing Covered Calls?

Here is a brief list. I’ll write more later, but here are the basics.

  1. We always have to look at the volatility of the underlying. A serious dip can quickly wipe out our profits. We need to choose  stock that is at or near a good support level. Often I call this hard support. We want to find a stock that has dipped and is on an upward trend.
  2. We need this volatility, however. Movement generates more “fluff” or more pricing into the option premium. In this price range, that would be 25¢ to 50¢ every few days, and then back down 25¢ to 50¢. Upward trend? That would be nice too.
  3. If we want about a 3% to 10% return, this percentage corresponds quite often to the aount of movement.  About 5% would be 20¢ or so, generating the 19¢, or $190. More volatility would make us more money, but there would be more risk.
  4. In that we like weekly covered calls, there needs to be weekly options. This is easy to check on the site you use for option prices. I use finance.yahoo.com and marketwatch.com. Sometimes, yahoo doesn’t have a certain strike prices and I know it should be there, so I go the marketplace.com. This is a DowJones Website.
  5. We also really like small, incremental stick prices, like 50¢. $3 then $3.50 and then $4. If the stock as the old format, like $2.50, then $5, then $7.50, we usually can’t find a suitable profit.
  6. We have to understand the company. Make sure you’re happy with the business of the underlying stock—including its competitors, management and direction.

PART Three: Writing Weekly Covered Calls.

Not only 50¢ incremental strike prices have enhanced the profit potential of Covered Call Writing, but stocks with options with weekly expiration dates has really beefed up the process.

Here are a few things we look for. You can look for these in the upcoming example, and ask a simple question: What would this process or this trade be like without this factor.

  1. Quite often we find stocks with option prices which hold their value right up to the expiration date.
  2. Said another way, once we look at the weekly option prices, we notice that the option prices from week to week do not go down or deteriorate rapidly.
  3. piuh
  4. opiuhpiuh

So, let’s get to the example.

  1. To see if this is a good trade, we establish a benchmark, which is usually the option price out in a month or so.
  2. We usually use the third Friday expiration date as it is the busiest, or most crowded.
  3. We take the bid prices now—even though as time goes by we will not get that price.
  4. So, we adjust that price. Usually we divide it in half, and for the time we’ve been doing these, that seems to be closest to the real results we receive.

You’ll see this working as we go through the CHK example. Today is Monday, August 20th.

Our benchmark is the $190. Let’s see if we can beat that.

8/24. This Friday, the $4.50 calls are 4¢ x 5¢. We’d take in $40 for selling the call at the bid.

8/31. Next Friday, the $4.50 calls are 9¢ x 10¢. Yes, we could sell these now if we don’t like taking in only 4¢. But then it’s a 2 week trade, not just 5 days.

9/7. the $4.50 calls are 11¢ x 14¢. We’d take in $110, assuming time has not eroded the option premium and assuming the stock price hasn’t changed.

9/14. The $4.50 calls are 16¢ x 18¢. We would take in $160.

9/21. The $4.50 calls are 19¢ x 20¢. This is the same as the 19¢ we used as our one-month benchmark.

We add up all of the bids and get $590. Again, taking 1,000 shares time the penny amount of the bids. All of them add up to $590. Now, we knw we won’t get $590. Time takes away the bid quite quickly.

So, we divide this $590 by 2, and rounding off, we get $300. Obviously this calculation is not always correct, but it has been pretty close. These numbers can be used to figure out if doing covered calls is a good way to go, and more specifically, whether we should do weekly calls.

We an change anytime we want—and even not do the selling of the call if we’re sick or traveling. We might be able to buy-back earlier and get in anther trade, but try as I have, that extra income has be elusive. In this case, I think working the trades to weekly calls works. Again, watch the underlying stock—putting in a stop-loss order around $4 or $4.10.

PART FOUR: What can $4,000 do.

I incorporated into this posting the number of $4,000, as one of your fellow student asked what could be done with $4,000? I get the question a lot. Usually asked this way: How much do I need to get started?

The answer is not that simple. With a smaller amount of money, commissions eat up a larger percent of the profits—as some part of the commission charges are fixed.

Here’s the simple question; Is taking $4,000 and making $300 worth your efforts for one month? Knowing what you know, can you do something like this every month? That’s up to you.

  1. Taking margin into account, $4,000 would buy double this amount, or $8,000 worth of stock. With 2,000 shares, not 1,000 shares, you could now sell 20 contracts, not just ten.
  2. Instead of $300, you’d take in $600.
  3. Five or six batches like this would generate a possible income of $3,000 or more. Some people could retire or at least move toward retirement with this amount.
  4. If you only have $2,000 the above trade of 1,000 shares could be done.

So, that’s it for now. Feel free to comment or ask more questions.

STOCK MARKET WORKSHOP—FREE

STOCK MARKET WORKSHOP
Wade B. Cook
This Mini Workshop is based on the Famous 2—Day Trading Workshop attended by over 80,000 ($4,295) people. Wade will share FOUR of the best cash-flow investing and trading strategies.
This event is not just a seminar but a “Roll Up Your Sleeves” and “Do the Deals” WORKSHOP. How to Get a Second Paycheck Without Getting a Second Job.
TOPICS:
1. BUILDING A GREAT PORTFOLIO—Learning and using basic Stock Market Strategies. Choosing Great Stocks. Getting started.
2. STOCK OPTIONS: The Beginners Guide. Three ways to make money. Leverage. Introduction to Writing Covered Calls.
3. WRITING COVERED CALLS—A Workhorse Strategy for generating Weekly and monthly income. Start Right. Avoid Problems.
4. CASHFLOWING THE STOCK MARKET: Rolling Stocks. Stock Splits. Plus, an introduction to Tax-Free Retirement Income with Indexing.
YOU WILL LEARN HOW TO GET YOUR MONEY
WORKING AS HARD AS YOU WORK.
PERTINENT INFORMATION: Note that this event is $1,245, but for this Workshop, there is a full scholarship. So, it is FREE for select people.
Call 206-437-1784 to register.
DATE: August 30th. If this event sells out, we’ve scheduled another for Sept. 27th.
LOCATION: Best Western Plus, 32124 25th Ave So. Federal Way WA.
AGENDA: Registration: 8 AM. Workshop begins at 8:30 AM. The Market is open. Real Deals, Real Profits. Lunch: 11:30 to 12:10 PM. Ends 2:15 PM.
BONUS WORKSHOP—FINANCIAL FORTRESS. 2:30 to 3:15. This is a powerful event and we invite you to participate.
Seating is Very Limited. Register Right Away.

Seminar Set for 8/30/18

Are any of you interested in coming to Seattle for our first Stock Market Workshop?
Yes, I’ve been retired, but a group here has asked me to teach a one day event. They wanted to charge $1,245, but I said for my students, former attendees, TDT members and anyone on our TNTs I’ll do it for free.
There is a full scholarship for you. Write me at copyworkz@hotmail.com. I’ll send you a full scholarship.
Or I’ll send you more information.
The first one in August 30th. It’s selling out fast. We’re doing another (if needed) on Sept 27th.
I took four of our best strategies and put them into a one day format—6 hours. I just finished the workbook that everyone will receive, and this event will be unique, powerful and pertinent.

When you sign up you’ll receive a pertinent information sheet.

UPDATES: August 2018

August 14th.

The market is having a mini-rally today.
95% of the S&P 500 have made their second quarter earnings announcements. Profits are up. I can’t remember, but about 80% beat their projected earnings.
Basically, business is booming. Most Americans feel it.
1. Apple did hit the One Trillion Dollar Market Cap. Let me take a minute and explain Market Cap, or Market Capitalization. Take all of the stock—the outstanding shares—and multiply it by the price of each share and you get the Market Cap. It’s primarily good as a measuring stick. You see, a stock may dip a few dollars and millions come off the Market Cap, but the company is the same—profits and losses.
2. AMZN is moving to the Trillion Dollar mark.
Both of these companies have something for sale. Other high-tech companies like FB and Google give away their service and make money in advertising and other services.

___________________________________________________________________

Well, July sure came and went quickly. Here are a few things that are driving the market or a particular stock.

  1. Disney (DIS) is doing well. They are going after the streaming market where content is king. For example, they’re targeting Netflix.
  2. Samsung is investing 22 Billion Dollars into—everything.
  3. The 10,000,000th Mustang just rolled of the line. But Ford (F) stock seems stuck around $10. I sort of like it as a covered call stock.

I’ll add more later. Errands to run.

UPDATES: July 2018

July 24th. The clock is ticking away and for many companies the profits keep growing.

I’m working on a few Covered Calls. Once again AMD comes to mind. Also CHK and AKS—some of my old standbys.
Google had blowout numbers and the stock is way up. They are taking in $2 Billion a week—mostly in advertising revenue.
Facebook is also doing well, with their earnings coming up.
Our GDP will probably be over 4%. That’s amazing. This is a good place and time to get money working for you.
We’re in about the middle of earnings season. Yesterday, 167 or the S&P 500 made their announcements. Earnings are up on average about 25% year over year.
Thank you Mr. Trump for the tax cuts. BTW, did you notice the government is taking in record revenues—maybe we can grow out of our problems.

July 17th 2017. Time marches on and the stock market game is afoot.

  1. The big news today Netflix—NFLX. Last night they had their earnings phone call. They’re making tons of money, but they missed their new subscription  numbers. The thp[ught they’d get 6 million new subscribers and they only got 5 million.
  2. The are highly profitable. The market showed the stock would be down $55. It was but soon recovered. They are developing content. I think their numbers are down because so many people are canceling because they signed the Obamas.

And in other news.

  1. Earnings are up everywhere. The tax cuts are working.
  2. You know what? The press doesn’t mention it, but the government is taking in  so much more money. Maybe we can grow out of our problems. I’m a supply-sider and that’s the plan. When you lower the tax rates, growth happens and we take in more money.
  3. Many companies are expecting 20% earnings growth, from a year ago.
  4. 80% of the gains come from the high-tech sector—namely FANG, FaceBook, Apple, Amazon. Netflix and Google. I wish I had more of each of these.
  5. For example, Netflix has this Predictive Software. “Oh, you like this movie, maybe you’ll like this one.” Many companies use this and we’re all affected by it. Many others use similar programs (algorithms).
  6. There are so many good companies—so many participating in the growth and the profits—that it’s difficult to choose.

Which ones do you think you’ll wished you own in 10 years?

We’re right at the start of earnings season. Should that be earning’s season? I want to keep up on my grammar.
1. It’s hard to ignore High-Tech stocks. It seems to me that they are growing and making money—and preparing to make even more.
2. Netflix was just nominated for 112 Emmys. Content is king.
3. AMZN, NFLX, GOOGL, FB, and even MSFT and AAPL are in a safe zone. Meaning they are immune for borders, Tariffs and the like.
4. Even though these stocks are at all time highs, they are still the ones that 10 years from now, you’ll look back and kick yourself for not owning.
5. There are other high-tech stocks that are also in this category—like NVDA, INTC, AMD.
6. I think AMD makes a perfect Writing Covered Call Stock, so far.
7. AMZN is bumping against $1,800 per share. One other is at all-time highs but I forgot which one. I forgot to take my memory pills.
8. Disney owns HULU, again, content and streaming.
9. When AAPL gets to $195 a share, it will be a Trillion Dollar Market Cap Company. Will it be the first to hit the Trillion mark?
I’m coming up with a new idea. I’ll share it with you shortly.

A FEW DAYS AGO:

The market is up nicely. Wash. DC is a mess. Here is something I’ve learned over the years.
1. We’re in earnings season. It’s called the summer rally, then comes the summer doldrums. Has been that way for millions of years. It’s fun to watch the pundits (including some of my favorites) trying to pigeon-hole this, like it’s new and special.
2. It’s earnings season.
3. Companies are making a lot of money. Stocks often rally into the upcoming news.
4. BUT, then there is often a sell-off. I have no proof of this, but it just seems that about 90% of the time, they dip down in a few days.
5. It’s the old: “Buy on rumors, sell on fact.”
6. Remember a stock price today is based on the anticipation of future earnings. Current earnings can point the way. But, the current news, and especially the commentary, play a vital part.
7. We’re buying the future.
So, follow your favorites and watch this play out. If you’re into options this is even more important. These options expire, adding a new level of risk.