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  1. phil

    Long-Term Portfolio Review (LTP) Part 1:  $1.4 MILLION!  That's up $900,000 (180%) from our $500,000 start back on 11/26/13 so a bit over 3 years to get that far but the main point I want to make is this is getting easier, not harder, as time goes on because our mature positions, like the Butterfly Portfolio, simply crank out gains from premiums we sell and dividends we collect.  They've long ago been paid for as we're back to $1,073,540 in CASH!!!, which is twice as much as we started with.  

    If you are new at PSW, I would strongly encourage you to go back to our first cash-out review (which summarized all of our trades at the time, after 6 months) and then go forward a year to see how slowly we add things.  Generally we'd sell one or two puts a month and, if the position got cheaper – we'd set up a bullish spread to go with them (assuming we still liked them).  

    At the time we had AAPL, ABX, BRCM, BTU, CAKE, CAT, CLF, DBA, DE, EBAY, EGLE, FCX, GLL, HK, HOV, INTC, IRBT, LGF, LULU, MSFT, NLY, RIG, RRD, SHLD, SLW, SPY, T, TASR and TWTR and we were up 19% in 6 months and were worried about a correction (as usual).  Not too different than what we do now with a lot of the same stocks – it's the discipline that's important to develop, not the positions.  The Man Who Planted Trees tells you everything you need to know about running a long-term portfolio!  

    Step one in building a portfolio is, of course, identifying stocks you want to buy (and once you buy your first one, all the rest need to balance with it!).  Step 2 is NOT BUYING THE STOCK.  That's one people seem to have trouble with.  Why would you buy the stock when you can sell a put and give yourself a discount?  60% of the time, that's how we initiate a position in the LTP.   Even when we we do start with a spread, we keep it small so we can easily double down – TWICE – if the stock gets 20% or 40% cheaper.

    If you start with a 20% discount ($100 becomes $80) and then you don't add more unless it's down at least 20% ($80 + $64)/2  = $72 avg on 2x = $144) and then you don't add more unless it's down at least another 20% ($72 + 50)/2 = $61 avg on 4x = $244) you end up with 4x at close to 1/2 of what you would have paid ($400) if you jumped right in at full price.  That's why we're THRILLED when a stock we like gets cheaper – even if we're already "stuck" with shares.  

    • ABX – Loose leg of spread below, we will deal with it later. 
    • AGNC – On track.
    • ATVI – On track. 
    • BBBY – Here's one that got cheaper but still $36.27 and our net is $35.50 so we're still good but I do like BBBY and, rather than commit to more puts, let's just add a bull call spread while they are cheap like 10 2019 $30 ($8.50)/$40 ($3.85) bull call spreads at $4.65 ($4,650) and those pay $10,000 if all goes well and we already collected $4,500 from the short calls so our net cash outlay is now $150 with $9,850 upside potential and we're already $6,270 in the money.  See why I like it when things get cheaper?  Great for a new trade, of course.

    • BRK.B – I WISH these would lose money so we could buy more cheaply!   On track.  
    • CMG – On track.
    • DIN – New, good for a new trade.  
    • DNKN – On track.
    • ESRX – Good for a new trade.  
    • GOGO – We cashed GOGO on 5/31, I forgot it was in the LTP too – will be fixed.  

    • INFN – On track. 
    • KATE – No point in these anymore, let's buy them back and clear a slot.  
    • M – I still like them, good for a new trade.  (not enough to add a spread, though).  
    • MON – On track.  China starting to buy from them – huge.  
    • NLY – We were hoping they'd get cheaper but they didn't.  Our consolation prize is $8,250 for not owning them.  On track. 
    • RH – On track 
    • SBUX – On track. 
    • SEE – On track
    • SKT – Good for a new trade
    • SKX – On track
    • SPWR – On track.
    • TGT – On track
    • TLRD – Good for a new trade
    • TWX – On track
    • VZ – Good for a new trade
    • WATT – Good for a new trade.  

    We have 25 short puts and, if they all expire worthless, we'll keep/profit about $90,000 – NOT including the profits we've already made (maybe $40,000).  This is that tree-planting part, every month we find something to sell for about $4,000 and some will become positions and most will simply end up turning into cash, which we use to buy more positions.  After 2 years, we have 24-36 in progress at any given time and it's $50,000+ in bonus profits each year, which is 10% of our original principle.  

    It's a totally passive way to make money, very low-maintenance and your worst case is owning good stocks at great discounts, which then drops them down to one of the trades below…

    • ARR – It went up and up and up and we never had a chance to sell the puts.  We'll end up getting called away at $22.50 but, until then, we get the monthly dividends.  

    • CM – They have finally come back down and we can sell 5 of the Dec $80 puts for $5 to net in for $75 because we REALLY would like to own more of this stock (especially since we're losing ARR) and their 0.95 quarterly dividend.  
    • FCX – Very simply, if we have a bull call spread in the LTP is probably because we're waiting for a pullback to sell puts.  We have one here so let's sell 15 of the 2019 $12 puts for $2.25 as we'd be happy to double down on those if FCX tests $9 again.

    • IBM – Let's sell 5 of the 2019 $135 puts for $9.50.  Thrilled to own that stock at net $125.50!  
    • OIH – Not confident in these enough to sell puts.  If oil doesn't recover next month, we may have to take a loss on the spread and get out.  
    • CG – On track
    • CLNS – On track
    • FNF – On track
    • GCI – On track
    • GME – Good for a new trade
    • GNC – Good for a new trade.  
    • HOV – On track.

    HOV doesn't pay a dividend but, when it was $1.47, it made more sense to buy the stock than pay a premium for a long call in a bull call spread.  The rest of the ones above pay lovely, lovely dividends of about $6,000/qtr and there's another $24,000/yr (5%) that just rains into our pockets and will rain into the pockets of your children and your grandchildren and your great grandchildren.   Dividend stocks should become more and more of your portfolio as it matures (and as you do) – you should always be looking for good ones to add.  

    Think about what we're accomplishing.  In 3 years we have 6 positions throwing off $24,000 and in 6 years we'll be getting $48,000 and in 12 years $96,000 and in 24 years $192,000 – all from our $500,000 initial investment and dividends tend to grow with inflation so $192,000 a year then is the same buying power you wish you had now.  

    Slow, consistent investing with clear goals in mind – that's all it takes to build wealth sensibly and reliably! 





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Phil's Favorites

Equifax breach is a reminder of society's larger cybersecurity problems

 

Equifax breach is a reminder of society's larger cybersecurity problems

Courtesy of Richard FornoUniversity of Maryland, Baltimore County

There are a lot more holes in cybersecurity fences. iomis/Shutterstock.com

The Equifax data breach was yet another cybersecurity incident involving the theft of significant personal data from a large company. Moreover, it is another reminder that the modern world depends on critical systems, n...



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Zero Hedge

Stocks, USDJPY Stumble After North Korean "H-Bomb Test" Threat Reports

Courtesy of ZeroHedge. View original post here.

After an initial slide on Kim's "deranged dotard" reaction to President Trump, both USDJPY and US equity futures are falling further after Yonhap reports, North Korea’s Foreign Minister Ri Yong Ho says the “highest level of hard-line” countermeasure could refer to hydrogen-bomb detonation in the Pacific.

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Chart School

Tech Trades Squeeze Stops; Russell 2000 Approaches Resistance

Courtesy of Declan.

There is a bit of an overreach on today's action as the level of loss was light. However, the much-anticipated breakouts in the Nasdaq and Nasdaq 100 look like they will have to wait a little longer. Both Tech indices saw the squeeze put on tight long stops, but not enough to suggest a panic sell-off is imminent. However, any sell-off has to be watched; losses below the 50-day MA would be concerning.


The Nasdaq 100 is looking a little more vulnerable with the MACD trigger 'sell' and +DI/-DI sell' trigger. Look to this index for leads.
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UAW's Loss At Nissan Auto Plant Masks Genuine Progress For Organized Labor

By The Conversation. Originally published at ValueWalk.

Harley Shaiken, University of California, Berkeley

]]> Get Our Icahn eBook!

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A spirited, decade-long effort by workers to organize a union at the sprawling Nissan assembly plant in Canton, Mississippi, seemed to drive into a ditch on August 5, when officials finally tallied the elec...



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Jamie Dimon Faces Market Abuse Claim Over "False, Misleading" Bitcoin Comments

Courtesy of ZeroHedge. View original post here.

A week after Jamie Dimon made headlines by proclaiming Bitcoin a "fraud" and anyone who owns it as "stupid," the JPMorgan CEO faces a market abuse claim for "spreading false and misleading information" about bitcoin.

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3 Reasons Intuit Will Continue To Dominate The Tax Business

Courtesy of Benzinga.

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Members' Corner

"Citron Exposes Ubiquiti Networks" But TNN Says "Not So Fast"

What do you think? (There's a comment section below )

"CITRON EXPOSES UBIQUITI NETWORKS" 

Does Ubiquiti Networks (NASDAQ:UBNT) actually have real products that sell to consumers? Of course! So did Valeant and WorldCom, but that does not stop its financials from having every indication of being completely fraudulent.

Citron will detail a series of alarming red flags and detail how Ubiquiti Networks is deceiving the investing public.

Read the full report here.

******

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Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Can low doses of chemicals affect your health? A new report weighs the evidence

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Assessing the data. LightField Studios/shutterstock.com

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The App Economy Will Be Worth $6 Trillion in Five Years

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The App Economy Will Be Worth $6 Trillion in Five Years 

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We have a great guest at today's webinar!

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Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

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Brazil; Waterfall in prices starting? Impact U.S.?

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CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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