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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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ValueWalk

Gold Was Chemically Destined To Be Cash

By Frank Holmes. Originally published at ValueWalk.

I think most of you reading this right now are aware that gold is unlike any other metal, certainly any other element. It doesn’t play by the same rules as iron or tin or aluminum, and its value has nothing to do with its utility—or lack thereof. People valued the yellow metal for its beauty and malleability eons before they knew of its usefulness in conducting electricity or its chemical inertness.

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Chart School

Volatility on the Rise

Courtesy of Declan.

Today's losses look big on current charts but in a historic context, they weren't too severe. However, big red bars are not to be ignored and 'market leading' Small Caps have felt the full brunt of the selling from July which is bad news for the broader market.  Today's losses in the Russell 2000 undercut the 200-day MA leaving 1,345 as next support (of which I would not be too confident of it holding).


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Fed's Kaplan Admits Stock Valuations Are Elevated, But He's Not Worried For One Reason

Courtesy of ZeroHedge. View original post here.

There were two explicit warnings about stock market valuations in the latest Fed Minutes: first, the Fed warned that "vulnerabilities associated with asset valuation pressures had edged up from notable to elevated, as asset prices remained high or climbed further, risk spreads narrowed, and expected and actual volatility remained muted in a range of financial markets." Then, in an odd admission, the Fed said that "recent rises i...



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Phil's Favorites

Unexpectedly Weak Industrial Production Report Released Unexpectedly Early

Courtesy of Mish.

The Fed accidentally released its Industrial Production report a half hour early today.

IP was 0.2% with an Econoday consensus o 0.3. Manufacturing was a disaster, down 0.1% vs an Econoday consensus of +0.2%.

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10 Stocks To Watch For August 17, 2017

Courtesy of Benzinga.

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Ukrainian Lawmakers Disclose $45 Million In Bitcoin Holdings

Courtesy of ZeroHedge. View original post here.

As Ukraine's crackdown on corruption continues, three lawmakers from Ukraine’s ruling party revealed this week that they own a combined $45 million in bitcoin, according to a report by RIA Novosti, a Russian foreign news service.

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Swing trading portfolio - week of August 14th, 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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Biotech

Editing human embryos with CRISPR is moving ahead - now's the time to work out the ethics

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

Editing human embryos with CRISPR is moving ahead – now's the time to work out the ethics

Courtesy of Jessica BergCase Western Reserve University

There’s still a way to go from editing single-cell embryos to a full-term ‘designer baby.’ ZEISS Microscopy, CC BY-SA

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Why we need to act on climate change now

 

Why we need to act on climate change now

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

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

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

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



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NewsWare: Watch 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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All About Trends

Mid-Day Update

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Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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FeedTheBull - Top Stock market and Finance Sites



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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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