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December 22nd, 2014 at 2:13 pm
I suspect that Phil would say that you should focus on 10 positions, instead of 20. If you follow Phil's system correctly, it can sometimes take 2-3 years for you to work into positions. I wouldn't focus on making 20% the first year, as it will take time to scale into positions. I also think you will be surprised how much you can make with just a 1x entry across 10 positions. If you decide that your initial allocation is $5k, on 10 positions, that will get you 50% invested, and about 25% of your available buying power. One of the positions could be IRBT, selling 2 2017 $30 Puts, and buying 2 2017 30/42 spreads. This uses about $7k of allocation, and makes about $2,600 in 2 years if IRBT hits $42. You can do similar positions on Apple, CLF, CCJ, F, BRCM, etc. If you did 10 positions that profited in a similar manner, you have the capacity to earn 26% in 2 years, or 13% per year. And you will have tons of buying power to take advantage of dips in the market. The most important thing to focus on is avoiding making a huge mistake. Keeping your allocations low, and avoiding the allure of shorting momentum stocks will go a long way towards helping you avoid the mistakes I have made over the years. Another thing to watch out for is not spending too much money on hedges.