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Why Simple Isn’t Easy

Living through a track record is very different than viewing it on paper. Even the most efficient track records in history have periods where they would have been very uncomfortable to stick with. Warren Buffett has had multiple 30-50% drawdowns in his career. In the world of indexing, there is nothing magical about the S&P 500.

Thinking in terms of decades

Peak to valley, from June 1998 – March 2000 Warren Buffett’s Berkshire Hathaway lost over 50%. In the same period, the S&P 500 returned over 45% and the Nasdaq 100 returned over 315%. A new client said to me the other day “I’m in this for the long term, but if after a couple years I don’t see any gains then I’m going to tell you this isn’t working.”

Why Dividend ETFs Yield Less Than Expected

I was asked a great question the other day by a member.  He had done some math and noted that the reported dividends received by dividend ETFs (such as SDY, VIG, and others), was LOWER than it should be, than if you just took a weighted average of the EFF's holdings.

What can you do with an option?

This article covers some basic stuff related to options owners. What are your choices when you own an option? You have three choices: sell it, exercise it or allow it to expire worthless. And that’s true whether you own a call or a put. Each choice has its pros and cons. Each choice might lead to different profit outcome.

It Is Time to Get Real

A few days ago a one of the Steady Condors members asked if the past performance of Steady Condors was in line with our expectations, and would we expect it to perform better over time. His concern was that our real results are worse than the backtesting. My response was:

Profiting From Unusual Options Activity?

I'm asked many times if we can use unusual options activity to make some good profits. In my opinion, using unusual options activity as an indicator for impending price moves is difficult, subjective, and dangerous. Yet many "options guru" pretend to build a whole "secret system" around this phenomenon.

Learn First. Trade Later

It is so tempting to begin trading options. Too many novices hear/read stories about earning 10% per month and, believing that nonsense, want their share of the ‘free money.’ They take a couple of lessons or read a chapter or two and believe they know what they are doing. A typical mindset is: ‘How difficult can it be if people are making 10% per month?’

Is Your Iron Condor Really Protected?

Iron Condor is a very popular strategy used by many options traders. It can perform very well many months, but the real question is: how much will you lose when the market volatility explodes? Many condor traders give back all of their profits during the 2-3 losing months each year when the markets make large moves because they lack a detailed plan for risk management.

How To Get Black Swan Protection For Free

After seven years of strong bull market, many investors became complacent. They forgot how bad it was in 2008. However, many still would like to get some protection in case things go south again. We know that bull markets don't go on forever. But protection usually costs money. What if you could be protected AND get paid for it?

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