SteadyOptions is an options trading forum where you can find solutions from top options traders. TRY IT FREE!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

Buy When You Have the Money, Sell When You Need the Money


Money can be quite an emotional topic for many of us. Emotions can enhance our experiences and relationships in many ways, but they can act as mental roadblocks especially when trying to make wise financial decisions. One of the most common emotional roadblocks I come across when working with individuals is an unwillingness to invest idle cash to meet long-term goals.

It takes courage and perspective to be willing to overcome the emotional fear of tying up one’s cash.
 

Current events, political or economic,are often the explanation in one form or another for clients’ unwillingness to invest. The problem with that reasoning is that there always has been and always will be uncertainty…In fact, we should embrace it! If there were not uncertainty, what economic rationale would we have to expect higher returns from equities relative to cash and bonds?
 

For this reason, I’ll refer readers back to the title of the article. For long-term planning and goal focused investors, buying opportunities occur when they have the money. Contrast this with what the media presents in a never-ending attempt to increase readership and viewership as it tries to distract us with buying and selling “opportunities” relative to headlines and current events. If you want your financial life to be one of constant stress, conflict and confusion, just become a regular consumer of financial media.


Consistently acting upon goal-based financial plans is what I’ve seen throughout my career as the best predictors of successful investment experiences, while attention towards current events and short-term performance is what best predicts failure.

Start with a goal…then make a plan to achieve your goal…and finally establish an appropriate portfolio to reflect your plan and goals. An example of a typical financial goal is a date specific (“I want to be able to retire by 62”), dollar specific (“I want an inflation adjusted income of $100,000 per year”), retirement goal. From here, a plan can be created based on how many years you have left to achieve your goal, how much you have already accumulated towards your goal, and how much per month from now until then you can save towards your goal. A good financial advisor can help you walk through this process, and even “Do It Yourself” investors could benefit from a second opinion to make sure their goals and plans are realistic as well as their resulting portfolios.  
 

Then to the maximum extent possible, automate your progress towards your goal(s). For example, make 401(k) contributions occur automatically from paychecks and IRA and/or HSA contributions occurring automatically from bank accounts. Investors should assign a purpose to every dollar in their possession. Volatility should be expected, and a good financial plan includes cash-flow planning that accounts for market risk. If saving for short to intermediate term goals that could require fully liquidated capital within 5 years, investors should not put much, if any, of that capital in the market. Instead, they should match short-term liabilities with short-term assets such as savings accounts, CD’s and bond funds.

For long-term goals, such as a retirement that might not begin for decades and might also last for decades, investors should automate their retirement account contributions (buying as soon as  money is available) into diversified equity funds and embrace volatility as this can lead to higher returns through dollar cost averaging. Anything else (piling up cash, waiting for “opportunities”) is playing the loser’s game of market timing.

One of the greatest gifts we’ve all been given is the power to choose. It makes sense to choose to become an expert on the things we can control, such as setting clear and realistic goals and making plans to achieve them. An appropriate portfolio is the reflection of such a plan and includes the basic fundamentals of portfolio balancing, broad diversification, low expenses, tax efficiency and disciplined rebalancing.

Goal focused investors know that efficient markets already reflect all known information and are therefore unpredictable, so he or she wastes no energy attempting to time them.  Risk is accounted for and thereby managed within a financial plan, not in real-time based on a forecast or gut feeling. Other factors that are out of our control, like political and economic current events, have no influence whatsoever on our decisions because publically available information has no predictive value.
 

Conclusion
 

Successful investors: Focused on goals and their financial plans


Failed investors: Focused on current events and short-term performance


If you can’t clearly articulate your goals and plansand how you’re working to achieve them, make it your top priority after reading this post to finally take action and get it done.


Jesse Blom is a licensed investment advisor and Vice President of Lorintine Capital, LP. He provides investment advice to clients all over the United States and around the world. Jesse has been in financial services since 2008 and is a CERTIFIED FINANCIAL PLANNER™ professional. Working with a CFP® professional represents the highest standard of financial planning advice. Jesse has a Bachelor of Science in Finance from Oral Roberts University. Jesse manages the Steady Momentum service, and regularly incorporates options into client portfolios.

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Try It Free

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • Are Covered Calls a ‘Sure Thing?’

    Most covered call writers enjoy the regularity and reliability of the position. In the majority of cases, the covered call will be profitable, even when underlying shares are called away. This assumes that the strike is higher than the basis in the underlying, and that the call writer understands the real limitations to the strategy.

    By Michael C. Thomsett,

    • 0 comments
    • 456 views
  • Lessons from Bill Ackman's comeback

    Bill Ackman is an American investor, hedge fund manager and philanthropist. He is the founder and CEO of Pershing Square Capital Management, a hedge fund management company. Ackman is considered by some to be a contrarian investor but considers himself an activist investor.

    By Kim,

    • 1 comment
    • 1,612 views
  • Steady Futures 2019 Performance Analysis

    Steady Futures began trading the 50K portfolio in July 2019. It produced a 8.5% return during its 6 months of performance (18.0% annualized). We had three goals when we developed this system. First, we wanted a robust system that benefits from turmoil in the markets.

    By RapperT,

    • 0 comments
    • 310 views
  • SteadyOptions 2019 - Year In Review

    2019 marks our 8th year as a public service. It was a good year overall. We closed 151 winners out of 232 trades. Our model portfolio produced 41.7% compounded gain on the whole account based on 10% allocation per trade. We had only two losing months in 2019. 

    By Kim,

    • 0 comments
    • 458 views
  • Momentum 2019 Performance Analysis

    Steady Momentum had an excellent first year of publication, producing significant gains in both of the published strategies. The most popular strategy writes (sells) out of the money puts on equity indexes and ETF’s, and returned 19.1% for the year, beating our benchmark by approximately 5.5%.

    By Jesse,

    • 1 comment
    • 550 views
  • SteadyOptions 2019 Performance Analysis

    Steady Options model portfolio produced 41.7% gain in 2019. This is a very good return by any standards, but well below our long term returns. In the name of full transparency and our continuous learning, we are providing a full analysis of the 2019 numbers.

    By Kim,

    • 0 comments
    • 1,441 views
  • Anchor 2019 Performance Analysis

    Steady Options now has a full year of trading the Leveraged Anchor Account under its belt. (Technically since today is December 30, the values used herein are one day off.) To say things went as designed is an understatement - the strategy outperformed the S&P 500 in 2019 by 7.2% while being hedged.

    By cwelsh,

    • 1 comment
    • 709 views
  • A Reliable Method for Picking the Underlying

    A lot of emphasis is placed on selection of one strategy over another. Are you conservative or a speculator? Are you trying to make fast money or hedging equity positions? In fact, this is a primary concern among traders. The strategy should match the risk profile, of course. But there is much more to how and why you trade options.

    By Michael C. Thomsett,

    • 0 comments
    • 494 views
  • Total Stock Market Index Funds: A Diversification Illusion?

    I’m a fan of index funds and diversification. Low costs, low turnover, and passively managed exposure to thousands of stocks make Total Stock Market (TSM) index funds great starting points for stock market exposure. In fact, most investor portfolios I see are insufficiently diversified to a point where a TSM index fund would be a material improvement.

    By Jesse,

    • 0 comments
    • 685 views
  • Back to the Basics: How to Get Started Trading Options

    To those of us involved in the Steady Options community, options trading is almost second nature. But most investors, and even most traders, don’t trade options. There may be a variety of reasons why this is the case, but I believe it’s mostly related to the learning curve of understanding a completely new concept.

    By Jesse,

    • 0 comments
    • 445 views

  Report Article

We want to hear from you!


There are no comments to display.



Your content will need to be approved by a moderator

Guest
You are commenting as a guest. If you have an account, please sign in.
Add a comment...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

Options Trading Blogs Expertido