Over the last 30 years I have invested in every type of investment from stocks and bonds, covered calls, puts gold futures. I have also read books galore and in my old age have come to the realization that one should just diversify with index funds and just stay the course. I would have saved tons of money, with much less heart ache.
Respectfully that's hardly 'every type of investment' .... what about art, antiques, rugs, wine, guitars, property (Commercial and Domestic), Nfts, B/Coin, vintage boats, cars. MC's, old tech, vintage watches etc etc...agree on the final point though...staying the course in say Rolex watches rather than continuously buying and selling them is the best route to c 15% p.a growth !
Exactly, with index funds they give you the highest weighting in the best top 10 stocks or so and you don’t have to pick and buy new stocks as they come and go
“ Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves” _ Peter Lynch.
I would suggest the best way to protect yourself from falling asset prices is to not overpay for the asset. If you do that, you won't need to protect gains from others speculative excess.
@@jl2525 Everything will fall yes and those assets you paid a "fair value" for also will BUT I do not believe that it is hard. Especially when discussing individuals stocks. It's all about being patient with those assets and believing in your research. Value does outperform during bear markets for a reason.
Short term treasuries have a negative income, in real terms at least. Gold at least over the long term has kept up with inflation. I don't understand a willingness to hold short term treasuries right now but a reluctance to hold gold.
Also, one should consider Ray Dalio's ALL-WEATHER portfolio. This is: VTI+TLT+IEI+GLD+GSG. I forget the allocations but I think TLT was 60%. Ray Dalio, who built the worlds largest hedge fund out of his NYC apartment, says this mix of etf's is the investor's "holy grail." I think I like replacing TLT with TIP these days. TIP is still a US treasury bond portfolio but these bonds index their coupon rate to CPI. Right now TIP yields 7% and the inflation cycle is just beginning.
At time code 33:00 (or so) Rob dispenses some misleading information. He says a married put is the same or similar to a covered call. That is not as correct as he would have liked. There's such a thing as put/call parity. P/C Parity says that there's a mathematical relationship between a put contract and a call contract. The way I remember this is that a covered-call equals a put sold short (aka "naked put" or a "cash-covered put"). And you can write this relationship algebraically: STOCK - CALL = -PUT. To be totally accurate this needs to include the risk free rate of return, but, that is the essentially the formula. Moreover you can manipulate the PCP relationship algebraically to find synthetic equivalents to any proposed stock/option position. If we add CALL+PUT to both sides then we see immediately that STOCK+PUT = +CALL. In other words a married put is synthetically equivalent to purchasing a CALL option.
How about having enough money in cash or CD and to use these for the next 3 or 5 years instead of withdrawing from IRA. That way we allow for market to work a bit longer and if it fails we can use money to buy cheap stock .
Based on my experience from the “tech bubble” and “the Great Recession” pulling money out in panic and returning to the market over time locked in my losses.
My 2 cents, in options keep it simple. Don't buy options, sell them. No complicated strategies, just use the wheel. Use collateral to back quality underlyings with strong support that you are happy to own only (no meme stocks, crypto, or microcaps...I stick to safe ETFs as much as possible as song as I can extract sufficient premium), particularly at the discount that you get them when they are put to you. No margin use, no whakky leveraged underlyings that will blow up your account in a downturn. Cash secured puts and covered calls. It will significantly accelerate your returns compared to the historic market average of buy and hold and stabilize your returns in most market conditions at the cost of missing out on some value in years where the market goes sky high. You try to get fancy and you'll lose money.
great video, and dont forget the gold pushers, this is the belief that gold will protect you from inflation. for the past year we have had 7% inflation and gold has gone nowhere. over the past 30-70 years gold has an average increase of 2-3% compared to 8%-13% for stocks.
Hey Rob, I know that you advocate simplicity, but what is your perspective on Factor Investing - regarding the relatively new factors of Quality and Momentum? Do you think they are as decisive Risk/Reward determinants as Size and Value/Growth? Maybe not enough data to back test it? Maybe too many people are also pushing along these lines and the supposed premiums are diminished.
I've held investments in particular companies for several years and decided to sell my shares. I don't participate in options trading but I've always felt that selling a covered call on the shares beats simply selling the shares at the market price currently. My thinking is, if you're not in a hurry, why not collect a premium for selling? If the price goes down, I keep the premium. If the price goes up, I get the strike price anyway - similar to if I sold the stock right away. I simply can't see any downside in this strategy. However, this is so simple, I'm thinking there must be a "catch"?
Well, the stock could go down way more than the premium collected for the call. Or you could have made more by selling the stock and buying something better. I understand you think you're getting a "free lunch," but it's not completely free. That said, I sell covered calls when I think the stock is high. I get "burned" some of the time and have the stock called
What about negative beta stocks as a diversification? Certain stocks like HOR have a negative beta and this will offset the positive beta of most other equity positions.
For me, selling options or holding a growth stock is not an either-or decision. I consider strategy diversification in addition to allocation based on asset type. For example, a portion of my portfolio holds growth ETFs and I do not sell calls for those positions. Another portion of my portfolio is used for Covered Calls, and this is more of an income approach. One note to Rob's criticism about losing the upside gain -- covered calls generate return on a sideways stock or when the stock price drops. That is much more common than a stock or ETF that suddenly jumps 20%.
Greed and fear are the two emotions a lot of investors tend to be driven by. That’s why so many of the crypto millionaires are still highly concentrated in them.
There is a flaw in your Options thinking. If I have a Stock, the entire point is to sell at a level I feel good with. That I never go "Man, if only I had held.". Because to do otherwise means we are assuming we can sell at the Top, which is a sure-fire recipe for disaster. Sure, you sold at 100... and it went to 120. But you don't know it's going to 120, maybe you decided you would hold to 160, and it hits 120 then bottoms. NOW you really did lose. But I told myself "At 100, I'm good.". I sold at 100. I win. Doesn't matter if it goes to 120, or 160, or 1K. I put in, I got out more than I put in, and I got out a number I am content with. To do it ANY OTHER WAY is to invite disaster by trying to "Time the Exit". So let's go to Dividend Stocks. Same thing. I say "I will NEVER sell my Dividend Stocks, I will retire and live off the Dividends.". That's something we just tell ourselves to not sell when a stiff wind gives us a 10% Bump in Share Value. If my $3 Dividend Stock paying me a sweet 10% goes up to 1,000,000 a Share... I'm an idiot to not sell. Somewhere up there, there IS a number that you will sell a Dividend Stock at... if only to reinvest that huge windfall into more Dividend Stocks. Obviously a 3USD jumping to 1M is hyperbole for the example, but there IS a number where the Sell will outgain all future dividends for your lifetime... and at that point it's silly to not sell. So let's take it to options. Every Month (or what ever time frame you choose, but let's stay consistent and say Month) you get to choose what Value is worth Selling that Stock. If it goes to X, I'm willing to Sell. Okay, cool. Now I will get Y up front, and if it hits X I'll ALSO get all that. That's the SECOND best Scenario. You got YOUR PRICE, AND you got paid a bonus UP FRONT. I don't care how much more it goes up, I was Selling at X anyways... because NONE OF US can realistically Time the Exit at the Top. When you try, ODDS ARE you'll overhold and not catch that price. The BEST Scenario? You keep saying 10% is my content level, it goes up 10% I'm happy to sell and never look back. You get that Payment... and it goes up 9%. Next month, 10% is my content level. Get that payment, goes up 9%. This happens for eternity, until now hundreds of months of 9% growth on top of each other have accrued and you FINALLY sell, becoming Uber-Rich and moving to the Moon... AND you caught those nice Monthly Bonus Payments along the way. Likely not realistic, but just catching 5 Months in a Row would mean a good bit from the Payments AND then a nice windfall gain on the eventually Sell. Now imagine that on a Dividend Stock, getting the Option Payment, the Dividend Payment, AND all that growth down the road when it finally grows more than your Stake price. Also, TO AN EXTENT, this is great for protection when the Stock falls. I have 100 Shares of a 10USD Stock. That's 1,000 USD Value. I offer an Option, it's picked up for 100 USD. Stock goes Down 10%. Stock is now worth 900 USD, but I also have this 100 USD. Strike Price not met, I get to keep the Stock and the Payment. I have 1,000 USD Value... exactly what I started with DESPITE the Stock tanking 10%. There are TWO Ways to 'Lose' at Options Trading. One way is how ALL Growth Investors (and Dividend Investors, if the price falls far enough that Dividend Cuts occur) Lose... and that's the Stock goes down excessively. Which, as stated, is how we ALL LOSE. And the OTHER way is Selling at a Value you actually weren't content with. Which is the same for ANY Stock we'd sell. So the Secret to 'Always Winning' on Options, is to NEVER set your Stake lower than you're willing to outright sell at. Just like any other Stock. If you can't get a Stake at the price you want... don't Stake it. Which, when you break it down... is how we 'Win' with any Stock we'd ever buy.
I’ll spare the backstory, but I have a question. When trying to do a mega back door Roth do you HAVE to max the pretax 401k first? Or can we just take the match, put the rest in the post tax, then convert to Roth. I can’t afford to do both. And obviously prefer my money end up in a Roth.
Did you say in another video that you out 30% in bonds? Our 401k suggestion for my age has a bond % and a larger % for stable. What is stable? T Rowe Stable invests in GICs whatever that is. Do we need stable and bonds?
Stable Value funds are essentially cash or Money Market funds. If you feel comfortable holding a "cash" allocation in your retirement account then the Stable Value fund will fill that need.
One thing that has always bugged me about annuities is the "guarantee". If the market is really bad, worse than the great depression, the insurance companies may go out of business. They also generally have the right to change the contract to reduce what you get in the event of hard times. So what is the legal definition of "guarantee" here? It certainly is not death or taxes.
Biggest risk is not investing in stocks, and sitting on the sidelines and complaining! I bought these on the dips in the last few days. Amazon Facebook Apple Microsoft
Rob, I'm 57 and plan to retire in a few years. I am maxing out my TSP and I also contribute to a Roth IRA. Is it wise to continue to do this right up until retirement?
Dude, you've been wrong on bitcoin and TSLA so far. Great fund explanations on funds but not great advice on active investments. I would of lost $4000 if I would of stayed away from TSLA and Bitcoin the past 4 months following your advice.
