"In Retirement" Portfolio's

[whitestick]

I honestly don't know. Her message as you point out is all about cash flow and yield. Her philosophy is all about the cash, which is different then the traditional asset driven methodology. You can calculate yield eventually when you close a position, but she really advocates not selling the underlying stock until you absolutely get it called away from you. The majority of time the stock will go down on a month to month basis - just the facts of the market. Tradtional equity investment is looking for the market to go up and then sell, or for the contrarian, to sell it short, and buy when it hits the level needed. Her thing is to sell calls (and occasionally puts accoring to her rules), every month that you can (not all months will qualify), so that you are looking for the cash flow as income to siphon off and live off of. When you continually siphon off the excess money, you really don't get to a total return calculation, and it is meaningless anyway. Like the folks here that talk about LBYM, and a minimum safe withdrawel rate, this is a methodolgy that matches the income to what you want month to month
She does state that you are drawing off the money a year later, to allow for positions to close, etc, as they will - however, one of her examples is of a position that she held for (I think) 2 1/2 years before she was able to be called out and closed the position, however, her yield on that for income was still slightly better then the 13% she talks about.
There are some non-disclosure things that she teaches that you agree not to talk about, when you sign up and take her course, so I think I better stop qualifying before I get myself in trouble. Suffice it to say, that I payed for the course (about 3k) within the first couple of months, and after that it was all uphill. I went into it wanting a consistent 13% return or better, and watching the and investing in the stock market and funds over the last 25 or so years, I know that some years it's up, some year's it down, and worse, so they analysts tell us, when the market is up, there are only about 15-30 days of the year that it jumps enough to exceed itself and pull up to make the average. Which means you have to stay fully invested to hit those few days.
Your results may differ, but my experiences (and as Justin points out, I'm a statistically small sample, self-selected to bias the results - whatever that all means), has been overall positive. My biggest problem is to continually remind myself that "Pigs get fat, Hogs get slaughtered". Which I interpret to mean that I can't be too greedy and chase the even bigger dollars, or i will get burned.
Her presentation seminars are free, so if your are in the Dallas area (and I have met people there that came from two states away to attend her classes), go and spend an evening and listen and judge for your self. She does provide finger food snacks, so you won't leave hungry. She often has alum there as well, so you can talk one on one, with people that are doing it themselves, and see what they say about it.
Oh, I think she is opening another class/office in the Atlanta area as well, so East coast folks can check it out.
I'm tired now, I feel like I should be a salesperson for her, but it is exciting to see the results and talk to other folks and share their experiences. That's the main reason that alum go to her seminars, I think.

[LOL!]

Quote:

Originally Posted by whitestick The majority of time the stock will go down on a month to month basis - just the facts of the market.

We would all be broke now if the majority of the time stocks went down on a month to month basis.

I see now why you like this method.* First, you claim a $4165 gain when you actually have a loss.* Sure you have sold calls and puts for the next month, so it looks like you might come out ahead, but you conveniently ignore the loss in the underlying stock.* Second, when a stock selling for $73 a share is put to you at $75 a share (forcing you to pay $2 more for it than anybody else is willing to pay), you claim that is not a loss.

I can put money in a savings account and withdraw 22% a year, give 10% of it away to someone else and claim I have a 22% annual return, but I would not be right.

[ERD50]

Quote:

Originally Posted by whitestick Her message as you point out is all about cash flow and yield.

whitestick, thanks for that reply. You have convinced me that I have no further interest in her seminars, and would suggest that all others approach with a 50 pound block of salt.

I'm with LOL! on this one. To focus on cash flow and yield and sweep TOTAL RETURN under the rug is a shell game. You are basically saying that a CD paying 4% and a stock paying a 4% dividend are 'the same', as the cash flow and yield are the same. If that stock drops 50%, your total return suffers. The CD does not drop. No comparison.

Yes, you can say that you didn't loose anything on the stock because you didn't sell it yet, but you cannot just dismiss it either. It may come back, and it may not. When you look at total return, you need to evaluate where you are TODAY. You can't estimate that you'll be OK in the future. If the SEC allowed the mutual funds to do that, you'd never see a down year reported by them.

I should add that I have been doing covered calls for the past year, and my TOTAL returns have been above the market with less volatility. But I have down months, and there is the risk one or more of my stocks will totally tank. I know you can hedge some of that, but it will lower your returns. No free lunch.

Be careful out there - ERD50

[whitestick]

I think I'll stop now. Obviously, I wasn't successful in communicating the underlying message, and that's ok. We all have different opinions, and Thank God we do. For some reason, (apparently magic if I believed the critics) through the months of activity, my total dollars available keeps increasing in these accounts. Obviously, you take a final reading when you close your position, and my point was that on a month to month basis, I don't worry about the relative price of the underlying stock, as I continue to sell calls against it, take that income, and when the stock is finally called away, at a price above my cost basis, then I "book" that small profit as well. I don't care if that profit is .50 above my cost basis, 'cause I made the money on the options all along. But then to each his/her own.
I take comfort in that this is a contrarian view, and if the mainstream bought into it, then there would be no one to bet against. Enjoy your View, and I'll enjoy mine.

[ERD50]

Quote:

Originally Posted by whitestick I take comfort in that this is a contrarian view

whitestick, I actually do agree with much of what you say. Being contrarian is important in many ways, and you may do very well with this system.

I am just concerned that you are counting your profits as such before the position is closed. I'm even more concerned that the website downplays total returns. That is not just being contrarian, it is a misrepresentation.

I used to do some short term trading, and I fell into the same trap. I would look at the many 3% profits I took over the month and ignored the stock that fell 30%, thinking that 'it will come back later, I have not taken a loss yet'. Over time, those failures kept piling up, almost completely offsetting my gains. But my 'realized gains' looked good, and Uncle Sam appreciated it!

You indicate that your dollars available keep increasing, so that means your gains exceed any losses - good. But I would suggest you use that as a measure of your performance rather than just the cash flow. If you do better than the market by that measure, and with less volatility, then you are clearly doing well.

I hope it works for you, in both the long and short term.

-ERD50

[whitestick]

Thanks ERD50! I was afraid that we were losing the group with all of our discussions. I do understand the need to only count on a closed position, and to date, my longest run has been about 5 months before I was called out completely, and closed the position. Kim has taught me to keep precise and meticulous records (if nothing else to satisfy Uncle), and that is why the danger of quoting a particular result mid-stream can be mis-leading. I was providing the information as an example only, and didn't want to teach the same class that Kim does.
I have enough to do, with my regular job, and planning for my FIRE. 3 yrs, 60 mo, 16 days, and counting. And just so we are clear, that timing is based on what it will take to clear out my lifetime of collections, prep the house, and get my plans in place for life after work - not a function of FI - at least not yet.
Been a good discussion, think I'll go get out of the spotlight now, and return to lurking.

[justin]

Quote:

Originally Posted by whitestick 3 yrs, 60 mo, 16 days, and counting.

8 years, 16 days? How did you get such an exact date?

[whitestick]

Because That's when Plan A, Plan B, and Plan C are all funded, so I'm not dependent on any one failure. Now if all three go under, I guess I'll work a bit longer.* I suppose I could RE earlier, by only going with A or B, but as it happens, it just works out that way.* I also have the dates for when DW quits, when various parts of the household goods need to be sold/eleminated, cars disposed of, house on market -etc.* That last one is a bit of a crap shoot, I'll admit, but nothing says that I have to be physically be here just to sell a house. That's what realtors are for.* Having revealed all that, would you believe that my idea of RE is to wander wherever the mood takes me, stay however long as I feel, and just explore to see what I missed in all my business travels. I know there must be something in all these cities beyond an airport, hotel room, conference room, and a nearby restuarant.* That's what I want to see. Quite a dichotomy, don't you think.
Relative to the various Plans,* *I have spent quite a bit of time planning on what the various combinations of fund withdrawels should be to minimze taxes, yet optimze to my income needs.* I have checked the referred links to the vangard site and other sites, and still am wanting. Problem is I have a combination of IRA, Roth IRA, LT Capital Gains stock(with minimal basis), ST Capital Gains - the options trading, Pension, SS, and Equity in Home & RV, as well as some equity in cars and other sellable assets.* Think my combined income needs are going to be in the 50k range not counting taxes.* I'll be 60 at my magic date of RE, so a few years to go for SS.* I estimate waiting till 66 to draw SS to avoid the tax and reduction of SS because of exceeding the 32k limit (combined after the 1/2 business) so I have a few years of matrixing withdrawals untill the SS kicks in.* If DW's company holds together, I should have Health Care factored in and covered, with a fudge factor as well.* I realize that this is not most people's problem, but it is mine.* Any ideas of a good calculator that can take in all the above mentioned income streams, timings, and variability, factoring in the tax issue (federal only - don't need state) to get optimum use of income streams.* As I write this, I'm concerned that the answer is a FP, but I like the hands on approach, as it has served me very well so far - I just would like a tool to use, maybe a linear regression tool would be the best.* Ideas?

[justin]

http://www.i-orp.com/

This site is a pretty nice calculator and will give some guidance on which accounts to withdraw money from first, given the tax implications. It may not be as sophisticated as what you are needing (it doesn't have any probablistic/stochastic modelling that it sounds like you want). At some point you have to accept that there will be unknowns and move on.

[LOL!]

Update on reply #49. Today TGT closed at 53.33 and the SEP 55 call will expire worthless. So I can tell y'all that I made a free $670.05 on writing the covered call over the 4 days or a 111% annuallized return.

The reality though is that the underlying stock position lost $1820, so I am down $1150 or a little over 2% when the premium of the covered call is included. Ouch!

[justin]

That is an annualized loss of 84%, LOL.

[LOL!]

Update on reply #49. Yesterday TGT close at 52.23. So I have lost about $2200 on the trade or about 4%.

OTOH, whitestick's MSTR closed at 68.35 if he still has it.

[whitestick]

Still have it, and bought another 100 shares to average cost down, and sold call 1 strike above for that lot. Will be interesting when Oct comes, as I have 3 different call prices, with only one in the money at this time. OTOH I still have one outstanding put at 75 for a couple of hundred shares. Thus I have a paper loss (not selling unless called away) of about 2500, and a dollar gain of around 4000, so still to the good, and in theory, should have about 800 shares to sell calls against at 75 for November, when Oct expires. If there is any kind of premium at all for that call, and it gets exercised, i will still be 1500 plus whatever that premium x the 800 shares is, and still sell (get called) on the stock at my cost basis. For the 4 months, that's not too bad, haven't bothered to figure the % yield untill it actually closes the position. Keeps me happy

[whitestick]

Just an update, as that MSTR position finally closed in Nov. Total profit of 8457, for an annualized profit of only 46.51% on the invested capital. Not to belabor the point, but cash flow is good, and focsing on income, rather then capital growth, has only one down side that I can see and that is the short term capital gains tax rate. Still and all, Cash is ready to spend when I need it, and no further taxation at that point, so that can help the SS taxation issue, if I end up going that way, when eligible. Had one lucky trade as well, percentage wise, in a did a put on a stock that happened to rise quickly over the next 3 days. No forthought on my part, just pure dumb luck, anyway closed the position in 3 days, and booked a 1176839% annualized profit - dollars was only 1472, but still not bad for 3 days. Not an expected result, but one that gives me something to brag about for a long time to come. I'll go back to lurking now.

[Merlin]

This is my plan for my first few years of retirement (eight years from now):

Div Paying Stocks.....................33%
Natural Resource Stocks............9%
International Stocks..................9%
REITs.........................................9%
Munis/Agencies/Corporates......8%
Treasuries.................................8%
Preferred Stocks.......................24%

Total * * * * * * *100%

[MRGALT2U]

Hello whitestick (nice name)

I've had lots of "lucky trades". Don't brag too much.
You'll tempt the fates.

JG

[renferme]

about 27% stocks, half of which is REITs for dividends.
most of the other 73% is in the 401k Fixed Fund, which is paying slightly more than 4% right now. Also have Wellington (401k) and Dodge & Cox Funds.
Most of my income is from my pension. 3 years until SS.
.