bosco said:
HaHa said:
This thread could not possibly reach the "Best of" category. Best of what? Best example of persistent and tediously explained delusions?
Ha
couldn't have said it better myself.
I vote NO!! Definitely does not belong in "Best of" Is there a category for "most obsessive and repetitive?" ...
Well, as one of the persistent, tedious, obsessive, and repetitive posters on this thread, I agree. I vote NO also.
I think there is some valuable info in this thread, but there is far too much back-and-forth over convoluted explanations and defenses of yield, risk, and 'total return' to wade through. It's painful.
If covered call strategies and the seminar sellers of 'low-risk' strategies could be summed up neatly, I think it would be a nice addition to the forum, as a reference for people that are considering forking over $$$$ for 'secret info':
1) Covered Calls (or selling puts) provide a premium, you can think of it as a monthly dividend, or 'income stream'.
2) Selling calls/puts limits your up-side. You are likely to underperform when the market is 'hot'.
3) When you sell calls/puts,
you are subject to all the risk of holding the underlying stock, offset only by the relatively small premium. 'Safe' stocks generally will not pay enough premium to make this strategy attractive. Do not underestimate the risks.
4) The people selling $$$$ workshops, downplay the risks, and do not measure 'total return'. They don't provide performance data that can be compared to other investments. One does not provide performance data for the down market of 2000-2002, but does provide a 'yield' number for the up market of Sept 2002 to present.
Google: compoundstockearnings and: kimsnider.com for examples ( I am not providing direct links - there is some legal wording about that on one site at least)
5) It is unclear what reporting standards the seminar publishers are held to - apparently not the same 'total return' reporting standards as Mutual Funds (bonds or market index), or ETFs, which would likely be our benchmark.
6) If 'secret' methods of stock selection, and 'averaging down' were effective at reducing downside risk- wouldn't other bright people be employing these techniques to advantage?
I think those statements are rather complete and unbiased.
Now, for my OPINION: either # 4 or #5 by itself would be recognized as a huge, waving, bright, neon red flag to the knowledgeable investor, and are used to distract the less knowledgeable investors from the real risks. #3 and #6 are yellow flags, not to be underestimated, especially by the inexperienced investor.
How many 'low-risk, high-gain' seminars, systems and books have been presented over the years? How many are still around? How many people on this forum achieved FIRE'd status because they used a purchased 'low-risk, high-gain' system through a down market? How many FIRE'd people on this forum trust that one can ignore 'total returns'? But, this time it's different?
I think I'm done (I sure hope so). Thanks to all who contributed, and I would like to follow up on the discussion of risk vs reward (in general) with lazyday - on another thread?
-ERD50
References - Try googling the following to glean info about 'total return' from these workshops:
site:compoundstockearnings.com "total return"
site:kimsnider.com "total return"
more recc reading:
"Fooled by Randomness" by Nassim Nichales Taleb
"Against the Gods: The Remarkable Story of Risk" by Peter L. Bernstein
more good references to earning 'income' while losing money here (must join group to view):
http://finance.groups.yahoo.com/group/compoundstockearnings/
a sample conversation was someone bragging that they made $5400 on $80K in their first month, then coming back to admit that they actually lost $4000 when they consider their positions in the red.