Fed announcement. Or non-announcement, as it were..Uh-oh, BND popped a little bit early:
Some equity ETFs popped very nicely for an hour, then settled negative for the day.
That was exactly what I was talking about. It happens every time. Whatever the big move is, its wrong and you should fade it.
I used the swings to close out the trades I already had opened when they swung in my favor.
Right after the Fed decision came out, I added to my GE and an EM ETF positions. The EM was meant as a short-term bet, while GE is one of my core holdings for dividend. Well, they went up, then fizzled out like Utrecht predicted earlier.
But with the Fed delaying the rate increase again, I am tired of holding my breath. I may start to shift some of my cash paying peanuts into blue-chip dividend stocks that pay at least 3%. Many of them are a lot less expensive than earlier this year. A few are down -20% or more. I guess that's good enough.
Well the market was up 100 then FED announcement and then immediately it was down 65 points, reversed went up to +140 then back to down 65. Number one there was not a "big move" off of this announcement, there was non reaction. If you are making profit on interday moves of +- 200 dow points that is a really fine degree of accuracy you hold
Right after the Fed decision came out, I added to my GE and an EM ETF positions. The EM was meant as a short-term bet, while GE is one of my core holdings for dividend. Well, they went up, then fizzled out like Utrecht predicted earlier.
But with the Fed delaying the rate increase again, I am tired of holding my breath. I may start to shift some of my cash paying peanuts into blue-chip dividend stocks that pay at least 3%. Many of them are a lot less expensive than earlier this year. A few are down -20% or more. I guess that's good enough.
Dirty or not, I am tired of holding my stinkin' cash, and I do not like bonds. The Fed made me do it.Why NW, you aren't turning into a "dirty yield chaser" are you? ...
Write some covered calls. Turn a 3% dividend into a 6% dividend, even with a call that is 10% out of the money. Worst case you make 16%.
Write some covered calls. Turn a 3% dividend into a 6% dividend, even with a call that is 10% out of the money. Worst case you make 16%.
Dirty or not, I am tired of holding my stinkin' cash, and I do not like bonds. The Fed made me do it.
Besides, like I said, quite a few blue-chip stocks are down significantly from their earlier high.
Examples:
MMM - down -16%, yield 2.9%
JNJ - down -13%, yield 3.2%
VZ - down -13%, yield 5.0%
PG - down -25%, yield 3.8%
WMT - down -30%, yield 3.0%
MRK - down -15%, yield 3.3%
And the above are just Dow 30 components too. If I buy them now or add to my positions, am I not true to form as a "market timer", like my self-proclamation?
That has always been the plan. In a poll earlier this year about market expectation for 2015, I said the market would be fluctuating +-10% this year because P/E was already too high, plus the bull market had been long in the tooth. So, selling covered calls was the plan.
However, there were diversions in life like RV'ing, home fixing, partying, wedding in the family, etc... and I have not been as active in the market as I should. But it all changes now.
^Yep, too many people get down on market timing if market timing is not absolutely perfect. For myself, I keep track of my benchmarks for comparison.
Perfection is not required since I am not trying to make a killing, but I want to hit singles and doubles consistently. That does not mean I do not strike out sometimes. So YTD I am ahead of my benchmarks, but more fun for me is that I am almost back to the portfolio value at the beginning of August when markets started to swoon. The trades I made in that last week of August were some of my best.
Especially today. It went down, then big up, then down again wiping out any gains. Pretty volatile.I don't have the guts. Do you?
The winds of hurricane eye are strong and go in opposite directions on the opposite side of the center. So one might get 80+ mph winds in one direction, then 30 to 60 minutes later after a little calm, 80+ mph in the other direction. One has to be prepared for all possibilities.
By the way, you are too bullish. Worst case the stock drops 20%. After 3% dividend+3% option, I still lose 14%.
OK, I think we were talking about different aspects of the same thing.I think you misunderstand me. I am saying I agree with you that covered calls reduce risk because they give you a bird in the hand in exchange for not being able to look in the bush.
They blow everything else out of the water in a decades long stagnant market. Imagine 20 years of everyone earning just 3% dividends while you earn 6%.