To save time on some replies and assist investors in getting timely replies, I have included here a Frequently Asked Questions list covering many of the topics asked by investors. Some answers are short and do not require more than a paragraph but others need a bit more outlined. Those questions that have longer answers can be viewed through selecting the title of the question.
How To Stay Up-To-Date
The best means to stay up to date on my trades is my twitter account which you can join here.
You can also sign up for email updates. Email is sent once or twice daily.
You can also join my free options forum at groups.io. Every article posted is also posted to the free options forum. You can set up your account to send you emails with each post published. If you need assistance with any of the methods to stay in touch, contact tech support and they will assist.
Why Dollar Cost Averaging Fails For Investing
Dollar cost averaging fails to provide anything more than mediocre returns at best. The belief that dollar cost averaging reduces risk of capital loss does not work as a Vanguard study found. It is important to understand that dollar cost averaging suits investment dealers and financial planners well. They do not have to recommend ETFs, stocks, bonds or other asset classes for the best times to buy and sell. In fact they have very little homework to do at all but instead can simply spend most time looking for new investors rather than maximizing the returns available for their existing investors. Dollar cost averaging is a poor choice for investors but works well for investment dealers. Here are two articles worth reading: Dollar Cost Averaging Failure Confirmed by Vanguard; Dispel The 9 Myths of Investing.
ETFs Are Not Safer Than Stocks
Many investors believe ETFs are safer than stocks and can provide superior returns. ETFs are as risky as stocks and not a “safe” vehicle. This article on dispelling the 9 myths of investing looks at ETFs in Myth #5. Select this link to read why ETFs are not safer than stocks for investors.
I get asked this all the time. Here is my answer on how to find the best discount broker in both Canada and the United States.
I get asked all the time why I would risk my capital for small gains. For example here a reader asked: “I don’t understand the money amounts. When you talk about buying a put for .48 cents (for example), surely there is more money involved. Can you point me in the right direction?”
This reader wondered about the bond portion of my overall portfolio and how I handle bond investing as well as any bond strategies.
I get asked this question often so here is a direct link to the Ultimate Oscillator settings I use for spotting oversold and overbought extremes in stocks.
I get asked a lot about paper trading. I use paper trading all the time and have for over 35 years. This is a three part series I wrote on paper trading. I hope it helps.
Aren’t You Breaking Investment Rules By Having More Capital In One Trade Than In Others
The concept of having your capital equally spread among stocks, sectors or ETFs, is I believe wrong. Instead I follow a focused investment approach which is obvious looking at my trades. This is the same advice from Warren Buffet, Peter Lynch and William O’Neil to mention just a few. When I invest I am not just buying or selling a stock, I am buying and selling a business. I believe the best way to invest is to focus my portfolio on those stocks that I think will provide the best returns for the trade or strategy I am currently employing. Spreading your capital evenly among a variety of stocks, sectors, ETFs, countries, commodities or other assets works well for financial planners, brokers and banks who follow a template style of “one size fits all” approach to investing. This is why their returns are never anywhere near mine. I study the companies I invest in and understand them and their potential for earnings and capital gains. Template driven investing believes that if the risk is spread out wider enough when one sector performs poorly another will perform well. In reality this means mediocre returns at best and earning less than 12% a year cannot compound my capital fast enough. Template driven investing serves brokers, financial planners and banks well since they are more focused on getting new clients than maximizing returns of existing clients. I have never seen a template driven system ever give 12% plus returns every year including corrections and bear markets. This is why they like to list their returns over 5 and 10 year periods. That helps to even out losses. My investing looks at annual returns only. I don’t care what returns have been made over a 5 or 10 year period through a template system because I may have started investing at the wrong time and sold at the wrong time so my returns may be a lot poorer than even their 5 and 10 year reported returns.
What Charting Software Do I Use
I use the charting software from my Brokers. As I am in Canada I use TD Waterhouse Active Trader Plus platform, Questrade has a great platform called IQ Suite and I use Interactive Brokers. You may want to read the article below on BEST CHARTING SOFTWARE to learn more.
I get asked this a lot. The best charting software may be from your own discount broker.
Options Are Risky
Investment dealers, financial planners and brokers often tell clients options are risky. In return, ask them if they have their license to trade in options as a dealer. You may be surprised to find that they do not. You may also be surprised to find that they have never traded in options and have not real understanding of them. Why then should you consider their advice? This is like someone telling you that driving is dangerous but they themselves do not have a driver’s license and have never driven a car.
It is actually stocks that have the most risk, not options. It is options that when applied, work to reduce the risk of stock ownership. Options when used correctly work to bring in income for an investor, protect the capital being used from plunges, and can provide a steady stream of profits which is done properly, can be consistent month after month. If you review the various stock portfolios I have listed you can see the returns from my trades. You begin to see that using options is perhaps the best tool available when investing.
Options strategies can be simple or as complex as you want. It is not options that are risky but investors who fail to understand the option strategy they decide to implement. Investors need to become educated about the strategy itself and how to profit and protect positions with such strategies. Without the proper knowledge or understanding of the option strategy being used, investors will continue to experience losses and warn other investors that “options are risky”.
Where Do I Live
I get asked this all the time. I live in Canada, 2 hours outside Toronto, Ontario.
How Long Have I Been Investing
I started investing in 1972 using a broker. The brokerage lost a lot of my capital in the 1974 stock market crash. They explained to me that “no-one” was making any money and taking huge losses. That’s when I decided to take what was left of my capital and learn how to grow it and protect it. I learned quickly that options strategies could do just that by providing growth, profits, income and protection. I had a mentor who worked with me for several years. He advised me to buy stocks near the bottom of the 1974 market crash and recovered all my losses and compounded my capital quickly. He had been doing over the counter options for many years prior to my meeting him. He introduced me to the concepts of Put Selling and the value of covered calls as well as credit spreads. From there over the years I have developed the strategies that I use today and many of which are on my website.
Why Not Real-Time Trading On FullyInformed.com?
I tried real-time trading software as well as a private members only twitter feed and what I found was no one was actually learning how to become a better investor and there was still time lag between when I entered or exited a trade and when members would follow. Basically everyone was trying to duplicate my trades “verbatim” without much thought or any strategy. To become a successful investor takes time and patience. That is what builds experience. My website takes the approach of the proverb, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”
With that being the focus I am able to teach other investors what I know and have learned. I have time to answer emails and questions, tutor, develop more investing tools like the put selling tool, best bets tool, etc. I have time to test out new strategies, discuss and post strategies and show how those strategies can be used to grow a portfolio while also learning how to protect capital being risked all with real examples. The response from members has been overwhelming positive and many investors have been with me for well over 10 years because of this tutoring style. If you want to learn more about why there is no real-time trading, this article is worth reading.
I thought this post from my Yahoo Options Forum years ago outlines perfectly the purpose and goal of FullyInformed.com:
Teddi is a breath of fresh air over the other “learn & earn” sites. She diligently describes her rational for her trades and shares, in depth, her plans for managing her trades. Subscription sites probably have a place for some investors, but over the years my largest return from any of them has been high disappointment. The “teach the person to fish” model works very well here. I’m holding onto the pole I’m using.
Name: Mel (Yahoo Options Forum) June 2 2014
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