FINDING NEEDLES IN HAYSTACKS

One of the statements you will read on a regular basis in my writing originally came to me from Peter Lynch, the former manager of the Fidelity Magellan Fund and one of the people who was instrumental in inspiring me to manage my own money, who said: “Never invest in businesses you don’t understand.” Sage advice that I always remember. I just wish I could say that I always remembered it before every investment I make. All too often, I find myself reminded of that pearl of wisdom when I am analyzing the factors that caused me to make one of my losing investments. 

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THE GUY IN THE WHITE ROLLS ROYCE

In 1982, on a late summer afternoon, I was walking through a parking lot when I noticed a white Rolls Royce turning into a parking space up ahead of me directly within my existing path. Not being a person hindered by a shy and withdrawn personality, I timed my progression to reach the car just as the driver was exiting the vehicle and reaching the rear of it as I passed. Being in the south, when eye contact was made, we exchanged the typical courtesy greeting of southern strangers with a smile and "How are you doing?" 

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THE INVESTING PHILOSOPHY WE APPLY

At Self-Made Millioniare, we do not believe that we are going to pick "big" winners consistently enough to build a personal fortune quickly. However, we do understand that the largest mountain can be built moving one bucket of sand at a time, if we are simply willing to stick with the task consistently over an extended period of time. Rather than attempting to "time" the market and hope a stock will move in our favor now, our objective is to find (what we believe to be) under valued companies that provide us with an opportunity for 1.5% to 3% profits in a 30 to 60-day time frame through selling options against those securities. 

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Options 101

People in the professional world of finance would like you to believe that trading options on stocks is very complicated and very risky. They would like you to believe that it is a technique that should only be employed by serious professionals who are capable of dealing with the massive complexities of this type of activity. They will also eagerly point out that the vast majority of people who engage in options trading on stocks eventually lose money. The first statement may or may not be true, depending on the particular strategy employed; the second statement is most certainly true and the professionals in the financial world are more than happy to advise you of these facts since they charge very significant fees to provide you with “professional guidance” in this area, should you wish to participate.

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DISCLAIMER

All information presented on this site represents only the opinions of the author. It is in no way a recommendation to buy or sell any of the securities discussed. The author is presenting information that is accurate to the best of his knowledge at the time it is written but provides no warranty, expressed or implied, as to the accuracy of this information. It is the intention of this site to present to its readers a method of trading securities that allows for the consistent generation of profits within a core account. The trades shown in the Tracking Portfolio and discussed as executed trades in the Trade Alerts and Updates are actual trades that were made with real funds allocated toward the original funding of the Tracking Portfolio. This however should not be construed to indicate that any reader would be able to enter the same trades at similar prices thus producing the same results as the author.