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Hi Tom, No, nothing new on the AIM front for me. Other things like Christmas and helping the credit union have kept me away for more than a casual look. Plus the longest bull market in American history has me wary about all the problems, Presidential impeachment, fire in Australia, new virus that seems to be spreading from China and that almost a billion hogs put to death to prevent the further spreading of an African virus that started only about 18 months ago.
My concern is that another big issue happening might trigger a very big down turn in the economy and the stock market.
In any case, have a Totally Merry New Year!
Allen
Hi Gang, I'm now totally out of my GERN position. I was in this for 3 years and 4 months and made 8.56%/year after all costs and including dividends. I would have done about 1.5% better had I been willing to sell the last option for a higher exercise price than I did. I chose the lower exercise price because the income from the sale was almost triple than the option I didn't choose. Ouch. Well, I guess one can't win them all.
Hi Karel, I've been away a while because of computer crash that saved sites as "about:blank". Oh, well, on with the show. a couple of questions and one tidbit.
The first question, earlier this month you said: "- AIM BtB 3rd edition style." Could you explain that, please. Somehow I'm not making the connection.
Then in this post you said: "I was thinking about taking a 1/N approach...." What is the "N"?
Now the minor tidbit. At TDAmeritrade options buying/selling did not got to zero, but it did drop to a tiny bit less than half of what I was paying before $1.25/per contract. Now I pay $0.65/per contract. This appears to be the price everyone is now paying, while before it was $1.50/per contract or more.
I agree with you Adam. My checking account at Provident CU gets 2.08% up to $25,000 in it if I spend $300/month using my debit card. Groceries and gas are more than enough each month.
When looking for positions for holding cash I look for things that are a minimum of 1% more than inflation so I stay ahead a tiny bit.
Hi Tom, TDAmeritrade says that RAVI's dividend is 2.59%. NASDAQ says 2.618% based on today's price and the total paid last year. Yahoo says the yield is 2.57%.
If you go to Dividend they list hundreds of positions with their dividend rate such as Guggenheim Enhanced Equity Income, (GPM), which has a 11% dividend.
My suggestion is to select one that pays dividends monthly and has options available to allow you to increase your income by selling PUTS and CALLS.
Doing this I am maintaining 75% of my cash this way, keeping roughly 25% as cash cash to allow for various trades. My income done this way is about 10.5%, net, after trading costs.
Hi Gang, I did a truly stupid thing on Sunday evening. I was attempting to manage the trust account I'm the trustee for and placed a trade for an option on a stock that was held in the account to gain some additional money on a non-moving position.
I did the research for the option in that account, at least I thought I did. Ooops! I didn't double check the account I placed the trade in because I was tired and it was getting late. Double Ouch. Since in my account I did not have that position and it was an option to sell something I did not have, I had to buy it back and lost a modest amount.
Now I've learned that I must not do anything at the end of the day when my eyes and brain are ready for bed.
Thanks, Toofuzzy, for the post of Lance Robert's advice.
And speaking of how to work it the best, I've noticed that the daily up/down of my portfolios range has gotten bigger. While some days are small some are up or down about 1%. The multi-day cumulative rage has been about 2% to 3% and then the next week it mostly rolls back the other way. Not enough in any one position for a buy or sell yet.
It looks like the downturn is in the not too distant future. Given that I'm sitting on about 40% cash I can't wait.
On another note, I have a quite small IRA account at Fundx Upgrader and it has been doing quite well this year. The combo of 50% FUNDX, 25% HOTFX, and 25% RELAX has gotten 14.4% gain so far this year.
Quite funny, Toofuzzy. Keep finding more humorous posts to help us survive the next downturn.
Hi AimStudent, I don't know, maybe my brain is lost for the day but I don't understand what you say about "Payout Ratio in excess of 100%".
The top dividend payout, ORC, is 15.12%, $0.96 per year and the current cost is $6.35/share.
How do you come up with over 100% payout?
Hi TF, I haven't been able to find out if the NLY-C bond pays a "qualified " dividend.
Our tax system is so complex, I just hate it.
Hi folks, Here is a list of possible high dividend positions one could use to hold some of your cash funds. The interest ranges from 7% to 15.1%.
ORC Orchid Island Capital Inc (REIT)
DX Dynex Capital (REIT)
WMC Western Asset Mortgage Capital Corp (REIT)
AGNC American Capital Agency (REIT)
IVR Invesco Mortgage Capital (REIT)
NLY Annaly Capital (REIT)
EFC Ellington Financial LLC (MLP)
ATAX America First Tax Exempt Investors L P Units Ben Int (MLP)
TSLX TPG Specialty Lending, Inc.
NLY-C Annaly Capital Management Inc 7.625% Series C Cumulative Redeemable Preferred Stock (I think it's listed as NLY-PC on finance.yahoo.com but Yahoo doesn't have data as far back as TDAmeritrade has.)
Listing at Dividend.com
NLY-C is a preferred stock so its price range is very narrow which could be a good choice because when you might need cash for a different AIM move you wouldn't lose much even if you bought it at the highest point and it was at its low point when you cashed it in. Over the last 5 years the low point, $22.48, is about 15% lower than the high point, $26.34.
Given that the highest inflation per year over the last ten years is less than 3% this would get you a decent return on your idle cash which would help your overall return.
Hi Is7550, A couple of questions on your interesting post. First of all when you say "stocks," what are you referring to, S&P 500 or some other consolidated ETF?
Next, the column with the 1's and 0's references what?
Third, would monthly resetting get significantly different results?
Finally, does it make any difference when one does the reset between the stocks and gold? I've read in a couple of place - don't recall where at the moment - that it can be better to to the reset at the first trading day of the next period one is working with.
Hi Toofuzzy, Yahoo and TDAmeritrade both say that VSY doesn't exist. I'm guessing a typo, so what is supposed to be?
Thanks Tom.
Hi Tom, RAVI is obviously the most stable but the income is barely above cost of living index average over the last several years.
To help solve this problem I have about 21% of my cash set in MORL, which would get me about 8.5 times the income that RAVI would bring me for the same dollar investment.
I have about 85/90% of my cash spread between AWF, JNK, MORL and I recently added HYZD. The combo brings in about 9.3%/year
Using MORL raises my cash based income by almost 90%/year for my total cash fund, which exceeds inflation by more than 2.5 times.
Yes, it is more volatile/risky than using RAVI or other equivalent positions.
What I have done help reduce this potential problem is sort of an AIM move by moving cash into the lowest of the four when I get any dividends or money from selling PUTS or CALLS.
Hi Gang, Her's a few crazy questions. It's not that I'm actually going to buy TSLA but looking at what is happening and how one might want to act as a result.
A small, ~$25,000, position doesn't do all that well so I don't think it's worthwhile for me. My questions are:
1) Is the recent downturn for Tesla one possible indicator for the market as a whole, given this is almost the longest bull market in American history?
2) In addition the the stock market as a whole, how important is the lack of a dividend to selecting a position to purchase?
3) How important are the internal issues of a company, good-bad, in selecting a position to purchase?
Hi Tom, I took a look at the results that are current for your link:
Hi Gang, I came across https://www.cefconnect.com/closed-end-funds-daily-pricing and it has ~490 different shares listed and all are below ~$38.00 and then all the way down to ~$2.00 with some with quite good dividends. The ones I've looked at so far don't have options;however the seem to be not very volatile, even in major down turn markets.
Have fun.
Hi AIMStudent, Thanks for you approval of how I responded to the fickleness of reality.
In general I tend to stick with positions that are roughly $35/share or less because I don't have a ton of money to play with. Higher price positions make it more difficult to do options. The only position I have that is over this is BND which I am using as a holding place for my cash. I'm doing options on it as well. Haven't made much but a couple hundred is not to be sneezed at either.
Hi AIMStudent, We're all still learning how do things given the changing market and other things we can't see in advance.
A classic example is what happened to me in September last year. GERN had a medical product that looked interesting and they were being backed by Abbott Labs so I thought that it might be a good position to build up. First I sold a $4 PUT for 10 contracts. It got assigned for a net cost, after subtracting the income from the PUT and commissions, of $3,627.67. But it was above the price because GERN crashed when Abbott canceled their contract. Ackk!
I looked at the various options and decided I needed to lower my costs per share to get anywhere so I bought another 5,000 shares at $1.735 per share average, bringing my cost per share down to $1.95251. I then sold a $2.50 CALL for 60 contracts for a net of $224.04 which brought my total cost of this disaster down to $$1.91516/share, a total of $11,491, about two thirds of what I had planned for the position when I would start AIMing.
That call expired with no assignment. I bought a bunch more shares to bring my cost per share down to $1.793006 so I sold a bunch of $2 CALLs for a net of $1,447.40. I'm not sure why I did it but when the options went down I bought to close them for a cost of $177.39, a net income of $1,270.01, reducing my cost per share to $1.666062, almost exactly what it was selling for back in December.
So then I sold another $2 set of CALLs for a net of $423.40 so cost per share now of $1.623722, almost what I had planned for AIMing. I was concerned it might drop some more so I had chosen a long time frame CALL, a big mistake, that won't expire before June 21st. It looks like GERN might be called away as the price per share is up in the $1.90 range. Who knows.
If it expires without it being called away I'll be in a good position to sell a bunch as the current price will be up about 15% over costs. I'll sell about 400 shares and sell a few CALL contracts as well. I might sell some PUTs as well to reduce my cost per share some more, this depends on the likelihood - totally a guess for sure - of whether it might drop big time. If it might, I won't do it.
This is an example of how using options has helped me avoid a disaster.
Hi AIMStudent, I suggest you sell a PUT option at a price below but fairly close to the price you want to get in at. This brings in a bit of money which lowers your basis a bit plus you get it on a minor dip, which also helps a bit.
Thanks Tom for the explanation of the steps you use. Are you using a spreadsheet for this or doing it on paper?
Hi Tom, I'm curious why there isn't a sell of CY before $16 when the last low price was around $12.5? $16 is about a 30% increase and given you say you set your SELL safe at 0% with a 10% SAFE I would think there would be a sale.
I ran a backtest using monthly data with $20k, 80% shares (1065 shares to start with) and 20% cash, 10% BUY safe, 0% SELL safe, 100 share minimum trade, $500 minimum trade, $5 commission and got only 2 buys and 2 sells. The last sell showed up as April 1st and sold 145 shares. The two buys were on 10/1/18 and 12/1/18. Total return was 6.43%/year.
I reran the backtest using weekly data and got better results, 12.8%/year. Part of the difference was based on the weekly entry point as the price on 9/4/17 was $1.55 (1187 shares to start with as a result)less than the monthly on 9/1/2017. Nonetheless, there was still a sale of 130 shares on 4/1/19 so I'm quite puzzled that you did not have a sale around that time.
Hi Gang, I must say this is embarrassing, but a very small rollover IRA that I have got a gain of 12.62% gain from 1/1/2019 to 3/29/2019, a yearly rate of 64.717%!
My funds are spread across 3 of their different funds, 50% FUNDX, 25% HOTFX and 25% RELAX. I learned about them years ago when my then wife mentioned that the organization she was working at used FundX Upgrader Funds and had a quite good result for them. I needed a place to put the small IRA funds and had no clue as to where so I went with them and it has bee fine over the years
The other thing of note is that I use the required distribution as a payment on my taxes every year. Even with this withdrawal, almost 10% of the total, over the years the IRA has grown a couple of percent per year. This not to say that it dosen't take a hit when the market tanks but it seems to come back quicker than most do.
The company is FundX Upgrader Funds, www,fundxfund.com and the phone number is 866-455-3863 if you are interested in a decent approach that requires no time at all. I'm going to put some of my cash reserves that are mostly sitting idle with them and see what happens over the next year or so.
Hi AIM1979, Maybe my brains a bit dead today but I don't understand the steps you are talking about when you say:
Hi Cap10 Kaoz, did you get the second e-mail I sent you? If not, please send me another note and I'll reply to it and see what happens.
You may want to check your spam folder to see if it got put their.
Hi Toofuzzy, I, too, have DHT and hate the dump it dived into; however, I bought sufficient shares, bigger than the AIM amount, when it crashed to lower my cost per share to $5.24.
Since then I've been selling enough CALLs at $5 that have lowered the effective price to $4.91. The current CALL expires April 18th and it doesn't look like it will be called away so I'll sell another one.
Sitting on my hands on this one has helped me big time.
Yes, I got the spreadsheet and sent you a rely e-mail. Didn't you get it?
Hi Cap10 Kaoz, Yeah, it can be a real pain to post complex stuff here. thanks for pitting the effort into it. If it is a spreadsheet you wouldn't ming sharing you can send it to me at 60e20f21@opayq.com
Thanks, and best...
Hi Cap10 Kaoz, Could you please explain exactly how your Cash AIM works? I like the numbers you have, especially since there are fewer trades and therefore less commission expense.
Typical commission that most pay is $6.95/transaction so that means $326.65 versus $69.50, a $257.15 difference that makes for one very good night out! My commission rate is only $5/transaction so the difference of $185 would mean a cheaper night out but still fun.
Hey Firebird400, I gather you look mostly at lower priced positions. I've been doing the same for a while and came across one that might be interesting, AQ, Aquantia. As well as being cheap, $8.60 today, it is in a potentially very interesting market, ultra high speed semiconductor chips for the auto industry. They read and help analyze sensor data to help safely maneuver autos.
Given the heavy trend to self-driving cars, over 200 firms are working in this area, it seems likely that it will go up over time but will dump down when the economy hits bumps or some of the autos crash. Given that they supply many of the auto makers it seems like it would be a better choice than any of the auto firms out there.
It's only been on the market since October, 2017, has 35 million shares and a current value of $304 million, the size that AAII likes. They don't have options, alas, or I'd jump right in.
Anyway, what do you think about them?
Hi Toofuzzy, The market as a whole may be up but that does not mean every possible position will be up. For example Apple is down 1.03% today and it is one of the big ones. Google is down 0.63%. AMD was down 1.08% today. Beacon Roofing Supply, Inc. was down 4.75% today. ProShares VIX Mid-Term Futures ETF was down 1.44% today. And Netflix was down 1.73% today.
As you can see, not everything goes up when the market is headed up.
I always sell those shares that are at "Highest cost," as TD Ameritrade allows, to keep the tax consequences as minimal as possible.
Hi Folks, I came across a couple of books that I think are worth reading because they have an approach that I think can be used in parallel with AIM, especially the idle cash that one has sitting around.
Both are by David Alan Carter. The first is "The 12% Solution" and the other, which has some similarity but is a bit more aggressive, is the "Stock Market Cash Trigger."
Both are available as e-books or hard copies on Amazon. Me, I always get hard copies because I like to read them when I'm away from the computer/tablet.
What makes them both interesting is he isn't trying to sell you some high priced service and the data examples are recent. They both have 10+ year back tests through December 2016.
The "12%" approach is more oriented to SPY, TLT and cash. It basically uses 60% SPY and 40% TLT along with cash at times.
The "Cash Trigger" could be used with any positions you hold, using SPY for a trigger and 4 alternate ETFs, TLT, JNK, MUB, and VMFXX as well as cash in more extreme down markets.
In my opinion it is worthwhile to see what others are doing as no method is good forever in our changing times.
Hi Tom, Thanks for the "Termvest" note. I've been helping a couple others but this is one area I've struggled with. This makes it much simpler and much better adapted to a questionable market.
I've been using Twinvest but not with a time frame to move into a position.
The one thing I suggest is finding the right position to use this approach. Mostly I've been using 2x ETF/ETNs such as AMJL, MORL, or SDIV. If leveraged ETF/ETNs are scary then you might consider ones like JNK, a 1x ETF which still pays a decent dividend.
I try to use positions that pay monthly dividends so that you get a bit extra as you go along, even if your time frame is short.
Hi Tom, Toofuzzy, sorry, I don't have a way to reply privately to your notes.
As too RAVI, Tom, that's a very good point about a 5 year average being potentially inaccurate. I'll keep that in mind going forward.
As to writing an APP, Toofuzzy, I'm not a programmer and have no clue as to how to go about it. Sorry.
Thanks for the tip on the browser. Information security, especially personal finance. it quite critical.
As to Duck Duck Go, because it is located in the US they can be required to provide an information they get, IP address, what you searched for, etc., to the feds without you being told that it is happening. It's not that they aren't trying to be very good in protecting your data from the web sites that you may have searched for to companies to use for advertising like Google does, they are one of the two best in the world. The other one is located in Holland and because the European Union security rules are much stricter than here Startpage.com is the only search engine in the world with an European Privacy Seal, and they have to prove they meet the requirements every year.
I suggest you consider using them while you search for what you need.
Playing around I found IMTR which pays about 2.99% with a range of about +/-4%. but it is not a "free" trade at TD Ameritrade.
Hi Firebird, As president of the BoD of a small credit union (less than $10 million) I deal with this issue all the time. The prior manager/CEO didn't look closely enough at the money we had stashed away in CDs so our average was only about 1.65-1.75% for the better ones and as little as 1.25% for much of the money we had sitting around and sometimes as low as 0.75%. Typically they had a 3 year lifespan.
Working with the new manager/CEO I've been able to get our income up to 3.00-3.125% for the new CDs as the old ones come to the end of their life.
Compared with BND with an average income of $2.04/year on an average price of $81.43 over the last 5 years, or 2.51%/year with a price range +/- roughly 5%, compared with RAVI at an average return of 1.18% over the last five year, but much less volatility, only about 0.1% price range.
Then there is FMB that trades commission free (sort of) at TD Ameritrade that roughly matches BND with a price range about +/-5% over the last 5 years and gets about 2.47% interest rate.
What I'd like to find is a position that gets roughly the same return as MORL and FMB but has options so when I have a bit of extra cash I could sell a PUT to get it assigned at a lower price. then I would also sell a CALL or two to earn more money sitting on the idle money while waiting for a BUY signal on AIM positions.
Suggestions, anyone?