This may be big mistake, but I just liquidated everything and 100% into cash. I am confident of almost nothing except that this election will roil the markets for several days (weeks?) to come.
Right now, I’m looking into options as a way to redeploy the cash. I’m not too well versed in options, I’ve only dabbled in options, so it’s kind of a go slow tactic.
I’m looking into options as a way to redeploy the cash.
Dude - I’d recommend a health portfolio of exchange listed common stock spread across a range of growth companies with low PEG.
Ant
Unless you really know what you are doing, do not play with options. The Fool has a newsletter devoted to rational option investing. But in general, option investing is basically gambling unless done in a rational manner.
I really do hope you do not go down that path. If you want to preserve capital, fine, but playing with options is the worse way to preserve capital and should be done only in very rare circumstances (I’ve done it before a few times over the years on specific circumstances) or in a rational manner with some real knowledge of what you are doing.
Tinker
Unless you really know what you are doing, do not play with options
I agree 100% with this statement. There are conservative ways to use options, and I have done well in that regard, but that involves owning share of the underlying stock(s), ie- not gambling on which way, and when, a stock’s price will rise or fall.
Hi Brittlerock,
I hear where you are coming from and agree that this bull market feels long in the tooth. Nothing wrong with cash, but inflation will slowly eat it away, and you get no benefit of compounding.
Regarding options, I use them off and on to boost returns or supplement trades, and they are really the same as trading stocks with two important differences:
Both these characteristics can be very detrimental to your portfolio’s health if they turn against you. So make sure you educate yourself and understand the risks before you dive in.
Morgan Housel published a great article here at the Fool about his strategy for building and deploying a hoard of cash, which I found extremely well thought out. I think it is available on the public site somewhere, but can’t find the link. I’m pretty sure it is available on all of the pay services, so check it out if you have access. I highly recommend reading this as a starting point on how/when to redeploy your hard earned $$.
Good luck,
DT
Tinker,
Thanks for the advice, but I’m not a complete novice. Just not well versed in all the sophisticated spreads, collars, choke-holds, arm breakers and the rest of the jargon.
What I’ve done in the past with fair success is to sell cash-covered puts and stock-covered calls. I don’t buy options unless it’s a roll forward.
The only times of been “burned” with this strategy is to have some calls run away from me so I ended up selling under the market, I still made some $$, just would have done better without the option at all.
You and CaptainCC will have a lot in common then. He does the same or similar things with his long-term holds.
Naked calls…sigh…I’ve made a few very great calls in regard, but have not done so for many years now. Wonderful what one does in their youtful (not youthful) days.
Tinker
Tinker,
I’m too old and fat to do anything naked other than shower and sleep.
A few months ago someone provided the following link. I think it is a good idea to look at it every now and then.
http://thereformedbroker.com/2016/08/23/applying-the-lessons…
OK - A follow-up now that the markets have closed.
I panicked - I admit it. Almost everything I sold closed higher than my selling price this AM.
So much for my cold, calm, steady, unemotional investing. Oh yes, I’m still frightened about what’s to come in a political manner and how it might effect me (health insurance premiums? Taxes? Social Security? etc).
I’m finding it hard to find the “silver lining” in the election results. Or maybe that freight train of financial ruin is still coming down the track.
OK - I’m done. This is not a political board and I don’t want to start any arguments.
Just saying, I find it hard to ignore politics when it comes to investing. It does make a difference. But, deciphering what the difference might be is difficult to impossible. Hell, for all I know, I mind find investments benefit from the new regime in DC - it’s just hard to see how if Trump really takes all the trade actions he talked about.
So be it . . .
Brittlerock,
Trying to time the market over the course of a few hours over an election result is a fools game. Politics pales in relevance to our returns when compared to company earnings.
Find a few companies with growing solid earnings from quarter to quarter. Then relax and enjoy your life with more important issues like family and friends.
Your enjoyment of life will be enriched and your returns will be better.
Jim
Brittle:
I’m finding it hard to find the “silver lining” in the election results. Or maybe that freight train of financial ruin is still coming down the track.
Some times we are our own worst enemies. It’s tough to control your emotions I invest for income so as long as the dividends are paid and/or increased the share prices will take care of themselves. I invest excess income into additional shares for more income.
Patience is the key metric
b&w
Jim:
Find a few companies with growing solid earnings from quarter to quarter. Then relax and enjoy your life with more important issues like family and friends.
Good advice
b&w
I panicked - I admit it.
brittlerock
During my days as a sailor I learned that one prepares for the storm when one sees the storm warnings. If you wait until the bad weather arrives you are too late. When the storm arrives you just survive it, reacting only as necessary. It’s too late for prevention and too hazardous for most actions.
One major difference between sailing and investing is that you don’t have so much noise from commentators at sea to distract you. You rely on your own acquired experience.
I had a curious experience once. I hired a deck hand for the last leg of a cruise. On arriving at our destination we were directed to a berth. There was a fellow in the next door berth shouting helpful instructions that Andy, the deck hand, was not able to ignore. The docking was a total mess so I gave orders to Andy to raise the anchor to get out of there. Then I had a talk with Andy: “Andy: I’m the captain and you are the deck hand. We make ready to moor the boat and you follow my instructions no matter what they are shouting at you. So let’s give it another try.” The second docking was as smooth as silk.
I’m not saying one can’t have a disaster. I’m only saying that being prepared and following the plan is generally the best option.
They call it “the cruel sea” but the market is even less forgiving. Neither sea nor market cares about you, one way or another. You are on your own. And too many voices create confusion as we learnt from the story of the Tower of Babel.
The Captain
The movie The Perfect Storm should have been called The Perfect Idiot. There were plenty of storm warnings to keep any sensible mariner safe on land. The captain in the story was a looser who took a stupid risk because his life was a failure. All that followed were just the gruesome details of his destruction by the uncaring sea.