Cliff Wachtel CPA

3 Must-Know Options Strategies for Dividend Investors

No crystal ball, just research and some critical thought. THAT tells me not to chase stocks. I'm not revising buy points at this time. My coming post will discuss why I don't believe in this rally and what you can actually do about it.

You're right about some of the Canadians being thinly traded. That will make them volatile to the downside when the bear resumes. Fair price? Until I see fundamentals that justify this rally, keep entry points near recent lows.

Hope to get the post out soon. Cliff


On May 12 07:16 PM arthurofchicago wrote:

> Cliff,
>
> I have enjoyed your excellent series and bought a number of your
> recommendations. Unfortunately, I moved slower then the market while
> doing my own DD and watched as the market ran away from a number
> of my buy orders. Sigh.
>
> Given the recent, dramatic run up in prices are you revising your
> buy/strong buy price points? Some of your recommendations are sparsely
> traded making it especially hard for me to gauge what is a fair price.
>
>
> What does your crystal ball say?
>
> Thanks,
>
> A loyal reader.

3 Must-Know Options Strategies for Dividend Investors

thanks for the kind words, Cliff


On May 04 10:13 AM anarchist wrote:

> thanks for the options ideas and information. I use options all the
> time but for those who don't this is a great article with the pros
> and cons spelled out.

3 Must-Know Options Strategies for Dividend Investors

Thanks for the input. Where would readers find him? Does he write /post somewhere specific, or just books?


On May 04 03:16 PM Dividend Growth Investor wrote:

> As usual, there is no free lunch. Both buyers and sellers of options
> have the same opportunity of profits as option pricing is limited
> by its Black Scholes model, which primarily looks at past market
> behaviour.
> For a good reference on options, try reading anything by Nassim Taleb,
> the guy who buys options and makes money from it.

3 Must-Know Options Strategies for Dividend Investors

thanks. Options are an unjustifiably neglected tool for income investors. They should know about the "conservative" uses. Hope to do do more in future on them. Cliff


On May 04 10:13 AM anarchist wrote:

> thanks for the options ideas and information. I use options all the
> time but for those who don't this is a great article with the pros
> and cons spelled out.

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 1

Well, I'll try. First I DON'T know that stocks are going lower, merely that the balance of evidence suggests that they will. Since the Ultrashorts move at 2x the market rate, they can indeed get down fast if the market makes a sudden move up, which it can easily do given its technically very oversold condition.

Markets don't go straight down or up, they oscillate around a rising, falling, or flat mean (like a 200 day moving average). Thus within a downtrend you DO get rallies within the overall downtrend - i.e. a series of lower highs and lower lows than the previous up-down oscillation.

I set buy levels for the ultras at strong support because I and most of my readers are not traders but income investors, who generally don't try to time markets. Thus if we buy something that isn't paying us a large dividend for a long term hold, we only buy at strong support so that if that support fails we can get out before the loss gets large.

Hope that clarified things. Please feel free to ask follow up questions.

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 3

Thanks for the comments. Legit point, but I don't recall saying they were long term hedges, sorry if that was implied. If you read about the "ultras" they are indeed NOT considered great long plays and lose some of their value over time. As I said, these are for those who feel like trying to time the market - which most of us (myself included, for all my tech analysis) don't do well. That's why I suggest taking only when the market is feeling very optimistic. Not easy to do, but a simple way to hedge for those not wanting to bother with options.


On Mar 06 10:33 AM SkipinCA wrote:

> I have not fully read your article but intend to but I have a couple
> of comments:
> 1) Why are you recommending any Ultra ETF's for long term hedging?
> That is, I believe, very misguided. Have you read Morningstar's analysis
> of the compounding issues that occur with these ETF's?
> 2) Your intro says a) high yield stocks are a form of cash - NO,
> where did you get that idea and b) inflation eats away at principal
> and yield. I thought the idea of owning stock in companies was that
> companies can pass along price increases and are therefore a form
> of hedging against inflation. Would stocks yielding nothing be a
> better hedge? I think your analysis is a bit off here.

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 3

Oh, you just say that to all the contributors! Why, I'm blushing! So, since you're one of the editors, how about some cash? Cool prizes like a laptop? An official SA baseball cap? Seriously, thanks for the kind words, much appreciated.


On Mar 07 10:52 PM SA Editor M. Hunt wrote:

> This via email from Philip D.Roos:
> I wish that I could "grade" the articles. Cliff Wachtel's three-part-er
> would get an A triple + (collegiate) or 5 stars (conventional zero
> through 5 stars) or 4 bulls (unconventional nine-point scale from
> 4 bulls through zero to 4 bears).
> His contribution is so far above the average as to be at the 99.999th
> percentile!

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 3

I'm with you. The really big telecoms are core holdings and one of the only upsides of this meltdown is the chance to get them cheap as long as you can wait. Also love ATP at this levels and don't significant risk to this distribution.


On Mar 06 09:37 AM macsmart wrote:

> I own several of these stocks; have owned Atlantic Power for years,
> and the dividends just keep rolling in monthly. It doesn't matter
> to me that the price has been fluctuating; I've just bought more
> when it goes down.
>
> Recently bought T and VZ paying over 6% quarterly. They both are
> well captialized; the dividends appear solid, and people are not
> going to stop using wireless phones.

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 3

Exactly, I thought I was clear that there is an excellent argument against a dollar collapse. I'm only saying some hedge in addition to high income is an added bonus. I don't see any serious alternative to the USD, battered though it may be.
Thanks for your always worthy comments.


On Mar 06 04:53 AM Dividend Growth Investor wrote:

> What happens if the dollar does not collapse, but all the other currencies
> depreciate against it? When the WHOLE WORLD quotes their currencies
> exclusively against the dollar, and any major central bank in developed
> or developing countries is happy to keep dollar reserves you are
> talking about collapse of the dollar. Has it ever occured to you
> that the dollar is a global currency, not a local currency?
>
> What happens if the deflationary cycle keep on going? The portfolio
> needs some allocation to assets that would do ok in a deflationary
> environment.

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 2

Thanks for the comments.Shipping, like energy, is no doubt distressed now, so but at the right price the rewards justify the risks for those who can wait. See my comments on Atlantic Power in Part III and in the article prior to this series. Worth consideration


On Mar 04 12:53 PM gimli wrote:

> I like the article and am currently attempting to build a dividend
> income portfolio in monthly increments of around $100-200. I was
> all set to buy BP after tracking them for months and what happens?
> they announced today that a dividend freeze is most likely to happen
> later this year. <sigh> Cancelled the order and will probably buy
> COP instead. Also NAT suspended their dividend some time ago. Did
> they re-instate it?

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 2

Thanks for the kind comments, glad to be of service. Given the continued downtrend, the only long positions I can see taking are in these kinds of stocks, as long as you can afford to leave the cash alone while getting 4x the return of cash and near cash. Its a balance between trying to hold ammo for the bottom, which we may well miss, and getting decent current income.


On Mar 04 01:11 PM Universal Huckleberry wrote:

> Great article, Cliff- organized, thorough and well written. Exactly
> what I'd expect from a CPA! Judging by your inclusion in 120 "watchlists"
> since January, it looks like there is substantial interest in your
> content and style. I know it takes hours and hours to do the research,
> collect your thoughts and then translate them into a coherent stream
> of words that make up an "article", so on behalf of the SA community
> I'd like to say that we certainly appreciate your efforts!
>
> I'm looking forward to the rest of this series, particularly with
> regards to MLPs. I noticed that among your list of MLPs you hold
> only one CEF, Tortoise Energy Infrastructure. I've spent some time
> examining MLP CEFs including (seekingalpha.com/symbo...),
> (seekingalpha.com/symbo...), the Tortoise funds (seekingalpha.com/symbo...),
> (seekingalpha.com/symbo...) and (seekingalpha.com/symbo...),
> the Kayne Anderson funds (seekingalpha.com/symbo...), (seekingalpha.com/symbo...)
> and (seekingalpha.com/symbo...), and (seekingalpha.com/symbo...)
> which Delojozafado commented on earlier. I also looked at the ETN
> (seekingalpha.com/symbo...) based on the Alerian MLP Index
> (seekingalpha.com/symbo...), but I'm very hesitant to invest
> in a debt instrument. I would like to invest in the MLP sector, but
> I have a modest portfolio via dollar cost averaging and would prefer
> to be diversified within the sector. (Also, quite frankly, I'm a
> little intimidated by the UBTI and K-1 requirements.) Obviously,
> an analysis of the MLP CEFs might be somewhat outside the scope of
> your Series, but I'm sure there are many other SA'ers with more limited
> time and financial resources who would greatly appreciate your input.
>
>

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 2

Thanks for the complement and wry comic irony of employing spelling and grammar errors while making highly dubious claims and accusing others of uneducated positions. I love it! Thanks again for the chuckle.

Lest any innocent soul take some your comments seriously, they should consider the following.

The Red Cross Is Hardly an Unbiased Source: Like many international organizations subject to knee-jerk anti-Israel bias from the Moslem block, the IRC is about as objective a source on Israel as the U.N, Durban Conference, or Teheran “Official” news agencies. The IRC has a long, well established records of blatant anti-Israel bias. Incidents are too numerous to detail, but my favorite is when one of its past presidents equated that Star of David to a Swastika. Repeated use of Red Crescent (IRC member) ambulances for moving arms and troops also well documented.

Regarding Iran’s first strike record: As we say in the investment world, past performance in no indication of future returns. Iran openly and repeatedly calls for Israel’s destruction, backs up their words by providing extensive support to both Hizbollah and Hamas. Thus Iran already bears indirect responsibility for “first strikes” of its proxies.

FYI, unlike Iran, Israel does not seek to commit genocide, merely to defend itself from those who do. Israel has repeatedly ceded or tried to cede disputed territory seized in the course of that self defense.

In case your Madrasah’s history program didn’t cover this:

1948: Israel agreed to U.N. partition plan, Arabs reject it, declaring a war of annihilation in contradiction to the U.N.
1956: Israel withdraws from the Sinai after taking it with Britain and France in a war triggered when Egypt violates treaty and closes Suez Canal)
1996: Israel leaves a 15 klm strip of Southern Lebanon, after occupying it in order to stop repeated attacks originating from that territory. Attacks on Israel resume.
2007 Israel evacuates Gaza after occupying it in 1967 when its neighbors again declared a war of annihilation against it.
2009 Israel withdraws again after a brief incursion aimed at ending years of rocket attacks INTENTIONALLY aimed at its civilians.

Don’t wish do be harsh, but I feel a moral responsibility to protest the more blatant cases of what Harry Truman called “The Big Lie” – in this case the demonization of Israel in its efforts at self defense. I don’t claim to be an authority on ME politics.

Again, thanks for the laugh, and I respond only as a precaution that someone might have thought you were being serious.



On Mar 03 08:55 AM jairo wrote:

> Your comments about hedges and investments makes sense. As regards
> politics you seem to have drunk the same cool aid as most others.
> First an undue concern for Israel -- a nation that has nukes, and
> according to organizations including the Red Cross, commits war crimes.
> Secondly, an uneducated position about Iran. Ask yourself and then
> check the history: the number of countries that Iran attached (first
> strike) versus the number attacked by the US, Israel, the UK, and
> all the other countries in the world. Maybe the results will open
> your eyes. I do not support nuclear weapons for anyone or any country.
> Nor do I support repressive regim,es whether Iran or Israel, However,
> when countries with nuclear arms threaten to attach others without
> such weapons and refuse to eliminate their WMD's, what can one conclude
> about a desire for peace?

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 1

Thanks for the comment, dead on, as usual.


On Mar 04 09:15 PM DuffBeer wrote:

> Cliff,
> Nice post !!!!
> I too am building out my monthly divie portfolio and you post have
> been very helpful. This should be a part of Everyone's investment
> plan. I was so caught up in growth that I forgot income. You young
> guys out there believe you will find this out too . Put some dough
> in income stocks you will be glad you did.
> Wow it amazes me how quickly the comments on the political front
> come.
> Doesn't anybody like to be shot or rocketed at anymore ??? I think
> Iran should test out their new nuc in Tehran or Birjand that way
> they would know it works !!!! I will watch the test on Nasa channel
> can as I drink a
> Shmatz's Jewbelation 12.
> Cheers, DuffBeer

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 1

Thanks! I heard the same rule, and specifically believed that spelling did NOT apply. Will check, always appreciate a legit correction.


On Mar 05 08:07 PM Chance Carson wrote:

> Cliff, Nice series. Thank you. might check your use of "principle",
> however. Correct spelling is "principal" for Money matters. I always
> differentiate the uses of "principle" and "principal" by recalling
> that money is my "PAL," as was my high school "princiPAL". LOL! Best
> wishes.
>
> Chance Carson, Editor, aboutetfs.com/

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 1

Legitimate point. Its not the sectors, but the individual stocks that I believe are likely to sustain and grow their dividends. I can't make claims for every stock in a given sector. Some clearly ARE at risk of divy cuts, like energy and shipping. I suggest the rewards justify the risks, though I've repeated that anyone going long now use only funds not needed for the next year or so, since the trend is still down. You balance that risk of near term loss against the chance of a bounce and certainty of earning far better than in cash or near equivalents.


On Mar 03 08:40 AM Dividend Growth Investor wrote:

> Aren't you afraid that concentrating your portfolio mainly in high
> yielding sectors will hurt your portfolio in the long term? for exampl
> many investors seeking the highest yielding financials got burned
> when the dividends were cut. Isn't it better to obtain a balances
> approach between dividend growth and dividend yield?