The 'Lucky 13' Dividend Stocks For 2012 [View article]
Hi gapwedge - Thanks for the comments and thanks for reading. Continue to stay patient with your cash in 2012...there will be some great buying opportunities...
Energy Sector: 2 Option Income Trades With Limited Risk And Potential Yields Over 45% [View article]
Actually, you are incorrect rjj1960...if the trade goes against you, your loss is 100% of margin. We have discussed risk management rules for call spread trades in previous articles, however it sounds like we need dedicate a future article solely to the topic.
In a nutshell, we look for low risk entry points (like the ones discussed in this article) on these trades. Our experience has been that 80-85% of the options in these trades will expire worthless, which puts the odds in the option sellers' favor. That said, there will definitely be times when the trade goes against you. However, with a spread trade, your risk is limited to the difference between your long strike and your short strike (less the premium you receive on the credit spread).
Over time, with proper risk management, this strategy is a very safe income generating strategy.
8 Core Dividend Stocks Retirees Should Buy On A Pullback [View article]
Hi Rincon - The company has a long and stable dividend history and we think the future prospects of both businesses are very strong. As such, we don't think shareholders should be too concerned about "spin-off" risk here. We'll know more about the future dividend policy after the split takes place later this year...but we still view ABT as a "core" dividend stock for our portfolio.
8 Core Dividend Stocks Retirees Should Buy On A Pullback [View article]
HI BTinSF - We own PM as well. This list was only meant to be a sample of "core" dividend stocks...not necessarily a diversified portfolio in itself.
From a risk management perspective, we are far more concerned about portfolio asset allocation (i.e., mix of stocks, bonds, commodities, real estate, cash, etc.) than we are about diversification within our dividend stock portfolio. We focus on stocks with stable dividend streams and lately have been overweight defensive industries. In a true downside scenario, asset selection is far more important than stock selection...
Hi, Archman investor - Thanks for reading and providing feedback. The vast majority of the articles that we write highlight trades (stocks or options) that we are in. We share your discontent about authors who have no skin in the game.
As far as the depth of the analysis in the article, we take a more macro, top-down approach to investing. The core of our thesis for investing in the utility space is built around the macro environment and the stability of the dividend income streams (which we discussed in the article).
That said, we appreciate your point of view for more analysis...
How To Profit From Homebuilders Priced For Perfection [View article]
Hi Jake - To be fair...the title was an SA editor change. We do mention in the article that many analysts feel that the sector is priced to perfection...which is true. If orders come in below expectations, there will definitely be some volatility to the downside.
We tend to agree with you about the potential upside, which is why we wouldn't take a short position in the stocks. That said, a healthy pullback in the sector would be good to see after the recent run up. If the put options that we mention in the article are exercised it would probably be a good thing for the investor (great cost basis)...
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
johnny - it takes alot of "patience" to withstand a 30-50% drawdown...how many other securities are you holding with that type of historical performance? Hopefully not too many...
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
Alan2a - Agree to a certain extent about the income rationale...but the flaw is that CIM is not a "solid company". If you were making the income argument about ABT, T, or MO its a totally different story...
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
Hi Bill -
(a) It's a bit of a stretch to say that CIM is a way to play the European debt debacle. If that is your thesis, then you would be better off just shorting the Euro.
(b) If you look closely at the insider buying...the nominal dollar value of the buys is extremely small. Certainly not something to hang your hat on.
(c) If you are comfortable with the mREIT space, AGNC is safer bet with a higher dividend yield.
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
Hi Carousel - Thanks for the comment. With a dividend yield of 12% it is going to take you 2 years to get back to break even! If you are really in it for the dividend, there are safer investments out there to generate income. Why risk your capital in CIM?
If you are comfortable with the mREIT space...why not sell CIM and buy AGNC (19.9% dividend yield)?
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
Hi Billie - we are still waiting for you to enlighten us with your CIM research...you talk a big game, but you have never come to the table with facts...
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
Thanks for the comment, Jonathan. Most CIM investors share your "break-even" mindset and that was the main reason for the article. You have fallen into the "loss aversion" trap described above. You are not alone though...we all fall into this trap from time to time...we are human!
It shouldn't matter whether or not you break even on a specific stock. Instead, you should focus on your portfolio as a whole. Cut your losers short and focus on new profitable investments for your portfolio and you will make back your CIM losses in no time...
Income Strategy Debate: Buy And Hold Vs. Market Timing [View article]
Hi - MakotoUeno. You pose a fair question.
Yes, we think it is a very fair to lump the put selling strategy into the market timing bucket. The essence of "market timing" is knowing when to buy, sell, or hold. Any well-structured market timing strategy will use limit and stop loss orders to enter and exit the market. With the put selling strategy, you are making the conscious choice not to buy the stock at current levels based on market conditions...how is that not "market timing"?
The beauty of the put selling strategy is that you don't have to sacrifice current income even though you are waiting for a better price on the stock...
The 'Lucky 13' Dividend Stocks For 2012 [View article]
Energy Sector: 2 Option Income Trades With Limited Risk And Potential Yields Over 45% [View article]
In a nutshell, we look for low risk entry points (like the ones discussed in this article) on these trades. Our experience has been that 80-85% of the options in these trades will expire worthless, which puts the odds in the option sellers' favor. That said, there will definitely be times when the trade goes against you. However, with a spread trade, your risk is limited to the difference between your long strike and your short strike (less the premium you receive on the credit spread).
Over time, with proper risk management, this strategy is a very safe income generating strategy.
8 Core Dividend Stocks Retirees Should Buy On A Pullback [View article]
8 Core Dividend Stocks Retirees Should Buy On A Pullback [View article]
From a risk management perspective, we are far more concerned about portfolio asset allocation (i.e., mix of stocks, bonds, commodities, real estate, cash, etc.) than we are about diversification within our dividend stock portfolio. We focus on stocks with stable dividend streams and lately have been overweight defensive industries. In a true downside scenario, asset selection is far more important than stock selection...
Defensive Dividend Portfolio Picks For 2012 (Part 1: Utilities) [View article]
As far as the depth of the analysis in the article, we take a more macro, top-down approach to investing. The core of our thesis for investing in the utility space is built around the macro environment and the stability of the dividend income streams (which we discussed in the article).
That said, we appreciate your point of view for more analysis...
How To Profit From Homebuilders Priced For Perfection [View article]
We tend to agree with you about the potential upside, which is why we wouldn't take a short position in the stocks. That said, a healthy pullback in the sector would be good to see after the recent run up. If the put options that we mention in the article are exercised it would probably be a good thing for the investor (great cost basis)...
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
Love the picture, BTW...
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
(a) It's a bit of a stretch to say that CIM is a way to play the European debt debacle. If that is your thesis, then you would be better off just shorting the Euro.
(b) If you look closely at the insider buying...the nominal dollar value of the buys is extremely small. Certainly not something to hang your hat on.
(c) If you are comfortable with the mREIT space, AGNC is safer bet with a higher dividend yield.
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
If you are comfortable with the mREIT space...why not sell CIM and buy AGNC (19.9% dividend yield)?
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
What The Rest Of Us Can Learn From Chimera Investors' Mistakes [View article]
It shouldn't matter whether or not you break even on a specific stock. Instead, you should focus on your portfolio as a whole. Cut your losers short and focus on new profitable investments for your portfolio and you will make back your CIM losses in no time...
Income Strategy Debate: Buy And Hold Vs. Market Timing [View article]
Yes, we think it is a very fair to lump the put selling strategy into the market timing bucket. The essence of "market timing" is knowing when to buy, sell, or hold. Any well-structured market timing strategy will use limit and stop loss orders to enter and exit the market. With the put selling strategy, you are making the conscious choice not to buy the stock at current levels based on market conditions...how is that not "market timing"?
The beauty of the put selling strategy is that you don't have to sacrifice current income even though you are waiting for a better price on the stock...