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Grow Your Portfolio: Consider Options Strategies

Apr. 24, 2011 9:42 AM ET
John Mylant profile picture
John Mylant's Blog
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Have you ever listened to the radio or watched the television only to hear one point of view from a money manager and then hear a conflicting point of view from another? What is an honest investor who is concerned about his/her money to do? Whose advices are we suppose to take?
So what does one do when tow very highly regarded investors do this to us? Rob Arnott who is legendary on focusing on articles dealing with quantitative investing argues against stocks as a long term investment right now. At the same time, Bill Gross, financial author and co-founder of Pacific Investment Management, takes the position against bonds (US Treasuries).
Both are pessimistic about holding either. While Arnott takes the position that our long term equities are fickle at best and putting all our eggs into this basket is not a good idea, Gross is dead set against US Treasury holdings because of the US debt.
There is something to be said for diversity. And there is not much of a difference between the two investments over the last 30 years. As an investor, I am not really concerned at the track record of stocks or bonds for the last 200 years. I don’t care how much stocks have performed over bonds; my portfolio is not 200 years old and never will be.
I am concerned as to how the markets are performing for me in my life time. Over the last 30 years, stocks have performed a measly .53% better than US government bonds. This does not sit well with me as an investor. Stocks may perform better than bonds over short bursts but can I afford not making money for my retirement?
One needs a much better hands-on approach to taking care of their portfolio. Learning how to trade options and becoming consistent and well versed on one strategy can help grow a portfolio where stocks or bonds may not be performing. One strategy that can work with 5 to 15 hours per week is Option Credit Spreads. These are known as high risk strategies, but if done correctly they can offer low risk consistent grow. It is possible for an investor to grow a portion of their portfolio from 50% to 100% a year with little risk.
Consider this as a portion of your strategy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Article speaks about the neutral impact on stocks and bonds over the last 30 years and encourages investors to consider better hands on management through considering an options trading strategy for part of thier portfolio.

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