July 25, 2012
by Jeremiah
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One of the questions I get from time to time is, “How do I select stocks to buy?” While this video mentions resources that are from a couple of years ago, I think the heart of the selection method is sound and worth taking a look at. Disclaimer – I do not earn any affiliate commissions from any products mentioned in the video.
For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!
Jeremiah John
July 23, 2012
by Jeremiah
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It may be a stupid question, but let’s see how you might be able to do it. Better, let me show you what I am doing in a real example. I’m not suggesting that you do this, but it’s what I’m doing since I have to live on my portfolio and you may or may not have to do the same.
I bought a stock in the middle of June, that was identified in my stock analysis software. I hope to have it ready for sale soon. I’m still testing it, and I may or may not release it to the public. But that’s another blog post. My actual purchase date was June 12th, 2012. The stock was Riverbed Technology Inc. (RVBD). I put in an order and got filled at $16.76 per share. I bought a 100 share block.
For this particular income strategy, you have to buy in round lots of 100 shares. On June 13th, 2012, I sold a call option for Riverbed Technology for September 22, 2012 at $18. What all this means is that I sold a contract between me and a purchaser that I will sell my 100 shares of RVBD between June 13 and September 22 for a price of $18 per share. When I sold this option contract, I got a cash deposit into my account of $1.45 per share or $145.
There are two things that could happen. (1) The stock goes up and goes over $18 by September 22nd, 2012. Let’s say the stock goes to $20. Then I am contractually bound to sell my stock in RVBD at $18. Let’s look at the numbers. I bought it for $16.76 and I have to sell it for $18.00 giving me a profit in three months of 7.39%. I am not making 7.39% any place else, are you? But that’s not all. I also got $1.45 for each share or $145 ($1.45 x 100). When you add the $1.45 to the $18 you get a total $19.45 that I would make on 100 shares of RVBD. When you subtract the purchase price of $16.76, the profit is $2.69 per share or 16.05%.
That’s the profit in three months between June 13 and September 22. If the above happens, and I have to sell my shares, then on September 24 I buy another 100 shares of something else and do it all over again. OR Here is the the other thing that could happen. (2) The stock price stays the same or goes down by September 22nd. If it stays the same (which is what I really hope) then on September 22nd, 2012, the price is about $16.75. At that time, the option will expire and not get exercised since no one is going to want to pay me $18 when the stock is selling for $16.75 on the open market. So on my investment of $16.76, I made $1.45. $1.45 on $16.76 is 8.65% for three months.
Then on September 24th, I do it all over again. I hope that I can get $1.45 per share on the RVBD call option sale or $145 and that the price does not go up or down. Then I’ll make another 8.65% for three months and do it again. I like this better since I have the chance to make 32% per year assuming that the price of the stock does not go up or down.
What if the price goes down? Well it could go to $15.31 and I would still break even. So how does that work? Well $15.31 + $1.45 = $16.76 which is the price I paid. On September 22nd, 2012, I am betting that the price will be about $16.76. I’ll make 8.65% and sell another 3 month option for around $1.45.
Wish me luck! I’ll let you know how it goes on September 22nd, 2012.
For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to the day when you can retire!
Jeremiah John
April 15, 2012
by Jeremiah
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I made a change to the web page and have removed my offer to send out a report on how to make 15% on your investments if you subscribe to my newsletter. The reason is simple. I need to update the recommendation that I sent out when people subscribed so that the information is current. I put that link up, to get the free report, in April, 2010. I was recommending a stock that I identified using my stock analysis software. This is the same software that I used to identify Starbucks.
The stock I recommended in April, 2010 was selling for around $5 a share. I thought it had a good chance to go to $7.50 or maybe $9.00 in 12 to 18 months. I was wrong! After two years, the stock is selling for $17.00. People who signed up for the newsletter, got the report, and bought this little company at $5.00, are now sitting on 200+% profit.
If you’re like a lot of people, IF you bought the stock, you probably only bought 100 shares. You did this even though the company is listed on the AMEX and not really a penny stock. As I disclosed in the report, I bought the stock on January 25th at $3.50 a share plus commission. I bought 1500 shares. I bought another 1500 shares on November 3rd, 2010 at $3.62. Between my first purchase and my second purchase the stock hit a high of $5.20, back in the middle of April, 2010.
The stock was trading at $4.00 last October, 2011 and if I had any money to invest I would have purchased more at that price. Alas, I had no money available to invest. In November, the stock was trading around $10. So now what? When the stock hits $20, I will sell some to recoup my initial investment. Then I will set a trailing stop to lock in profits in case the market goes haywire. My trailing stop right now is set at $14.00, and as the stock moves up I will move the stop up accordingly.
I have 3,000 shares of this stock. I will look to sell about 1,000 shares at $20 which will allow me to recoup my initial investment and lock in gains of almost 100%. The other 2,000 shares I will let ride and keep moving my stops up to be sure that I don’t lose money in this crazy market.
For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!
Jeremiah John
February 29, 2012
by Jeremiah
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I started this blog back in December, 2009. When I started the blog, I didn’t know what I was going to write about and someone told me to put a stock of the week on the front page and then every week change the stock and then I’d have something different to write about every week. It was supposed to be a writing crutch, and a way to get into the groove of writing the blog. Lots of folks have used it successfully in the past. It should work for me.
As fate would have it, I used to go to Starbucks, every Wednesday. My wife would come to downtown Santa Fe and join me for a coffee at Starbucks. We were regulars and we didn’t even have to call our drinks, since everyone knew what we ordered. When I got laid off, I mean when I took early retirement, I started making my own espresso at home. It was Starbucks of course.
And when I started the blog, I put the Starbucks stock on the front page. I never wrote about it. It was there in case I needed something to write about. It was a crutch, as I said above, in case I needed something to talk about. But as fate would have it, two weeks before I got laid off, I mean two weeks before I took early retirement, I purchased 300 shares of Starbucks at around $20 a share. I was actually going to write about it one week, but I had something else I wanted to talk about and I never got around to it.
Fast forward two years and two months, and here it is February, 2012. When I put the SBUX stock on the front page the price was around $23.66. My portfolio with the SBUX in it had a nice 18% gain in the stock going from $20 to $23.66, from October to December, 2009. I felt funny about writing about SBUX. It might seem like I was touting the stock after I made my purchase 10 weeks prior. So I never wrote about it. I just left it on the front page.
Well you can see how SBUX has done since I put it on the page at $23.66. Needless to say, I still have my 300 shares and I plan to sell ½ one of these days and buy something else. But for now, I’ll take my 100% gain and plan to go to Starbucks on Wednesday to celebrate.
For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!
Jeremiah John
P.S. If you look at the fine print at the bottom of the chart you can see what SBUX gained for the past 90 days. As of this writing, it says, 16.86%. I’m not getting that on my savings account, are you?
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December 24, 2011
by Jeremiah
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It’s been quite a year. At least the last 7 months. There are changes afoot with my blog and my life. Stay tuned. I sincerely hope you are doing well and that your retirement is going as well as mine.
Have a Merry Christmas and a Happy New Year!!
For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!
Jeremiah John
You can follow me on Twitter, by clicking here.
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If you enjoyed this post, then make sure you subscribe to my RSS feed.
If you need more information on RSS feeds, see my article at: my RSS feed.