Mad Hatter wrote a post and Ross has covestor. I know my friend Thiago is more informed than I, with a better memory, but a bit of a cowboy, and Howard likes to see all time highs and good price action, and Joe told me a while back that he reads and buys quality. Any time any of them say they are buying something I get a better picture of what that means, how much work they’ve done, etc. Its useful, to me at least…sooo…here’s my story:
I buy on 1. ideas/trends 2. fundamentals 3. momentum 4. recommendations. 5. volatility/liquidity of derivatives
My ideas come in the form of trends and observations I read about happening all over the world. Fundamentals are a high priority, I use morningstar premium to help me with that, I find their research great and useful. Momentum is great, and can be scary, I won’t touch momentum if it’s in a field I don’t understand, nor stupid high PEs, but ~25 and under – I’ll look at. Recommendations are high on my list, that means managers of hedge funds, money managers, friends, family and reader(s?) all get a high priority in my infinite search for good stocks. If a stock is trading with liquid options, it will get a higher priority than the one without, especially if implied volatility is generally higher – I like writing calls / shorting puts. I rarely ever use technical analysis, although I probably should. My holding time frame plans range from weeks to 50 years. Once I buy, I feel committed and prefer to hold through anything. Like my AAPL buy at $178 a few months ago – held right on through. I don’t use stop losses, I get that from my dad, he retired at 42. “If you liked it at $40, you gotta love it at $30″ is what he’d say.
I have a checkpoint set at 18% a year, but a goal of 26% per year…after taxes.
I currently have two accounts. The first holds positions in 19 tickers, right now. The only tickers where I’m not long the stock is FSLR and FCX I’m just short the $210 and $90 puts. I have 6 other open option legs where I offset the downside of my long positions by writing out of the money calls. I’m doing this to CCJ, JCI, and ITU. I’m also long calls on JCI and short puts on CCJ, these are both separate legs, aside from a long position in the stock. Right now this account is 14% cash, and no holding ever gets larger than ~8%.
I’ve just recently opened up an account at Interactive Brokers. I added more almost immediately because I liked them so much. I opened it to program an algorithm to manage a buy-write for me, on several ETFs. That is going slowly, and looks like it might not work that well. Regardless, I’m going to manage a less complicated version of the algorithm, manually. I own four ETFs, that I actively trade the front month calls on. HXU.TO, SSO, VWO and FNI. I know HXU and SSO have issues with losses/slippage, but I’m sacrificing that slippage for volatility in the form of capturing option premium. I’m 103% invested right now, if you don’t count the fact that i’m twice exposed with the two double longs. I plan to keep this account nearly 100% invested running my buy-write.
Equity is broken up ~63% (Investments) /37% (ETFs/Buy-Write)…I plan on keeping a ratio close to this, and if I beat the markets in the “Investments” account – cool, but right now, if I lost it *ALL* my “Investments” account and never added cash to the other, so long as I get index like performance on my “ETF account”, I could still retire in less than 30 years…no matter what.
My current watchlist which basically means I’ll write puts out of the money on these stocks all day long (and hopefully get assigned) include: FSLR, FCX, JCI, VE, CVA, MIL, CCC, IBKR, MORN…as well as a few others I can’t remember right now.