Pandemic’s impact on adolescent mental health, October 15, 2021 survey results

Greetings everyone,

Again, a sincere thank you to all those who took the time to respond!

On Friday, October 15, 2021, we asked our members and subscribers: “Are you concerned about the impact of the pandemic on the mental health of adolescents?”

You can see the results below.

Choice
Percentage

Yes, I am worried it is hitting young people really hard.

37%

I am not worried about it more or less than anyone else’s mental health.

44.4%

No, young people are resilient.

18.5%

Meditating or exercising would help

0%

Below, you can see two worthwhile comments.

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Mon., Oct. 19, 2021. How our fearless, intrepid investor made out last week and her plans for yesterday

 

Yesterday, we were unable to tell our members what our fearless, intrepid investor planned to do because the TD WebBroker site, our information source, was down. We now have the information. For other details, see yesterday’s post.

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Mon., Oct. 18, 2021. How our fearless, intrepid investor made out last week and her plans for today

Let me repeat what we frequently state about investing using the Monday morning program. Historically, 1.) over the long term, 2.) properly selected US market index exchange-traded funds, 3.) held in tax-advantaged accounts, 4.) in an appropriate asset allocation, have been the investors best way for growing savings and are likely to remain so for many years. Further, this approach to investing is effortless.

Trying to improve on this performance by picking stocks, timing markets, trading derivatives, investing in complex schemes works frequently enough in the short run to keep investors doing more of the same.

This approach to investing is OK in a “fun” portfolio which should make up a small percentage of one’s investments. In the long run, don’t bet on it your core portfolio.

We all need to invest, but nobody needs a “fun” portfolio. Saving alone will not keep us in comfort in retirement. Because of inflation, saving is riskier than investing using the Monday morning program.

Members who do maintain a “fun” portfolio would be interested in connecting with the link which follows. Ask Alan 186 Using Delta and Implied Volatility to Assess a High-Risk Trade

And again, let me mention a gift idea. A friend, a 91-year-old retired, highly successful businessman, is buying memberships in the Monday Morning program for his eight grandchildren, all grown adults. Buying the right gift for some friends and relatives is often a challenge. This businessman has found an answer. At the present annual fee of $12.00, the price is right.

Now, let us review how our fearless, intrepid investor made out in her “fun” portfolio last week.

Just out-of-the-money, Novavax (NVAX) was trading at $170.00 (NVAX C 15OCT21 170.00) and paying a premium of about $4.75 per share. She could have earned an immediate premium income of $5,700. ($4.75 times 1,200)

Instead, she decided to go further out-of-the-money and sold 12 Novavax (NVAX) covered call contracts, strike price of $180.00, expiry date Friday, October 15, 2021. (NVAX C 15OCT21 180.00)

She received immediate premium income of $2.20 per share for a total of $2,640.00. ($2.20 times 1,200) plus, she could hope for $10.00 per share of growth if any, for an additional total of $12,000.00. (1,200 times $10.00) for a grand total of $14,640.00.

And the hoped-for growth?

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Market sentiment — is it important? Can Monday Morning Program members benefit from understanding it?

TD Bank recently introduced its TD Direct Investing Index. It parallels Market sentiment AKA Investor attention and Monday Morning Program members might want to study it for use in their “fun” portfolio if they have one.

Everyone needs to invest. Savings alone will not provide a comfortable retirement. No one needs a “fun” portfolio.

Dollar cost averaging only guaranteed way to beat the market.

Other ways to beat the market are picking the right stock, market timing correctly, active trading, derivatives trading and more. Zura Kakushadze and Juan Andres Serur describe 151 Trading Strategies, everyone of which can beat the market.

With no guarantees.

The Monday Morning Program strongly recommends against every one of these for core portfolios.

With the habits of the Monday Morning program, luck hardly matters.

Good luck!

_____________________________________________________________________________________

We have designed the Monday Morning Millionaire Program to offer abstracted investment education. Over the last two decades, the program has outperformed over 90% of portfolios, including professionally managed ones.

The program does not provide any investment advice or endorsements.

Members can read our posts in less than five minutes. Following and studying the links embedded in these posts would take longer. How members manage a post depends on their level of interest and investing knowledge.

 

 

 

Scholarly view of writing covered calls, part 2

On October 13, we presented a scholarly view of writing covered calls and of Novavax (NVAX).

Today, we will present further scholarly reviews on writing covered calls. The October 13 post dealt with the NVAX issue. (NVAX is a bargain.)

Writing in Financial Analysts Journal, Vol. 70, No. 6, 2014,  (https://ssrn.com/abstract=2444993 or http://dx.doi.org/10.2139/ssrn.2444993)  in a paper titled Covered Call Strategies: One Fact and Eight Myths (October 2015),  Israelov, et al  describe what they call Myth 3 and that is “covered calls generate income”.

That view states that the assumption that covered calls generate income is a myth. The authors are highly qualified.

In another paper, the same authors state: “Equity index covered calls have historically provided attractive risk-adjusted returns …” (See number 5 below.)

Go figure.

The 12 papers listed below could take anyone but a financial analyst a week to digest.

  1. Israelov, Roni and Tummala, Harsha, Being Right is Not Enough: Buying Options to Bet on Higher Realized Volatility (September 12, 2018). Available at SSRN: https://ssrn.com/abstract=3248500 or http://dx.doi.org/10.2139/ssrn.3248500
  2. Israelov, Roni, PutWrite versus BuyWrite: Yes, Put-Call Parity Holds Here Too (January 13, 2017). Available at SSRN: https://ssrn.com/abstract=2894610 or http://dx.doi.org/10.2139/ssrn.2894610
  3. Israelov, Roni and Klein, Matthew and Tummala, Harsha, Covering the World: Global Evidence on Covered Calls (June 28, 2017). Available at SSRN: https://ssrn.com/abstract=2990522 or http://dx.doi.org/10.2139/ssrn.2990522
  4. Israelov, Roni and Tummala, Harsha, Which Index Options Should You Sell? (June 28, 2017). Available at SSRN: https://ssrn.com/abstract=2990542 or http://dx.doi.org/10.2139/ssrn.2990542
  5. Israelov, Roni and Nielsen, Lars N, Covered Calls Uncovered (October 2015). Financial Analysts Journal, Vol. 71, No. 6, November/December 2015, Available at SSRN: https://ssrn.com/abstract=2444999 or http://dx.doi.org/10.2139/ssrn.2444999
  6. Israelov, Roni and Nielsen, Lars N, Covered Call Strategies: One Fact and Eight Myths (August 2, 2014). Financial Analysts Journal, Vol. 70, No. 6, 2014, Available at SSRN: https://ssrn.com/abstract=2444993 or http://dx.doi.org/10.2139/ssrn.2444993
  7. Yang, Zhaoji George, Buy-Write or Put-Write: An Active Index Writing Portfolio to Strike it Right (May 1, 2011). Available at SSRN: https://ssrn.com/abstract=1827363 or http://dx.doi.org/10.2139/ssrn.1827363
  8. Kapadia, Nikunj and Szado, Edward, 15 Years of the Russell 2000 Buy-Write (September 15, 2011). Available at SSRN: https://ssrn.com/abstract=1928822 or http://dx.doi.org/10.2139/ssrn.1928822
  9. Hoffmann, Arvid O. I. and Fischer, Tobi, Behavioral Aspects of Covered Call Writing: An Empirical Investigation (November 1, 2010). Journal of Behavioral Finance, Vol. 13, Issue 1, pp. 66-79, Available at SSRN: https://ssrn.com/abstract=1615405
  10. Kapadia, Nikunj and Szado, Edward, The Risk and Return Characteristics of the Buy-Write Strategy on the Russell 2000 Index. Journal of Alternative Investments, Spring 2007, Available at SSRN: https://ssrn.com/abstract=966287
  11. Chaput, J. Scott and Ederington, Louis H., Option Spread and Combination Trading (January 2002). Available at SSRN: https://ssrn.com/abstract=296036 or http://dx.doi.org/10.2139/ssrn.296036
  12. Brandão Fernandes, Ana Cristina and Machado dos Santos, Carlos, Evaluation of Investment Strategies with Options . Available at SSRN: https://ssrn.com/abstract=313978 or http://dx.doi.org/10.2139/ssrn.313978

With a much simpler way of understanding, investors can get excellent results by following the method described on out post titled How to benefit from volatility the Monday Morning Millionaire Program way

With the habits of the Monday Morning program, luck hardly matters.

Good luck!

___________________________________________________________________________________

We have designed the Monday Morning Millionaire Program to offer abstracted investment education. Over the last two decades, the program has outperformed over 90% of portfolios, including professionally managed ones.

The program does not provide any investment advice or endorsements.

Members can read our posts in less than five minutes. Following and studying the links embedded in these posts would take longer. How members manage a post depends on their level of interest and investing knowledge.

 

 

 

Could we improve on investing in a market index-exchange traded fund? How? Are there downsides?

As we frequently state, historically,

  1.  over the long term,
  2.  properly selected US market index exchange-traded funds (ETFs),
  3.  held in tax-advantaged accounts,
  4. in an appropriate asset allocation,

have been the investor’s best way for growing savings and are likely to remain so for many years. One major benefit of this approach to investing in addition to the returns, is its ease of implementation and maintenance. Put it in place, go fishing and watch your investments grow.

One of our members, an expert, claims that if you took such an index ETF, for instance SPY, and removed the companies carrying large debt, you would get better performance. True enough, much of the time, although, in the present interest-rate environment, many companies can earn more with the borrowed money than the cost of that money. (So can we, if we are comfortable with the idea.)

What about if you concentrated on the companies repurchasing their shares? (Share repurchases increase share prices.) That produces better performance all the time.

We recently discovered such a company – Cambria Shareholder Yield ETF (SYLD). Over the last three years, SYLD has outperformed SPY (See chart above.). Morningstar gives it a five-star rating while giving SPY four stars.

How can we benefit by holding SYLD in our portfolios? What are the downsides?

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Scholarly view of writing covered calls and of Novavax (NVAX), part 1

Recently, writing covered calls on (NVAX), our fearless, intrepid investor lost some $70,000.00 in her “fun” portfolio! How much fun can that be?

She had done well writing covered calls on NVAX every Monday, most of the time with the strike price just out-of-the-money, expiry date Friday of the same week. Morningstar now rates NVAX as undervalued at an 18% discount.

Remember that the risk of writing covered calls entirely comes from the risk connected to the underlying security.

Given the undervaluation, should she:

a.) continue with the covered call writing strategy or

b.) buy more NVAX and wait for the market to make up for the lost ground or

c.) do both?

Answer from 5i Research:

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Mon., Oct. 11, 2021. How our fearless, intrepid investor made out last week and her plans for today

First, a gift idea. A friend, a 91-year-old retired, highly successful businessman, is buying memberships in the Monday Morning program for his eight grandchildren, all grown adults. Buying the right gift for some friends and relatives is often a challenge. This businessman has found an answer. At the present annual fee of $12.00, the price is right.

Now, let us review how our fearless, intrepid investor made out in her “fun” portfolio last week.

Just out-of-the-money Novavax (NVAX) was trading at $182.50 (NVAX C 8OCT21 182.50). She decided to go further out-of-the-money and sold 12 Novavax (NVAX) covered call contracts, strike price of $185.00, expiry date Friday, October 8, 2021. (C 8OCT21 185.00) That would give her $2.50 per share of growth if any, for an additional total of $3,000.00. (1,200 times $2.50)

She received $4.50 per share of immediate premium income for a total of  $5,400.00. (1,200 times $4.50)

And the hoped-for growth?

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Why write covered calls on Novavax (NVAX)? The stock is down nearly 40% this month!

On October 9, 2021, from anonymous DDS, Ontario, Canada

It’s a tough spot for the fearless investor. NVAX  is down nearly 40% in a month. Bizarre that this person does not use technical analysis at all and is married to this particular stock.

What does the Monday Morning program say about this?

Our answer

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Safe and effective, evidence-based investing; getting started

 

We are posting this message for the benefit of our new members. It is old had for existing members but might be useful as a review.

The Monday Morning Millionaire Program will show you how to outperform more than 90% of professionally actively managed funds, guaranteed.  At the same time, over an investing lifetime, you can save a year’s income by avoiding adviser fees. Investors can do that by buying and holding a US market index-tracking exchange traded fund (ETF).  For a detailed step by step description, join the Monday Morning Millionaire Program.

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