Are we in a financial bubble, yes or no?

Investors could spend all day studying the messages from these authoritative sources:

From equally authoritative sources:

The command of the language in these messages is generally first rate. Flawless. However, at the end of the day, investors would have a difficult time finding actionable suggestions.

At the end of the day!

What about at the end of the night? Here also, investors could then spend all night listening to talking heads discussing the yes-bubble/no-bubble issues. At the end of the night, they would be no further ahead.

Please note that for every buyer, there is a seller and vice versa. They need to have opposing views; otherwise, there would be no markets. Collectively, investors are right half the time and wrong half the time. A mathematical certainty!

What to do? What do Monday Morning members do when facing issues of this sort?

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How not to be victimized by Wall Street legal crime

In our post of January 20, 2021, titled How to avoid hidden fees and prosper, we stated:

“More crime, much of it legal, is committed on Wall Street before noon than any other place in the course of an entire year. (“Behind most great wealth, there is a great crime.” Honoré de Balsac)”

Legal crime? The list is long and goes back to ancient times.

Examples:

  • You and I would go to jail for trading on insider information but until recently, that did not apply to members of the US congress.
  • Jim Crow laws  enforcing racial segregation
  • Going back to the 18 century BC, the code of Hammurabi included the death penalty for harvesting timber illegally
  • Numerous presidential pardons, a continuation of many-hundred-year-old royal pardons
  • The treatment of women in many Islamic countries

Millions of investors are victimized by Wall Street crime, much of it legal. Here is what we can say about that.

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How to avoid hidden fees and prosper

Abigail really is a $15 billion woman. $15 billion is her net worth. The $50 million is her annual income. Think these figures are misprints? They are not.

Monday Morning program members are mostly American and Canadian dentists, veterinarians and optometrists, people with the highest qualifications in existence.  That is why, as a group, we have the highest incomes in North America.

It takes our average member five years to earn what Abigail earns in one week!

A visit to the Securities and Exchange Commission website will show you that her company has paid millions to settle charges for misdeeds of various sorts. Common enough. More crime, much of it legal, is committed on Wall Street before noon than any other place in the course of an entire year. (“Behind most great wealth, there is a great crime.” Honoré de Balsac)

These fines are a part of the cost of doing business for Wall Street. In the same league as wages, rent, heating, cooling, municipal taxes. Where do Wall Street banks get the money to pay these fines and continue to prosper? Where do they get the money to pay the unbelievable incomes of the top Wall Street bankers? You know the answer.

One ubiquitous hidden fee is that of opportunity cost. The commitment to invest in one area deprives us of the opportunity to invest the same money elsewhere, where it might do better.

The cost of education is another example of opportunity cost. The commitment to get that education deprives us of the opportunity of earning money by working at a job.

Bill Gates dropped out of Harvard after his sophomore year and so minimized that opportunity cost allowing him to build a company of global and historic significance .

As another example, Thomas Edison dropped out of public school!  (He did get some home-schooling and mixed his career with education by attending Cooper Union.)

Opportunity costs are unavoidable. Fortunately, we can minimize many other hidden fees or avoid them entirely. Here is how.

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Members’ views on virtual meetings . Survey results

On Friday, January 15, 2021 we noted that COVID-19 has enormously increased the number of virtual meetings. We surveyed our members and subscribers about their opinions on this. You can see the results below.

Option Percentage
They are great. 31.90%
I prefer to attend in person. 14.90%
They are OK at a time like this but I look forward to attending in person. 53.20%

Below, you can see members’ and subscribers’ comments.

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Don’t just do something. Stand there. Also, Novavax update

Don’t just stand there; do something, works well in most fields of endeavour. Not so when investing in the stock market.

Don’t just do something. Stand there — is much better. Historically, that is the most effective way to invest when done correctly, as in the Monday Morning Method.

As we stated previously, in the stock market, the lazier, the luckier. Sloth matters.

To review recently posted wisdoms:

“Investing should be like watching grass grow or paint dry.” Nobel laureate economist Paul Samuelson.

“Invested money is like a bar of soap. The more you handle it the less you have.” Nobel laureate economist Eugene Fama.

“The Stock Market is designed to transfer money from the Active to the Patient.” Warren Buffett.

“Passive investing consistently outperforms active investing over the long run.” The Monday Morning Program.

Passive investing?  One of our surveys  shows that 82% of our members spend less than one hour a week managing their portfolios. The other 18% are either new to our program, or they enjoy active management and are willing to accept their almost certain underperformance.

With today’s interest rates, the biggest risk is not investing. After taxation and inflation, the purchasing power of savings will decrease, guaranteed!

Savers need to do better. They can only do better by investing appropriately.

What is appropriate?

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How to profit maximally with derivatives. The Monday Morning Method

In 2020, there has been a 50  percent rise over 2019 in trading derivatives. Much of this is buying insurance by the big boys. Much of it is outright gambling — it gives speculators huge leverage. Financial weapons of mass destruction, Warren Buffett called this.

After selling (writing) covered calls and cash-secured puts for a while (the Monday Morning program recommends only selling and never buying puts and calls), several of our members noted that they would have been better off simply holding an exchange-traded fund (ETF) that tracks the S&P 500 within their personal asset allocation regime — the Monday Morning approach to investing. This approach is as boring as it is effective. Investing this way needs very little management time.

Is it possible to improve on holding an ETF fund that tracks the S&P 500?

Looking for an answer to the question, we recently posted an article drawing attention to a dozen scholarly, peer-reviewed papers on the subject of puts and calls.

Several of these papers offer actionable ideas, however, what we discuss here is unique. Let us call it the Monday Morning Method of selling covered calls.

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Smart money companies executives’ earnings. Survey results

On Saturday, January 9, 2021, we stated that some of the executives of  smart money companies that sell mutual funds earn in one week what Monday Morning members earn in five years! We surveyed our members and subscribers about their view on this. You can see the results below.

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Alert! Promising professional predictions plus the latest on the Novavax adventure

At the beginning of a new year, we see a large number of market “experts” predicting the stock market rest of the year. At best, they make for amusing reading. To quote Niels Bohr, it is dangerous to prophesy, especially about the future.

We previously wrote about forecasting and predicting here, here and here.

In March 2015, renowned market theorist and neurologist William Bernstein stated: “I would say that the expected return of a balanced portfolio is the lowest it’s been in financial history. We’re looking at 3 or 4 percent on stocks….

If there are degrees of wrong, Bernstein could not have been more wrong. Investors acting on his comments missed out; the expected return of a balanced portfolio turned out to be among the BEST it’s been in financial history.

Looking at “degrees of wrong”, here is the other end of the scale.

Irving Fisher, seen as “the greatest economist the United States has ever produced” by respected, Nobel Prize-winning colleagues, is largely remembered today for saying just before the Wall Street Crash of 1929,  that the stock market had reached “a permanently high plateau”.

Some predictions are highly reliable. For example, market experts will continue to make predictions that will be unreliable much of the time.

Why do they keep doing it?

What has been the best way to invest?

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Informative focus on tested covered calls strategies

Recently, we posted comments from one of our members stating: “I think your blog is paying way too much attention to her (covered call) ups and downs.” Another member stated that he wants to keep it that way.

We can keep everybody happy. Below, you can see a list of academic, evidence-based papers on this subject which we selected for serious students of the matter.

The bottom line is that the covered calls can improve portfolio performance if managed correctly.

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Will the S&P 500 continue to rise? Should we look elsewhere?

On December  20, 2020, from T. V……DDS, San Mateo, CA

Question:

Do you see a continuation in the next decade of a rising S&P or should we look at emerging markets, international and small caps over the next decade?

Monday Morning Millionaire Program Answer:

On 4/04/2018, we published an answer to a similar question. Below, you can see an updated version.

To a significant extent, investing in the S&P 500 involves investing globally since most of the 500 companies operate in foreign markets as well as the US.

If we invest in foreign markets directly, we add many avoidable layers of risk such as sovereign risk, currency risk, regulatory risk, property rights risk and more. Many autocratic countries have shown total disregard for property rights, historically.

Concerning emerging and foreign markets, the chart below says it all.

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