All of us at Monday Morning wish all of you a happy, healthy, prosperous and serene 2021!
A sincere thank you from us at the Monday Morning program to all those who bought gift memberships and coaching sessions for friends and relatives.
On 2020/12/29 we stated that one of our intrepid, fearless investors sold 24 Novavax (NVAX) covered call contracts (2,400 shares) at the market, strike price $130.00, expiry date this Thursday (not Friday), December 31 (C 31DEC20 130.00) and that she received $3.29 per share for total of $10,600.00. That brought her losses are down to $27,284.45 ($37,884.45 minus $10,600.00). (Her original loss on NVAX, incurred in August of this year when she bought NVAX at its peak, was $232,407.50 in a $500,000 portfolio.)
Some of our members with sharp pencils pointed out that 2,400 times $3.29 equals $7,896.00 and not $10,600.00 as we stated. That would have brought our intrepid, fearless investor member’s losses down to $29,988.45 ($37,884.45 minus $7,896.00) and not $27,284.45 ($37,884.45 minus $10,600.00).
Worse that that, NVAX shares dropped to $111.51 bringing the value of that one of her portfolios to $267,624 (2,400 times $111.51). Wrong direction but some headway.
Our sincere apologies for the error! Do keep your pencils sharp.
And now, let us review how our members did in 2020.
On, 2020/11/22 we wrote about the disconnection between the economy and the stock market.
In the past, the stock market and the economy moved in parallel. At this time, however, the economy is at its worst in years while the stock market closed 2020 at a new record high!
The stock market does anticipate what will happen in the economy and we hope that this is the case now. We don’t want to see food lines and high levels of unemployment, shuttered restaurants and places where people traditionally gather.
A more obvious reason could well be that interest rates are the lowest that they have ever been in our lives. Money goes where it is treated best and today, saving is not it. Searching for yield and growth, investors have pushed the market to its present levels.
And what does 2021 have in store for us?
Niels Bohr stated that it is dangerous to prophesy, specially about the future. Two issues are almost a certainty. The first, on March 23, 2020, Federal Reserve announced extensive measures to support the economy. Interest rates will remain low for several years.
For the second issue, let us look at the history of market losses. Over the last hundred years or more, there have been 5% market losses practically every year. Three out of every five years of produced 10% losses, one out of every four years have produced 20% losses, 30% losses occurred once a decade and 40% losses took place once every 20 years.
It is possible to connect the two issues above in many ways. And yes, market losses will occur. However, the Monday Morning mindset will see these losses as opportunities to buy bargains. And when markets return to growth, a long-term certainty, our members will take profits.
Once again, all of us at Monday Morning wish all of you a happy, healthy, prosperous and serene 2021!
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.
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