The Monday Morning Program encourages passive index investing by buying an exchange-traded fund that tracks the S&P 500. (SPY is an excellent choice.) However, many of our members are interested in puts and calls (derivatives) so we write about that once in a while.
Below, you can see one of the portfolios of a Monday Morning member who kindly allowed us to share his six-month record.
The table above shows 53 consecutive transactions every one of which was a winner. Every one!
If such a streak of winning transactions is possible, why did Warren Buffett call derivatives financial weapons of mass destruction? How did Orange County go bankrupt 27 years ago? Why did too-big-to-fail Long-Term Capital Management need a 3.6 billion dollar bailout by 14 financial institutions in 1998? Both were heavily involved with derivatives. LTCM was directed by some of the most prominent Wall Street tycoons plus two Nobel laureates!
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