Best Investment Strategy

Reading the chapter on treasury bill in the option bible and came across this:

Put 90% of portfolio in low risk securities like muni or even treasury bills, and invest the rest 10% in options. Space it out into 3 month chunks (each with 2.5% of money). Interesting strategy, and may be a good substitute for folks who are sick of this volatile market and want to de-risk.

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The author is a nutcase.

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Huh? I thought you like him?

Who is he?
90% muni + 10% option for average investor?
For average investor, blindly DCA purchase index fund. done.

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You really need to buy the latest edition.

Options as a Strategic Investment: Fifth Edition

Also, never said it’s best for average investors. Average investors should stick with average strategy, not the best. :smile:

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Like hanera said, it is a nutcase, very unreliable. IMO, Some crook seems to guide a short cut methodology, that is wrong.

When coming to investment, the best way is to go for fundamentals, watch possible bottom, buy and hold forever.

Hanera proved with AAPL and wuqijun proved with FB and TSLA. There is no Gimmick or short cut. No option, no margin, use whatever excess money buy and hold.

Whatever I am doing is just trading, that is also not correct, but I am skeptical and not comfortable.

Even the BRKB, I bought but sold when I saw a profit of $10000 !

Until I get seasoned, I will be like that, no change. I understand what is real investment, but not comfortable with it.

Option is speculative, but not an investment. Investments are like real estate, dividends (rent) and growth (appreciation).

Focus on selective 20 companies, read, analyze, buy at dip and hold long.

I think the advantage of that is if the market completely tanks you only lose 10% of your capital. The yield of the other stuff will offset that, and it’ll probably go up in value. I think most options traders do similar once they have enough capital. They invest most of their money in strong dividend payers and use options with a relatively small percent of their capital. Allocating all of your capital to options can leave you with massive loses.

Yes, I understand the concept behind 90 : 10, but that is not sound investment idea.

Here is the thread that talk about investment (and selling)

https://www.reddit.com/r/investing/comments/8b0pop/when_to_sell_an_investment/

Selling really depends. Few companies can maintain a dominant position for a decade let alone longer than that. If you want to own forever, then just buy S&P 500 index fund.

Just look at some former companies with monster returns: Intel, Cisco, HP, Dell, Sun, EMC, RIMM, Nokia,etc. They dominated the PC era and the beginning of the cell phone era. Intel is showing some life, but it’s nowhere near the returns of the 80’s and 90’s.

I don’t know why people think “buy and hold forever” should be treated as absolute truth. Even WB sells from time to time.

There is no distinction between speculation and investment. We are all speculators.

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You need to learn how to be lazy :slight_smile: i’m born lazy.

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90% muni, 10% option.

Is above allocation an initial allocation or portfolio is to be re-balanced, say, once a year back to that ratio?

WB, buy and (hopefully) hold forever :wink:

WB told people to buy and hold forever. He sold every year.

WB told people to buy S&P ETF. He never did.

WB told people not to touch options. He bought and made tons of money on options.

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He did say, do as he advises not as he does.
You’re selectively quoting him.
He is an old man, talked a lot and forget what he has said.
What he said in his early career is sometimes different from what he said now e.g. tech stocks.
Put on your critical thinking hat!

I am not telling “Not to sell for ever”

Remember what you used to tell about bay area homes? Are you ready to sell BA homes?

IIRC, you want to buy, buy, buy, add every year one home and hold, never sell. You need to have such a strong conviction in stocks.

Sell only when you feel that stock is worth no more like when you feel BA real estate is not good.

WB told people to buy S&P ETF. He never did. ==>Correct. He will not. It is not for him.
You are half reading his statement. Please read entire statement to whom he has given this advice.

WB told people not to touch options. He bought and made tons of money on options. ==> Check how much he earned through options and how much he earned through investments.

Whatever I was telling you is just a guidance.There is no point in telling “WB made all these and we can also do kind of argument”. It is up to you to use options, margins and trading.

The simple fact is “If I learn from hanera or wuqijun or WB or from investment books, I may get benefited. If I do not, I may get hit”. It is eventually garbage in, garbage out only.

I stop here.

Options are crappy, dangerous.

That’s what somebody here said.

Ask him. :laughing::laughing::laughing:

I think you’d rebalance once a year. That way you’re never risking over 10%.

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