Relax, Don’t Do It!

Relax don’t do it
When you want to go to it

Albert Einstein said "the only reason for time is so that everything doesn’t happen at once" but what I’ve noticed about time is that most people waste a lot of it.  As a business consultant, I often find the number one thing I can do to make a company more productive is to make better use of their time.  Companies look at rents, utilities, manufacturing expenses, distribution costs… but, other than being buried in productivity reports, they don’t often think about the time they have.

A company with 400 employees is paying for 16,000 hours a week of time.  Anyone who’s actually worked in a company will not be surprised to hear that an average of 20% of that time is spent not working.  I’m not talking about lunch, chatting etc, I mean time spent going from one place to another, waiting for meetings (and the meetings themselves), sitting on hold, looking for things, filling out forms, waiting for web pages or other data to load (my pet peeve with cheap bosses who don’t upgrade).  A company with 400 employees wastes enough time in a month to fully staff an 80 employee competitor.  Getting just 10% more efficient translates into 8 people’s salaries in extra profit per year.

I find that rich people tend to value their time much more so than poorer people.  Perhaps it’s because we get paid so much per hour that we think in terms of hiring a gardener rather than spending 4 hours doing yard work or taking the direct 4-hour flight rather than the 7-hour connection for $150 less.  The richer you are the more those numbers work for you and, sadly, the older you are the more you realize how valuable each moment is.

But even rich people do dumb things and one of the dumbest things rich people do is worry about money.  Assuming you have the money to invest in the stock market, the last thing you should be doing is sitting glued to a computer on a day like Friday (or Tuesday or Wednesday – what a rotten week!) worrying about protecting your assets.  I want you to be spending that time looking for and taking advantage of opportunities!

You are a valuable person, you are one of the top income producers in the United States.  Even if you are "just" a $10KP player, you still have more money available to you than 70% of the people in this country – it’s sad but true.  You need to use the brains and talents that helped you build up the cash for your virtual portfolio to make money – that’s what you’re here for right?  Then the question is, why are you risking the money you already made?

Of course everything we do in the markets is a risk, I’m not anti-risk but I’m all about MEASURED risk.  Virtual Portfolio balance is key to this because, if most of your virtual portfolio is balanced, then every day we can take an opportunity to make a small improvement.  When the market moves 178 points down in a day there are dozens of good opportunities – we went long with a put spread on RTP at 10:14 (winner), we shorted GS, POT and BG at 10:19 (so-so), shorted MA at 10:21 (huge winner), shorted XOM at 10:25 (so-so), sold C $32.50s at 11:12 (wiped him out!), shorted CVX at 1:12 (good so far), shorted BTU right at the top at 1:20 (huge winner) and bought FIG at what I FIGured was a bottom at 2:39.

We are able to take these opportunity trades BECAUSE the rest of our folder is in BALANCE.  Of course balance is pointless if all you do is stay even but, if you learn to be in the premium selling business, then staying even is exactly what you want!  While you do nothing, your callers lose their value.  While your virtual portfolio barely budges, they are running out of time.  While you look for new and better opportunities, they are trapped in bad positions, paying you a passive income while you put your time and talents to better use watching the markets, reading/chatting/studying about the markets, investigating opportunities or even(gasp!) taking some time to find balance in your own life.

Yes, a day trade needs to be watched carefully but I CAN watch them carefully BECAUSE I DO NOT NEED TO WATCH THE MAJORITY OF MY OTHER POSITIONS!  We’ve posted several quotes from members who’ve had the epiphany that comes from finding balance.  Every once in a while I like to pound this point home by posting up the day’s "untouched’ $25KP as the goal of that virtual portfolio is pretty much our system in a nutshell – take measured, manageable risks, establish an income stream by selling calls and puts and, ONCE THE PRINCIPAL IS SAFE AND SECURE,  look for opportunities with a percentage of the profits. 

We are not "swinging for the fences" with the $25KP, we have made about 150 trades in 90 days (9/24) and have averaged a gain of just 14% per trade but that 14%, as it is compounded daily, has given us a gain of over $100,000 so far.  As of Friday morning, when I posted the $25KP review, we were up $112,628.  At the end of the day, that mix of positions, if left untouched, would have lost a total of $155 (see below).  That means that, with a $138,437 virtual portfolio, you could have taken the day off while the market was collapsing and you would have lost just $155 – WHAT IS THE VALUE OF A DAY IN YOUR LIFE, WHAT IS THE VALUE OF YOUR PEACE OF MIND, WHAT IS THE VALUE OF YOUR FREEDOM?

We have $101,674 worth of open positions protected by $27,389 worth of puts and calls we’ve sold against them and $64,152 in cash.  While the day trades I mentioned above didn’t apply to the $25KP, we did make some moves and the important point is we COULD make some moves because we were ready to watch and react to the market and we were NOT worried about the positions we already had, despite the 178-point drop.  Even in this whole, terrible week, when the Dow dropped 350 points, we once again gained more than 10% in our $25KP and the really good news is that 10% is now 10% of the $120,000 we started the week with, not of the $25K we staked the virtual portfolio with 3 months ago, so it’s a better than 50% gain off our original basis.

The mission has been accomplished with this virtual portfolio and we will start a new one on Jan 19th, at the next expiration (there’s no point starting one now with all the holidays making a mess of things).  For anyone who had a tough week, I urge you to at least be ready to paper-trade the new account with us.  This is a virtual portfolio that is set up with the assumption that you DON’T have time to sit and watch the markets all day.  We don’t day trade it, we don’t jump in and out of positions and we don’t even rush to slap index puts and calls on the account in a violent market – we just follow safe and balanced trading practices to grind out a reasonable return.  Just like my favorite film about investing, "The Man Who Planted Trees",  it’s amazing the rewards a little bit of steady progress each day can bring you over time!

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” – Steve Jobs