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Due to Joseph's vacation, this week's editorial will be written by Randy Bassett. Randy teaches our 2-Day Intensive Seminar in both Chicago and Los Angeles and run the Covered Call Platinum Selections Service. He was a Compound Stock Earnings client for many years and retired as a result of what he learned from a senior management position at fortune 500 company. As I began the CSE Covered Call Platinum Selections Service 2 months ago, I have learned even more what concepts are on the minds of many people. First, a little about the CSE Covered Call Platinum Selections Service. My goal is to enhance the understanding of the CSE Covered Call techniques by showing the practical application as I manage my “Platinum Portfolio” real time with my own money. I use all the concepts and techniques taught in the 2-Day Intensive Seminar in addition to a few techniques that are not taught in seminars. One of them is a proprietary technique that I developed and is not taught by anyone else. It is called the RSC (Randy’s Synthetic Covered Call). The RSC combines elements of the Covered Call, SSR, LEAPS, and GGR processes. The RSC position leverages the capital to produce higher returns than the traditional Covered Call while using Blue Chip stocks and ETFs. Normally ETF and Blue Chip stock premiums are 2-3% per month due to lower volatility and risk. The RSC technique can generate returns in the 4 to 8% per month range with the same risk profile of a Covered Call. The RSC technique uses the management concepts and techniques of a Covered Call with specific modifications. The RSC can be applied to weekly, monthly and quarterly options on both stocks and ETFs.
I am very thankful that I learned the Compound Stock Earnings Covered Call investment techniques back in 2006. They not only allowed me to retire early in 2007, but also enjoy managing my own investments. They have allowed me to maintain a monthly cash flow whether the markets are going up or down. It is the management techniques that Joe and Aaron taught me during the 2-Day Intensive Seminar that are the key. While I do not enjoy a drop in the markets, I know that I can generate cash income each month without selling my stocks for a loss. I managed my portfolio through the 2008 / 2009 market drop while earning cash income each month to pay my bills. I actually made more money during that time then I made during the months Joe Hooper’s Weekly Editorial before due to the TSS technique. While I had friends that did not know the CSE techniques that were “pulling their money” out of the markets and locking in the losses by selling their stocks, I was not selling my stock. I applied the CSE management techniques to my portfolio to generate cash while not selling my stocks for a loss. As we know, the market dropped from about 12,500 to around 6,700 during that period due to economic turmoil and uncertainty. It eventually returned to the prior levels with the DOW recently hitting above 12,800 points. We are now in the mist of another market correction and I am not panicking because I know I can still generate cash each month by using the CSE Management Techniques on my portfolio, without selling my stocks for a loss - and that those stocks always go back up in value. The market simply goes up and down. With the CSE Management techniques, we do not need to sell stocks for a loss, which locks in the
loss of money. We are able to keep the stocks while they cycle back and continue to generate cash profits using these Management techniques.
I have looked at the DOW futures tonight, as many of you have. They are down and how the market will finish is anyone’s guess. It will depend upon the panic and fear being experienced by some people.
I am not one of those people because I know how to use the Compound Stock Earnings Management techniques. I will continue to evaluate the charts of each of my positions to determine what technique is appropriate to use and when is the proper time to implement it. Sometimes, patience is the appropriate “technique”. I will use TSS and JFC with my positions while this cycle continues. I will draw the cycles of each position’s chart and watch for the inverted V to enter into a TSS. If appropriate, and TSS is not right yet, I will implement a JFC to earn income in the short term.
The other question that arises in many minds, is what is the “value” of my portfolio? I hear people ask, “but haven’t you lost money in the down slide, your portfolio value must be down”. I simply answer with, ‘the value of my portfolio is based upon how much cash profit I can generate from the positions each month’. I do not look at the street’s concept of value when they say wealth has been lost in the market downturn. Wealth is lost only when stocks are sold for a loss. That is a self inflicted situation when someone actually decides to “take a loss”. Over time, the cash flow that you generate and compound grows the value of your portfolio. If you earn 4% per month, after just twelve months you have earned 48% of your investment back. So if your stocks are ALL down 50% after the first year (very unlikely), you will be at "break even" on a market value analysis. After two years, if you have earned 4% per month cash flow, you have generated 96% of you original investment in cash. If all your stocks are down 96% (so unlikely it's almost impossible), you will again be at break even. What is more likely is that stocks go up and down and the stocks you buy are are even - leaving you with huge returns. As each month goes by, you also have more cash, so you re-invest more capital and your income just grows and grows and grows. That is compounding. That is how $10,000 can turn into $3,500,000 in just ten years. Through generating cash and re-investing it. It has nothing to do with which way the stock market goes. I look at my portfolio much like a real estate investor looks at a rental house. How much “rent” can be generated from the asset each month? That investor does not sell their assets just because the “value” of the property has fallen according to the “market analysts”. No, they just keep pulling in the rent each month without considering how much they would receive by liquidating their assets in a down market. That is how I look at my stock portfolio, how much cash can I generate from the option premiums each month based on my positions? That is what I am interested in and that is how I “value” my portfolio. If I can generate a minimum of 3% cash each month based upon my original capital investment, then my portfolio is worth that 3% per month to me. The portfolio grows if I generate cash within it each month. I am not planning on liquidating my assets. I want to continue to generate cash profits each month. Since I know how to use the great Compound Stock Earnings Management techniques, I can generate cash even on “fallen positions”. Because, stocks go up and they go down as the market moves in either direction. This truth allows the CSE techniques to be able to generate that cash in premiums.
I will continue to manage my portfolio for monthly cash flow until I get each position to a profitable close.
So, like you, I do not like seeing the markets go down, I would much rather they just go up every day, forever. But, that is not the market reality. Since I have made the decision to invest in the stock market, I must realize that there will be up markets and down markets. We are now experiencing a down market period. I do not know how long it will last, but I take comfort in knowing that I can generate cash income on my portfolio without being forced into selling my stocks for a loss. I can use the Compound Stock Earnings Management techniques to generate that cash income. Of course, I want to “will” the markets back to all time highs. I look forward to seeing many of you at future CSE seminars. If you have not mastered the CSE Management techniques, I encourage you to attend or re-attend the next 2-Day Intensive Seminar either in person or on line with the Dallas seminar later this month. You can also take advantage of the other CSE educational services such as subscribing to the Wednesday Live-in-the-Market Coaching sessions.
