On the path

[Martzee]

I am a mechanical engineer by profession. I liked the job when I was on a learning curve. I still do like it - sort of. But, lately, I experienced too many people who hire you for your expertise and help, and then do not listen to you, blame you for their own stupid decisions, blame you for over-designing the projects, blame you for contractors mistakes and how come your plans didn't show how to install this or that... I got sick of all this. So one day, I started looking for an opportunity where I would not be required to deal with all this bullshit. Starting a business? No, you still need customers (mostly unreasonable, not knowing what they want, whining all the time), you need employees (worst thing ever to deal with employees which are not committed and it is hard to make them treat the business they work in as their own), you need supplies, suppliers, subs, storage (if you are in a product business or selling stuff, or even manufacturing it), urging unpaid invoices, sue people for not paying you, being sued for mistakes of others... give me a break. I have been there, and I do not want that. And don't take me wrong, I was on the executive levels, not just an employee.

The only answer I found to my problem was the stock market. But not the stock market MJ talks about and most people here think about (as a casino). Not a buy and hope strategy, but active trading management. It took me a few years to develop a viable strategy that would work for me, make me money, and quit the rat race. Investing and trading are simple, but not easy. One market wizard once said, "trading in the stock market is the hardest way to make easy money".

After years of learning, reading, practicing, and trading, learning from my mistakes, I developed a strategy that generates income in any market (up, down, or sideways). And that's all that matters to me. Make money, I can spend to pay the bills and not have to deal with anything and anyone.

Well, I am not in my early retirement yet but on the path there. If things continue the way they do, I should be out of the rat race in five years.

 

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[Martzee]

Why I like investing and trading in the stock market:

1) You can generate great returns
2) You can treat investing and trading as your business
3) You do not need customers
4) You do not need supplies
5) You do not need any marketing looking for customers, and keep them happy mainly when they do not know what they want
6) You do not have to deal with competition, there is none
7) You do not need any manufacturing, rent buildings, offices, warehouses, you do not need a third party like Amazon to sell your product
8) You do not need any product, after all, you do not need to spend time searching what to sell, what to make, what to manufacture, and you do not need to beg for startup money

All you need is a computer or laptop, a brokerage account with full trading privileges, and $2,000 to start with. You are free, you have no boss, no partners, no investors to answer to. You have full-time freedom.

People think investing and trading in the stock market is a bad proposition because the market only makes 8% a year... Those who claim and believe this probably never actively traded in the market and have no clue what they are talking about. These people should stay away from the market because thanks to their own false beliefs they predetermined themselves to failure before they even started.

I am not a guru or great in investing and trading. I make mistakes, but I believe in tremendous freedom trading offers. I started trading in 2014 and averaged 45% annual returns except 2018 and 2019 where I had losses of 33% and 24% respectively. However, 2020 was a very good year. Despite covid troubles and selloffs, I am currently at 157% revenue.

 

[Martzee]

November 2020 is over.
My trading/business account is up +263.82% for the year despite 2020 was really a bad year.
My ROTH account which is passive is down -5.38%
My IRA account down -3.77%
My personal trading account up +33.39%

 

[Martzee]

During 2014 and 2016 I rocketed a huge debt. Part of it was medical expenses which weren't covered by my insurance (mostly rehab cost), the rest was pure stupidity.

But, I was a high salary earner and I didn't care.

In 2017, when I had to take a second job just to pay the bills only, I realized that my debt was over my head. Yes, I worked two jobs and both salaries went towards bills and paying credit cards - just minimums!!! Almost $3,000 a month went to credit cards!!!

That was an eye-opener.

I restructured the debt, renegotiated interest rates (some lenders even dropped the rates to zero), and went to an aggressive pay-off plan.

I have about 2 years to be debt-free. Mortgage loan excluded.

Here is my road to debt freedom...

 

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[Martzee]

► TRADING PLAN

We are investors, not traders. We buy assets - dividend-paying companies. We buy dividend growth companies. Our plan is to hold those companies forever. We treat those businesses we are buying as our businesses. It is like real estate. People do not buy homes just to sell them the next day, or next month. People buy to hold their home for the next 30 years or more. We buy dividend growth companies for the same reason.

We buy dividend growth companies to generate income receiving dividends. We want our businesses to reward us for holding their shares and paying us for it. We reinvest the dividends to accumulate more shares. Our goal in accumulating shares of a selected company is to reach 100 shares of that business. All dividends and account deposits are used to accumulate shares.

Once we accumulate 100 shares of a company, we start selling covered calls. When selling covered calls, we sell to avoid our shares being called away. We deploy all hedging strategies to avoid the exercise of the calls. If, however, our shares are called away, we immediately start selling naked or cash-secured puts. We sell puts as a means of investment to buy shares, not to speculate or sell put just to bring premiums. We sell puts against companies we want to buy. Once the shares are assigned to us, we implement the Wheel of Fortune strategy by immediately start selling covered calls again.

All premiums generated from selling covered calls or puts are used to buy more shares of the companies we want to hold.

We only sell our companies when they no longer meet our requirements - reduce or suspend the dividend.

From time to time, we use other options strategies to generate income: poor man's covered calls, butterflies, covered strangles, or collars.

Poor man's covered call
We use this strategy against expensive stocks where we do not have enough capital to trade a standard covered call right away or in the near future and when saving money would take many months or years; usually indexes such as SPY, RUT, IWM, etc. We also use it against ETFs or individual stocks while accumulating shares of that stock.

Butterfly
We use this strategy as a directional trade. When we identify a strong trend in any direction, we may apply this strategy to limit our risk but reap a decent profit. For example, buying a call against SPY to participate in a strong trend would cost us $800 while the same butterfly would cost us $200. This limits our risk in case we are wrong.

Covered strangle
This strategy is selling an OTM put and a call against a stock which we want to add shares to our holdings and we already own shares. For example, we own 100 shares of a stock XYZ, and we are OK to buy another 100 shares. We sell covered strangle and our calls are covered by the existing position we already own and our put is covered by cash we have in our account in case we get assigned.

Collars
We may use this strategy (selling covered calls and use the premium to buy protective puts) if we see a need to protect our holdings and buy insurance. The covered calls will generate income for us to buy the puts.

Cost basis offset
Selling covered calls and puts, as well as other strategies, will be used to offset our cost basis. This is more of a psychological or mental offset. However, it helps to see it as having less risk in our stock and that we have purchased our shares for "free" (we used premiums collected when selling the calls and puts, although on many occasions we started collecting these premiums after we purchased the stock).

What about other options strategies?
From time to time we may use a different options strategy, for example, naked call, if we see it fit and we are prepared for any consequences from such trades. But, these trades will be very rare.

► REDUCING TRADING COST
Our other trading goal is to reduce trading costs. Therefore we picked a broker that charges low or no fees to trade. We think Tasty Works is the right broker for us. Tasty Works charges no fees to purchase or sell stocks and approx. 1.15 per contract of options trading. This allows us to accumulate our stock holdings buying a single share of the desired stock for no fee.

► DISCLAIMER
Note that all trades presented here are our trades and we post them for educational purposes. We are not licensed as investment advisors and we do not know your objectives and goals, so we cannot provide you with any specific investment advice. If you seek advice, contact a licensed advisor. Note, that trading or investing in stocks, options, or futures involves risk and that you may lose all your money. If you decide to mirror our trades, do it at your own risk and do your own homework.▼