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Why I Love Market Volatility

Income Genius is a monthly newsletter from Iron Gate Global Advisors that reviews methods for intelligently generating income from your investments. In this month’s Income Genius we discuss why volatility can be a good thing from an income perspective when you effectively utilize covered calls. ======================== There are two great things about stock market volatility including the volatility we are experiencing now. You can buy great businesses (stocks) that are on sale. Those stocks that you have wanted to own for a long time but haven’t. You can sell options to create an extra income stream and to protect assets among other things. Today I’m going to focus on number two – options . . . We implement many different strategies for our clients. Strategies for protection, income, or taking advantage of a falling market are a few reasons we use options. In today’s Income Genius I want to focus on
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Categories: Markets.

A Short Term Market Rainstorm

One of our favorite places in all the world to vacation is the Garden Island in Hawaii, Kauai. There is nothing better than hiking the famous Kalalau Trail that overlooks the famous the Nepali coast. It’s one of the most beautiful places we have been which keeps us going there over and over. The one thing we’ve learned through our multiple trips is to prepare for anything. One minute the weather will be beautiful, the next minute you could be in the middle of a jungle rainstorm (they call it the Garden Island for a reason!). A saying that we have come to know through our time there is “if you don’t like the weather, wait five minutes.” This is because the rain normally doesn’t last long before the beautiful weather comes again. The stock market acts in a similar way. As we enter 2016 it has been raining. The market has left
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Categories: Markets.

A famous stock market parable: Mr. Market

One of the greatest stock market parables was given by the famous Benjamin Graham and reiterated by Warren Buffett in his 1987 shareholder letter. It’s a parable that puts the day to day, week to week and month to month stock market movement into perspective. Below is a copy of that parable from Mr. Buffett’s 1987 shareholder letter. We hope you enjoy it as much as we do! The why is best explained by the great Benjamin Graham.  Warren Buffett quoted it in his 1987 shareholder letter. The following is taken from that letter (our emphasis added): Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success.  He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business.  Without fail,
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Categories: Markets.

What every investor should do . . . but very few will.

We live in a world of immediate gratification. From entertainment to shopping to the markets . . . people want it done well, done cheap, and done right now! For entertainment and shopping, those requirements may be possible. For the markets . . . no way.  One of the problems investors have is something that may not be their fault. We have several news channels focusing 24/7 on the global markets. We have the world wide web, Twitter, and other formats where information and news is constant. We have major brokerages (Schwab, TD Ameritrade, Fidelity, Scottrade, etc.) that make millions on trading revenue. They call it DARTs (daily average revenue trades) in the industry. Despite knowing what is best for clients some of these brokerages spend millions and millions pushing active trading because it makes them a ton of money! We are inundated with short term this and short term that.
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Categories: Markets and Strategy.

Will 2015 Be Another 2016 for the Markets? IGGA Market Commentary

At IGGA we are kicking off the New Year with our regular Market Commentary, however this is a special edition because we have a heavy emphasis not just on the month behind and the month ahead. This time we’re looking at the full outlook for 2016. I start off with a perspective on 2015 and a look at specific global indicators along with an assessment of major market sectors and how we’re weighting IGGA client’s across those sectors. Then I get right to the heart of the matter. Is 2016 another 2015? I discuss the likely outcome from a probability perspective. We discuss the specifics of three major areas: What we typical expect to see after a flat year What a Presidential Election year can mean for the markets The probabilities that accompany rising interest rates And as always I’ll review how we at IGGA use a probabilities based approach
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Categories: Uncategorized.
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