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COVID-19 & Our Commitment to You

Heading Back to Bora Bora Message Sent 06.22.2020 Today was our 4th Trade Day since the Coronavirus became a regular part of our life. In one way or another, COVID-19 has caused us to change or alter nearly everything in our day-to-day lives. But, one thing that didn’t change was the Snider Investment Method.   Just as the sun rises in the …

What is your investment ‘Plan B’?

A client recently asked a great question, “What is our ‘Plan B”? I think part of the question stemmed from the idea that if we aren’t reacting to the market and its changes, we are doing something wrong. Adjusting our investments or calling an audible in the middle of the process makes investors feel good. Just like nearly every other decision, the change is driven by emotions yet investors fail to realize it. After the change, they normally come out feeling the portfolio is much ‘safer’ now, or they can make a whole bunch more money. (Fear & Greed) Rarely will an investor go back and evaluate previous decisions to decide whether or not it was advantageous in the end.

Bad News Bears: Reacting to Bad News

In the Information Age, nearly everyone has access to boundless amounts of information at their fingertips thanks to the Internet. When researching stocks, investors can access statements and news within seconds of opening a web browser. This allows information to reach your hands much quicker than receiving financial statements in the mail or waiting for the newspaper or televised news program in the evening. Since news travels faster, this also allows investors to rapidly react the moment they read good or bad news about a company. If an investor reads news about one of their stocks underperforming earnings, they may want to sell their stock, thinking this news will cause their stock to decrease in price. However, this course of action may not accomplish what the investor is looking to do.

Avoid the Herd

By nature human beings are drawn to a Herd Mentality. It can be evidenced in new fashion trends, technology, social norms, and even the stock market. Ideas and trends start small with only a few early adopters jumping on board. Then as acceptance grows the new trend starts to become the new norm. It is this inherent need to follow the herd that prevents some people from joining trends too early on.

The S&P 500 at Post Crash Highs, What to Do Now?

Since the beginning of the year the S&P 500 is up nearly 8 percent. This quick jump in the stock market has taken place depite the fact that much of the debt crisis remains unresolved in Europe as well as in Washington. China’s economy is showing signs of slowing while inflation fears could lead to a surge in emerging markets. All the while a presidential race is heating up and the prognosticators are calling for all sorts of calamity. This surge has sparked frenzy in the media bringing about predictions from financial pundit bulls and bears.

What were you thinking in 1986?

In spite of all these economic and political issues the S&P 500, including dividends, has still returned nearly 10% over the period. Nonetheless, most investors did not experience this level of returns because they let their emotions drive them in and out of the stock market at inopportune times.

Stock Prices: Always on the Move

Throughout the Trade Month, I get many phone calls from clients asking why one of their positions has increased or decreased dramatically in price. Stock prices reflect a company’s current value as well as a projection of the future. Since the projection of the future is constantly changing as each day passes, stock prices are always fluctuating. To understand why a particular position moves dramatically, we first have to see why stock prices move in general; supply and demand.

Winter: The Season Before Spring

Winter. The word alone brings images of kids playing in snow (unless you’re from Texas), Santa Claus, and a plethora of religious holidays such as Christmas, Hanukah, and Kwanzaa. However, to Snider Method investors, the word “winter” causes people to cringe and have premonitions of the Apocalypse. Winter is a term used in the Snider Method to describe a position that is not able to generate any option premium. Winter positions are never fun and I get many calls from clients asking how to get their positions out of winter, if there is some way to strategize their way out, or simply sell the position and move on. However, the question you should be asking isn’t “How do I escape winter?” but rather “What are the alternatives and is it better than waiting?” There are three main alternatives: selling the position and starting over, buying more stock to reduce the cost basis, and Transmogrification.

The mother of all reverse compounding problems

The only proven way to achieve a passive double-digit yield to replace your income is to own businesses – either directly or indirectly through common stock ownership. But this creates a challenge. The chart shows each of the bear market declines since the end of World War One. We are in the tenth decade and there have been twenty bear …