General

S&P and Money Calls

A look at the historical performance of selling S&P 500 out of the money calls. If you’re comfortable owning an S&P 500 index fund, you should also be comfortable with covered calls. For example, CBOE publishes data on a simple covered call strategy with their BXMD index. The description from CBOE is as follows: “The…

Read More

A Question about Trusts

Are the use of Trusts the best way to leave money to your heirs? I was recently asked a question about putting money into trusts to help pass things “tax free” to someone’s kids or other heirs.  Given the number of misconceptions out there about trusts, I thought I would expand on the question a…

Read More

Options in the Media

In general, financial reporting is a scam.  The daily highlights of “President Trump had eggs for breakfast causing futures traders to worry as markets decline slightly” or “Markets up on Mickey Mouse’s birthday,” always amaze me at the abject lack of correlation.  (In fact, it wouldn’t surprise me if those articles weren’t algorithmically generated based…

Read More

Option Equivalence

A few days ago I had an inquiry from a person trading options in a restricted account (e.g. an IRA that did not allow marginable trades or short options positions): “I have an IRA in which I trade options.  I wanted to sell a put, but my broker won’t allow the sale of puts in…

Read More

How a Fund is Developed

Many individuals are curious as to the testing process for a new fund.  With the plethora of funds continually being developed, having some insight into this process can be helpful for investors.  At the very least, it can provide a series of questions which should be asked in conducting due diligence on fund managers. This…

Read More

How to Think about Financial Models

Checking the weather? Guess what—you’re using a model. While models can be useful for gaining insights that can help us make good decisions, they are inherently incomplete simplifications of reality. In investing, factor models have been a frequent topic of discussion. Often marketed as smart beta strategies, these products are based on underlying models with…

Read More

The Importance of Time Horizons in Investing

The following set of charts are great visual aids for showing the benefits of long-term investing in the stock market. The charts can help investors plan and set proper expectations. Two terms to understand the charts are below. DFA Domestic Balanced Strategy Index: This is a diversified blend of Dimensional US equity indices. The index…

Read More

Getting to the Point of a Point

A quick online search for “Dow rallies 500 points” yields a cascade of news stories with similar titles, as does a similar search for “Dow drops 500 points.” These types of headlines may make little sense to some investors, given that a “point” for the Dow and what it means to an individual’s portfolio may…

Read More

Equity Index Put Writing for the Long Run

Equity Index Put Writing For The Long Run One of my all-time favorite investing books is Jeremy Siegel’s Stocks For The Long Run, which is currently in its 5th edition. It’s a true classic that I refer to often.  Professor Siegel lays out the compelling case for equities over extended time horizons such as 20 or…

Read More

Why Should You Diversity?

When international stock returns lag, investors may feel tempted to double down on their home market. Historical data suggests the long-term benefits of diversifying globally. Why Should You Diversify? As 2019 approaches, and with US stocks outperforming non-US stocks in recent years, some investors have again turned their attention towards the role that global diversification…

Read More