Look, after my decades in the investing game, I know the stock market is tough. You can get everything right... and still be wrong.
You can investigate every aspect of a business, study its financial accounts, interview customers, speak with management, model its valuation, and know every single detail about it... And yet, when you buy the stock, it goes down.
Or maybe more likely, its share price just floats around... never gaining any real traction.
Over a few months or a year, luck matters more than anything when investing in stocks. Even if you're right, it can take much longer than you expect for a stock to head higher.
That's the game most investors play. You need to find stocks that go up. And that's hard.
But I don't want you to be stuck playing that game. I've found a better one...
You see, rather than ramping up risk, we can generate income from stocks with a unique strategy – selling options.
By selling an option, we collect money up front at the start of our trade. That means we don't need to pick stocks that go up to make money. We can make profits on stocks that rise, stay flat, or even those that fall a little bit.
In short, our entire investment strategy changes from searching for stocks that will go up... to searching for stocks that won't go down. If you have more ways to win, your chances of success rise.
But this isn't just a safety net that helps you out when stocks don't rise. It opens up an entirely new world...
Everyone is out there chasing the same hustle. They want growth. They want booming industries. They want earnings per share to shoot up. They want a frenzy of investors who will follow them into a stock and push the price up. That's what everyone looks for.
Everyone is competing at the same game. And of course, the more competition... the more difficult the game gets.
But let's say I suggested you invest in Oracle (ORCL). It's an "old school" tech company. And sure, it has some good things going for it...
It has a lot of free cash flow... It pays a dividend... And plenty of customers keep using its products to run their businesses.
But there's no way you would consider Oracle to have the same growth prospects as Alphabet (GOOGL), Facebook (FB), or some smaller, younger tech companies.
If you buy the stock of a mature, profitable company like Oracle today, you could expect to earn about 7% per year over the long term (but with a lot of month-to-month noise). And you wouldn't expect the stock to soar, since its high-growth days appear to be behind it.
When presented with such an opportunity, most investors simply pass. Sure, it's a safe stock that you can likely hold for the long term... but so is cash.
With options, we can look at Oracle differently. We figure it's a sturdy business... And its shares are cheap today. It trades for about 18 times earnings and 16 times free cash flow.
Even though Oracle's stock could rise, it likely won't rocket higher from here. And more important, we don't think it will fall too far from its current price.
Now, we can take our options strategy and use this "stock that won't go down" to earn better profits. In my Retirement Trader advisory, we did just that last fall...
We sold an option on Oracle and collected $1.32 per share instantly (when the stock traded at $53.81 per share). And since each option deals with 100 shares, that means we pocketed $132. Our trade only took two months to play out. That means we could use the capital six times over the course of a year and earn about 15% on that capital at risk.
A stock that goes nowhere for everyone else can earn us about 15% in annualized gains.
We can do this over and over with boring, forgotten, safe stocks...
If you've never seen opportunity in stocks like Walmart (WMT), JPMorgan Chase (JPM), Coca-Cola (KO), MetLife (MET), Walgreens Boots Alliance (WBA), CVS Health (CVS), and other stalwarts... it's just because you haven't looked at them the right way.
In the past, I've taught family members, coworkers, and thousands of readers just like you exactly how to make these trades. Last winter, I even traveled to upstate New York to teach a retired police chief with almost no financial experience how to complete an options trade. Anyone can do it.
So please don't tell me it's not for you. Give options a chance before you dismiss them. I promise, you'll be glad you left the crowd behind... and started playing an entirely different game.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor's note: Over the last decade, Doc has racked up a 93% win rate using this strategy – and taught more than 100,000 people how to use it for themselves. Last year alone, it could have added an extra $3,000, $15,000, or even as much as $30,000 to your bottom line. To find out how, check out Doc's latest presentation – only available until midnight tonight – right here.
"Most folks are still scared of stocks," Doc says. Fear of risk is running rampant in the market. But you can actually use other investors' uncertainty to reduce risk in your own portfolio... Get the full story here: Fear Reigns Supreme... Now's the Time to Profit.
"Many people in the U.S. have adopted the attitude of just surviving this crisis," Doc writes. Folks young and old are making rash choices with their personal finances. Learn Doc's three tips for ensuring you can live comfortably in retirement right here: Don't Let the Coronavirus Empty Your Retirement Account.
Today, we’re looking at a company that thrives in the booming housing market…
As regular readers know, America has too few homes today, even as low mortgage rates tempt more buyers into the market. That means homebuilders are constructing more houses… sellers are sprucing up existing homes … and buyers are putting personal touches on their new homes. They all turn to this company…
Masco (MAS) is a $15 billion maker of home-improvement and building products. Its brands include Behr paint, Delta faucets, and Kichler light fixtures. They’re just what you need to build or upgrade a home… and that’s happening a lot today. Despite COVID-19 disruptions, Masco expects sales to drop only 8% year over year in the second quarter – much better than the 15% to 20% it had feared previously.
MAS shares collapsed early this year on virus-driven fears of economic catastrophe. But they’ve doubled since March as the housing market shrugged off those concerns… And they just hit a new all-time high. As the housing boom continues, Masco should continue to soar…