Of course, I can't make any promises as to what you can or will achieve...
But I do promise to show you HOW I do it...
WHAT I use to do it...
And my theory as to WHY I'm able to do it.
But first, a confession...
I gave Buy & Hold bigots a hard time on the previous page, but I actually agree with them.
I also failed to mention that bigotry is also present in the active trading community...
I know as I used to be an active trading bigot...
I thought buy and hold investors were stupid to settle for 7-9% a year when they could easily earn 15-30% a year trading options.
Bigotry = Ignorance!
My own bigotry blinded me to other 'truths' that could be beneficial to my life.
Lucky for me, I met a millionaire who taught me a better way of thinking.
Basically, don't get caught up in arguments over which "method" is better. Learn both methods and implement the best of each approach.
I wish I could remember who told me this so I could give them credit, but the advice went something like this...
That's how I now feel about the war between Buy & Hold bigots and Active Trading bigots.
Those idiots get into pointless arguments about who's method is the best.
While those dummies are debating details, curious minds like my own are studying BOTH of their approaches.
And that leads to the secret to HOW I'm able to beat the stock market average each year...
I combined 'conservative' Buy & Hold with 'conservative' options trading to earn 12%, 32,% or even 45% on my money each year (your results may vary).
And here is WHAT I use to do it...
I won't have time to fully explain options trading here, but Puts and Calls are a highly leveraged form of investing.
Basically, they have the potential to produce returns of 50-100% in a matter of weeks, if not days.
Hence, why a lot of people trade options (to get rich quick). However, I trade options because I hate losing money.
During Bear Markets I hated losing 40-50% of my money with traditional buy & hold. So now I only buy stocks during market crashes.
Step 1: I sell options (stock insurance) to other investors and this allows me to get paid to buy stocks after they've fallen 20-40%.
This is an approach I modeled after Warren Buffett who also sells options. Yes, Buffett uses options in his overall investment strategy. You can verify this by reviewing his 13D filings (page 7) and reading his shareholder letters (page 14).
Forbes and Morningstar also wrote articles on this. The Morningstar article in particular talks about a 4.9 billion dollar option trade he made ("We have received premiums of $4.9 billion, money we have invested").
So that's Step 1 of how I use options to beat the market average as well as reduce my risk of investing.
The one downfall to this approach is I do a lot of waiting and most of my money sits in cash as stocks only fall 20-40% every few years.
However, Options allow you to benefit from stock price movement without actually owning any stocks.
Yup, you read that right. I can make all the money I would make with buy and hold without having to buy any stocks.
Step 2: I buy either Call or Put options and the leveraged return of those contracts give me an annual return of close to 7-9% on the overall account even though I didn't actually invest my entire account.
Said another way, I use Options to earn the same 7-9% Buy & Hold return while only having to invest roughly 5% of my account. So 95% of my money can stay safely in cash while I wait for a market crash.
I know...it sounds completely unbelievable and I don't expect you to believe it. I FULLY expect you to verify each and every claim I make. It's what any prudent investor would do.
So hold your judgement until you verify everything I am saying.
One last thing before I show you my current performance...
...I have a quick question for you.
Do you believe that it's possible to beat the market average each and every year? Not if it's possible for Warren Buffett or some other super star investor, but is it possible for YOU?
It's one thing to know you can beat the market with a more active style, but you have a preference for passive investing. There is nothing wrong with that! I have zero problem with that stance.
Active investing is not for everyone.
What I have a problem with is the ignorant viewpoints of people unwilling to even consider there is another realm of truth outside of the buy & hold bubble they live in.
That's why if your answer to the above question was "No", then I'm 99% sure your investment performance is close to the market average.
My theory as to WHY I beat the market is because of my 'belief system'. It has absolutely nothing to do with my strategy or the fact that I trade options.
I simply adopted the belief that I could beat the market and that I could find a way to do it. I find it no surprise that I have found a way to beat the market each and every year.
But here is a snippet of what someone once said about my performance...
"Your type of story is exactly what messes up new investors. 'Oh, this guy did it! I guess all the academic studies were just a conspiracy! Sign me up for the 211% annual returns!' Your language is that of anecdote and not of science. Also, your website shows you are selling options trading coaching, which tends to undercut the message.
Many people have stories like that, and I’m happy for their success. I am not contesting your personal results. But what the scientists do is round up 10,000 Trader Travises with recent amazing returns and start tracking their results. Over time, some of them start to have some bad years, and some go completely broke. Over a longer time, people revert to average performance, minus their trading costs.”
I want to focus on this word 'anecdote' as it shows up in the scientific community a lot. Basically it means it's not necessarily true or reliable, because it's based on personal accounts rather than facts or research.
And that's what bother's me...
Science is largely keeping people broke. It's not encouraging them to be great! Instead the science is used as an excuse to not even try.
I don't care how many studies you quote me. I have to at least try.
If I prove to be incompetent and fail to beat the market average then I'll retire from active investing and put all my money into an index fund.
But until that happens, I ignore all the naysayers who try to encourage me to be "average".
There is nothing wrong with being average per se, but as a father I'd never encourage my kids to be average.
I teach my kids to follow the quote on their pre-school diploma...
Basically, if you aim for 'greatness', you'll most likely end up somewhere better than if you aim for 'average'.
So that's my theory as to WHY I've achieved the performance you see on the next page.