Historically, tariffs imposed on China have caused recessions. This week both you and I have yet again, witnessed President Trump's insistence on imposing tariffs within the next 90 days. Clearly, Wall Street institutions that trade millions of shares per day are not in favor of this policy.
Question: How do we make money in this market?
The answer is simple: Patience and skill.
Here are 3 major strategies that I ask you employ in this market:
1. Sell staggered out of the money calls that are 30 days out until expiration.
2. Buy-back call options that are ten cents or less.
3. After you have bought back your call options, resell those options 30 days out.
Reminder: Pay attention to how much income you are generating under these circumstances. For example, if you are accustomed to generating $1,500 in call option premiums and capital gains during a bull market, your monthly income may decline during this volatile period. However, it is important to remember you will still be generating consistent profits by selling covered calls.
Dividend Paying Stocks
In this market you will notice that it is tech stocks that are the most volatile. When your portfolio is overweight with highly volatile tech stocks, you put too much of your capital at risk. That is why during a bull market it is important that 1/3 of your account is invested in long-term dividend paying Dow Stocks. Investing in Dow Stocks and collecting dividends will help stabilize your portfolio now and in the future.
Following the Wealthy Investor approach, as it relates to allocation, will pay off big during bull and bear markets.
Stay Patient! Stay Disciplined!
Tyrone Jackson
The Wealthy Investor
