I'm making a list of investing strategies that I plan on implementing in different accounts to see how they do. I'm curious to hear everyone's thoughts on each of these strategies and if you have any other ideas.
In general to see greater returns you have to take on greater risk. I take this into account when listing the strategies.
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Dollar cost average. No brainer here. I'm DCA into my 401k. Risk equals the market average. Returns will be the market average.
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Model warren buffet. Low diversity picking my favorite stocks. Buffet says diversity is a hedge against ignorance. If you know which companies are good invest why put your capital anywhere else? Right now my favorites are ASO and BABA. Risk reward significantly larger than the market average.
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30+ stocks with low PE stocks with growing EPS low debt. These may be value traps but it's relying on one of the advantages Peter Lynch says small investors have over professional investors: time. We don't have to perform each quarter. This portfolio of cheap stocks could stay cheap for a decade and it wouldn't matter. If they're solid companies with a good dividend and steady growth they should appreciate eventually even if it takes 30 years for the market to realize their true value. Depending on the companies I pick this may be a low risk low reward strategy or a high risk low reward strategy. Some companies may go bankrupt. High risk. While the others may not grow. Low reward. As long as I pick solid companies that don't go bankrupt it may be a low risk with a good upside long term.
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Risk on. Buy SPXL. Sell covered calls when the price looks over valued to pay for volitility drag. If I get called sell puts. The volitility can help make selling calls very profitable. This strategy requires a steady hand when prices plummet. High risk high reward.
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Risk on/limited risk. Buy leveraged options with very long dates just at the money. I may set up a portfolio to do this during market corrections. But honestly I may avoid this because I don't like the time decay working against me. I'd rather sell calls than buy them. The benefit of buying calls is the limited downside risk, unlimited upside. High risk high reward but also high headache. With spxl I could hold forever. I can't hold calls forever. They expire.
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Buy SCHD. A great dividend ETF. And sell covered calls on it to try to bring the yield up to 5%. Risk should equal the market or be slightly less due to lower pe ratio companies. Reward should equal the market or slightly beat the market. This strategy probably has the best long term risk/reward profile. This could be done over several decades with little effort and little risk. Dividends and call premiums can be set aside to buy more SCHD during market corrections.
There are other strategies I've considered implementing.
Sell cash covered puts slightly in the money. This is a good strategy in a bull market.
Sell iron condors.
Submitted June 06, 2021 at 09:34AM by BeaverWink https://ift.tt/2T6o0Xl
