Welcome to our beautiful garden! We have an Apple tree, a Peach tree, an Orange tree and even some Avocados! On the other side we also have all kinds of vegetables like Tomatoes, Cilantro, Cucumber and so on. We love the variety in our garden and spend a lot of time making sure everyone grows to their fullest. When the time is right and the fruits are ripe we reap the benefits and of course we are always on a lookout for weeds!
Wait…what has gardening to do anything with Investing? Well, just like gardening, Investing is also an art. You selectively pick stocks based on technicals and fundamentals and build position over time. When the time is right, you start selling calls against your assets and collect premiums which in turn improves your cost basis. Just like the variety in your garden, you want to make sure your portfolio is also well diversified. Last, but not the least, you always have to watch out for value-traps (weeds) or else it can ruin the beauty (performance) of your entire garden (portfolio). Building positions is an art in itself. We normally do this in 4 steps. If we like something, we initiate a small position (10%) and then start monitoring the stock. If the stock dips due to Market conditions but there is no change in the business fundamentals. we keep adding to our position: 15%, then 25% and finally 50% to make a full circle. This is the way we come to 100% which normally is no more than 5% of the overall portfolio. During this process of dollar-cost-averaging, we make sure that the business fundamentals are still intact. As the stock appreciates and when the time is right, we start selling calls against that position and start juicing the Assets. As long as we own the stocks, we keep collecting the dividends too and all this improves our cost basis over a period of time. This process of asset building (10/15/25/50%) has worked very well over the past several years.
Well, can one do his own gardening or does one have to hire a gardener? It depends. If you have a full time job then it is better to leave this job to the Pros who will take care of your garden. Of course, they charge a fee to manage and keep your garden in great shape as they know the ins and out of the game just like you know your job very well. There are several factors like Quarterly earnings, change in competition, risk of regulation, share holder meetings and other important events like product launch or change in geo-politics that can affect your stock. Do you have the time for all this? Probably not. A good gardener will always create a fence around your garden (asset protection by buying Puts or stop orders to sell) in case something unforeseen occurs.
So would you like to visit our garden? If yes, contact us for a free one hour consultation with no obligation whatsoever. If you like what we grow then maybe we can do some gardening for you too!