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Thursday, January 24, 2008

Sticking With Our Covered Calls Investing Process

This brief article offers some words of encouragement and a few bits of advice.
It's not news to any of you that the stock market results during the past month have been very disheartening. Please don't dismay. That is, don't let your emotions and concerns get the best of you in these difficult circumstances. Keep a cool head, don't do anything rash, and continue with your covered calls investing process.
I repeat, continue with your covered calls investing process.

Over a period of time, we will be rewarded with market-beating performance; but it will take a few months before we can totally erase losses incurred during the past several weeks. I remain confident that we will exceed all major stock, bond, and money-market benchmarks in 2008 by continuing with our covered calls investing process. I strongly suspect that the intraday lows hit yesterday will prove to be the market lows for 2008. Hence, we are now beginning a period in which covered calls will enable us to gradually return to profitability. But be patient -- we will not regain all losses in a single month.

Again it should be said: By sticking with our covered calls investing process we can fully regain all our losses over the next 2-3 months. Over a short-term period, such as the past month, it is extremely difficult to time the market and to know when to abandon the market completely or even when to establish more defensive positions (such as deep in-the-money covered calls). Over recent decades, numerous investing gurus have demonstrated that the surest path to investing success is through investing in high value and high quality companies and by a consistent and disciplined application of ones own investing process. Our covered calls investing process will continue to serve us well as long as we stay the course.

Regards and Godspeed,

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