InvestingWithBrandon

Retail investor: Everything's expensive right now. There's nothing to buy.
Me: The index is near highs, sure. Did you look inside it?
Retail investor: What do you mean inside it?
Me: Chips/banks/semis/memory/retail/energy... There's a full panic happening inside a market sitting near records.
Retail investor: Huh. I only ever look at the index level.
Me: That's the mistake. "The market" isn't one thing. There's always a sector getting wrecked while everyone stares at the headline number.
Retail investor: So that's where you look.
Me: YES... There is almost always opportunity somewhere. I ask

Retail investor: I run the wheel. It's the complete system... premium coming in from both sides.
Me: Look at this 10 year chart of $Q & run your wheel over it in your head.
Retail investor: Ok...
Me: Phase one. You sell a cash secured put. Your money sits frozen for months next to the Nasdaq doing 15% ish a year.
Retail investor: Fine, but then I get assigned & own shares.
Me: Usually after a little drop from a crappy valuation... So still assigned at a bad price. Then the wheel says sell covered calls on it. So the recovery starts... & your shares get called away at the bottom of the bounce.

Retail investor: I sell cash secured puts. Keep about $150k in cash to secure them. It's the safe way.
Me: Look at that 10 year chart. The index has averaged roughly 15% a year over that stretch.
Retail investor: Ok...
Me: Your $150k has been sitting in cash next to that chart. What'd it earn?
Retail investor: ...basically nothing. But it HAS to be there. That's how it's secured.
Me: It doesn't though. My puts are secured by my $VOO & $Q. Same trades. Same premiums. My collateral rode that entire chart while it backed every promise I made selling puts.
Retail investor: Wait, the shares can be

Retail investor: I trade weeklies on the Nasdaq $Q. Just need to read the short term move.
Me: Pull up the 5 day chart. What's the story there?
Retail investor: ...it's just noise. Up Monday, dumped Tuesday, bounced Wednesday.
Me: Right. Now pull up the 5 year. (screenshot below)
Retail investor: Oh. Up & to the right. Obviously.
Me: Same index. Two completely different games. One is unpredictable garbage. The other is companies earning more money every year & the share price following that.
Retail investor: So the week is random & the years aren't.
Me: Go buy a business in the real world and

Monthly puts vs 2 year puts.
The math that ends the argument.
Market gets cheap.
I sell one 2 year put. Collect $20,000.
You sell monthly puts on the same company.
$1,000 per month average.
To match my $20,000 you need to hit 20 trades in a row.
But here is the problem.
As the market recovers from the dip each monthly put becomes less compelling.
Less undervalued. Less premium. Less margin of safety.
You are forcing trades as the opportunity shrinks.
Meanwhile I deployed $20k at peak fear & great valuation.
Took that premium. Bought more shares & leap calls.
Done.
One trade at the right time b

The best stock of a generation fell 94% first. Most people don't know that.
$AMZN, dot com crash. Roughly $113 down to about $5.50 by late 2001.
Down 94%. $100k became ~$6k. & this wasn't some junk startup... it was THE Amazon. The company that went on to change everything.
Two lessons off this one chart & they both matter:
First... even the greatest company in the world can fall 90%+ when you buy it at a bubble price. Amazon the BUSINESS was fine. Amazon at 1999's price was a 13 year mistake. This is why I stress the importance of valuations so much.
Second... the people who actually got rich

If you put $2,000 into Micron $MU in 2010, you would be rich today.
Well...
Let’s play it out if you somehow did nothing & held until right now.
You would have about $3,250 by the end of 2015
and did nothing
Then watched that $3,250 climb to about $13,200 by the 2018 peak
and still did nothing
Then watched $13,200 get cut almost in half to about $7,300 in the late 2018 crash
and still did nothing
Then watched $7,300 rip to about $21,400 at the November 2021 peak
and still did nothing
Then watched $21,400 collapse to about $11,600 at the September 2022 bottom
and still did nothing
Then watched

Retail investor: I only do 0DTE options on $Q It's the INDEX man. Way safer than doing it on some random stock.
Me: Zoom this chart into one day for me. What do you see?
Retail investor: Just... noise. Up in the morning, dumped in afternoon. kinda random and depends on the day...
Me: Right. Pure noise. Nobody on earth can predict it. Not the hedge funds, not the algos, & definitely not us. So walk me through how the "safe index" helps you when the TIMEFRAME is the problem?
Retail investor: I mean... $Q won't crash 40% like a meme stock...
Me: Doesn't matter. Your contract expires in 6 hours. A

Retail investor: Made $11k in premium this year on cash secured puts. Pretty happy with it.
Me: How much cash is securing them?
Retail investor: About $120k
Me: & what's the market done this year?
Retail investor: Last time I checked the nasdaq $Q is up 17% YTD.
Me: So your $120k sat out of that. Call it $20k+ of gains it never caught... to earn you $11k in premium.
Retail investor: ...I'm behind where doing nothing would've put me.
Me: The trades were fine. The collateral was the problem. Mine are secured by $VOO + $Q + Elite companies, so I collect the same premiums AND my money rides the ma