Category Archives: Finance

Instagr.am Critic (And the Like)

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I hate to be critical of running startups, because I\’ve never raise $500 of capital, much less $500k of capital like InstaGram, but, I\’m going to because somebody asked on Quora about Flickr failing to get into the mobile single post image game.

The IDEA of mobile picture sharing is to share with friends. This means to me, that a service that does solely images (like InstaGram) will never be as great as something like Facebook. And, as a twitter user, I use TwitPic, mostly because it is very well integrated into every twitter client and has a pretty easy to use comment system. My incentive to download a different app is severely limited when I have two that do what I need.

Capital Intensive; Where is the money? Hosting images is the next most costly thing to hosting video, and I suppose that with maximum ad revenue, you might be able to make money. But let\’s face it: If you have images online, who actually looks at the ads next to the picture where the attention focuses : Viewers have a specific scope. Ads in the app – which I\’m still not convinced actually make much money – might be the source.

The Future of Wireless Internet

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Today in Atlanta, http://clearwire.com launched their marketing campaign for their WiMax, Microwave transmitted wireless technology to basically blanket the metropolitan area with Wireless Internet. About two weeks ago, my friend Brian and I had a debate about what the future of wireless is between Wifi and 3g and 4g networks.

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3g is probably the technology that you\’ve heard about the most as Verizon and AT&T have networks that offer services on this version of mobile standard. Typically 3g networks can achieve about 1mbps down and 300kbps upstream bandwidth, but that\’s before we consider the internet applications – typically when you buy a data card from AT&T they will sell you a dual band card now that bridges two connections (and 3 has been mentioned) meaning that you can achieve 1.5mbps down and 500kbps up as long as you\’re near a 3g network (most major cities at this point and available 30 miles outside Tuscaloosa, Al where I did a streaming video link to North Carolina using one of these cards.)

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Clearwire is one of the newer Macro technologies that was actually looked at about 5 years ago, long before 3g came out and was having some major success in \”last mile\” service for people outside DSL and Cable installation coverage areas. Today, clearwire is selling this as a mobile connection similar to 3g, but with greater speed. It\’s true, as a technology, WiMax (over microwave networks) has greater speed and line of sight range, at approximately a 3mbps limitation. I\’ve never used this service, but in research when I was looking at the technology, it seemed like a great idea for places without services, but less so when there are alternatives. Mobile computing (aka driving) should be really interesting as Microwave receivers tend to have longer switchover timings than say a cellular network — and microwaves technically require some sort of line of sight, more so than RF.

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As I mentioned, a good friend and I had a discussion about the future or wireless, especially wifi as we know it today in the future when much more Macro/Mobile technologies will be rampant. As you know, wifi networks are a more local network designed for your business or house use. Wandering wifi sets up wireless networks at commercial stations (like the Chick-Fil-A I visit) so that customers can use wireless as they eat or sit around a restaurant. Wifi (802.11 is a much more micro technology with a range typically considered in < 1000ft but in fact with antennas can go several miles (directionally.)) Economically speaking, I believe that wireless has a long future ahead because every household simply can\’t afford to pay $55 a month per computer for internet, and it makes little economic, or branched security sense. In fact, wimax, 3g cards, and your local cable/dsl provider all encourage local area networks for sharing your connection at home. The limitation here will come as 4g comes out, unless magic happens with the limited 2.4ghz spectrum.

My questions on twitter today though involve how WiMax possibly feels like it can compete with 3g networks that have the huge advantage of cellular telephone subscribers to maintain market share and profits as they develop and role out new technologies. And what\’s the point of a mobile 3mbps network inside the area where land and 3g connections are numerous and high quality. Of course, maybe in deadlock traffic you could use your laptop,  but typically if you\’re driving most people are going to use their awesome new data phones. Then if I go out to eat, get coffee, whatever, I think I can live with either local wifi or succumb to the slower speeds of tethering my phone to my laptop (as soon as AT&T allows it.) And in the end of things, I\’d much rather have a slow edge backup as I leave to the mountains or country than nothing at all.

Why Speed Does not Matter

Like the power grid, the internet needs some updating badly.  All of these companies, ATT, Comcast, Clearwire are supporting connections with increasing speeds, Comcast is up to 16mbps.  With this 16mbps connection, which I know is true because if I download Linux from the nearby Georgia Tech or Virtual Box from Sun I get over 10mbps (3MB/S) but with most things that I download (the Linux Kernel even) I see only about 600KB/s on my download… or 1.8mbps. Sure that is definitely over the capabilities of a single 3g stream, but barely significantly. Besides, for streaming video, networks only need about 800kbps if they use a respectable codec like H264, Xvid, or the new HTML/5 OGG. When was the last time that you complained about downloading something at 100KB/S?

By the way Clearwire plans on pricing their metropolitan based network above comcast prices right near AT&T dual band 3g prices They do have a bundling option for home based phone service. I guess if you hate AT&T / Comcast because of their political issues (Net Neutrality / Warrant-less wiretapping) this gives you a good way to fight back.

By the way, as you\’ve heard Dan Hesse say on the T.V. commercials, Sprint is working on 4g in America which as a possible potential of 1gbps stationary, and 100mbps mobile… Blowing all of these current technologies out of the water.

Now I\’m hungry for that microwaved chicken sandwich.

Stephen.

Stephen Reid has a minor in Computer Science from the Georgia Institute of Technology and has worked with both wired and wireless network broadcasts (single cast and multi-cast) for applications involving streaming media and high throughput data, including on the University Internet 2.0 network. Stephen has also considered commercial applications for neighborhood wireless access points including using directional antennas to increase gain in the wireless reception.

Oracle / Sun Merger Price and Open Source Question

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Earlier last week, an alumnus from the Georgia Tech Student Foundation asked what my thought were on the Oracle proposed deal to buy Sun, the company. Earlier we had seen IBM being looked at as the possible acquirer, but similar to the Microsoft and Yahoo deal, IBM decided not to go for the acquisition. . Oracle offered to pay $9.50/share from trading $6.69, the previous business day. Here are a few things to consider.

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The Merger

The Effect on Open Source

Sun currently owns numberous open source projects:

  • MySQL (a database software that is a low cost, less implementation of Oracle Databases)
  • Virtualbox (Virtual Machine engine for Linux)
  • Java (was to be open sourced, now we will see)
  • Open Office and Sun Office

Oracle has traditionally been more commercial in their interests (part of the reason they can acquire a company) so the question is how will Oracle treat these open projects, will they let them branch off, close them and cut support, or will they continue to open the software like IBM tends to do and offer services in line with them? Will oracle move toward a more open model with consulting as their business model?

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Pricing

The 42% premium that Oracle Offered Sun seems like a great pricing that will limit opposition to the takeover that could hurt both companies. Apparently,  Sun seemed appropriately valued and has some growth opportunities for Oracle. Their horizontal players in the software market don\’t hurt competitive advantage against the likes of Microsoft SQL either.

Of course, now that the general stock market is going up (particularly the Nasdaq), perhaps Oracle is getting a steal!

My Love Hate Relationship with Leveraged ETFs

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Leveraged ETFs have been the rage, the the talk of the town since late 2007 and early 2008. They seem to be the primarily tool of want to be day traders, and they can work for you too! But they have a darker side, a side that makes me feel bad about putting money in them, a side that may not be safe for anybody.

What am I talking about?

ETFs (Exchange Traded Funds) are financial instruments that were designed by the SEC and various fund managers to provide low cost index following opportunities for investors. This means that management fees are below what a mutual fund would charge with no load and always a present value during market hours (unlike mutual funds that only close you out at the end of the day. ETFs by themselves can provide some layer of diversification in types of investments (but do not guarantee diversification.)

Then, invesco made the short and powershares family of funds that attempt to mimic a short position in the market, or 2x bull or bear the market. Naturally, other fund managers decided to offer similar opportunities and last fall the 3x bull and bear funds by Direxion came out.

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To list a few of these that I\’m active in:

  • FAS/FAZ 3x Bull/Bear of Russel 2k Financials
  • BGU/BGZ 3x Bull/Bear Large Cap Russel 2k
  • SSO/SDS 2x Bull/Bear S&P 500
  • DOG – Short DOW (GT Student Foundation held this for a while)

The Great

If you want to try market trend trading, what I would venture to suggest as a small form of short term trading very close to day trading, new and old users can get in these funds and track the trends. The market is headed up, great! Headed down, I can follow that too.

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But the Ugly

First of all, these are dangerous because they\’re mad volatile. They are even more dangerous to the novice because, they are not priced exactly, and have intraday prices marked the same way a stock does (bid and ask) only to be reconciled at the end of the day. So a 1% market gain could mean a range of 1.8-2.2% action in your ETF.  Then there\’s that volatility, you know, that index that rose through the roof as the market hit bottom last November, the 2% swings at the end of the day!

The Thing I Hate though is that these are effectively driving away the actual idea of investment. Options tracking an index have such a little positive effect on an underlying company that we are now just trading financial instruments that have an effect on the market… meaning companies like GM could be going out of business because they don\’t need capital because all of our investments are in \”financial instruments\” of options so disconnected from actual success. A bank could lose all form of market value because nobody is willing to invest in them instead of just trade their options.

I encourage you to look at your portfolio and consider that you put some of it in actual companies and not just financial instruments. Have a positive effect on capitalism, and hopefully through that, the world as leaders are altruistic with their gains. Or, by all means, consider some regular ETFs that invest in actual companies.

Learn more about these

  • here http://www.direxionshares.com/
  • http://www.invescopowershares.com/


Bloomberg Futures and Other Market Information Sources

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Some of my readers might wonder why I link to sites like bloomberg futures when they don\’t neccesarrily reflect what the stock markets will actually do the next day… and since I don\’t trade FOREX are of relatively little value.  I suggest that you are probably wrong then, because you are underestimating the value of knowledge in watching the markets.

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The futures markets are a great way to investigate into the daily sentiment of the market.  You and I probably shouldn\’t trade on the actual markets based soley on the trends they set, but they can point out the existance of major stories that you haven\’t see yet. Even if you aren\’t trading on the FOREX these need to be followed.

Bloomberg is the CNBC of the UK and a lot of financial news covering many stories, and is not as limited in scope as less international news corporations… even though the New York Times is also a very good source, I think that you will find more and more interesting articles on an easier to use web site at Bloomberg.

Of course, you can also track futures on FOREX, and they have a great free trading trial that you should probably investigate.  Currency trading can be very dangerous, and just remember, for you to win, somebody else has to lose (as is often the case with markets)  and when we are talking about intitial margin accounts, little regulation, and very much prediction based pricing, where even technical analysis gets it wrong sometimes, I\’m weary to enter. But their trading platform has very nice charts and information details for that information.

Some other ideas:

http://finance.yahoo.com tends to have the most complete dividend information.  They have yield, amount, ex div date, and dividend date that are likely to be the most helpful in deciding whether a selected dividend play is worth it or not.

http://finance.google.com, New York Times, Bloomberg all seem to have the most easy to find financial news sections. I follow the NYTimes on Twitter and google wins on this list simply because it coorelates the charts and the news stories so that you might better understand what has been the market movers and what hasn\’t (Like the news story that a huge company like P&G (PNG) layed of an entire 80 employees last week.)

But there is no better place to get the story when investing than the company website and their annual reports. They have marketing departments, so be weary of too biased information, but if you want to compare how companies ideas compare to eachother, take a look at this information.

A Man Who Lives By Rules

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To be responsible and reasonable it is very important that rules exist to govern how and why you perform certain actions. If you don\’t have rules when you are investing and trading in the stock market, then you are relying on luck absolutely – and even gamblers like to do more than that.

I like the scenes in the transporter movies where Frank makes it clear that he lives his life based on rules. He does break his own rules a couple of times though, but I\’m going to start with the quotes that I can relate to our topic first.

Frank: Rule #1. Never change the deal.

When you make a trade, you need to know what you are getting into and what you hope to get out. Just like a business plan, have an exit strategy. What % loss, % gain will mean that you will exit the position.

Frank Martin: Rule number two?
 Jack Billings: Greet the man. Good afternoon, Frank.

If you are trading or investing in anything it is important that you do some homework. Mutual funds can be a little lax here. Don\’t think that it is worth your money to keep track of the financial news? Newsflash, it is, that\’s why you are INVESTING because you think that it is worth your time and money.

I used to have an actual stock broker though, and that can be legitimate, but there is the huge possibility that your representative is not really doing an adequate job of keeping track of your portfolio. In fact, I would suggest that you ask your representative what he and his other accounts are like and follow an asset allocation similar to that, at least then your account is more likely to be watched.

Frank Martin: You know my fourth rule? Never make a promise you can\’t keep.

I\’ve made the mistake of breaking rules and I\’ve gotten burned. If you are blinded by emotion you need to reconsider an investment. Like that REIT dividend payment, seriously consider the news on profits and bad news that happens. Pick some stocks that you are excited about. Under allocate to anything that you wouldn\’t sell.

I lost 75% of my value in $NFI – but I had been buying in as the price decreased with warning articles written by CBS Money. The funny part is that I had had stop orders that I purposely canceled because I was overly optimistic about receiving 9%+ every quarter.

Saving on Every Day Things – Car Edition

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So as I noted yesterday in my post on Gold, I breezed through Dave Ramsey\’s book. I\’m also pretty familiar with his other financial advice due to members of my family also being very financially acclimated. Dave and Clark Howard both have a group of every day expenditures that they like to call the stupid tax.

Cars

I drive a fancy 20 year old Mazda RX-7, it\’s stylish and I paid for it in full in high school, and I come to the somewhat painful realization on road trips that maybe 1 in 10 cars is close to the age or older than mine. I think that the truth that reflects on societies is that my car is noticeably one of the oldest daily driven cars at most colleges and high schools, where it is typically safe to assume that the driver did not pay for the car outright and probably does not pay for the insurance.

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In his book, Ramsey has done the research that suggests that the average person with a car loan pays $376 a month, every month of their lives. I don\’t know about you, but that is absolutely shocking what people will do for luxury.

In addition to this loan cost, consider your costs of insurance, especially if it\’s an almost dead car worth hardly its value in steel, you will save a ton in not having (your fault) collision insurance. For teens, that can double the insurance premium.

Furthermore, when you finance your brand new car, it loses 60% of its value in the first 4 years as a depreciating asset that is likely to suffer damage and wear.

Dave Ramsey goes on to suggest that you should look at cars that are 2-4 years old and that the majority of millionaires own these older cars as their \”new\” cars. That warranty tends to not be worth it either. As an example, I was looking at cars this December and ran into a premium edition Infiniti G-35 with 50k miles for only $15k (the new ones were right around $30k.) Bringing me to a small and optional point Learn to Drive a stick… you might enjoy it and you will save about $2k on many cars.

The 14-20 year loans that some financing arms offer is the most ridiculous part though! I can\’t think of anybody who buys a new car and plans on driving it for 10 years… and you would still owe most of the loan amount at the point anyway. So when you sell your car 5 years later without GAP insurance you would still be paying for your own car. (By the way, at the Atlanta Boat Show this year there were $200/month terms for $35k boats over 20 years — which is equally as appalling – especially at the 7% interest they wanted to charge)

Market Wise we all know that GM, Chrysler, and Ford (U.S. companies) are having dreadful sales and I think that a lot of it has to do with the car industry overselling their products. The SUV has changed America, but people don\’t need or want to buy a new Suburban, Escalade every two years. And then thing about work trucks, like the F150, most companies keep these trucks for just over four years. But what this means is that there is a limit. GM Sold More cars than they had every sold before in 2007 barely beating Toyota. But there are limits to the  driving need, and unless GM can get that marginal cost down and stop depending on selling infinite  cars in the future then it will never survive in the long run.

I added this to the Environmental category as well because, well, getting more use out of the same 4000lb piece of metal is environmental. My car may not get 35mpg, but it gets slightly above 20 (very comparable to the RX-8), but by not buying another car, I\’m reducing the parts and minerals being used in a new one. I\’m also saving junk yard space.  Reemember – Reduce comes before recycle, so I\’m reducing and encouraging you to do the same.

Finally, I\’m going to make your kids hate me. Don\’t buy them a brand new car. Don\’t give them a car that is worth much or amazingly appealing. I used my dad\’s 1991 pickup form 2002-2005 that was won at auction from a company for a reduced price. It got me around just fine. It was pretty safe, reasonable looking, and I had my first off-roading experiences among with other in it. So, get that junker like they suggest in Transformers and let your kids figure out what kind of car is for them.  And remind them not to complain about something that they\’re getting for free (or on discount.)

Should Gold be in your Portfolio?

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Today I breezed through Swain\’s copy of Dave Ramsey\’s financial management book The Total Money Makeover\"DaveRamseyBook\" Workbook and it had a short section on not investing in Gold (and it is Maven IG\’s position as well). I believe that gold and similar commodities are an important part of an investment portfolio.There are really arguments on both sides, and my side is definitely a conservative but insightful one.

Gold is one of those limited natural resources that all of the women and men see as a status symbol in their lives. In the old days it was a major currency, and backed the U.S. dollar into the 1970s. But today, almost every major currency is a fiat (and I don\’t mean the car) imaginary value for \"01-goldbar-collection\"currency. Because gold is a limited natural resource (unlike cotton) it theoretically only decreases in value when miners discover more gold.

Why not? Dave has some very good points when it comes to gold

  1. Gold rarely outperforms inflation (its recent average is around 2.2% annual)
  2. Gold people are out to get you (like the Cash for Gold people and pawn shops) and will get you to buy Gold high in times of economic crisis. (or in the case of cash for gold, give you modest value per the actual value.)

Why? Paul from the GTSF Investments Committee has been fear mongering a lot recently about how the U.S. banking and currency systems are doomed – we were both fans of Congressman/Dr. Ron Paul for Republican Party Presidential Nominee last Spring… partly based on the Gold standard ideas of Dr. Paul.

  1. Wouldn\’t it be great if your penny was worth something?
  2. What if this private entity the fed could not randomly debase the currency?
  3. How can the U.S. be 7 trillion dollars in debt and still be printing money?

What I see as proper portfolio management is that gold and commodities need their own sector in your portfolio. You want to hedge against inflation, currency risk, and global meltdown – but you obviously don\’t want to use your hedge to make great expected returns.  A reasonably amount of your portfolio to have in real assets like Gold is about 10%, which means that when 80% of your portfolio is down, if you needed to access something that has been growing, you could use Gold. Eventually your portfolio should have 10% of high risk (like startups too) so you would have 10% completely safe, and 10% completely at risk.

And like most major portfolio purchases, you should never buy because of the hype (so don\’t buy because I wrote this article) but because it is what\’s best to manage your desired risk/reward.

ETFs make it simple to invest in gold without worrying about storing it where it won\’t degrade. Check out $GLD and $IAU which I have invested in before and made a reasonable amount of money from 2005-2008, and I just held it knowing that on a bad day, it would go up. They store bullion in warehouses and purchase 1/10th of an ounce per share that you buy. It\’s easy, simple, and easy to track.

So don\’t go shore up all of your capital in cash to gold or vice versa. Gold will protect your cash and equities, but it really is not designed for growth… Assuming a stable and intelligent government, value protection should be a part of the currency and so Gold should stay relatively stable. Treat gold as one of your sectors to manage.

Finally though, if you are going to cash out from the stock market and keep cash under your mattress, look into Gold, it\’s better to have something that can\’t be printed than something that can. Check out this video on YouTube from Ducktails on inflation httpv://www.youtube.com/watch?v=t_LWQQrpSc4

Lowest Levels Since 1997 and so how sell to buy again.

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In case you don\’t read the news (which would make it similarly unlikely that you are taking time to read my blog,) the Dow Jone Industrial Average DOW dropped 299 points jumping right by technical resistance levels at the 7000 point level. Similar the S&P 500 barely stayed above 700 by the end of the day. These are very interesting times that we are seeing, and today was more a surprise I think, because everybody would have expect $AIG to be the stock losing value as it gets more and more diluted by the U.S. government, but instead we saw everything else (especially the financials) down on rumours of Freddie and Fannie future.

Today I\’ll cover a lot on how the trader protects himself from down markets, and eventually sells. In an ideal world the \”investor\” would only sell when the fundamental strategies behind the company change  – and continually collect a dividend, reinvest it, and trust that the company will grow over the period of infinite. Realistically, the downturn that we\’ve seen should suggest that everybody follow these guidelines to selling a stock.

Trailing Stops

Trailing stops are the best hassle-free way to go about protecting yourself. A trailing stop automatically trails the current price by points or a percentage, so as the price rises, your stop order rises.  So if during the boom times of 2007 and early 2008 maybe your non-volatile stock shot up from $50 to $70 a share and when you bought it you decided to go ahead and protect it with a 5point trailing stop order. This means that you would never lose more than $5 per share, and assuming steady growth with no $5 down days (like we see in 2008-2009)  you would be set until it hit $70 until October 2008 comes and the stock price goes below $65, at which point your broker automatically sells.

What this means is that, if you assume a steady uptrend with no huge spikes in either direction (typically a safe assumption when you want to be standardly long) that your account will automatically switch back to cash when there are major events in the systematic markets… or your company announces in an earnings call that they don\’t plan to be profitable for 5 years.

Stop-Loss orders

This is really what a trailing stop is, except here you do all of the work instead of your broker. Now to keep protecting your losses you need to manually adjust the stop loss to a point value at periodic intervals (say every $5 for kicks.) You should also consider switching brokers, as any broker worth having should offer trailing stops most of the time.

Most of All, Don\’t Hold On to Losers

I\’m not a fan of what a lot of people call dollar cost averaging in a down market. If a stock is trending down, then you seriously need to sell it! Don\’t hang on to a sinking ship, get out and re-analyze. Staying in is a purely emotional play.

The GT Student Foundation should have followed this advice with BAC (Bank of America) and probably would have if it were slightly more actively managed and many swaps of positions were not frowned upon. The Foundation bought originally at $24, bought more to dollar cost average at $17,  then bought more at $12, and finally, bought more at $5. Instead, drop your losers until the price is more certain (yes, you may miss a big jump) When the foundation was down 35% as the price dropped to $17, all positions could have been sold. Then at either $12 or $5 we could have reconsidered, ultimately giving us more share for the same amount of money.

This is really how Trading works. In the last weeks we have seen Bank of America in major channels between $3.40 and $5.80. This is a huge opportunity, you buy low, and have that stop loss limit (potentially mental) at that 5% as it climbs the next two days. Of course we\’re looking for the end of the channel, but momentum tends to be visible.  I\’ve made this tracking trade 3 times now.

Complications

As you know, I am a fan of the covered call trade, which means that these orders can not happen as easily as this makes it seem. If you implement both strategies, you will need to have a double legged order to buy back a (cheaper) call, and then sell the stock. Even fewer brokers do this. Tradeking does though, check them out http://tradeking.com

So What are these Covered Calls?

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More and more brokers are allowing their users to be able to use the trading and risk management strategy of selling \”covered calls\” otherwise known as buy write style trading. So what is a covered call? Are they too complex? What are the risks?

Calls are a type of option contract (this article is written for American style options) trading the right to buy the underlying security at a given strike price. It\’s important to know that options contracts tend to trade in sizes of 100 share increments and that options expire on the 3rd Saturday every month (but some securities don\’t \”have\” them every month if they are low volume.)

Option prices are based primarily on the following:

  • Underlying volatility (does the stock move a lot of % every day)
  • Price of the underlying
  • Distance to strike price
  • Time Decay (how long until the expire)

Risks

Covered calls themselves carry an inherent less amount of risk than directly investing in a given security. It is hard to lose money by just selling a covered call (unless the security drops and you don\’t buy back your call and sell the stock quickly.) That being said, it is very likely to reduce the earnings that you might have through a security.

Examples

  • Buy 100 shares of BAC at $4.64, sell a call at a strike price of $5 for $0.30 a share, so your price per share is now $4.34. In the end, BAC goes to $5.64/share and whoever bought your option exercises it. You make $5-$4.34=$0.66/share, but if you would not have sold the call, you would have eventually made $1 a share.

Trading

In 2008 and 2009 we\’ve seen systematic volatility in the stock markets increase drastically — and in an overall negative direction. This provides a huge opportunity for a trade to be established on these calls.

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The idea is just a simple idea of buy low and sell high, but with the call option we are selling at the height, and buying it back at the lows.

I\’ve taken the 3 month chart of BAC (it has been extremely volatile over this period) and put some dots at the 20/20 hindsight spots of the trading. You\’ll notice that if you had 100 shares of BAC you would have lost a significant amount of value ($10/share),  but thanks to trading covered calls you could have made back up to $6 (very liberal estimate) of that… Not to mention that you\’ve kept 100 share of BAC (something that you think is a pretty solid long term 5 year investment.) And that $6 is in 3 months, so in a year, you could potentially erase all losses if you trade optimally.

But It\’s Not Easy

So you may be thinking that I just showed you how you would never have to work again in life, but you would be sadly mistaken. First of all, you have to be careful with your brokerage fees: I mentioned that tons of brokers are allowing covered calls; brokers like sharebuilder who charge high commissions. Next we\’re talking about a lot of analysis, 20/20 is one thing to say, but when you add that with the emotion of selling close to strike price for more immediate money, you are very likely to not maximize money. To be able to track the stocks you would need to look at them very often and  have some pretty strong technical skills. Finally, there is the possibility in a high news volume market that huge price changes will overshoot your calls, and if you sell a call below your purchase costs, you would be completely out of luck and out of money.