Getting Back To Even notes:
Invest in dividend stocks in bear markets, use the yield as an indicator for if the stock is a good buy, yield over 4 is a good buy, historically high yield is also a good sign, it means the stock is cheap bc the price on the stock is down from normal rates
Dividend stocks are best when interest rates are low
Look for accidental high yielders
Rule of 72: divide 72 by the dividend yield to find out how many years until you get your money back
Coverage ratio should be 2 or over to make sure company has the expected earnings to cover its annual ratio
Beware of dividends that are too high... make sure you use coverage ratio if buying dividend stocks
CAT, MMM, VFC & V
Stock replacement strategy of option calls. Make deep in the money calls to balance the price of admission for the call with the going rate of the stock. Example $70 Exxon price... buy stock at $65 with $7.50 call price... then once stock goes over $72.50 you are in the money. Cramer’s rule is to not let the balance go more than $5 over the going rate. Also go at least two months out on your call option, but never way longer. One month is not enough time.
A call option is for 100 shares so you have to take the price times 100, that’s the price of admission for the right to control the 100 shares until your time is up... can roll over a call, but costs extra.
Put options work like calls, but capture the downside (like a short). So a reverse call. Use only deep in the money puts.
Technical: Cramer loves the strategy of shorting common stock against the call. Eliminates the risk involved in shorting a stock.
2 accounts
Act 1: Call Option (100 shares) of stock deep in the money... wait until you hit a favorable gain. Say your call option is for $65 on a $70 stock and after trade you make money at $72.50...
Act 2: short 100 shares at $72.50 to lock in your profit... not at $70.
...This hedges your short, in the case the stock skyrockets up to infinity.
^^^complicated... need to play around with the math on calls and shorts for fun to see what works
BONUS: When you short (sell) the stock, the money actually appears in your account.
***make sure broker gives you short interest rebate (interest on the short money in your act)
Beware of large buy backs, increasing dividends are a much better way to reward share holders