17 of 18 people found the following review helpful:
5.0 out of 5 stars
Solid book on investing and call writing on your portfolio, November 26, 2010
This review is from: The Stock Option Income Generator: How To Make Steady Profits by Renting Your Stocks (Wiley Trading) (Hardcover)
This is a high quality book for beginning investors who want to build a value investment portfolio and then write covered calls for their stocks for increased returns. The author does a great job explaining what investing in stocks is all about. He walks the reader through the history of the stock market discussing the crash of 1929, Black Monday, and the 2008 financial meltdown. The author's method is to build a diversified portfolio of stocks using the Benjamin Graham value method. You should own at least 10 different companies and no more than two companies in one industry. These stocks are to be diversified across many different sectors to lower risk. The author is a believer in always being invested and only selling when the fundamentals change in a stock. His style is contrarian investing buying great companies at good prices. He wants large companies with sheer strength of size with dividends for increased income.
Stock selection:
Low P/E-Should be no higher than half the market multiple.
Current price-Should be less than the average of the 52-week high and low prices.
Increasing sales and earnings trend over the last five years.
Dividend payout ratio-Percentage of net earnings allocated to shareholders should not exceed 30 percent.
Annual report-Analyze independent auditor's report;verify financial information and study all the footnotes; and read the CEO's report, which should state his opinion of the company's future outlook.
Readers are also advised to add to holdings by both dollar cost averaging and using margin to buy when prices are very low. Both writing covered call options 3 months out and writing LEAPs are strongly recommended for increasing your portfolio returns. The author shared that he learned the lesson that "You make money on the difference between playing the true odds and the opponent's disregard of the odds" In call options the one that writes the option has 70% odds of the option expiring worthless and keeping the price collected for selling it. There are no better odds in the markets or in Las Vegas than this. That is why it is such a great income generator.
The author gave some great examples of how writing covered calls and then buying them back as they decline in value and then writing new ones can generate nice income both in hypothetical examples and in the appendix with his Citigroup writes over 18 years generating $223,705 in profits with a cost basis in the stock of $12,113. Now if that does not make you a believer in covered call writing I do not know what will.
This book is not for advanced traders in options, they will be disappointed in the books simplicity and teaching things that experienced traders and investors already know. However this is a five star book for those interested in getting started in value portfolio construction and covered call writing to increase returns and generate consistent income on the stocks you already own as investments.
From the book: "Optimism is a tonic. Pessimism is a poison. You must become a realist."
Help other customers find the most helpful reviews
Was this review helpful to you? Yes
No
1 of 2 people found the following review helpful:
1.0 out of 5 stars
Poorly edited and that's the best part, November 15, 2011
This review is from: The Stock Option Income Generator: How To Make Steady Profits by Renting Your Stocks (Wiley Trading) (Hardcover)
While I have to concede that this book was easy to read, the content was mediocre at best. If read carefully, there are discrepancies in his calculations, errors in the financials and sections that are copied from one chapter to another. All in all, it really is a 100 page book creatively manipulated into 317.
Help other customers find the most helpful reviews
Was this review helpful to you? Yes
No
1 of 2 people found the following review helpful:
4.0 out of 5 stars
The Stock Option Income Generator, March 13, 2011
This review is from: The Stock Option Income Generator: How To Make Steady Profits by Renting Your Stocks (Wiley Trading) (Hardcover)
The book is easily read even for a rank beginner in the options field. It covers much more than options for people like myself who are beginning stock investors.
I will adopt much of the strategies within.
Help other customers find the most helpful reviews
Was this review helpful to you? Yes
No
