An Options Trader’s Take On Market Risk This Summer

Steady Wealth Podcast

An Options Trader's Take On Market Risk This Summer

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"It's just not that easy to make money in the markets; it requires discipline."

These words resonate with self-directed investors who often find themselves underperforming the indices. The new Steady Wealth Podcast website, available at www.steadywealthpodcast.com, delves into the heart of this issue (and others), addressing the reasons behind individual investor underperformance.

Welcome to this week's episode of The Steady Wealth Podcast with your host, Serge Berger.

In this episode, Serge takes a deep dive into the options market, sharing his insights on its significance and how it impacts trading strategies and investment portfolios. He discusses the recent market rally and provides analysis on what the summer months may have in store for investors.

Serge emphasizes the importance of considering the macroeconomic environment, which is often overlooked by many traders. He acknowledges the concerns surrounding the macro environment and highlights the role it plays in shaping market trends. Serge reflects on his own trading experiences over the past few months, particularly in relation to the counter trend rally he observed.

Drawing from his expertise, Serge explains the distinction between macro environments and fund flows, highlighting how the latter dominates in the multi-week and multi-month timeframes. He shares valuable insights obtained from the options market and its role in understanding investor sentiment.

Serge presents various statistics and indicators to support his analysis. He discusses the heightened call buying activity, increasing implied volatility, and extreme market moves. He provides visual representations of market trends and discusses the implications of extended market conditions and their potential impact on volatility.

Additionally, Serge examines the relationship between options market behavior and the broader equity market, discussing the nuances of the VIX and the importance of monitoring the implied volatility of different strikes and expiration points.

Serge concludes by addressing concerns about liquidity in the market, highlighting factors such as the Treasury general account, student loans, jobless claims, and interest rates that contribute to potential liquidity constraints. He emphasizes the need for cautious investment strategies given the current market conditions.

Where is The Recession?

Steady Wealth Podcast

Where is The Recession?

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"It's just not that easy to make money in the markets; it requires discipline." These words resonate with self-directed investors who often find themselves underperforming the indices. The new Steady Wealth Podcast website, available at www.steadywealthpodcast.com, delves into the heart of this issue (and others), addressing the reasons behind individual investor underperformance.

In the latest episode of The Steady Wealth Podcast, host Serge Berger dives into the topic of the economic recession.

Frustration is growing among investors due to the lack of a noticeable economic downturn, especially in the equity market.

Serge focuses primarily on the United States economy but also touches on Europe and China due to their interconnectedness.

He discusses the performance of the S&P 500 and NASDAQ 100, noting significant gains year-to-date.

Serge presents two different camps of thought: the bullish camp, which believes the market won't go much lower due to extreme negativity and a strong consumer, and the bearish camp, which looks at interest rates and the potential impact on economic growth.

He discusses the timing of a recession and highlights problems in regional banking and commercial real estate.

Serge concludes by stating that an economic recession is imminent and advises investors to prepare for a potential downturn.

Can AI Push the Nasdaq To All Time Highs?

Steady Wealth Podcast

Can AI Push the Nasdaq To All Time Highs?

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"It's just not that easy to make money in the markets; it requires discipline." These words resonate with self-directed investors who often find themselves underperforming the indices. The new Steady Wealth Podcast website, available at www.steadywealthpodcast.com, delves into the heart of this issue (and others), addressing the reasons behind individual investor underperformance.

In this episode of The Steady Wealth Podcast, host Serge Berger discusses the topic of artificial intelligence (AI) and its impact on the market.

He begins by emphasizing that risk assets, including AI-related stocks, don't move in a straight line but experience pauses and corrections along the way.

Berger shares his personal experience of using AI and how it has improved operational efficiency and cost savings for his business.

He then discusses the phenomenon of companies mentioning AI in their conference calls, which triggers algorithmic trading and drives up stock prices.

Serge highlights the rapid pace of technological adoption and the potential for volatility in the AI sector.

He cautions investors about the risks and advises them to be cautious and not underestimate market volatility.

Berger also mentions the importance of using indicators like the Relative Strength Index (RSI) to identify overbought and oversold conditions in volatile stocks.

Overall, he acknowledges the transformative power of AI but reminds listeners to approach the market with a realistic understanding of its ups and downs.

Tales of Traders: Pushing the Boundaries!

Steady Wealth Podcast

Tales of Traders: Pushing the Boundaries!

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Welcome to the Steady Wealth Podcast, hosted by Serge Berger!

In this episode, Serge shares fascinating stories of traders taking outrageous risks.

Serge is joined by Brent, a wizard at Steady Trader, who interacts with clients and hears their unique perspectives on approaching the market.

Together, they shed light on the dangers of excessive risk-taking and the misconceptions surrounding trading.

They discuss unrealistic expectations, the allure of quick fixes, and the need for a realistic mindset when it comes to trading.

Join Serge and Brent as they unravel the entertaining yet perilous world of trading and provide valuable insights for listeners!

Why Self-Directed Investors Underperform the Indices

Steady Wealth Podcast

Why Self-Directed Investors Underperform the Indices

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"It's just not that easy to make money in the markets; it requires discipline." These words resonate with self-directed investors who often find themselves underperforming the indices. The new Steady Wealth Podcast website, available at www.steadywealthpodcast.com, delves into the heart of this issue (and others), addressing the reasons behind individual investor underperformance.

Looking at actual statistics paints a sobering picture. A staggering 70% of US equity managers underperform their respective indices on a one-year basis, and this number climbs to a disheartening 90% over a ten-year period. Over a 20-year span, the S&P 500 has returned an average of 7.5% per year, while a typical 60/40 portfolio has yielded approximately 6%. Astonishingly, the average investor lags behind at a mere 2.9% per year.

One key problem lies in the trading-centric mindset adopted by most individual investors. They fail to tap into the power of compound interest, shying away from the proven strategy of buy and hold. Diversification becomes an afterthought, and distinguishing reliable information from dubious sources becomes a daunting task. Lack of discipline further hampers their ability to adhere to a long-term investment strategy. Overconfidence bias is a common pitfall among individual investors, leading to detrimental decisions.

To combat these pitfalls, it is recommended that self-directed investors allocate only a fraction (10-20%) of their assets to a trading portfolio, while entrusting the rest to professional guidance. By taking a free 3-minute risk survey at www.bluemarlinadvisors.com, investors can gain valuable insights into their risk profile and make informed decisions to maximize their long-term wealth.

What You’ll Learn:

• What it means to be an individual investor.

• Why individual investors underperform on average.

• How to understand your risk profile and correct it.

• And much more!

Favorite Quote:

“Individual investors often exhibit an overconfidence bias.” -Serge Berger

Breaking Down the Current State of the Stock Market: What You Need to Know

Steady Wealth Podcast

Breaking Down the Current State of the Stock Market: What You Need to Know

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The current state of the market remains uncertain, with potential challenges ahead in the coming quarters. Serge is joined by Brian Terry, a colleague from The Steady Trader and Blue Marlin Advisors, to discuss the US markets slow-down. The overall sentiment is negative, as inflation is still not under control, making this year a tough one.

The looming debt ceiling debate adds further volatility, with politicians seemingly waiting for market turmoil before taking action. This situation resembles the uncertainty surrounding Brexit, where a last-minute deal is expected. However, past experiences, like the 2011 default that led to a 6% drop in the S&P, indicate that increased anxiety may occur as the deadline approaches. Failure to reach a resolution could bring short-term pain to the market.

As it is an election year, the divide in opinions is hardened, and there is mounting political pressure on the Federal Reserve (FED) to take action. The current administration seeks to instill hope in the market by urging the FED to act. Amidst these conditions, there is a significant shift towards active management funds, with a focus on longer-term investment strategies and seeking opportunities such as dividend captures or selling covered calls. It is crucial to adopt a more cautious and strategic approach after the prolonged period of essentially free money and irrational market behavior.

What You’ll Learn:

• How other countries' markets are fairing compared to the US.

• A few ways you can still make an income from this market.

• How a covered call strategy works.

• And much more!

Favorite Quote:

“Our big focus is, and should be on, our longer term investments.” -Brian Terry

I’m Shocked At People’s Attitude Towards The Markets

Steady Wealth Podcast

I’m Shocked At People’s Attitude Towards The Markets

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The attitude towards money and investing among the majority of people is concerning, according to Serge. Despite the economy being at a point where it needs a healthy slowdown, people continue to show a lack of seriousness toward their finances. Most people have forgotten that the markets go up and down, and there are economic cycles. People tend to have shameless greed and want to make as much money as quickly and as cheaply as possible. This attitude has resulted in people not taking long-term asset allocation seriously, and instead, they trade with 80% of their money while investing only 10-20%.

Serge advocates for the opposite approach, advising people to trade with only 20% of their money and invest the remaining 80%. He suggests spending more time on the long-term investment strategy instead of the short-term trading approach, which is the major fault of financial media and brokers. Serge believes that after two years of a bear market, people should not have a gambling mentality, but instead focus on the power of compound interest. He concludes that there comes a point when it's too late to fix one's portfolio for retirement, and it's essential to start taking investing seriously.

What You’ll Learn:

• The difference between investing and gambling.

• How different generations tend to view investing and trading.

• Ways to boost the long-term bucket when markets go sideways.

• And much more!

Favorite Quote:

“I’m truly, honestly, sincerely, shocked at people’s attitude towards the markets and more specifically, their money.” -Serge Berger

Are You Investing or Are You Gambling?

Steady Wealth Podcast

Are You Investing or Are You Gambling?

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Trading and investing are two distinct approaches to building wealth in the stock market. While trading involves attempting to profit from short-term market fluctuations, investing aims to generate long-term wealth through a diversified portfolio of assets.

The average annual return for the stock market has been around 10.3% per year, while day traders have experienced only a 3.5% return. Despite this, many individuals are still allocating too much of their capital to trading, hoping for big wins rather than steady gains.

Investors understand that there's a time, place, and amount of money to trade with. They typically invest in a diversified portfolio and aim to make the most of their money through this strategy. Swing trading, or the "fun bucket," can make up around 10-15% of their portfolio, while day trading, or the "drunk bucket," should only make up around 5-10%.

Trading requires active management and can lead to higher fees and a lot more time invested. In contrast, investing is more passive, allowing individuals to buy and hold their investments over a longer period. Investors can compound their interest over time, leading to significant long-term gains.

While trading can be an exciting and potentially lucrative strategy, it's important to do it with far less capital than investing. Ultimately, investing has historically outperformed trading, and individuals should aim to allocate more of their capital toward this strategy for long-term wealth building.

What You’ll Learn:

• Why it’s important to diversify your portfolio.

• The differences between investing and trading.

• What the 3-bucket approach is.

• And much more!

Favorite Quote:

“Quick profits, from a psychological perspective, is rooted in greed.” -Serge Berger

The Bull Case For Gold

Steady Wealth Podcast

The Bull Case For Gold

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The performance of different asset classes has been highly varied this year, with gold emerging as one of the best performers year-to-date. The bull case for gold is clear and there are several reasons why you should consider owning it, although it can be tricky to look at it in a neutral way as people tend to either love it or hate it.

One of the main criticisms of gold is that it doesn't pay a dividend, which may be unacceptable for some people. However, for those who don't trade actively and hold onto it as an investment, gold can be a valuable addition to their portfolio. Gold is often seen as a hedge against inflation and can help with asset diversification. Allocating a portion of your portfolio to gold can offset the underperformance of stocks as it tends to hold its value well.

Furthermore, with a potential economic downturn looming, gold could perform well over the next 12-36 months as it works best when real interest rates are lower. It is worth noting that while silver is more volatile than gold, it has more industrial uses, so it can be a good investment as well. In conclusion, there are compelling reasons to own gold, and investors should consider adding it to their portfolio.

What You’ll Learn:

• Clear reasons why you should own gold.

• How much of your portfolio should be allocated to gold.

• What a gold-friendly environment looks like.

• The difference between gold and gold miner stocks.

Favorite Quote:

“Some people look at gold as a hedge against inflation.” -Serge Berger

The Power of Compound Interest

Steady Wealth Podcast

The Power of Compound Interest

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The power of compound interest is an incredible phenomenon that can have a huge impact on our financial lives. As Einstein famously said, it is the 8th wonder of the world. But what exactly is compound interest, and why is it so powerful?

Put simply, compound interest is interest that we receive on interest. This means that if we invest our money and earn interest, we can reinvest that interest and earn even more interest on the original investment and the interest earned. Over time, this snowballs and can lead to significant growth in our investments.

In the current economic climate, interest rates are higher than they have been for some time, but there are still multiple ways to take advantage of compound interest, including through bonds, ETFs, and dividend-paying portfolios. Reinvesting dividends is a key way to ensure that compound interest is working for you.

Compound interest is not only important for retirement age, everyone should be doing it, and the earlier the better. Many people have gotten into a short-term investment mentality because of low interest rates in recent years, but taking a long-term approach can lead to significant financial gains.

If you're not sure where to start, consider seeking the advice of an investment advisor who can help you create a balanced portfolio that includes both investing and trading. Head over to Blue Marlin Advisors to learn what they can do for you. By harnessing the power of compound interest, you can make your money work harder for you and achieve your financial goals more quickly.

What You’ll Learn:

• What compound interest is and how to tap into it.

• What a dividend aristocrat is.

• What percentage of your portfolio should be for trading vs investing.

• And much more!

Favorite Quote:

“Compound interest is not only important for retirement age; everyone should be doing it, and the earlier the better.” -Serge Berger