The Stock Option Income Generator: How To Make Steady Profits by Renting Your Stocks (Wiley Trading)

338 Pages·2009·5.15 MB·English

by  Harvey C. Friedentag

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The Stock
Option Income
Generator
i
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The Stock
Option Income
Generator
How to Make Steady Profits by
Renting Your Stocks
HARVEY CONRAD FRIEDENTAG
JohnWiley&Sons,Inc.
iii
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Copyright(cid:1)C 2009byHarveyConradFriedentag.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
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LibraryofCongressCataloging-in-PublicationData:
Friedentag,HarveyC.(HarveyConrad)
Thestockoptionincomegenerator:howtomakesteadyprofitsbyrentingyourstocks/
HarveyConradFriedentag.
p.cm.—(Wileytradingseries)
Includesindex.
ISBN978-0-470-48160-8(cloth)
1.Stockoptions. 2.Investments. 3.Finance,Personal. I.Title.
HG6042.F7372009
332.63(cid:2)2283—dc22
2009015534
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
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Contents
Preface xiii
Acknowledgments xvii
CHAPTER 1 Fear and Ignorance 1
TheStockMarketCrashof1929 2
InvestmentKnowledge+StockMarket=Profits 6
UnderstandingInvestorBehavior 6
TheCrashof2008 7
WhattoDoFirst 8
MyInvestmentHistory 10
Summary 13
CHAPTER 2 Invest with Confidence 15
WhatIsInvesting? 18
AssetAllocation 18
RiskversusReward:FindingYourBalance 19
TheThreeStrategicFactors 22
Stocks:TheLong-TermCore 23
DefiningInvestingandFear 29
MarketMadness:BlackMonday,October19,1987 31
MarketAnxietyIsCausedbyManyFactors 32
Year2008:TheCollapseoftheStockMarket 32
InvestingandGambling 34
InvestmentPolicyStatement 35
DisciplineCanBeReallyGoodforYou 35
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vi CONTENTS
CHAPTER 3 An Overview of How to Invest 37
Inflation 38
InvestinginStocks 39
ContrarianInvesting 48
GrowthStockInvesting 48
Common-SenseStockSelection 49
DividendIncomeStockInvesting 50
KeepinMind 50
CHAPTER 4 Stock Picking, Research,
and Annual Reports 53
QuestionsforInvestmentDecisions 54
SourcesofInvestmentInformation 55
TradePress 57
InvestmentClubs 58
ReadingtheAnnualReport 59
TheQuarterlyReport 66
ChangingtheRules 66
AnnualMeetings 67
StockSelectionSummary 68
CHAPTER 5 How to Read the Financial News 71
GuidetotheEconomyandtheStockMarket 74
YourWalletCanBeaLeadingEconomicIndicator 76
CHAPTER 6 The Art of Investing, Risk,
and Reward 79
StocksorBonds? 80
MarketTiming 81
AvoidCommonInvestmentRisks 82
RiskBreedsFear 83
GeneralInvestmentStrategies 85
TheToolsofContrarianInvesting 89
ClassicStockMarketStatements 89
MadnessofCrowds 90
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Contents vii
TakeAdvantageofthePros 92
InsiderInformation 95
InsiderTradingIsNotAlwaysIllegal 96
Buy,Sell,orHold? 97
PerformanceRecords 100
InvestingConsiderations 100
TransactionCostsCompared 101
ToMakeMoneyintheStockMarket,Don’tLoseAny 102
CHAPTER 7 Dividend Reinvestment Plans 105
DividendReinvestingPlansandDollarCostAveraging 107
TheCompoundingEffect 108
DRPs:AdvantagesfortheInvestor 108
DRPs:AdvantagesfortheCompanies 109
UsingDRPstoSelectStocks 109
SafetywithaSmallInvestment 110
DividendReinvestmentPlansandtheCompoundingEffect 110
TheDividendDebate 110
CHAPTER 8 Picking and Dealing with
a Stockbroker 113
WeInvesttoMakeMoney 114
TheBuckStartsHere 115
ShockingFacts:IsResearchfromWallStreetUseless,
orWorse? 116
TheStocksintheDowJonesAverages 118
Today’sBargainsCanBeTomorrow’sWinners,andToday’s
WinnersCanBeTomorrow’sLosers 120
WhyUseaDiscountBroker? 121
UnderstandingProcedures 122
CHAPTER 9 Advanced Investing and Goal Setting 131
FinancialFailure 132
Money×Return×Time=YourGoal 134
YourMoney 135
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viii CONTENTS
YourReturn 136
YourTime 136
InvestmentRisks 138
Risk-RewardRelationship 139
CHAPTER 10 Building Your Portfolio 141
HowtheProsChooseStocks 142
BenjaminGraham,theValueInvestor 143
HowOtherProfessionalsInvest 145
ValueversusStockPrice 146
BuyingandSellingStocks 147
PortfolioManagementGuidelines 150
AReliableWaytoInvest 155
CHAPTER 11 Basic Investment Guidelines 159
TheRealitiesofInvesting:MindoverMatter 159
Don’tPanic 160
DoNotTrytoPredicttheMarket 160
CapitalizeonStockMarketAnxietyandEuphoria 162
Remember,NoOneBecomesPoorTakingaProfit 163
UnderstandingBankruptcy 164
KeyConsiderations 166
AlwaysRemember 168
CHAPTER 12 Options and the Stock Market 171
WhatIsanOption? 171
TheBusinessofOptions 172
OptionsShareManySimilaritieswithCommonStocks 173
HistoryofOptions 174
FunctionofOptions 175
FactorsAffectingOptionValuation 176
TheOptionPremium 179
TheOptionStrategy 180
SomeQuestionsandAnswers 181
GettingStarted 182