written by reader Palm Beach Current Income

By glseneca, March 30, 2013

Has anyone used this service that can provide guidance of if one should subscribe?

Your Palm Beach Current Income program includes: •Palm Beach Current Income’s 6-part webinar course on our “create your own money” strategy:
Using your home computer, you can watch our 6-part training course online, when it’s convenient for you. We’ll show you real simulations of the Palm Beach Current Income strategy in action, step by step. By the time you’re finished, you’ll be confident in knowing exactly how to use it successfully.

•Palm Beach Current Income research advisory:
Every Tuesday, we’ll send you details on a new opportunity to potentially generate hundreds or even thousands in extra income. We’ll give you all the information you need to know, including the transaction code… and we’ll explain exactly how to take advantage of each new recommendation, in plain English

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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Brent
7 years ago

Thank you for posting that question as the Palm Beach Current Income strategy looks almost “too good to be true.” I did try to scrape as much information as possible from the teaser videos as well as customer testimonials. It looks like it’s a “put selling” options strategy. It looks like it focuses on large-cap, stable companies because the risk of put selling is that you may end up owning the stock in some cases (which isn’t all bad because you acquire them at a discount).
But $3000 for an options course and weekly newsletter seems a little pricey to me. Throw on the fact that you need to have a margin account with your broker to do put selling which means you need to have some good financial reserves (one of the videos said you should have $20k to work with). Even if phrases like “options”, “margin”, and “put selling” sound completely foreign, you can learn those concepts for way less than $3k IMHO (actually, I think it’s currently $2k right now with a 90-day money back).
Of course, this is all sleuthing on my part. Has anyone actually purchases the service and have something to say?

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Gary
Gary
7 years ago

This newsletter got my attention. I was hoping to find out if anyone actually purchased it as well. SOunds to good to be true

Gary
Gary
7 years ago

anybody have any thoughts

Bob Flynn
3 years ago
Reply to  Gary

Thanks Brent!
I appreciate this very much. I’m a long time stock investor and have recently began studying options trading.I’ll keep my 2 Grand and “hit the books.”

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Brent
7 years ago

I bit the bullet and purchased the 30-day trial for $99 (non-refundable). That is much more doable than forking out almost $2000 (refundable) for 90-days. Amazing how the psychology works. I’ll hand over $99 dollars non-refundable no problem for a trial but wouldn’t fork out $2000 fully refundable for the same offer. But I digress.
Here is my take on this. It is a cash-backed, put selling strategy combined with covered call writing. The six-part webinar series is really basic if you already know how options work. The course does plenty of cheerleading, followed by options basics, and a few sample trades. There really isn’t much to the course and I probably could have aced the 10-question exit exam without the course. Fortunately, you can read the transcripts pretty quickly and not sit through hours of videos if you’re comfortable with options.
What I did like was that it explained the strategy is very plain English. I always knew about selling puts and writing covered calls, but after taking this course I really feel like I “get it” and it isn’t something just for experts traders and it isn’t as risky as I thought. I now have the confidence to actually put this strategy into action.
I’ve only received one newsletter so far. Here’s my take. Why fork out $2000/year for a weekly subscription when you can see the types of stocks this strategy recommends during the trial period? I don’t need to spend thousands of dollars to know that Microsoft is a large and stable company and is a good candidate for put selling. $2000 is a pretty deep hole to start and you have to put down some pretty big trades throughout the year just to break even.
My final thoughts. It’s a good course if you need a pep talk on selling put options. It might be worth the money to actually pay for a subscription (and not just cancel after the trial period) if you really need specific entry and exit points on trades. Otherwise, save your money and learn the strategy for free on any options education website.

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KennyG
KennyG
7 years ago
Reply to  Brent

Brent et al;
I know this is a bit late, but having just come across this I wanted to ask just a question or two since you have “seen” whats behind the curtains.
I wonder how the Put strike and expiration are determined? Is it via 1 or 2 standard deviations? How far out in time do the puts get written? And the covered calls I assume are for when/if you actually get assigned the stock as opposed to selling deep in the money covered calls (a covered call is basically the equal of a cash secured naked put write) or writing a covered call on 1/2 the position and a cash secured put on the other?

Thanks for any additional insight you may be able to shed.

Regards,

ken
.

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Brent
7 years ago
Reply to  KennyG

Hi Ken. I don’t recall whether the training went into how they determine the put strike and expiration. They did cover in very loose terms what type of stocks are good candidates for this strategy, but they keep the specifics to themselves. After all, they can’t give everything away in their training videos since they want you to subscribe to their weekly newsletter with buy/sell instructions. It’s really on a stock by stock basis where they weigh the premium received vs. the odds of being assigned.
The training also hand-waved over the covered calls which was only covered in the last training video. They advertised it as just being the inverse of the put sell if/when you get assigned from your put sale. I don’t recall the specifics. I glossed over it since I use a covered call strategy from another newsletter (I forget which one) that has worked out well for me.

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KennyG
KennyG
7 years ago

Brent:

Thanks for the quick reply. I do put selling and CC’s pretty regularly, but always figure that someone may have come up with a better mouse trap. I guess it was too much to hope that someone hyping an investment letter would divulge very much info. I guess pretty much everything they said in their teaser is along the lines of the old “falsehood” that something like 80-90% of options expire worthless when it is very far from reality. Most of those 80-90% are in reality options that have been closed before expiration date. Some of which may have been in the money at expiration and some not if they had been held until then.
Anyway, thanks again for the reply, and good trading to you.

Ken

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jheere
jheere
6 years ago

For those that are still interested, here’s my feedback.

Yes it’s a put selling strategy. The idea is to get paid selling low-ball offers (puts) on exceptional companies that you’d be happy to own anyway.

You do need some reserves. Within the course, it’s made clear you need 25k (although you can get started with 15 or 20k, but your position size will be larger and thereby you’ll take additional risk that might come with emotional baggage).

Brent, yes, you can learn the concepts for less than $3k but I also agree the course does a very good job in making the concepts very clear and understandable, even to those who have never purchased a stock before. If you already are familiar with put selling strategies, I don’t think the course will offer much value, although the ideas behind their concept might be valuable to you (basically, the value investing perspective combined with put selling).

Kenneth, as for what’s behind the curtains on deciding strike price and maturity. They really hammer the most important rule and that’s to only write options on companies that you know and understand and you’d be happy to own anyway (and that have a liquid option market).

The put strike is not done via 1 or 2 standard deviations, they use a “double safe strategy” which is to sell at least 10% from the current price and get paid a decent amount of cash for that (typically by looking at dates 3-4 months out, no more than that).

However, these are not hard rules as you regularly see recommendations with cushions of 3-4% in the weekly issues. They claim this is OK if the VIX is low and stock is already undervalued.

And yes, the covered calls are indeed for when you actually get assigned the stock, and so the idea is to keep making money in “sell put-sell call” cycles (and hope the stock doesn’t drop too much!!).

They go a bit deeper by giving some extra tips like considering dividend yields, earning announcements, and the realm of psychology/sentiment. But that’s about it.

As Brent wrote above, they also cover the “art and science” of selecting a stock, and discuss 6 things they consider for the “art” and 6 things for the “science” part.
The art part includes questions like “is the product they sell going to be around in 50 years?”. The science part includes things like RoE, price to sales, percentage of shares short, etc. They give some guidelines on the numbers they like to see, but they are not hard rules to follow.

They use American options and assume 90%+ of options will not get a premature exercise and of course the intention is for most options to expire worthless.

I want to make a few side notes. Googling “palm beach current income review”, you get a lot of BS reviews from people who have obviously no clue what they’re talking about, did not take the course and/or are just trying to get you to buy via an affiliate link.

So here are some critical point of views with regards to the program:

The program sales letter (and course intro) both state that you can use this strategy forever (and that that’s amazing)…

However, at the same time, we get some hints that this might not be the case.

I found an old sales letter still online, http://pros.palmbeachletter.com/1205PBNDFWEB/WPBNN601/, now I’m not sure exactly when it was written, but I know it was online with the above text at July, 2012, Tom writes “You see, thanks to a rare confluence of events, we are living in a time where it has never been better to take advantage of this strategy. I’ll explain exactly why this is the case a bit later. And I don’t know exactly how long this window of opportunity will last – probably for the next 18 months or so… ”

That seems to hint the bull market in options might be ending beginning of 2014. When that happens, much less money can be made from this strategy.

This subject is only touched upon very quickly during the actual course… It is discussed how in a bull market, options (and stocks of course) are expensive and you want to be selling them, and that in a bear market options are cheap (like stocks) and that you want to be buying. A graph is shown with the option market cycle, which also seems to hint that the current bull market in options will end… sooner or later.

Who knows, it might be a year, maybe more, maybe less.

But no education is given about what to do if the market really changes… The only thing we get is “if the option market becomes bearish and options become very cheap, we might turn to buying them instead’. So you really need to stay subscribed to their weekly issues to learn “what’s next”. It’s disappointing they do not discuss the potential downfall and the “what-if”.

They do clearly say the number 1 risk is for a stock to fall significantly (like ABX, which was actually their first recommendation).

They also do not extensively discuss a stop loss policy within the course, but during the weekly issues it became clear they use a 25% stop loss policy that you have to manually track. As such, some subscribers probably made quite some losses with their ABX recommendation, because of which subscribers bought ABX at $42 (currently trading around $18).

Gary, about it being too good to be true. The old sales letter above also includes a part about Mark’s son who invested $25,000 into this strategy and made about $3,700 with two transactions ($1,844 and $1,835) in under 3 months.

In other words, that’s an annualized return of almost 60% and quite a misleading example.

Based on what I’ve seen on the inside, this is not what you should be expecting and will most likely happen very rarely (unless you take on additional risk).

I also note that this part of the sales letter has since been removed, and is not featured in current sales letter.

Still, if you have enough funds for this strategy to work, it’s a pretty safe method for making about 5-10% per year.

If markets were to crash again like in 2008, they will probably claim a 25% loss because of their stop loss policy and start over, but seeing you have to track the stop loss and close out manually, your loss might be substantially larger. Then again, seeing the strategy ensures you pick great companies, in a period of 5-10 years, you’ll most likely see your money returned to you.

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jheere
jheere
6 years ago

For those interested, a few more points to add to my review above (now that I’ve not only gone through the 2 week Webinar course, but also read through the entire last 2 years of Weekly Issues, so basically everything that has been published so far).

1. Customer Support. Although the course and weekly issues are written in a very friendly tone, if you have a question you’ll most likely find that Common Sense Publishing’s support is very limited.

Try giving them a call and you’ll hear a message that the wait will be 10 minutes or more. I called 3 times, not once was I able to reach someone within 10 minutes.

Email is worse as you do not get a reply at all (unless, probably, your question is “I lost my password” or “give me a refund”, though I did not test this).

They have a general email address for support (info@cspcustomerservice.com) and course specific emails for questions/feedback (such as income@palmbeachletter.com for Palm Beach Current Income).

They ask you to mail in your questions, but include the disclaimer that the SEC prohibits them from responding to your email personally…

They say every question is read and that the most common questions are addressed in the weekly issues. In practice, this means that if your question is not a common question (or not a question they care about/want to answer), it will be deleted/ignored.

For example, I’m sure that many questions/comments were sent after they closed out of their ABX trade via a stop loss. They announced on Tuesday, April 9 2013, that the previous Thursday they had closed out their trade because it hit the stop loss. However, because subscribers were supposed to manually track the stop loss (most brokers do not allow for option stop losses based on the underlying stock price), I’m sure a large percentage was still holding the stock. After their announcement that you were supposed to be out already, the stock plummeted even further and, as such, many will have lost more than 25%. “Somehow”, not 1 question or comment was sent in / discussed about the ABX topic since that week… It’s clear they did not want to discuss that loss in more detail.

I find that surprising seeing their advice was not really spot on… (On August 2012, they wrote “Barrick Gold could go up or down in the short term. But I want you to stop worrying. Right now, people are done selling gold stocks and are busy bidding them back up. ABX is going to go up, and we’ll take advantage of this big move upward in ABX by extracting extra cash with this third high-ball listing trade.”)

Anyway, back to the topic of customer support, whereas the SEC indeed prohibits them from giving individual investment advice, they obviously don’t prohibit them from sending ANY response at all.

For example, I sent an email to support asking for information on delivery times of a specific service. So far (3 full weeks have passed), I have not received a response. In another email, I asked about some of the company’s business principles. Almost 3 weeks have passed and no reply to this email either. I sent a third email asking about the portfolio tracking techniques they use. Also no reply so far (19 days have passed since this one).

While I can understand that the SEC prohibits the Palm Beach Letter from answering questions like “Should I buy Stock X or Y?”, I really see no reason why they are “prohibited” from answering questions not related to personal investment guidance.

It seems to me that they are using the SEC as an excuse to limit the cost of (and time spent on) customer support by encouraging people to solve their problems on their own (or have them read through 2 years of weekly issues in the hope to finding the answer to their question).

For example, I have a couple more questions, but did not send them in, as my experience above led me to give up on support. Maybe that’s what they want, I don’t know.

There is an interesting article about the SEC’s regulations about financial newsletters here: http://hallandhallnj.com/Publications/TJH/NewLowe.PDF

This also seems to suggest they can reply to emails just fine. Hopefully their support will get better in the future.

2. I’ve been going through the weekly issues to see if there’s some added theory in there (that is not within the regular webinar course), especially about their strategy for dealing with a bear market. They clarify quite some stuff, but basically keep on coming back to their 25% stop loss.

They also changed their mindset from what’s stated in the webinar (that the strategy might change if the option market gets bearish). They now state that the strategy can be used forever, in bull and bear markets.

The idea is that if the market crashes, you would lose approx 25%, but that you will make up for that loss via increased income from option selling and (eventually) the stocks rallying back up.

3. Interestingly, Paul (one of the original editors) writes in one of the weekly issues: “I estimate that by selling puts, you’ll make about 70-75% of the return you would get from owning the stock outright. We came up with that figure at my old asset management company by comparing the returns of our put-selling mutual fund against the returns of our stock mutual fund. Both funds used the same stocks. But one fund held them as stocks. The other just kept selling puts on those same stocks.”

Therefore, you might question the value of this strategy especially considering the amount of work it will require versus a simple buy-and-hold strategy.

4. Portfolio Tracking. They often claim annualized returns of 20% or more, however, as you typically cannot have all your cash sitting in trades, your actual return will be lower. They acknowledge this (and even encourage you to minimize idle sitting cash). In order to make $1,000/month with this strategy, you need around $100k to invest.

5. Although Palm Beach Current Income focuses on educating you, the trading service itself is very similar to Retirement Trader run by Dr. David Eifrig.

For that service, Max on StockGumShoe writes “Yes sadly Stansberry shows the income stream from this method but does not show the capital losses. Evidently if the capital losses equal or are greater than the income stream then this method is a waste of time.”

The same can be said for Palm Beach Current Income. Their focus is also on making cash from selling puts, and capital losses can really eat your income. They say that over time capital gains and losses should balance out each other.

Note that despite my critical review, I am (overall) positive about the course. If you’re new to options, it will definitely help you understand how you can use them to your advantage. The strategy should be in the toolkit of every investor.

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