I was just settling down for a nice teaser read from our friends at Stansberry and Associates — this time teasing the relatively new Advanced Income newsletter from Jeff Clark.
And it started to sound a little bit familiar …
“It’s the world’s best income secret, perfected by a California Millionaire over the past 20 years… and the only opportunity we know of that is certain to add up to $1,550 or more to your account… in the next 24 hours.”
They’re calling this investment strategy “Transfer Dividends” now, but your friendly neighborhood Gumshoe sniffed it out for you
several months ago, when this teaser made it’s first rounds and was called the “California Overnight Dividend”
Except back then, the tease was that you could add $5500 to your account in the next 24 hours. So we’re downsizing a little bit.
Still pretty much the same thing, with mostly the same wording … a veiled teaser for a strategy that essentially involves buying stocks and selling covered calls for income. I don’t have much new to add about the strategy, which is certainly a legitimate one, but if you missed the writeup on “California Overnight Dividends” a while back, you can read it here … just substitute “Transfer Dividend” for “California Overnight Dividend” and it will all make sense.
I didn’t notice any clues for particular companies he’s recommending this strategy with right now, but generally for this strategy you’re looking for stocks with relatively high option premiums in the near months — and companies that you should like, since you have to buy up quite a lot of shares to make any income selling covered call options.
He also included a couple paragraphs on a new strategy he’s teasing, called “Double Dividends” — haven’t sleuthed that one out yet, but I’ll take a look soon. You’ll be the first to hear.
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Yeah the transfer dividend thing is obviously covered call options. Gosh, could one not have figured that out since it is the most common form of option trading. As for the Double dividends, I am not really sure about that. It could be buying long term options and selling short term options against them. for example, instead of paying $33 a share for MSFT, laying out $3300 for 100 shares, and selling a February 35 call, that would net $72 less commissions (obviously not s good deal but this is just an example), you could buy one LEAP January 2010 call for $700 and sell the February 35 for the same $72. That is a one month yield of 10%, which sounds great, but if MSFT falls and doesn’t recover you lose money on the stock or the LEAP, so there are risks. OF course the risks are never discussed in these nefarious touts.
Anyway, I haven’t actually seen the material not having subscribed but my guess is that is what he is talking about.
I scoped this one out too, based on the reference (quoted below)to Joseph Hooper:
[“As a former Merrill Lynch stockbroker named Joseph Hooper says, this is “without a doubt the most misunderstood… and poorly implemented financial tool in the world.” A financial planner in Washington named George Middleton agrees: “Most financial planners aren’t CFAs, so they don’t have the knowledge or background to understand [how this investment works].”]
Hooper’s book is listed on Amazon.com for $78.75. Customer reviews are very mixed. A typical negative review is copied below.
Covered Calls and LEAPS–A Wealth Option + DVD: A Guide for Generating Extraordinary Monthly Income (Wiley Trading) (Hardcover)
by Joseph R. Hooper (Author), Aaron R. Zalewski (Author), Robert Kiyosaki (Foreword)
Key Phrases: selling high rule, first buy point, new covered call position, United States, Feb Mar Apr, Sep Oct Nov Dec (more…)
52 Reviews
5 star: 53% (28)
4 star: 3% (2)
3 star: 15% (8)
2 star: 1% (1)
1 star: 25% (13)
3.6 out of 5 stars 52 customer reviews (52 customer reviews)
List Price: $125.00
Price: $78.75
Most Helpful Customer Reviews
127 of 135 people found the following review helpful:
1.0 out of 5 stars I returned it to Amazon, January 11, 2007
By trader – See all my reviews
This book is basically the same material that Joe used to sell on his website a few years ago. Not much has been added. As already stated in previous reviews, most of the techniques have been around forever. The CSE fund was one of the big selling points on his website at one time and many people mirrored that account, as did I. It was his “show piece” to prove that his technique worked. Then one day the fund was mysteriously removed from the website, never to return. In my opinion, it was discontinued because it had lost so much value. You can sell calls, but if the value of the underlying stock decreases by 90%, then you still have nothing. I spoke with Joe’s broker at OptionsXpress (for the CSE fund) and was told basically the same thing – that the account had just lost too much money. He told me that Joe was “just a good salesman”. I traded with Joe for over 2 years. Most of his trades generated income, but the percentage that did not do well really lost huge amounts, more than enough to wipe out the gains. However, those losses were never documented on his site because he never closed them out. He just quietly forgot about them. I personally talked to both Joe and Aaron on the telephone about several of their positions that had “gotten in trouble” and neither one could offer any technique to correct the situation. For those of you who read the book and are thinking about the seminar – been there, done that, feel like a sucker. In short, the book does explain covered call techniques adequately – however, fails to point out the potential pitfalls and risks involved. Earning 5%+ in your investment account every month sounds too good to be true and it is.
I’ve had fun scoping out a number of teasers and I enjoy your service. There’s often some truth to these deals, but usually not the whole truth.
T. Atkinson
i get emails from several investing sites but here latly i have started unsubscribing from a few of them. you know you get these news letters there five miles long they dont really tell you anything informational. and after waisting twenty to thirty minites of my life your told for three hundred dollars you can get these trade secrets sent to you. well my point is there just as bad as these info commercials it slices it dices it empties your wallet!!
ha! ha! well to the add from daily reckoning its called the paddle strategy,it claims that with this investing strategy a man made a million dollars in one year and some other guy made over a billion.
well im not sure if thats all b.s. but i thought i would tell you about this one. i looked it up on your site but it didnt show any article about it. thanks for all your good articles!
One technique I discovered at Dividendium is buying the target stock issuing the dividend 5 days before the EX DIVIDEND date and selling it on the EX DIVIDEND date.According to Forbes,the stock price tends to rise due to the volume of buyers gathering the dividend. I havent tested the tactic but it makes sense.
I JUST SIGNED UP ROF A 30 DAY FREE TRIAL WITH MARKETFN. i WENT TO THE SITE, AND THERE THEY ARE! THE GREAT INFO! NEW INVESTORS ARE NOT GIVEN MUCH HELP. I ALSO FOUND IE:NFG ONE OF THE BUYS HOWEVER SINCE THE SERVICE DON’T GIVE THE FOUR VITAL STATS I FOUND OUT I WOULD HAVE NEEDED TO OWN THE STOCK SINCE NOV OF 07. TO GET DIV THIS FEB. LOL BIG HELP! NOW HOW IS THAT A GOOD THING. PLUS THEY CHARGE 69 DOLLARS A MONTH FOR THIS SERVICE. PERSONALLY I THINK THEY SHOULD BE ASHAMED OF THEIR TABLOID! ANY COMMENTS? aNY ONE INVESTING IN DIVIDEND STOCKS? ANY PAY LG. MONTHLY? BIF HAS BEEN PAYING ME APPROX 67.00 PER MONTH. 0.115.
“Double dividends” are indeed covered calls using LEAPS – I am a subscriber to Advanced Income. Normally I would think it unethical to just come out and say that on the web, but the real value in the subscription is Jeff Clark actually telling you which stocks to use for your covered call writing and sending email updates as necessary. So if you want somebody to read the charts for you and give you advice, pay the $200 subscription fee. Otherwise, now you know he’s talking about LEAPS and covered calls, and lots of people talk about that on the web and in books.
I like and have BIF and also Canadian oil stocks HTE, PGH, AAV. There are several more paying great dividends. They are down right now so the dividend percentage is even higher. I hope to be getting dividends for years from these. There is an excellent newsletter called Canadian Edge for $100 a quarter that goes indepth about lots of Canadian dividend paying stocks in other areas also like Yellow Pages, real estate reits, etc. I buy them with my Scottrade account if they trade in the US or Scottrade buys them for me if they don’t. I really like this newsletter as it covers many top dividend stocks with good charts and information. If you only take it one quarter you will learn a lot.
Thanks, Gumshoe, you have saved me so much money from NOT falling for the newsletter hooks! I had already spent $1200 on newsletters whose recommendations I still didn’t take. No more! I’m happy to send my paypal donation to you each month.
I have tried out several of these “newsletters” only to be bombarded monthly with endless promises that if I send $89.00, $129.00, $500.00, [Insert any ridiculous figure you like] they will send you the “Secret Information” to make a fortune. However, they don’t mention that each one you send to will only bombard you with yet more advertising, and precious little, if any, actual information that you could use to make a buck. When my current trials run out, I think I am going to just concentrate on using my hard-earned skills at reading charts etc. and just be my own “guru.” It’s a heck of a lot cheaper, and frankly, tends to be more lucrative. I hate to say it, but Stansbury and Assoc. is one of the worst of this kind.
I bought pgh and when I go my dividends I ended up with much less than I was told by the site promoter. The reason for this is you also have to pay up front the Canadian tax which is almost half of the dividend, which cuts you earnings in half. bif is way down from what i paid for it, but i like the fact that it pays monthly, and would like to know what other div paying stocks pay monthly.
As a retired contractor-developer, I started playing around in the market and other financial instruments recently in an effort to make some easy money on my hard-earned money. After buying memberships in several clubs and newsletters, I think I know now how to make money in this business; SELL MEMBERSHIPS! It’s been a bit painful & expesive, but I’m catching on!
BlueSkyCasy and Investorgirl,
I purchased shares of PVX, which is paying around 15%. The stock is down from where I bought it, but I hope to buy more.
Jeff Clark I have followed for years and he is really quite good. His plan is two fold, buying stocks that have little dowside and have large near months premuims for covered call writing. Since he has started this service he has done fantastic. Everything has worked to plan so far. I have done quite well and am pleased with his picks. This service is touted for people who have larger sums of cash and need income. This service does provide this and am sure its helping many who use it.
Thanks Stan — glad to hear it. I certainly don’t doubt that selling covered calls is a good strategy for many people. My main concern is what you noted — though the ads for this are sent to pretty much everyone and nothing in the ad says you need to start with a big pile of capital to get this income, this strategy really does work much better for folks who have capital but need more income. I’m glad to hear that Clark has helped you, it’s always nice when investors can weed through the junk to find the advisers who match their needs.
I have come up with a different “double dividend” method. Buy a multiple of 100 shares of a high dividend stock. Sell “deep in the money” LEAPS. Collect the dividends. You can sell LEAPS that are 50% of the cost of the shares. That method is my own creation as far as I know. It is low risk since the LEAP owner takes the majority of the risk.
Could you buy an option 5 day before ex dividend date and sell the day of the ex dividend date? Could one buy puts and sell after the ex dividend date to get value?
Options contract terms don’t adjust for routine dividends (they do adjust, usually, for significant one time dividends of more than 10% or so of the share price, much as they adjust for splits and mergers). So theoretically, yes, you could buy and sell your options around the ex div date if you believe your strategy will make that profitable — but the prices in the time before the dividend will gradually adjust to reflect the dividend in almost all cases. You might get lucky in contracts with very low volume and sneak a bargain in against a seller who makes a mistake, but I wouldn’t rely on it as a strategy. Who knows, though, maybe it will work, it’s hard to know unless you have access to historical options pricing data to backtest.
On your first thought, I assume you mean a put option, right? Stocks drop on the ex dividend date, it’s the day before that when we would assume the shares might peak (all else being equal) if people are buying to get the dividend.
Jeff Clark has a new plan “unclaimed dividends”. Just sign up with any big brokerage house, fill out a “special” form and then you receive $1,500 to $2,000 per month from a big pile of “secret” money known only to the big brokers. No stock purchases are necessary just open an account and apply for your monthly “free money”.
Yeah,isawthesamething. itsnow”unclaimeddividends”whichisanother”buzzword”in the lineof”buzzwords”like”transferdividends”and”californiaovernightdividends”. Same pig different lipstick.
Unclaimed dividends discussed here: http://www.stockgumshoe.com/2008/06/unclaimed-dividends-2-page-form-collect-2100-jeff-clark.html
I have dealt with stansbury and associates for quite a while, consistently have lost month trying to follow their advice. You will get one newletter from Porter telling you that the whole world is about to crash and one from Jeff or another person saying quite the opposite and one to buy gold and silver, but don't be surprised if they make a short term correction. So pretty much whatever you do you will be wrong in the short term, and if you are looking to make money long term, you don't need these guys, just buy on dips and hang on. Lots of luck following these jokers.
Perhaps you are trying to hard. My story has been very different. I’ve made money following their advice and using the sources and information that they provide.