ChoiceTrade ends their “no commission during option expiration week” feature. Sad, but true.

Option trades with ChoiceTrade are now $5 + $0.15 per contract all the time.

So now, each of my NLS purchases will also incur a trading cost. That will shrink the number of trades I’m actually able to place. But there haven’t been that many NLS trades available lately that meet my criteria, so at least for now, this isn’t that big of a problem.

If you know of a broker that has lower option commissions, please leave a comment, or send me an email at aleks@dividendium.com.

Do you ever stare out at your unused curbside and wish there was a way to make a little cash off of it?

Maybe there is…

I’m working on a new business project called Turvel. Turvel is a website that will allow RVers (or people pulling a travel trailer) to find private areas to park the RV.

Maybe an RV park or campground is not near where they want to park. Or the RV parks that are available don’t feel safe or welcoming. Or the parks are too expensive, or are too full. Or they just need a quick place to stop for a night to get some sleep before hopping back on the road. Whatever the reason, it’s about giving them a little more convenience.

And obviously the homeowner or landowner providing the place to park would be able to make a little income off of something that would otherwise just be sitting there unused.

And just maybe it’ll make the world a little friendlier place.

If this sounds like something you’d be interested in, either renting or hosting, leave your email on the Turvel site, and I’ll let you know when it’s ready. And if you know someone that might be interested, let them know too.

I just had one of my No Lose Stocks (NLS) trades pay off, so I thought it’d be fun to run through it as an example.

On 2/15/2011, I got my daily email with 21 NLS trades available that met my personal criteria. You can look at the NLS Historical Data if you want to see the spreadsheet. (I still had a few bugs to work out at the time, so there are some duplicate entries, and the first two are probably buyout situations. And my personal preference is not to buy any trades that require more than 25% Annualized Percent to Profit.)

I placed 12 of the trades by buying the call options. All expired in January of 2013. In total, this cost $958. That was money that was gained as interest on CDs. So spending this money did not lower my core capital. There were no commissions because I was (and am) using ChoiceTrades “no commission during option expiration week” feature. (I only bought 12 of the 21 because I didn’t have the interest earnings to buy all 21. I would have had to dig into core capital to do that, and that’s a no no.)

Once the trades went through, I then entered 12 alerts in my Fidelity account. One for each stock, set to alert me if the stock ever reached the call option’s strike price.

The specific one we’re talking about here is MCD. The strike price was $95. The closing price on 2/15/2011 was $76.15. And the option cost $1.03…which is $103 for 100 shares.

Doing all of that took about 20 minutes on 2/15/2011, and I was done placing trades for that month.

During the time between then and now, the only time I spent on investing was to place trades during the option expiration weeks. Fewer and fewer trades because NLS hasn’t been finding as many trades that fit the criteria lately. That again took less than 20 minutes each month…some months less than 5 minutes when there weren’t any worthwhile trades to place.

Fast forward to 11/8/2011…9 months later. I got an email alert from Fidelity that MCD had gone over $95. I logged into ChoiceTrade, found the MCD call option with a $95 strike and a January 2013 expiration. Then I placed a sell order at the market.

The call option sold shortly after for $7.05 per share…or $705. But this wasn’t during option expiration, so the commission was $5.55 with a $0.04 fee for a net of $699.41. (There’s no need to wait for option expiration to hit when I have a nice profit that I need to harvest.)

So I made ($699.41 – $103) $596.41 over 9 months. And I still have 11 other call options that expire in 2013 that might still pay off.

And if you take a look at the MCD chart between 2/15/2011 and 11/8/2011, you’ll see a number of places where I might have sold early, or at least been anxious about whether or not I should sell. But since I didn’t follow the stock at all, and just waited for my alert, I didn’t have to suffer through that at all, and the $596.41 is all the much sweeter for it.

That $596.41 will now be added to my core capital, and since I never spend my core capital, it will never be less than this new total. And this will add to the amount of interest earnings that I can place on future trades.

Little time to place the trade, no worry while waiting, and a fun pay off. Good stuff.

Dividendium isn’t exactly dead, but it’s not really thriving either. It’s in a kind of zombie state…and I kind of expect it to stay there.

My interest in investing is what was driving the site, and now that interest has basically disappeared. I’ve studied stock market investing for 10 years or so, and basically concluded that stock investing is a scam and not worth spending the time to learn about.

But Dividendium is also a business and I do plan to start other businesses, so I’m going to try to perform an honest postmortem to see what I can do better next time. If you have suggestions on what I did wrong, or right, or what business I should start next, I’m all ears.

What did I do right?

I started a blog for the site. A blog gives the search engines reasons to list the site in search results. The blog also gives the site visitors some insight into my philosophy and who I am. It allows the possibility of a human connection.

I did some promotion. When I first started the site, I wrote two articles and posted them to various article repositories around the web. This was successful in getting some initial traffic.

I tried stuff. I hid or removed some features to make others more prominent. I added new features that people asked for or that I wanted for myself and received new income from those changes. No one knows what’s going to work right out of the gate, so it’s important to be open to trying different things to see what will work.

I dropped “we-speak” in the blog. It’s more important to be human and open than to try to sound “big” or corporate.

I paid someone else to do the design. Design work (CSS/HTML) drains me. I love the code behind it, but I can’t muster the energy to persist in a site wide design. If I had persisted in doing it myself, it would never have been done.

I stayed within budget. Dividendium supports itself and so can continue on without any external support.

What did I do wrong?

I slacked off on writing blog posts. The posts are what drive traffic increases. The site gets higher rankings in search engines if you have more content. With more content there are more ways that someone can stumble across your site and find it useful.

I didn’t promote enough. I wrote those two initial articles, but I should have been doing more over the life of the site. That would have lead to higher traffic. I should have paid attention to where the traffic was coming from and tried to do more to encourage that.

I didn’t engage with the community and I didn’t create raving lunatic fans. There’s a huge community of stock investors, bloggers, and services. I didn’t try to make any connection to them at all. This may have eventually been due to my dwindling interest in stock investing, but initially it was just my natural introversion and fear of rejection. Engaging this community could have provided more word of mouth exposure, and more feedback on what services people might actually want.

I waited too long to stop. Or rather, I didn’t make a conscious decision to stop. I just let it languish and sap my will to start other things. I wrote the “is the market a scam” post back in 2008. At that point I should have taken a step back and honestly considered if this was what I wanted to continue putting my time into. I should have considered if I was really creating value for someone else…without just taking that value away from another person.

I didn’t test enough. I should have done more specific measuring and testing when I made changes to the site. This would have helped me to see if a particular change improved or worsened a particular metric. Instead I just made a change and waited to see if it overwhelmingly made a difference. I didn’t have a clear time frame for when that difference should happen, or what that difference should be. And so I didn’t know when to remove the change or leave it for longer.

What now?

If you’re subscribed to this blog, this may be when you want to cancel that subscription. I expect this blog will now have nothing to do with stock investing, and will become much more personal. I plan to use it as a place to discuss what I’m thinking, reading, doing, or creating. I could have started another blog for this, but then I’d have one more blog to back up, and in truth this blog already has a number of my core principles baked into the previous posts. Where it’s going now is really just an extension of those principles.

The dividends and investing services part of Dividendium will stay up. Those parts of the site are what pay for the servers and I plan to use those servers to host other projects as well.

I’m working on a new site now (not stock investing related in any way), and I expect I will be posting about the pitfalls and progress here.

Email me if you have any ideas for businesses or services that you would like to see (that are not stock investing related).

Principles and Philosophy

This seems like a good time to explicitly state some of the things I’ve come to believe and not believe:

I don’t believe in retirement. This is an about-face for me. For 10 years or so, my goal had been to retire early. But I no longer believe that retiring should be a goal. What I was really saying was that I wanted to not worry about making an income. I don’t think that’s possible. No matter what savings I squirreled away or what investments I made, there’s always the possibility that something will go wrong, and I’d lose it all. Inflation, theft, bad investments, fraud…any one of them could kill decades of saving in a very short time. So instead, my goal is to enjoy creating value and to become comfortable with not being “safe”.

I don’t believe in a guaranteed return. This ties into the no retirement thing. Inflation and technological advance will not allow a guaranteed return. Any apparent guarantee has a leak some where.

I don’t believe that money is important or an end unto itself. Money is a transition phase between creating value and consuming value. It’s also a good way to measure the rate at which I am creating value…but not the amount of value I’ve created in total. I don’t want to hoard money long term or use the amount of dollars I have as a proxy for my self-worth.

I believe in keeping my expenses low. Low expenses means I don’t get stuck financially. It means I maintain my independence. Consequently it also means keeping debt low, at zero, or only transitional (like using credit cards, but paying them off every month). Low expenses also means I have less stuff, which means I have fewer distractions from doing good work.

I believe in having a financial cushion. A short term (a few years expenses) stash to allow me to try some things out and to keep from getting stuck some place I don’t want to be. It provides options.

I believe that stock market investing is a zero sum game and a waste of time…a lot of very smart peoples’ time. People who could be creating value instead. I still use No Lose Stocks, but I view it as playing the lottery, and a short term (a few years) place to store cash.

I believe in enjoying life throughout it’s course. I don’t believe I can save it up for “retirement” in my “golden years”. I may die before I get there. The people I want to spend that time with may die. The things I want to do may no longer be possible due to health, laws, or opportunity doors closing. I don’t want to regret things I didn’t do.

I don’t believe in safety. Change is the only constant. So I want to be excited about changes…not fearful or anxious about them.

I believe fear or anxiety is a great indicator of what I should do or try. And vice versa that comfort is an indicator that I’m not trying enough new and scary things.

I believe I should do things other people find useful. I should create value.

Sweet and simple, your savings are being stolen. If the U.S. continues down it’s current path of spending, rampant inflation will result.

All of your savings will be wiped out. We will likely all be millionaires, but we’ll be eating ramen for dinner every night. Each dollar will be nearly worthless.

Now, I like ramen…but not every night.

The Presidential primaries are starting up and there is one candidate that has consistently warned about this rampant inflation…Ron Paul.

If you’ve heard he’s a “kook”, please take a minute and judge for yourself. Generally he’s called this because he thinks the government should spend less than it makes, and that it shouldn’t take everything we earn out of our pockets. He thinks we should be able to spend our own hard earned money the way we want. That’s just crazy enough to work!

There’s been a media blackout against this guy. It’s very odd. Jon Stewart recently did this awesome job of shining a spotlight on the blackout. It’s pretty funny…even though it’s painfully true.

If you want to keep your savings, and not end up a sucker, consider tossing Ron Paul’s campaign a donation on Saturday (8/20) to help out with their latest fundraising push.

At worst, his continued presence in the race will keep the other candidates focused on issues that matter to us investors. At best, he could actually win, and help you keep your savings.

I don’t watch the news or the markets, so I was surprised to find out how far the market has fallen lately. Take a look at this…

(Chart of SPX for past year grabbed from BigCharts.)

That’s painful just to look at. Looks a lot like the story of the turkey and the axe.

That’s a roughly 17% drop in 10 days. That wipes out all the gains since mid-September…10 and a half months ago.

A 10 day loss takes out 10 1/2 months of gains.

What if you were 10 days away from retiring? I suppose you would have reallocated or something to try to get away from that volatility, but still, I’m guessing you’ve got another year of work now, instead of a couple weeks.

Even worse than that, investors that bought stocks back in 1998 are pretty much at even.

13 years of seesaw investing, and they don’t have anything to show for it…except maybe an ulcer.

And I guess even worse than that are the investors that invested at the highs of 2000.

11 years of investing and they’ve only got 75% of their money left.

Pretty painful when they probably expected to get some where between 6-8% per year.

At that rate, they should have been up about 90-130%, but instead are down 25%.

I guess the upside is that the 25% might come back in a year…before it’s all lost in a couple weeks again.

I realize this is a tragedy for a lot of investors, and that they’re all glued to every news report even tangentially related to this, trying desperately to figure out what their next move should be.  (I know because I used to be that investor…)

But for those of us using the No Lose Stocks strategy, this is just an interesting event.  Something to glance at once, and then get back to enjoying life.

I came across this really interesting study on ego depletion (PDF) the other day.

The conclusion drawn from the study is that “choice, active response, self-regulation, and other volition may all draw on a common inner resource.”

So if you’re self-regulating, and actively resisting temptations (dieting, quitting smoking, quitting drinking, quitting internet usage, sales advertisements, etc.), you may be lowering your willpower to resist other temptations. This would imply that you should only take on one willpower intense task at a time. If you take on two, you may fail at both.

It’s also a good reason to attempt to avoid temptation in the first place. If you can’t even see the cookies, then you’re not actively resisting them.

The study also links choice and active response to willpower. Meaning, if you want to reserve your willpower, try not to put yourself in situations where you will need to make considered choices or active responses. Alternatively, you could have a predetermined plan for what response you will give without even considering. Like always answering “no” to any phone offers, avoiding picking up the phone in the first place, or always throwing away ads or mail solicitations.

One thing that comes to mind is being on the receiving end of the negotiation tactic of asking for a bunch of small concessions that the asker doesn’t care about in the beginning. Then asking for what they really want at the end.

The tactic supposedly works because the two parties feel like they are “working with each other” once they have agreed on all these small things, and so continue to work together on the big thing at the end. But it may be that the one side just gets their willpower exhausted and doesn’t have the mental stamina left to object. They just “go with the flow”.

This reminds me of a line from a show I once saw:
“If you think you might be talking to a conman, just keep answering ‘no’ until he goes away.”

Sounds like a good plan.

No Lose Stocks (NLS) and Predicted Dividends (PD) used to cost $14.95/month, and $4.95/month respectively, and 12 times those prices for an annual subscription.

But I had a few problems with that.

Too Expensive

One is that it’s too expensive for NLS. I wouldn’t pay that for NLS. NLS is a good service, and the only one I use for my own investing, but still, that’s a significant chunk of change. That scares people off that might actually benefit from the service.

I want the services I offer to be priced so that people are happy to pay the prices. Not just that the price is fair, but that it’s so cheap you’re surprised and delighted to pay it.

That was also the problem with the pricing on PD. It was a fair price, but it wasn’t a great price.

Mirage Pricing

Then there’s the “$X.95″. This is a tactic that is so pervasive nowadays that we don’t even notice it. I didn’t really even think about it when I priced the services that way. But it’s a form of dishonesty and it makes me uneasy now that I have thought about it.

Making a price be a penny, three cents, or five cents below a round dollar number is an attempt to make the price look better. $49.95 is basically $50, but $50 looks a lot more daunting. So it’s a way to get a customer to pay $50, when they really only wanted to pay forty something. So I’m dropping it, and dropping the price even further.

Bulk Discount

Lastly, I was charging 12 times the monthly price for an annual subscription. But the general expectation is that if you buy in bulk, then you should get a discount. I don’t like violating people’s expectations.

If the violation is done quietly, so the person doesn’t notice, then it’s a form of dishonesty. If I know that someone is expecting something to go a certain way, and I quietly do it another way, then I’ve basically lied to them. (I’m looking at you grocery store that prices a bigger package at a higher price per ounce than the smaller package.)

Alternatively, I can try really hard to let them know that their expectations aren’t going to be met. This is what I tried to do by putting a calculation right in the daily email that said “the annual price is 12 times the monthly price”. But when I do that, I’m making people think harder. I’m violating their expectations and making them have to think about every transaction they make with me. They’ll always be asking “is this going to meet my expectations or am I not seeing the warning that says it will be different than I expect”.

I hate that. I want every interaction with me to meet or exceed expectations. That’s how you build trust and a long-term mutually beneficial relationship.

New Prices

So here it is:

Predicted Dividends is now $2/month, or if you subscribe annually, $20/year (2 months free).

No Lose Stocks is $4/month, or if you subscribe annually $40/year (2 months free).

And both still have the 60 day free trial, so you can see what you’re getting before you pay.

Refunds

I’ll be:

• refunding subscribers to these services for the current month
• sending them links to be able to unsubscribe from the higher price,
• and assuming they like the service, links to resubscribe to the new lower price

Annual subscribers will receive a refund of the amount they paid over the new amounts.

Let me know if there’s anything else I can do for you, or if there are any areas where I’m violating your expectations or could be providing a better service.

Thanks,
Aleks