The Rich MacDuff Investment Philosophy (Part 3)

In the last post, I delved into the basics of Rich MacDuff’s SysCW investment philosophy. Today I will continue detailing some of these principles.

MacDuff claims that someday the market will be higher than it is today. Such has always been the case through this point in history. CC/CSP investing is a long-term pursuit. We should not expect to make big money fast. We need to be patient and cope with the downtrends that occur from time to time.

MacDuff aims to never, ever realize a loss. If a stock falls then we can roll down. If the stock shoots back up then we can roll out or do other things to generate more cash and avoid assignment. MacDuff states that we never want to be assigned when the strike price is lower than the initial position strike price.

The goal of SysCW is to raise cash with every trade. MacDuff suggests that we should not focus on the current stock price: just our ability to sell premium against it.

By this way of thinking, stocks are like real estate holdings whose sole purpose is to generate rental income. As long as we continue to collect rent, we need not worry about the value of the buildings. We should be willing to own the property for the long term. The real estate market will have its pullbacks and declines but at some point it will be higher than it is right now. When that day comes, combined with the cumulative rental income we have been able to generate, we will be ready to sell with a solid return on total investment.

All of this certainly sounds great but as with life, everything in the investment world has its pros and cons. If I do not understand the cons then I have not done my due diligence.

In the next post, I will discuss the “rolling out and up” strategy along with some risks that cut to the heart of the “never take a loss” argument.