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Rent out your stocks - "Thrillionaire" book.
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The Australian international wealth mentor Nik Halik has written an inspirational book called "Thrillionaire".
Younger Numberers may be particularly impressed by his exploits: in the centre of the book you can see him as:
- a rock star guitarist;
- experiencing weightlessness in preparation for his space flight;
- standing outside a diving bell before going down to look at the Titanic;
- on the top of mountains in South America and Africa;
- lying in off-limits parts of the Great Pyramid in Egypt; and
- landing on Antarctica;
And in the text he talks about chasing tornadoes.
He is particularly keen to advocate passion - its passion for wealth and passion for life that have led to him tackling a myriad of exciting projects, and he seeks to encourage ordinary folk to re-connect with passion in their own lives. And he is not shy of talking about how the spiritual realm has on occasion entered his life, with talk of his "out of body" experiences, improving his inner consciousness, and receiving guidance from a shaman.
Only one chapter of the book focusses specifically on wealth-building strategies, and obviously he frequently references his own businesses that concentrate on this issue. (Chapter 12 - Multiple pillars of income).
While attempting to retain an air of mystery about the wealth-building techniques he's describing, personally I can see that he's talking about selling stock options when he speaks about "renting out your stocks".
However, he is correct to say that your stockbroker is unlikely to tell you that you could obtain additional income from your portfolio of stocks by "renting them out" - your stockbroker probably won't tell you about selling options on them.
What is fascinating about his approach is the way he says:
"Its always better to be the market-maker, not the punter".
I would explain this in connection with casinos. Is it better to be the casino-owner, or is it better to be a punter who wanders in and sits at the roulette table?
Well in the world of stock option trading, the punters are the people who want to buy the options. So you can become the market-maker by offering to sell those options against your own stock holding. No longer are you a punter.
If you don't currently sell options against your current stock portfolio, he compares that to buying a block of apartments and then not renting them out.
Further, he uses the phrase "buy insurance against stock market falls" rather than spelling out exactly what techniques he's actually advocating. Here I would guess he's saying: "Buy put options" which increase in value if a stock or an index falls.
He has some specific advice on how to make money from Real Estate. One particularly clever trick is to insist that you be allowed to put your team in to redecorate the building you're about to buy so they can do the work during the interest free settlement period, then get the building re-valued immediately after the sale goes through, so you seek finance based on the new valuation price.
He also takes an international approach to property investing, seeing Morocco, St Lucia and Brazil as good targets.
Like Kiyosaki he sees fantastic income streams from the internet, especially in providing education and for building sales.
His wealth-building teaching emanates from the Financial Freedom Institute (FFI): here's the link to the website:
Thrillionaire's FFI website
So if you want one chapter of slightly cloaked, but intriguing financial advice, and in the remainder learn the details of his rather exciting, exceptional life, then this is the book for you.
KC
The Australian international wealth mentor Nik Halik has written an inspirational book called "Thrillionaire".
Younger Numberers may be particularly impressed by his exploits: in the centre of the book you can see him as:
- a rock star guitarist;
- experiencing weightlessness in preparation for his space flight;
- standing outside a diving bell before going down to look at the Titanic;
- on the top of mountains in South America and Africa;
- lying in off-limits parts of the Great Pyramid in Egypt; and
- landing on Antarctica;
And in the text he talks about chasing tornadoes.
He is particularly keen to advocate passion - its passion for wealth and passion for life that have led to him tackling a myriad of exciting projects, and he seeks to encourage ordinary folk to re-connect with passion in their own lives. And he is not shy of talking about how the spiritual realm has on occasion entered his life, with talk of his "out of body" experiences, improving his inner consciousness, and receiving guidance from a shaman.
Only one chapter of the book focusses specifically on wealth-building strategies, and obviously he frequently references his own businesses that concentrate on this issue. (Chapter 12 - Multiple pillars of income).
While attempting to retain an air of mystery about the wealth-building techniques he's describing, personally I can see that he's talking about selling stock options when he speaks about "renting out your stocks".
However, he is correct to say that your stockbroker is unlikely to tell you that you could obtain additional income from your portfolio of stocks by "renting them out" - your stockbroker probably won't tell you about selling options on them.
What is fascinating about his approach is the way he says:
"Its always better to be the market-maker, not the punter".
I would explain this in connection with casinos. Is it better to be the casino-owner, or is it better to be a punter who wanders in and sits at the roulette table?
Well in the world of stock option trading, the punters are the people who want to buy the options. So you can become the market-maker by offering to sell those options against your own stock holding. No longer are you a punter.
If you don't currently sell options against your current stock portfolio, he compares that to buying a block of apartments and then not renting them out.
Further, he uses the phrase "buy insurance against stock market falls" rather than spelling out exactly what techniques he's actually advocating. Here I would guess he's saying: "Buy put options" which increase in value if a stock or an index falls.
He has some specific advice on how to make money from Real Estate. One particularly clever trick is to insist that you be allowed to put your team in to redecorate the building you're about to buy so they can do the work during the interest free settlement period, then get the building re-valued immediately after the sale goes through, so you seek finance based on the new valuation price.
He also takes an international approach to property investing, seeing Morocco, St Lucia and Brazil as good targets.
Like Kiyosaki he sees fantastic income streams from the internet, especially in providing education and for building sales.
His wealth-building teaching emanates from the Financial Freedom Institute (FFI): here's the link to the website:
Thrillionaire's FFI website
So if you want one chapter of slightly cloaked, but intriguing financial advice, and in the remainder learn the details of his rather exciting, exceptional life, then this is the book for you.
KC
Comment
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Comment by KC on June 14, 2009 at 9:11am -
@Adrian. Those are very insightful comments - thank you.
I'm not at all conversant with exploiting Real Estate so I personally can't comment on what precise steps to take, but I fully take your point that times have changed from the exuberant earlier days, so methods recommended then could well be inappropriate today.
I just mentioned that Real Estate example to show readers that he advises on that area too as part of his wealth-building advice - it sounded clever, he sounded pleased with himself for having thought of it, but personally I thought ramping-up the valuation before seeking finance seemed like making the whole job more difficult, but I hoped that Real Estate people might be able to comment and enlighten me, as you have done.
As for your 3 comment entry:
1) I have heard that there is a "difficult zone" when you're heading towards riches, where, as you say, you have a sizeable amount, but it may not be quite enough to properly implement the strategy you have in mind, and blindly going on with the strategy, buoyed unrealistically by your feeling of "being rich now" can be disasterous if things don't work out. He might sidestep this criticism by re-interpreting the word by saying: "make your life thrilling - be able to pursue those thrills by getting rich - become a thrillionaire!"
2) Yes, for investor who gets attached to their stock-picks, and to the corporations associated with them, then they will be considerably upset if their stocks are taken from them if the option sells are exercised.
This is illogical and emotional, but investors should be honest with themselves about how they relate to their portfolio.
But if you don't fall in love with your stocks, then receiving option income without being worried that your stocks can be taken off you, is indeed a clever strategy.
So I can see that selecting sideways stocks to reduce the likelihood of exercise seems a good idea, but I also hear stories of options being exercised almost randomly, even though the stock price hasn't surged.
This is a useful warning to those who have fallen in love with their stock purchases - exercise can come out of the blue, and there's nothing you can do to stop it, once the exercise has been enacted.
Thus if you do get into the "rent your stocks" strategy, then you must be relaxed and unconcerned if the stocks are taken from you - after all, they did pay you the option price to allow them to do this, and they did say it could happen at any time.
Given that good "stock renters" don't care if their stocks are taken, then it doesn't really matter if the stock is a sideways mover or a rocket. What would bother them is if the stock tanked by more than the option price they'd received as income - they're now in an overall loss situation, although of course they have retained the stock, so they can continue to get more option income next month and beyond. Which I guess brings us to your point number ...
3) To give protection against this downside risk, it would make sense to investigate buying a put option which will rocket in value if the stock price sinks.
From what I've seen of option spread traders (where they deliberately buy and sell options for a net income) they exploit the fact that the further-out options are universally cheaper than the closer-in options.
For example if the stock price today is 50, then we sell the 55 option for, say, $1.38; and we buy the 60 option for $0.87 giving us a net income of (1.38 - 0.87) = 0.51
I'm not sure if this would work in trying to balance the cost of "insurance against stock price fall" versus "income from option sells" situation you mention, but it does provide a skeleton of an approach that could be investigated further.
Presumably providing the definitive answer to this problem is why the Thrillionaire's Sharelord course costs AUS$5000 - see sharelord home-study course prices
KC
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Comment by Adrian on June 13, 2009 at 10:33pm - PS The real-estate advice seems to lead into the 'irrational exuberance' that fueled the US crash - that Aus hasn't seen, yet; a 'safer' strategy might be to buy with 10% down (or lowest deposit that you can get) then do what he suggests to 'automatically' increase your equity?
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Comment by Adrian on June 13, 2009 at 10:30pm
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@ KC - Interesting 'dissection' as usual ... thanks, KC! Three comments:
1. Thrillionaire was a term first used in your home (the UK) because 3 million POUNDS is substantial; in Aus and US $3 million is just enough to get you into trouble: you're not poor, but any super-normal spending will quickly send you broke!
2. Covered Calls - the 'stock rental' strategy that the author appears to be alluding to is a great strategy, most widely popularized in Aus by my fav. Aussie "I went from supermarket shelf-stacker to 2 Ferraris" author/spruiker/wealth-manager, Peter (Freeman Fox) Spann. It is very low risk (in that you only open yourself up to opportunity cost: you may be forced to sell your stocks in the face of a substantial upward spike in price), hence is best suited to stable stocks in a sideways (or slowly rising) market.
3. It MAY be possible to create the ultimate strategy: buy a Rule #1 stock that you love and would be prepared to hold forever; add covered CALL options to create monthly income (buy back in to the stocks - according to the indicators - every time you are bought out); buy a long-term (e.g. 1 year) PUT option to protect the downside ...
... the only problem is that the cost of the PUT may very well offset most - or even all - of the covered CALL gain, making this a zero-sum game :) What do you think? Perhaps some research or a trial run or two?
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