Can anyone explain compound stock earnings?

Question

I've heard these 2 guys talking about compound stock earnings on talk radio, and I've checked out their website, but I'm still not sure what they are talking about. 1. Is this program a scam? 2. How does it work? 4. Sounds like you need to own stocks before enrolling, true? 5. They keep talking about options, what does this mean? 6. What are covered calls? 7. Do these guys work on commission or do you pay a fee upfront? 8. Has anyone actually gotten rich using this service?

Answer 1

I don't know about your program, but compounding generally describes investing earnings to make still more earnings. How to do that with stocks?

One approach (probably not theirs) is a dividend reinvestment program. That, of course, requires a company that pays dividends, and a company program to reinvest the dividends. Not all companies pay dividends, and not all companies that pay dividends have a reinvestment program.

Another approach, which touches up on the "calls" you mention, is to sell an option on the stock that you own. Depending upon prices and timing, you can get a premium on the option to buy your stock at a preset (strike) price. If you sell an option, say, to sell your $43 stock at $40, then you would get a premium of about $300 or more (you have to have a full block, or 100 shares, of the stock to do this, so your $4300 is represented in the $4000 for the option purchase, plus the option premium, which should be at $300 in this example, at a minimum). Some people watch options prices for values above the basic value-covering premium, so if that option was selling for $4.30 (times 100 shares) instead of $3, then you just got an extra $130, or some 3% immediate return on your money for the next few months. Another tack to take is issue an option like this about a month before the option expires. Then, because some brokerages automatically exercise the option, as in buy your stock for the agreed price, then you buy it back for a few pennies a share nearer expiration in order to close the issue, so you keep your stock.

Complicated? You bet. Do all stocks and options have these kinds of illustrated values? Nope. Some are better, but most, and most of the time, they are not.

Finally, another idea is for volitile stocks. If you know that the company is good and ought to fly through the roof (some do indeed, I passed up RIMM at 50 cents, its over $170 now), then when it rises a big bunch, sell out enough of it to cover what you paid in. Then, durring a "correction" say, some stock downturn, then you buy it back, it is on sale. Meanwhile, when it rises again, you have profits from the recent recovery rise, plus your "free shares"--those are the extra shares from your original purchase that you didn't need to sell when you recovered your original investment.

It is tricky. Don't worry your head over such sophisticated "finesse" plays. Change the channels and listen to something better.

Answer 2

Compound Stock Earnings Reviews

Answer 3

I heard these guys years ago and can't believe they are still around! These guys are the Kevin Trudeau of the investment world. Selling promises that cannot - on an average - produce the returns they state. I am only writing this to urge you to use as little as you can to test this method if you must, and please do not risk any retirement money on this. I am not an insider - although I did work on the floor of an exchange MANY years back. This is the truth.

These strategies work under certain conditions, don't under most, and require a certain amount of skill that cannot be acquired from 20 minutes a day watching your stocks. They have been around since I was there and that was decades ago. Some strategies are a tool to use under certain conditions, and no single strategy should ever be the whole of your trading. The strategy these guys use requires a lot of trades for the new investor, and the seasoned investor already knows of this strategy and has rejected it.

Bottom line. I knew the guys getting into options when they first started getting hot and they were all smart guys. SMART. If they aren't using the strategy - and they are much better at it than we are - how can we make it work.

Answer 4

Listen/Attend the free 2 hour intro workshop. They give a very general overview of the program.

1. It does not seem like a scam, but a way to slowly grow your investment with a bit of work and attention to your investments
2. Listen in on the introductory program, you get enough info to form a general idea of the basic process.
4. You do not need to own stocks to attend, but you use stocks and covered calls to generate cash.
5. Options are a contract to buy stock, but you are not required to buy the stock. You pay a "premium" to have the option to buy the stock.
6. Covered calls are generated when you own a particular stock (in 100 share increments) and "write" or sell a call to someone who may want to buy that stock. The premium the buyer pays is what goes into your pocket in when you sell the call.
7. You pay a upfront fee for the seminar, but you can get a cheaper overview by buying their book - once you get the basics down, the investment in the live training may be beneficial.
8. Not sure, but it does sound like a solid plan for slowly growing your investment, with less risk than straight long stock buying.

Answer 5

--->> Tips---> https://trimurl.im/e63/can-anyone-explain-compound-stock-earnings

Answer 6

dont concern yourself with options...thats a whole new ball game.

for compound earnings, they are refering to dividends being reinvested, thus they too earn interest. its the same idea as comound interest, whereas interest also earns interest.