Revere Asset Management
President & CIO
Daniel Stewart is President & CIO of Revere Asset Management and has been providing financial services and portfolio management for over twenty years. Revere Asset is a Fee Based RIA which Always Acts as a Fiduciary in the Best Interest of its Clients. Prior to joining Revere Asset Management, Dan advised on investment portfolios exceeding $200M. He is also well versed in comprehensive planning including corporate, individual, and estate planning.
Dan joined the NorAm Capital team in 2010 to create and manage their Private Wealth Management firm. This eventually led Dan to buy the business and rename it Revere Asset Management. He graduated from The University of Texas at San Antonio with concentrations in Finance and Accounting. Dan has passed the CPA Examination on the first attempt and subsequently earned his CFA® Charter (Chartered Financial Analyst).
Dan, a native of San Antonio, Texas, is married with 3 children. Dan played NCAA tennis on a full scholarship at Vanderbilt University. He played professional tennis on the United States and European circuit and was then the Head Tennis Professional at both the Retama Polo & Tennis Club and Thousand Oaks Indoor/Outdoor Racquet Club, in San Antonio, Texas.
Chartered Financial Analyst (CFA®), BBA in Accounting
Assets Under Management:
Fee Based Only - Fiduciary with No Conflicts of Interest
#Yes Primarily Term
No information presented constitutes a recommendation by Revere Asset Management, to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities by Revere Asset Management. Revere Asset Management does not offer or provide any opinion regarding the nature, potential, value, suitability or profitability of any particular investment or investment strategy, and you are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs.
A 770 account is a Permanent Life Insurance Policy used more as an "investment vehicle" than life insurance. I have to be careful how I phrase that because there are rules against implying or calling life insurance an investment. In fact, that is why life insurance agents must call contributions a premium and not an investment.
It derives its name from Section 7702 of the tax code. People use it not so much for the death benefit, but for the cash value growing tax deferred. You must be careful, however, not to "overfund" the policy, thus losing its tax advantage. I will say, you should normally only do this if you need life insurance anyway and can put a "relatively" nice sum, again without overfunding. Many times, people will normally determine how much they can put into the cash value and back into enough death benefit (life insurance) without overfunding.
I am not a big fan of permanent life insurance, and usually recommend cheap term and investing the difference. But sometimes, there are uses for permanent life insurance. If you have a high liability like a doctor and have already maxed out your retirement plans, it may be suitable, especially if you need the life insurance. Or it could be suitable if you need life insurance anyway and have extra cash available to build up the cash value. Later, you can either take a loan against the cash value or you can take out principal amounts tax free, leaving the growth inside the policy. Therefore, you can have better control of taxes later on in life. I tried to keep this in very simple language leaving out all of the insurance jargon, but the philosophy is accurate.
This can be a tricky strategy and you must be careful of unscrupulous life insurance agents trying to generate big commissions. If you plan to investigate further, seek out someone you trust knowledgeable in insurance.
Hope this helps, Dan Stewart CFA®
You have a few different alternatives,namely mutual funds or ETFs (Exchange Traded Funds). The only real difference is that an exchange traded fund can be traded throughout the day whereas a mutual fund you get the end of the day NAV (net asset value). This won't make a difference to you and I personally would probably go with a couple of ETFs, but both types of funds can offer stock, bond, commodity, options, currency, and even hedging strategies. With some research, you could get exposure to just about any type of strategy you would like.
But keeping it simple, you could invest in the SPDR S&P 500 Index ETF, ticker SPY, which would give you the largest 500 companies in America. You could then add the PowerShares NASDAQ 100, ticker QQQ, which are the largest 100 companies on the NASDAQ like Amazon, Apple, etc. There will be some overlap because the largest NASDAQ companies will also be in the largest 500 companies on the S&P. Lastly, you could invest in the iShares Russell 2000 Small Cap, ticker IWM, which are 2,000 small cap companies.
Depending upon your time horizon and how young you are would determine the market weights and level of aggressiveness. But a diversified exposure would be something like 50% SPY, 30% QQQ, and 20% IWM. There are also bond ETFs and international and emerging market ETFs as well. But with $5K, you can't touch all of the water.
Vanguard even has some very inexpensive Total Market ETFs where with one trade, you can get the "entire stock market" and would another alternative. I would likely shy away from bonds at this particular time due to the prospect of rising interest rates, but that is my opinion.
Now, there is another choice. You could take around $1,000 in each of five individual stocks and spread it across different sectors. I would stay with large, established companies, a couple with strong growth prospects along with a couple industrial, pharmaceutical, etc. You could start with Amazon, Apple, Berkshire Hathaway B Shares, Proctor and Gamble, Merck. Then when you add more money, you could add a couple of other companies and round out your portfolio. This would be a more aggressive strategy but would give you the opportunity to beat the indices over the longer term. But to mitigate risks, it is important that you stay in the strongest companies with strong balance sheets. This way, you are exchanging "if" risks with "when" risks. In other words, you are not worried whether the company will make it or not, you just don't know the exact timing of getting a great price.
That said, the most conventional approach though with your limited capital is to use funds or ETFs for broad exposure, especially if you do not intend to be researching carefully.
Hope this helps, Dan Stewart CFA®
IPOs are normally very speculative. And not all IPOs are created equal. If it is a "hot" issue and "oversubscribed," this is a clue that it has much support, but then shares are hard to come by, especially for small retail investors, even though it is supposed to be done on some type of lottery or allocation method. And many times, even "hot issues" will push higher and sell off after the original investors (the private equity investors) are able to cash out of their investment. IPOs that are not oversubscribed simply sell-off immediately. You must always ask the question, if it is so good, why are they taking it public? Now there are some very good reasons; normally to raise more cash to expand and/or to create a liquidity event to let the original investors cash out some or all of their investment.
From a technical standpoint, IPOs will gap higher for the first day to a few weeks, then sell-off, creating a bowl shaped formation for weeks or months before stabilizing and coming back up the "right side" of the bowl. That is normally a good entry point if you plan to hold over time. You can even see this with popular stocks like Facebook (FB).
If you are not a seasoned investor who does a lot of due diligence that IPOs require, you should only invest a small portion of your portfolio that you consider more speculative money. If you are planning to hold over the longer term, then invest in the strongest IPOs with a good story, good management, and a great product.
I am not trying to rain on your parade, but just want you to go in with your eyes wide open. If it were that easy, everyone would be doing it. At our shop, we normally let the IPO come out, watch the price and volume, and then look for the basing pattern mentioned above.
Hope this helps, Dan Stewart CFA®
The answer to your first question is yes, that is naked short selling. If AT&T stock goes up, you would have to purchase in the open market at a higher price to deliver them at the strike price, so you would lose. Theoretically, with a naked call, your potential loss is infinity because the stock could skyrocket. In reality, if AT&T goes up $8 or 10%, you would be out 10% minus the call premium you took in. If you do this - sell naked - in a taxable account (you cannot do it in an IRA), be careful that AT&T doesn't report earnings between now and expiration because if they "beat" you, you could get taken to the woodshed.
I like to think of the call premium as a reduction of my cost basis rather than "income" (really S-T capital gains but for tax purposes the same). At least until the call expires or the trade is adjusted/unwound one way or another.
Regarding the second question, your call is already $2.50 in-the-money (ITM), so you are only getting .30 cents time value. The rest of the premium is because it is ITM. If the stock price doesn't change, you will have to have to deliver 100 shares/contract at $82. Then you are only left with the small number of shares you purchased with premium.
Normally, you want to sell an ITM call when you think the stock is going down some, but are willing to hold or take the money and run if it gets called away. In fact, some investors who are ready to part ways with a stock because they think it is fully valued will sell an short term ITM call to enhance their cash flow and return. If it doesn't get called away, they will rinse and repeat. The determining factor of how much ITM to go is a factor of your thoughts on the security. If you think the stock will sell off quite a bit, you are usually better off simply selling the stock (in lieu of a more complicated options strategy like a collar). When the investor wants to hold the security for better odds of keeping the stock and rolling calls, they will sell out-of-the-money (OTM) calls. Again, picking the right strike price is crucial.
Options are tool like any other investment. Use correctly, they can either create "income" or be a risk reduction strategy, but used incorrectly and they can be very dangerous. We do options at our shop and are big on education. If you want more information, go to revereasset.com and sign up for our free daily video newsletter. We discuss options fairly frequently and I promise we won't spam you in any way. Lastly, do some research on implied volatility and options volume at different strikes. That is important when determining strike prices.
This might be a lot to take in, but if you are serious about options, you need education first. Hope this helps, Dan Stewart CFA®
MRDs are based on the total value of all of your retirement accounts based on the value as of December 31st (year end) of the previous year. You can have the distribution taken from one account, or have each institution take out the necessary amount from that respective institution for that specific balance. The choice is yours and you just need to let each custodian know how you intend to handle the distributions and give them the appropriate instructions.
Hope this helps, Dan Stewart CFA®