🔒Premium Membership Positions - January 1, 2023

Call to Leap
Dec 30, 2022
4 min read

Happy New Year Wealth Builders! 👋

We had a challenging 2022 year in the stock market with the major indices ending in red. Let's take a look at how we did:

SPY (-19.83%):

QQQ (-33.49%):

DIA (-9.28%):

Though these charts may look scary to you, it's important that we stay calm and understand that we are investing for the long-term.

Even though there are concerns of a recession (or maybe we're already in one if you have a different definition), know that we've always made a new all-time high afterwards.

Also notice that with every bear market that we've experienced, we've had a monstrous return the following year after we reach a bottom. The median annual return is around 23.8%!

Remember that the majority of the companies we have in the S&P500 and DOW30 are still fundamentally strong. The sell-off we're experiencing is due to major institutions taking profits and keeping their cash on the sidelines until market uncertainty starts to diminish.

There is a strong incentive for institutions to want to invest in the markets. They are the ones managing 401(k)'s, pensions, etc., and they make money by charging a managing fee. If their clients make money, then they also make money. And if companies get more money invested into them, they have a higher incentive to want to continue to innovate and generate even more revenue to please shareholders and get fatter checks for themselves.

Money moves the economy. It's a win-win-win situation among the retail investors (you and me), institutions, and companies.

So what's the game plan?

We're still going to deposit money into our brokerage accounts to take advantage of the tax benefits. If you haven't contributed to the maximum amount ($6,000) to your IRA for 2022, you may want to do so before April 2023. Or, if your brokerage doesn't provide high interest growth for leaving your contributions as cash in your brokerage, you can consider putting your money into a HYSA with around a 3-4% APY. Once we observe market sentiment start to shift to positive, you can consider moving your capital from your HYSA to your brokerage account(s).
For those of you who have many long-term holding, dividend-paying stocks, you can continue to collect dividends and sell covered calls against your positions to collect premium. I would also let your dividends and premiums sit as cash for now.
If you have been disciplined with building your cash reserves for 2022, you can also consider using your cash as collateral to set up bear call spreads to collect even more premiums.
I know it's boring, but it's important to stay patient and keep an eye on the overall technicals to see if we finally break out of our downward trending trajectory before heavily investing. We've rejected our resistance line 4 times already and I would feel more comfortable once I see a confirmed breakout.

As we enter the new year, I'm going to take the observer's seat and not place any new trades for now. If I see the markets sell off as institutions come back from vacation, I will continue taking bearish positions and set up more bear call spreads.

For those of you who have been setting up these bear call spreads with me over the past year, you can see why I love this trade as our primary goals are to let underlying stocks not go anywhere for a certain amount of time and let theta decay away from our contracts. 💵

What are my predictions in 2023?

Though I don't have a crystal ball, I believe that if the Federal Reserve starts to pause on increasing interest rates due to lower CPI and we get positive earnings from overall large corporations, we may have a better probability of the markets moving higher. As for now, I think we may go into consolidation (sideways) for the next 3-6 months.

Let's see what kind of news we get in Q1 (end of January, beginning of February) and Q2 (end of April, beginning of May). 👍

📌Submit Your Questions 🙋‍♂️🙋‍♀️

Have any other questions? Before asking me and my team, feel free to check out our Level 1 FAQ. This FAQ is located on the Dashboard. You might find what you're looking for. 😊

If you do have questions, make sure to ask them on our Dashboard, rather than asking us via email. We also encourage you to watch all of the core video content and some of the past archived videos, read past Membership Positions, and take all the quizzes before sending us your questions.

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Investing, trading, and building wealth was a lonely journey for me. This is why my team and I created a Discord group for you and the other members to shares ideas and support one another. You don't have to go through it alone as we're all here to help. 😉

Make sure to check it out on the bottom of your "Dashboard" and follow the instructions on how to sign up. Coming from a teacher's perspective, I believe it's important to engage in conversations with people who are also seeking to reach financial freedom.

Remember that we are a community of wealth builders at all different levels, so be positive, kind, and helpful to others, so we can help each other get to financial freedom much faster.

Overall, I'm happy for the majority of you who are new to investing to experience this bear market in the beginning of your journey to financial freedom as opposed to seeing it later on. (If you're a seasoned investor, you've seen this movie already many times.) These bear markets are a normal part to anyone's journey and there is a high likelihood that you will experience 4-6 more in your entire lifetime. By experiencing this bear market early on, it will help teach you on how to manage your emotions and pivot your strategies.

Money is an emotional component to our lives and it's important to know how to control it.

Take advantage of this time to reflect on what your risk tolerance is and your strategic plan moving forward next year.

All in all, you are doing a wonderful job with staying invested in the markets and keeping those long-term lenses on.

Cheers to a new 2023! 🥂

Love,

-Steve and the Call to Leap Team

The following article is strictly the opinion of the author and is to not be considered financial/investment advice. Call to Leap LLC and the author of this article does not claim to be a registered financial advisor (RIA) or financial advisor. Please visit our terms of service and privacy policy before reading this article.