These are questions from new subscribers we have answered over the last year.  If you don't find the answer to your question here, please write john@galtstock.com  We will answer it and post it here for other customers.

Question:  Should I wait for the market to move higher before I start entering positions?

Answer: No.  We recommend you only enter one position per week to "ladder" into our portfolio.  Now is a great time as some of our stocks are lower than the original pruchase price.

Question:  When one of your positions is called away, do I buy back the stock?

Answer: No.  When our stocks are called away we recommend a new stock to take its place the following week.  If we have multiple positions called away in one month, we replace them one per week to "ladder" back in to a full portfolio.

Question:  How much money do I need in my account to benefit from Buy, Sell, Hold.

Answer:  We recommend at least $40,000 dedicated to this service.  We have subscribers with much larger accounts.  Dedicate 1/10 of your account to each position, then increase your position size in new recommendations as profits increase your investable funds.

Question:  I am having difficulty coming up with a formula that works for % gain (loss) as you show on the website under Past Results.  Would you please share with me your formula?

Answer: I simply divide the closing price of the stock by the net price in our original position, or the strike price if the stock is above the strike or we are being called away (that is all you can make regardless of the stock price).

Question:  As a new subscriber, please explain how you calculate the end of month gains, or losses, in the Buy, Sell, Hold service. Do you use only the closed out positions and keep the paper losses out of the accounting? I tried a service that was showing 21% profits for the year but discovered they only counted closed out trades. They were taking quick profits and holding the losers.

Answer: We were up 15% at the end of April, which was the high water mark for the S&P, which had gained 8.4%  I have completed the end of May calculations, they are available under "Past Results" on the website.  The Buy, Sell, Hold Portfolio was up 8.6% while the S&P 500 was up 7.0% (all numbers for year 2011)  We use closed positions and the valuation of the total portfolio of ten open positions to calculate the gains and loses at the end of each month.

At the end of April every one of our positions had a call sold against it and was close to or above strike prices.  At the end of May we did not have covered calls sold against all positions and many were lower than our strike prices (some were under our purchase price).  This accounts for the difference in the percentages.  Our numbers give an accurate reflection of the "liquidation" value of the portfolio.  The small exception here is we do not minus out the residual value of the sold covered calls.

We are the only stock investment service that publishes the Past Results of all our premium services for customers.

Question:  You have done a great job of explaining the potential profits of selling covered calls.  How do you protect the covered call portfolio in a bear market?  If (not if, but when) we experience another severe bear, do you have some point to go to the sidelines or at least changing to selling deep ITM calls?

Answer: An interesting question.  I thought about moving to an even more conservative stance with In-The-Money calls in April, fearing "Sell in May and Go Away."  The end of QE2 caused concern also and re-enforced the idea behind this idea of "timing the market."

I did not, choosing instead to take the contrarian view that since these were such well known observations that the boat may be overloaded and the market would punish those that played it. Consider the action in U.S. Treasuries going up in value rather than down as almost everyone has predicted for the last year.

My decision is partially verified if you believe this market correction is due in large part to the Greek credit rescue coming to a head in June. I did not put enough weight on this event (and it was well known also).

This is not a 'severe bear' yet, if 1250 holds on the S&P, it will be over before you know it, and that causes me worry that 1250 will not hold for support.  Sometimes we need some pain to take the optimism out of the market.  I don't know if we have done that yet.

We will not go to the sidelines as only new subscribers are buying at the present prices, and getting great deals on our positions.  When we get one of the ten called away, the replacement will be a stock that we feel is undervalued and has excellent upside potential.  We will keep "loading the gun" for new subscribers, and the rest of us will sit in our positions letting our calls expire and selling into the market when possible.

We get to a point here where doing nothing and sitting on our hands is the best course of action.  I know it is hard to sit tight, our natural tendency is to want to do something.

We will institute stop limits if...if we feel we must.  If a stock is broken, we will be ruthless in dumping it.  But, our preference is to continue selling calls against a position as long as it offers good call premiums and a return to stable and an upward trend that favors selling covered calls.

FAQ

Buy, Sell, Hold Model Portfolio
(found under Past Results)

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