What strategies did I employ to make my first million in the stock market?

Contrary to what most successful investor did - to buy the right funds/companies and sleep on it, if I have to use a word to describe my investment journey, it would be a "turbulent" journey.


I started my full-time investment journey in December 2019 and made many mistakes along the way.


My initial strategy is to HODL (for those that are not familiar with this term - this actually stands for HOLD). The rationale behind my HODL concept is because I am a big fan of Warren Buffet and one of his famous theory: "Our Favourite Holding Period Is Forever". Along the way, the fluctuations got crazy (given that market had been crazy). At one point, my profits were up to S$3 million but I got consumed by greed. I did not take profits I got out of my positions and then went back in again. And because of that, my profits fell back to S$200K+/- at one point and my world came crashing down on me - I couldn't believe that I lost it all just because I believe in HODLing my investments.


I fell into a depression as I thought I "had it all and now I lost it all. I thought to myself "I LOST A CAR AND A HOUSE AND MY RETIREMENT". I couldn't stop blaming myself and suffered sleepless nights. I had to take melatonin to put myself to bed. Every single time I plucked up the courage to stare at my account balance, I'd hate myself all over again.


After a month of swallowing in guilt and self pity, I started to watch (self) motivational videos (I know, it's clique but it helps) on learning how to be stronger and accept myself for the way I am. I thought to myself - "this cannot be it". I began to ask myself - how can I still continue to HODL AND earn back the money again? I do believe in my judgments and like what Buffett said "Price is what you pay, value is what you get" - so sometimes the market CAN price things wrong.


Initially, I started with selling covered calls and selling puts. For those that are not familiar with options, covered calls means owning 100 shares (this applies to most companies but does not mean that every option contract has to be 100 shares) and then selling a covered call on it.


Using the below sample screenshot as an example, if your cost is $200, you might want to sell a covered call at strike price of $210. The premiums that you would receive if the closing price were to go below $200, would be $565 to $760 (depending on how much you manage to "bid" for based on the underlying share price. I repeated this strategy over and over again every week. It is a slow strategy (no shortcuts here) but it has proven to work for me. Sometimes, I would have my shares assigned (assigned means that your shares will be sold at the strike price you sold it for if the closing price is higher than your strike price). Then I made a judgment call as to whether I want to buy my shares or just wait patiently for a better opportunity.


The whole "grinding" process took me a long time to build my profits back up. Every Monday night I'd stayed up to sell calls and every Friday night I will close off my positions (sometimes I would let them lapse if I do not think that I will get the shares). I could go into semi-retirement because of this.


I went to using COMB function to roll over my calls/puts. Basically, this means that you do not want to get your shares called away or get assigned and you would like to roll over your current week option to the following week/month.


For in-depth guide on how to trade options, please click here

FYI I am still practising this right now even in this volatile market because I believe in holding the investments that are worth holding AND one is paying the opportunity cost if her funds are just tied up "idling" in investments. Selling covered calls will help to lower your cost basis over the long run (why I'd use the term "long" run because in the short term, you might get your shares called away or get assigned shares in a market crash and your account balance might not look so impressive in the short term). As with everything, there's no shortcut and get-rich-fast scheme often does not work out for most people (if it sounds too good to be true, it probably is).


I finally learnt that investment ultimately boils down to one single thing - Mental Fortitude. Here's another Warren Buffet famous quote: "You shouldn't own common stocks if a 50% decrease in their value in a short period of time would cause you acute distress." Without a strong mental fortitude, one can never invest (successfully). Perhaps a better alternative to owning shares might be investments in ETF if one does not have the mental fortitude to deal with this.


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