Method #1 – Leveraged Investing

I’ve gone into much greater detail in other areas of this site (for more detailed information be sure to read this site’s central essay, “Leveraged Investing or No Substitute for Planting a Tree” and visit the Leveraged Investing Strategy Section) but in a nutshell, this type of options-based investing attempts to synthetically mimic successful value investing—acquiring quality assets as cheaply as possible and then squeezing a little something extra from those assets once you’ve acquired them.

I certainly didn’t invent anything new here. There’s nothing Top Secret about any of the individual strategies I employ and promote. Still, I know of no other resource, book, or website that so systematically and vocally advocates combining the power of options with the discipline and philosophy of value investing.

The emphasis of my approach is always on the assets themselves, not the options. If it’s not Quality Investing, then it’s not Leveraged Investing. The options themselves are merely tools, although they are very powerful tools that give you an edge over other investors who are resigned to paying full price for their stock and then having to wait for the share price to appreciate.

Practitioners of this style of investing, however, seek not only to acquire their stock for a discount but to continue lowering their cost basis on the stock for as long as they own it. Conceivably, given enough time and patience, they could actually lower their cost basis all the way to zero (and beyond) and pay nothing for their stock (technically, they paid for it with time itself.)

Although this is not get rich quick, the accelerated compounding effects will produce long term results in a much shorter time frame than traditional long term investing.