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Answer 1)
I have Cash management rules described here: Cash Management | Hello Suckers ... Unfortunately, last year when the market was rallying like crazy I broke the rules and went 100% invested. This year, that greed is hunting me down. But I am able to manage those trades and wind them down without losses. But it is really giving me a hard time and sometimes I feel like I want to give up.
My strategy is pretty much simple: accumulate dividend-paying stocks and sell options around those stocks to generate additional income on top of the dividends. Plus I trade naked options as well. Then I use the income and reinvest it. The goal is to generate enough income to go full-time (I am still in the accumulation phase). My options trading is already generating $8k to $10k monthly income but I am reinvesting it still because it is still all the account brings in and there are no reserves. If I stop trading, there will be no income (the dividends bring in only $500 a month, so that is not enough).
This year would be a "go back to work" year if I decided to retire from the 9-5 rat race and live off of the trading only because although I made about $35k in options this year, I cannot take that cash out due to depressed margin requirements. That means I would have no income.
So I was thinking about how to overcome the hurdles of bear markets to still secure an income when I will not be able to take money out. I remembered once I read a blog post from a guy who decided to retire or start his own business when he quit his job with a severance equal to 5 years of his salary. This was my answer to my question. So I found a cash equivalent fund (that pays about 1% dividend yield but holds value - during this bear market it lost only 0.4%) and I plan on saving at least one year of my salary in this fund. I started last year, but then I thought it was a waste of cash making nothing, so I liquidated the position and reinvested it. Today, I am kicking my a$$ for it and I restarted to rebuild that cash reserve. Once this bear market is over, I should be able to rebuild the cash reserves within a year and then dip my toes into semi-retirement (meaning just trading for a living but still keeping my job before I get confident that I can make it).
If everything goes to plan, I expect to go full trading in 5 years.
Answer 2)
Not sure what you are looking for but I trade as a business for several reasons. One reason is that when I switch from 9-5 to full-time trading, I still want to keep the routine of having a regular job. That will also help in qualifying for a TTS status with the IRS. As a person (sole proprietor) you will get challenged. As a business, it will be less likely to get challenged by IRS. And the TTS brings in a whole plethora of tax advantages that you will not get as an investor. The second reason is the tax advantages you get as a business compared to a sole proprietor already (even without a TTS).
Then I write a blog about investing, do the research, etc. At some point, I want to start hiring people to help with it. I also have planned what to do next when the trading is more on autopilot, like charitable work - again, I once read a blog from a trader who started a college grants program and he grants tuition every year to students fully financed from his trading. It may sound foolish to some people, but it is something I want to do as well. Other plans are to invest in housing programs, healthcare programs, etc. Not there yet, but hopefully heading in that direction. And of course, my goal will be buying more shares of the companies - pretty much crate a "Berkshire Hathaway" holding.
Answer 3)
I think I answered some of the questions above but, I do not trade other people's money. Only money of my own and our members. And the members are aware of the risk and trading style I use. As of today, I use a multimember LLC (S-corp) but may eventually switch to C-corp in the future. I am not yet in the process of hiring people, so I do not have answers to that. Maybe five to 10 years down the road I might start hiring staff. But as of now, I need to be able to sustain myself and the members who plan on retiring using their investments (once we start distributions).
Hope this answered your questions.
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