Income Without the Dividend (Part III): Generating Income From Growth Stocks

Investing with a Margin of Safety Benjamin Graham and David Dodd, the so called founders of the value investing mantra, coined the term “margin of safety” in their 1934 book, Security Analysis. According to Graham and Dodd, for an investment to have a proper margin of safety, it should only be purchased if there is minimal downside price risk. The term “margin of safety” is often misunderstood, especially when investors seek a perceived margin of safety within volatile growth stocks. These investments are oftentimes not suitable for individual investors who do not have the time or skill set to evaluate these securities. In addition, many investors blindly make purchase decisions without having an exit strategy in place, which is an extremely risky endeavor. In the current market environment, we think that the best approach for these investors is a cash-secured put selling strategy. With this strategy, investors can generate income... Read more