https://marcusneo.com/reshveen-rajendran-idiocy-in-options-trading-for-income/ Pasting this here incase the website is taken down. All credit goes to Marcus Neo: This is a review of a value investing seminar I attended years ago. It’s taught by Reshveen Rajendran. You can find his website at MillionDollarRush.Com. Here are the reasons I am publishing it after all these years: 1) I’m much more educated in financial markets today. 2) I researched my rights as a consumer. 3) I avoided writing negative reviews for the fear of potential legal action taken against me. 4) I decided to balls up. I am also exasperated at Singapore’s investment education industry pitching flamboyant theories that don’t work in real life to prey on unknowledgeable public. I got nothing against education. I am all for it. However, when you’re teaching the wrong information leveraging on the knowledge gap and using unethical marketing strategies: over promising and under delivery, I’ve got a problem with that. How Did I Sign Up in The First Place? So why did I sign up in the first place? I was a naive person in my early twenties. I wanted the short cuts. I wanted the quick answer to the financial markets. I also knew most of the programs in that market were extremely expensive: charging up to 5000 dollars for a seat. Since Reshveen Rajendran’s program was relatively cheaper than what the market was offering, I gladly participated along with a couple of other factors: - Reshveen was recommended by a friend (social bias here) - He safely assured me that doing 10% a month on my portfolio was easy and many others including himself has achieved those returns - The course’s irresistible marketing angle was: generate ‘part time’ income as a student. Now, before I’m accused of making false claims here. I’ll back it up. The following pieces of information are taken from his Facebook page and his website’s blog post. The Review of Reshveen Rajendran’s Course The instruction taught in the course was entry level. The course promoted using options to generate ‘insurance premium’ on underlying assets. It serves as a ‘monthly cashflow’. This wasn’t substantiated by the course instructor in his profit or loss statement. For the ones more financially savvy, you’ll know that options don’t always expire and there’s a possibility of it being exercised. Since you can’t predict the market, you can’t guarantee a cash flow from premiums generated from selling options. Secondly, in the instruction, commodities were also recommended by the instructor as an investing vehicle. This goes against the fundamental principle of value investing. The fundamental principle of value investing is purchasing companies when their prices are traded below their intrinsic value. Commodities are entirely different from companies. Thirdly, to claim that your ‘6 figure’ equities portfolio generates you a passive income is highly suspicious. Now, assuming you built a portfolio around the highest paying dividend yield stocks in Singapore. The average yield would be approximately 5-7%. You’re required to have one million dollars invested to have a dividend income of 6%, $60000 annually, which adds up to $5000 per month. That’s a million dollar account, alongside with the assumption that you’re invested in the highest dividend stocks for the last 10 years and the companies pay out dividends regularly. Lastly to cite a quote from his blog: My returns have been very substantial with 5 -7% compounding growth every month! – Million Dollar Rush Blog_ Let’s take an average of 6% compounded growth on a $10000 starting account balance, you’ll end with $20121.96 at the end of 12 months. You’ll achieve a 101.21% per annum returns. Let’s compare these returns to actual, audited investing track records. - Warren Buffet’s Track Record Everybody favourite uncle: Warren Buffet. His returns are 23.8% compounded per annum. - Charlie Munger’s Track Record Vice CEO of Berkshire Hathaway, partner to Warren Buffet. Charlie Munger’s compounded returns: 19.8% per annum. - Walter Schloss’s Track Record Referred by Warren Buffet to be one of the greatest value investors ever lived. Walter Schloss’s compounded Returns: 16.1% Per Annum. Here’s the reference. You could argue that Buffet claimed that he could achieve 50% returns per annum handling smaller amounts of capital. However, I’m sure Buffet himself never claim he could generate 201% in a year, much less this trainer. Selling Put Options as a Strategy to Own Undervalue Stock You’re required to have some basic options trading knowledge and experience to understand the following. One of the theories proposed by the instructor is that you are able to sell put options to generate cashflow and to potentially own undervalued stocks at at a discount. Firstly, not all stocks have an options market at the price at which you valued it to be your purchase price. Secondly, not all stocks have an options market trading far out of the money. Yes, you could sell options at stocks are trading ‘at the money’ of your valuation. It’s barely worth selling a put option when it’s valued near ‘at the money’ (it’s better to own the stock itself, since it is undervalued in the first place right?) Henceforth, the entire notion of selling options on an undervalued stock to generate free cash flow that leads to passive income, is absurd. The Lack of Empirical Evidence I don’t make these arguments without evidence. I’ll retract this article if there’s new evidence supported: audited or non-audited profit and loss sheets: namely the trainer’s profit and loss statements and trades. Years ago, I negotiated with the trainer for a full refund of my course fees, citing the evidence and stating the mentioned case studies. However, he outrightly refused and cited that I haven’t applied any of his instruction on my end and am unable demand a refund of his course fees as it would be unreasonable. Ironically, I took it upon myself to test out his methods. I also took it upon myself to do acquire investing knowledge independently of his course material and instruction. Note: If you’re looking to sue me, there is a difference between online defamation and a negative product or service review. I present my case with basic mathematics, supporting evidence and no intention to accuse or character assassinate the company nor trainer. 2020 update: Low cost index fund investing has gotten me a far better returns that actively managing capital for the last 7 years. No fancy options trading or theories. Statistically, the average individual is not going to outperform the market. No, you’re not a Buffet or a Munger. No, you’re not special. No, you don’t belong to the minute percentage that are able to generate an income from trading options. Unfortunately, the trainer is still going around selling the same program to the public at scale.