Okay, so I didn’t spend $94.85…I spent $109.80 to find out if the Blue Collar Investor is worth your time and money.
The result? I think it is.
If you haven’t had a chance to take a look at my other reviews of BCI and my trades using its weekly stock screener, take a look at these four posts:
Let’s take a look at why I think Blue Collar Investor is worth $39.95/month and how my trades using BCI measured up.
Return on membership
This is the big question. How much did I earn on my trades using the BCI weekly stock screen? Let’s take a look.
A quick review from my post on my first trade with BCI netted $324.20 and the next trade, though in a paper account, still would’ve led to a gain of $323.89. My subsequent trades with Trinity Industries gained $101.79 for a total of $749.88 since September.
Compared against a cost of $109.80 I’d say this is a good return on my money!
Of course, I still need to look at the value of the underlying stock which as of close on Jan 12, 2015 is $25.93. My cost basis on TRN is $48.02. That’s a drop in value of $22.09/share, or $2,209. That’s if I was to sell it today…but I’m not.
I’ve got other plans for TRN and I’ll outline my 2015 trading plan for it in a future post, but the bottom line in my book is that the loss on the value of the stock is unrealized and doesn’t count against my return.
Eric, one of the Naked Options Trader readers has taken advantage of the Blue Collar Investor and gave me permission to share one of his trades. Eric is a conservative trader and made use of a collar trade with his first trade with BCI.
In his trade, Eric combined the BCI list to technical and fundamental recommendations from a previous course he took with Fokas Beyond. Eric ended up picking up Integrated Device Technology Inc. (IDTI), putting a collar on the stock with a Put strike of 16 and a Call strike of 19. Eric successfully exited the trade with $18.03 in profit.
This definitely clears the $14.95 charge for the first month’s use of BCI’s screen. And Eric captured this in only two weeks, which equates to a $36.06 monthly return or $432.72/year. That’s a great start!
Beyond just the return on the course, let’s look at some other aspects of BCI.
Beyond the numbers
When you’re signing up for a course or using someone’s membership site, the cost is important but there are a lot of other factors you need to think about as well. When I first discussed reviewing the Blue Collar Investor, I listed five characteristics I wanted to look at: return on membership, course/site content, small account friendliness, customer support, required prerequisites.
Let’s take a look at some of these.
Membership site content
I’ve already covered what you can expect to find inside the BCI membership site. If you want to get a quick reminder, bounce over to the first BCI review. There’s tons of great content behind the membership wall and Alan continually adds to it as he expands his business.
Small account friendliness
I think the BCI screen and pricing is definitely friendly towards small accounts like mine. At $39.95/month, it equates to $479.40/year which can easily be made in 1-3 months’ worth of trading. And with an introductory month of just $14.95 it’s cheap enough you can give the membership a spin and decide for yourself.
Another aspect of small account friendliness is the range of stocks which show up in the weekly stock screen. Thinking about my own account, I usually look for stocks under $40 and the last BCI screen I downloaded had five stocks meeting this criteria. This gives me enough room to make a choice and not feel like I’m cornered into a single stock or two.
Granted, it’s a stock screener so there may be more or less than this if you choose to use the BCI screen. However, in general I can definitely say this membership is friendly to small accounts.
In evaluating customer support, I really didn’t go about it in a normal manner. Most times you’d send an email to email@example.com and wait to hear back. I actually had the opportunity to go straight to the source.
On 27 October, 2014 I had the opportunity to attend a meeting of the Austin Chapter of the American Association of Individual Investors and listen to Alan speak. It was great to listen to him discuss his system first hand and answer questions from an interested audience.
During Alan’s discussion I was particularly drawn to when he discussed a trade he made long ago on Taser (TASR) which didn’t go well for him. During this series of trades, Alan, from his own retelling, rode the stock down selling calls along the way and ended up losing money in the end.
This made me think of my roller coaster ride with Cliff and what he would suggest, so I asked. After his presentation was over, I worked my way over to Alan and asked his opinion on managing a bad underlying stock.
He told me he wished he exited the TASR trade much sooner and applied those funds tied up in the trade elsewhere.
Did I take Alan’s advice?
But I understood the concept he was pushing me towards and why he would make the suggestion he did. In the BCI system, the goal is not to own the stock for a long time but to get in, make a profit and get out.
I differ slightly as I prefer to hold stocks longer and enjoy the additional income from the dividend as well.
All in all, though, I was pleased with Alan’s response and felt it was in line with his system and everything I’ve read on his site.
I’ve covered the prerequisites for the BCI system before, but I’ll run through it quickly again here. Alan has a “Beginner’s Corner” in which, for free, he runs you through the basics of his system and outlines clearly for you how it works.
These handfuls of videos are the only real prerequisites for his course, and I feel if you were walking into this with just a basic understanding of what stocks are, how the market works and no understanding about options that you would be fine with just this.
Now, would you be better served by going through one of the educational courses over at CBOE.com or another educational site? Absolutely.
Are they required? I don’t think so. My impression is Alan can get you to the basic understanding you need to be effective with his beginner’s corner videos.
Wrapping it up
Are there any concerns? Yes.
The main concern I have is for those who may not realize they will own the stock when they make a covered call trade. Alan covers this in his educational videos and makes it clear, but some of the newer options traders may not quite catch on and be caught off-guard when they see their stock take a tumble.
Or they may let their emotions take control and exit at the wrong time.. Alan does his best to offset this with some basic rules of thumb, but it’s up to the individual investor to apply them successfully.
Overall, I would recommend this course to beginning and moderately experienced traders who are looking at reducing their time required to screen stocks on which they want to sell covered calls against. More experienced traders are likely to already have a stock watch list setup which they’ve honed over years of experience.
However, it may be worth a single month’s trial even for experience traders to see if you find anything new or if you enjoy the stocks rising to the top of the screen.
For those of you who use the Blue Collar Investor screen or have a question, leave a comment for others to read and add your thoughts to the conversation. I’d appreciate any and all feedback on how it’s working for anyone else.