Did you know that legendary investor
's largest holding is the San Francisco-based bank Wells
That's right, Berkshire Hathaway recently reported that it now
owns $21 billion or 463 million shares in
Wells Fargo (
a stake the investment guru has been steadily increasing since
1989. Buffett has even gone on record stating, "I like Wells
better than anything by far. We bought Wells this year. We've
bought Wells month after month, well not every month, for a lot
"I like loading up on the one I like best," he said. I can't
agree more with his sentiment."
In June 2013 I bought WFC stock for $40.66 in my High Yield
Trader portfolio and immediately sold calls against the stock for
an instant 0.6% return over the next 30 days. The return might
not sound like much, but 0.6% every month for a year equals 7.2%
in income. Add in the bank's 2.5% dividend yield and you have a
conservative income strategy that allows you to make 9.7% every
We've actually managed to make 15.7% in WFC in just nine
months using our unique approach to
Let me explain.
Each and every stock in the High Yield Trader portfolio must
be a blue-chip, shareholder-friendly stock.
Moreover, the stock must have a highly liquid options market.
Without a liquid options market our covered call strategy is
useless. This is where most newbie income traders fail. They want
to sell options on stocks with rich options premium…typically
volatile, high-flying stocks.
We take the opposite approach.
We only buy blue-chip, shareholder-friendly stocks…preferably
sector leaders. Our goal isn't to hit homeruns. We are perfectly
satisfied extracting 8-12% annually in safe, reliable income from
each stock we purchase. Realistically, the only way to accomplish
this is through buying stocks that aren't volatile.
Once we've decided on a stock our formula is quite simple. We
simply sell calls that allow us to bring in on average of 0.75%
every 30-45 days. By bringing in 0.75% in income we are able to
sell calls at a strike price approximately 5% above the current
stock price. And the benefit of selling calls 5% above the
current stock price is that if the stock rallies above our strike
price at expiration we will immediately lock in 5% plus the 0.75%
in call premium.
So far, our WFC has been called away twice during the past
nine months and each time we made 5.7% and 5.9%, respectively.
Remember, that's 11.6% in income. Add in the additional 4.1% in
options premium we collected even when our stock wasn't called
away and our total return is, again, 15.7%.
It's a very simple formula that becomes even more simplified
when you purchase stocks adored by one of the world's greatest
investors. And WFC stock is just one example of the type of
companies we look for when selling covered calls. We consistently
sell calls on 15-20 stocks just like Buffett's favorite.
You can quickly see why so many professional money managers
use this strategy for investors who seek income, particularly
I challenge you to find a better income strategy for widely
And given how this conservative strategy works and our track
record over the past year, why would any investor choose to shy
away from such a proven income strategy that has outperformed the
market and dividend-paying stocks over the long term?
Why Warren Buffett keeps his money outside the
There's never been a more forthright or upstanding investor
than Warren Buffett, but even he hates taxes. That's why the
Berkshire Hathaway CEO keeps his personal fortune (over $600
million) in an offshore account… on an island paradise that
offers the best retirement benefits. Here, the government doesn't
tax dividends or even capital gains. The result is, investors
with money here earn more on average than investing in the U.S.
alone. Best of all, this billionaire's secret retirement haven is
now OPEN to individual investors. You can join Warren Buffett
today… right through your brokerage account - without ever
Click here to find out how