Unintended Consequences of AI.
There’s a side effect of the ‘AI Revolution’ that I’ve been monitoring for quite a while: now anyone can write a book. Even if they don’t know anything about the subject, no problem, AI will do it for them.
Publish by lunchtime!
Yes, I actually saw that headline. Pick a topic (and for a small fee we will tell you what topics are hot), get ChatGPT to write some chapters about it, cobble them together (we’ll show you how) et voila! You’re an author. Brilliant. (we’ll show you how to publish it).
Published - but no-one buys it!
Ahh, that’s because you need our services to navigate Amazon Ads. For a small fee (usually around $1k per month) we will do your ads for you (and you have to pay for the ads as well, of course).
I Need Help!!
Don’t worry, there are hundreds of people out there who really want to help you. 🤣🤣🤣
You want to be a best selling author? Just hire us!
A Real Life Example
Here is a real life example. My inbox is swamped with these ‘experts’ but one caught my eye as they claimed to be responsible for several bestsellers over some years. I took the bait. They promptly replied with costs (‘$1,500/mo per book recommended starting ad budget and our management fee is $1,000/mo per book/market. We have a 4 month minimum’) and some examples – here are the 2 best ones at the top of their list:
At first glance it looks pretty good, doesn’t it? But dig deeper. A simple analysis showed that the authors were actually losing money! Surely not! I wrote back:
Hi Alex
Thank you for your prompt reply.
I looked at the books that you manage, and am a bit confused about the costs – they don’t seem to add up. Here’s my workings on the first 2 on your list
It seems to me that all the profits are eaten up by the spend? Cost of sales based on list price and advertising spend doesn’t really give the whole picture.
I note that the total number of books sold per month is actually quite a bit less than I usually do (although my sales are down recently because I have cut my ads budget by 75%) – am I reading this right?
I am sure that I must have missed something, if you could let me know I would appreciate it.
I was dumped!
I got a terse reply:
Hi Heather,
60% of our authors use their book for lead gen or building their brand.
Only a small % of our self published authors make money on book royalties alone.
If that’s what you’re looking for then it does not make sense.
Alex Strathdee, CEO
www.AdvancedAmazonAds.com
I was decustomered? Ouch!
Reality has sharp teeth
Quite a few of you have said you would like to write a book and I just want you to be clear about the realities – most authors don’t make money. It is more a vanity project, which they end up subsidizing their books to the tune of many thousands of dollars as you can see above.
Cost Per Click (CPC)
I have tested and found that if you don’t pay for an Amazon Ads campaign your book somehow disappears to page 23 of the results. But here’s the problem: when I first published 4 years ago I was paying 10 -12 cents per click (a click on the ad, not a sale). Now it is $1.20 or more, which makes it uneconomic for me to keep the books on sale.
Why the big CPC Increase?
My explanation is that it is because everyone is now an author! When they don’t get any sales, they fall for emails promising lots of sales (and there are lots of emails after you publish as it is easy for them to find you). But they don’t actually do the math to realize that they are paying more for the sales than they get in revenue.
Clearly Amazon Ads are responding to demand, and as more people bid up the cost per click the more it costs to run an ad campaign.
I have actually checked out some publishing houses, and it’s the same story: they are swamped with books and not even looking at manuscripts for a year or more.
Unintended consequences
Don’t get me wrong: I love AI, but this side effect is bringing my short career as a writer to its close.
I am not planning any more books (I have a couple of drafts, but I’m not doing any more work on them.)
While writing was never about making lots of money from books, I am averse to losing money. It’s looking as though this is the way things are headed, so it is time to bow out.
If the game has changed you have to reassess and decide if you still want to play.
This is just a heads-up that I am probably going to unpublish the books, but I will give a couple of weeks’ notice in case anyone wants to get a hard copy.
I am also considering the future of the blog. Next week I will have a short survey of readers which will help me make a decision.
To the Markets
Well, rather a good week! The charts are at some very interesting levels. Let’s take a look.
SPY Charts
SPY made a new high in mid-January at $609.75. Thursday’s close was $609.73 and Friday’s close was $609.70. What dos this tell us? That the previous high is a resistance level. As yet, it is not well established, but the accuracy of the closes tells us that it is significant. What happens next? 3 possibilities:
- $610 proves to be resistance and SPY goes down
- $610 proves to be resistance and SPY goes sideways
- $610 proves NOT to be resistance and SPY continues to go up.
I know which one I am hoping for – but the market does what it pleases no matter how hard we wish it!
On the long term chart, we see SPY has bounced off the lower bound and is back in its trading channel.
SPYG Charts
Everything that I wrote for SPY is relevant here – a retesting of the previous high in mid-January, right down to the accuracy: $92.37 and $92.33.
The long term chart we can see that SPYG is right in the middle of its trading channel.
QQQ Charts
QQQ is also nudging against a previous high, but from mid-December the highs being $538.17 and $538.15. It always surprises me, and pleases me, when charts show how accurate the market can be in its behavior.
In the long term chart, we can see that it is still bouncing along the lower bound of its trading channel.
VIX Chart (Volatility)
The VIX continues in low volatility territory.
ITMeter
The week ahead
I have just realized that the market isn’t open today, it is President’s day / Washington’s birthday. That makes it even more interesting what is going to happen on Tuesday. Ahead of a long weekend traders often dump their stocks as they don’t want to hold them over a 3 day period as so much can happen – so you will often see a drop in the last half hour of trading before a long weekend.
Earnings are still going on, this week the main ones are Walmart, Alibaba and Baidu.
The main thing of interest is the Fed minutes of the January meeting come out and will be examined in great details for clues about monetary policy and interest rates. It always surprises be that they take weeks to get them out – it they are a true record why aren’t they available immediately?
The futures
Right now, they are slightly positive but it is 36 hours until market open.
Fingers crossed for a good week!
Heather
Q & A
If you have a question for me please ask it below.
(Elementor (the editor I use) was updated on Monday – and of course, part of the blog stopped working. I have recreated it and it seems to be OK – but there was no easy way of transferring the comments so I have cut-and-pasted – and seem to have lost a couple. Apologies! If your question or comment hasn’t been answered please put it in again.)
36 Responses
Hi Heather,
Please keep sharing your views here. I really love to read your thoughts.
I do understand the costs involved in running the blog- that can be mitigated by using other platforms like Discord/Telegram channel as an alternative.
HI Tejas – thank you!
Not going anywhere in the very near future, am rethinking my whole ‘operation’ and checking out some new ideas (not trading, more delivery)
h
Hey Heather ,
I am beginning my ITM journey and was wondering your thoughts if it is best to dump my full account allotted amount in all at once or to DCA a portion each month ?
Thanks
Joe
Hi Joe,
I’m afraid I can’t really advise you one way or the other, but I am not a fan of DCA.
I think it is a personality thing – for myself, I am always ‘all in’ once I have decided to do something. Early in my trading I used to go in bit by bit, but the market always seemed to take off while I was only half invested, and I would kick myself for being a wimp.
On the other hand I am reading a book now about Jesse Livermore (the original lone wolf of wall street) and he would go in 20% – 20% – 20% – 40%, each time only if the market had confirmed that he was right and it was moving in his direction. He amassed several fortunes – and lost them and ended up shooting himself, so I am in 2 minds a bout mentioning his advice.
So all I can say is that personally, I would get in – but it is you who has to seleep at nights, so do what you are comfortable with.
Hope this helps.
h
Would you please do a review of stochastic? Thank you.
Morris Michael
HI Michael – certainly, will do in the next couple of weeks.
h
previously… i was curious on what you were doing before 2010 ( the weeklies ) started. I remember the witching hour term ( when three sets of investments ended ). My Spy is at least 1 year out ( so i’m ass u ming that the monthlies would have been the order of the day before 2010 ). AI is going to put a lot of ppl out of a job. Factory workers • dock workers • auto workers etc any type of menial work will be done by robots or robotics. When computers reach the speed or capacity of the humane brain who knows what will happen. I’m seeing advances in nuclear fusion so there will be another revolution in space technology…
I came in looking for information on options and why i was losing my shirt following optioneers and found an investor ( trader ) “ You “ with a strategy worth trying. As a kid i learned to ride a bike with training wheels until someone kind enough showed me how to ride without them. Now i have to ride a bike to keep healthy… You’re that kind person in option world… Here’s my dumb question of the week • if options weren’t available ( or spiders ( Spy )) how could one invest in the SP 500 directly and achieve 20% on the upside and the downside? That’s what i was trying to ask you last week. If you decide to go… you will be missed greatly!
r
ps and yes i’m up this early.
(Randy)
HI Randy – before 2010 I was trading the US market, using monthly options, but on stocks, mainly technology stocks (as I thought I knew a bit about them being in IT). I had a short infatuation with interest rates (got smashed) and a long tail strategy (didn’t work) before realizing I was doing it all wrong.
Re AI – I see it revolutionizing everything just as the Internet did – hard to think of an area that will not be affected.
Re your question: if options and ETFs weren’t available what could we do? Hmm . . . probably give up! Seriously, you can limit your downside by putting a stop in place but there is no way that you can MAKE your portfolio go up. If there were no ETF’s you could try spreading over 20 stocks to limit risk and in the hope of catching an outlier.
If there were ETFs but no options that would be the safest bet – but the only way you could get more than the market return would be to use margin – which I definitely don’t recommend!
Not sure if I answered your question – please get back to me if not.
And thank you for your kind words!
h
Hi Heather- I for one would like to see you continue your blog.Its short and to the point and quite informative–I’ve learned how to interpret charts and data from it.If you do decide to no longer write it,you should know you have taught many of us out there “how to fish” for which we are grateful.Thanks for reading-
Steve
Hey Steve – thank you! I’m glad I could help!
h
Hi Heather,
I came across your books a year ago, and am finally trying to follow them as close as I can. Last year I jumped in and out of the market too much.
Question — Which ETF’s would you recommend to somewhat track your methodology? My largest account is a 401K retirement account where I cannot trade options. I am fortunate enough to be able to trade individual stocks and ETF’s in that account.
Really appreciate you and your insights on trading & investing.
Best regards,
Brent
Fountain Hills, Arizona
Hi Brent – I definitely would not recomend any leveraged ETFs. Although they sound like they are the same as ITM they are really only for day traders – I go into them in detail in ITM Bull, ch 11. Leverage and Protection.
I am no expert on 401k retirements accounts so I asked ChatGPT – maybe his answer could help? Here it is:
A 401(k) retirement account is typically limited in the types of investments it can hold. Whether options trading is allowed depends on the specific plan provider and the plan’s rules. Here are the key facts:
Standard 401(k) Plans:
Most employer-sponsored 401(k) plans do not allow options trading.
They generally limit investments to mutual funds, index funds, target-date funds, and sometimes individual stocks or ETFs.
Self-Directed Brokerage Option (Brokerage Window):
Some 401(k) plans offer a “self-directed brokerage account” (SDBA), sometimes called a brokerage window.
If your 401(k) offers this, you may be able to trade individual stocks, ETFs, and sometimes options.
Fidelity BrokerageLink and Schwab Personal Choice Retirement Account (PCRA) are common examples of this.
Options Restrictions (Even with SDBA):
Even when options are allowed, writing uncovered (naked) options or other high-risk strategies is often prohibited.
Cash-secured puts, covered calls, and long options (buying calls/puts) are more likely to be permitted.
Margin trading is almost always prohibited inside a 401(k).
Solo 401(k) (For Self-Employed):
If you are self-employed and set up a Solo 401(k), you have greater control.
You can often trade options freely (depending on the brokerage) because you control the plan’s investment options.
Brokerages like TD Ameritrade (now merged with Schwab), Fidelity, and E*TRADE often allow options trading in Solo 401(k)s.
Summary:
401(k) Type Options Trading Allowed?
Standard Employer 401(k) Usually Not
With Self-Directed Brokerage Sometimes (depends on the provider)
Solo 401(k) (Self-Employed) Often Allowed (depends on brokerage)
Hope this helps – in Australia we have SMSFs (Self Managed Duper Funds) and if you write into your trading strategy that you are using options then you can – but Scvhwab is pretty li9miting on how you can do it – no spreads for example, yet you can leg into a spread – go figure the logic!
Hope this helps
h
Please don’t disappear, your weekly reviews and knowledge are so greatly appreciated!! You’re awesome!
Blake
Hi Blake – thank you! Very Kind. I’m not planning on closing down in the immediate future – but in 2 months I am off for my usual Australian winter holiday in the northern hemisphere – and this year I will be above the Arctic Cirle for a bit, not sure how good the internet will be up there!
Thank you again
h
Hi Heather,
Thank you for your weekly blogs as always. If for some reasons that you have decided to discontinue the ITM books/blogs, then I will ask your permission to open a Discord channel to keep the ITM alive and going. Well, hopefully you will still provide your wonderful services to the ITM readers/traders/investors.
Sincerely,
George Henry
HI George Henry!
I’m trying to separate my frustrations with Amazon and the blog. Really, they are separate, so I’m trying to work out if I can have one without the other.
Still working on it!
h
I hope you don’t quit your blog. You are a terrific explainer and I am grateful for ITM, your books and yor blog. Luckily I bought all the books. But I totally understand if you decide to move on.
Was wondering if you could give us your viewpoint on LEAPS and ITM. I think they are kind of expensive so I don’t think you get as much leverage. But maybe I am wrong about this.
Anyway thank you so much for the books and the blog so far.
I wish you well in whatever you decide.
Andy
HI Andy – and thank you for your kind words.
Re LEAPS and ITM -Using LEAPS is fine, just that you are paying for time value that you probably don’t need.
For example: the costs of a 300 and 400 strike for Dec 2025,26 and 27 are :
Dec-25 Dec-26 Dec-27
300 $321.77 $331.00 $339.00
400 $227.15 $242.50 $256.78
The difference isn’t huge, but with SPY currently at $611 it is possible that in a years time it may be have risen 20% to $733 ad the next year to $880 (optimistic, I know!). So if you have the 300 strike it would be down to 34% of current value which is not giving you as much leverage as a 50% or 60% strike.
However, it is still giving you more leverage than holding the shares outright.
I hope that answers your question, if not please get back to me.
H
i went back to my last question about PLTR … The stock was at 34.00 a share or 43.00 a share when He suggested it to me… not the years of 1930’s or 1940’s which was a response that got – “ Goodness Randy I’m not that old “…
hope that clears the air…
r
(Randy)
Hi Randy – I wasn’t cross, just being facetious!
I am more ancient that I look, but that’s what enjoying life does for you I think!
h
Looks like all the ETF’s (SPY, SPYG and QQQ) are coming up to resistance. It will be an interesting week.
Veeron Wilson
Absolutely – and yesterday (Tueday, Monday was a holiday) both closed just above resistand and made new highs! Not that you would know unless you looks at the chart, no mention of it in the press!
Lets hope it keeps on creeping up!
h
My immediate message is “Don’t Go!” I understand you not publishing books, but the blog is a sanctuary for those of us who are confused by all the noise. I have many many investments, but I’ve been all over the map on strategy. After reading In The Money about a year ago I put a pinky toe in the water -a 245 strike for 272.1 (times 100 of course) on 2/29/24. Apparently up 34% as of last Friday. Wish I’d gone a lot bigger. But still so much to learn from you. Would love to hear how you managed the transition from all the other strategies to DITM- e.g. how you got rid of all your other securities. Anyway, hope you keep blogging. I’m learning from it, but I’m a slow learner. Thanks John
HI John – thank you for your kind words!
How I transitioned from other strategies to ITM – the answer is ‘slowly and painfully’!
I think I mention in the book that one year I was congratulating myself on making 25% for the year – then realised that If I had just bought the market I would be up 35%. The figures are a bit hazy, it was post GFC sometime, but thats when I realised that complcated isn’t better and started looking for a better way.
I am really glad I stopped stock chasing and jumping in and out of the market – so much more restful!
h
Heather- as I have said before, your blog is among the best. You are one of the only holdouts that just provides quality thoughts and information without spamming. I appreciate you. Your work has literally changed my life and I am forever grateful. I know that previously you mentioned that the kindle versions would not go away if you unpublish, is this still the case? Or should I head a few hard copies? Thanks, as always.
Eric Krause
HI Eric – thank you for such lovely words! I really appreciate them.
I understand that the kindle versions on Amazon will stay for people who have already bought them, but not be visible to anyone else (just like the paperback and hardback).
The kindle version will still be available on this website, and I am thinking about how to make the hardcopies availalbe also without having to hold inventory and post stuff.
So any ideas – please let me know!
h
Hi Heather, your ITM book taught me much more than the ITM strategy. Finding you has been a great thing for me. You are such a gem. If you stop the blog it would be sad but nothing lasts forever, right? All the best to you and yours.
Michael Framer
Hi Michael
Thank you so much – people are being so nice I am choking up while typing this! I really do appreciate it, and hope that you keep on being successful.
x
h
I’ve been reading your column for about a year, and I always learn from it and enjoy it. I hope you keep the blog going. Thanks for all you share
Raquel
HI Raquel,
thank you for your kind words, glad you find the blog useful.
I am seriously thinking of keeping it going, will keep everyone posted!
x
h
Hi Brent, You said that most of your money is in your 401k so you must have other accounts that you can use the ITM system on and then just use your 401k to follow the Golden and Death cross for signals to follow the ITM system with un-leveraged ETF’s such as SPY, SPLG or QQQ or QQQM. I have also found a new ETF that I have put 10% of my account in, it is SPMO and has outfreformed SPY by 50% since it’s inspection in 2015. Check it out for yourself.
Heather, Please don’t leave us, I value you Blog, comments and insights into the market and you would be surely missed.
Jim
Heather, I’ve been trading options for many years trying most every strategy the “experts” recommend as sure-fire winners. Your approach to buying options with very little extrinsic value is one of the simplest to follow and since it doesn’t require using any of the various zero extrinsic spread strategies which of course all have limited upside since they are spreads. Thank you for sharing in your books and your weekly blog. I for one will miss reading your down to earth Monday morning blog and would very much like to see you continue to publish it.
HI Gregg – thank you for your kind words!
While I am definitely going to unpublish the books, I am having second thoughts about stopping the blog.
Thank you again.
h
Dear Heather,
I really enjoy reading your weekly blogs and I hope you can continue them. As for Amazon, Jeff Bezos is super rich because he does not care much about the unknown writers and he takes advantages of them. That is why you are frustrated. Is there anyway that we can send you monetary donations for the weekly blogs as a sign of our gratitude.
Sincerely,
George Henry
Hi George – thank you!
I have wanted to keep the blog free for 2 reasons –
(1) I actually want to help people by showing them there’s an alternative to all the rubbish that gets served up as financial advice and
(2) I am not financially obligated to anyone – that’s a big thing for me, the freedom to walk away at any time.
The cost of running the blog (hosting, URL, MailerLite, adobe photoshop, elementor, other software) is around $2,000 per year – which of course I can afford, but sometimes I feel a bit silly about running something at a loss!
So thank you for your kind offer – but I will continue it free, simply because of the freedom it gives me.
x
h
Will you please consider releasing future e-books on Kobo in addition to Kindle/Amazon?
Greg