May 2020

life. money. probability.

PLUS

3 Rules for Active Investors 16 Healthcare Stocks to Trade 3 Essential Political Podcasts

MAY 2020

Survival Tips & Longevity Lessons from the World’s Happiest People

the control freak's guide to life, money & probability

may 2020

HOW

NOT TO Nearly everyone holds the power to achieve a long, happy and healthy life. This Luckbox special report lays down the ground rules for successful living and offers tips on how to follow them.

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14 The Pandemic, Immunity and the Long Game to Longevity How can an ordinary person unlock

the secrets of health and longevity?

A diverse panel of Luckbox contributors shows the way.

20 Longevity Lessons From the World’s Happiest People Residents of five “Blue Zones”

scattered over the world tend to live longer than other people.

Here are some of the reasons why.

24 Eat Plants, Live Long

Adhering to just four simple

healthy lifestyle rules can make all the difference in preventing a host of chronic diseases.

26 Increase Your Immunity

To make living longer worth the effort, a U.K.-based immunologist concentrates on enhancing “health span,” not just lifespan.

28 Yoga for longevity

Scientific research verifies the

DIE

health benefits of ancient yogic and meditation practices.

29 Living Well Beyond 100 Years The means for living a millennium

seem within reach, says a pioneer of radical approaches to good health.

30 Three Rules for Longevity as an Active Investor Investors who are in it for the long

haul need to know the rules. A veteran trader breaks it down.

luckbox | may 2020

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editor-in-chief ed mckinley managing editor yesenia duran assistant editor mike reddy The guys from Barstool Sports’ Hard Factor are killing it in the prediction markets.

p. 33

trends

trades

tactics

life, luxury & the pursuit of happiness

actionable trading ideas

essential trading strategies

BASIC

THE POLITICAL TRADE

33 News, Comedy & Gambling on Politics 36 Political Predictions

LIQUID ASSETS

37 Value and Vitality in Good Spirits

CHERRY PICKS

49 Two Ways Back In

THE TECHNICIAN

50 Nine Health Stock Trades

DO DILIGENCE

54 Healthy ETFs

40 Drink and Be Happy

INTERMEDIATE

58 Calling on Commodities

NORMAL DEVIATE

contributing editors vonetta logan, tom preston creative director jacqueline cantu contributing photographer garrett roodbergen editorial director jeff joseph comments & story ideas feedback@luckboxmagazine.com contributor’s guidelines, press releases & editorial inquiries editor@luckboxmagazine.com advertising inquiries advertise@luckboxmagazine.com subscriptions & service service@luckboxmagazine.com

ADVANCED

media & business inquiries publisher: jeff joseph jj@luckboxmagazine.com

Luckbox magazine, a tastytrade publication, is published at 19 n. sangamon, chicago, IL. 60607

61 How This Sell-Off Stacks Up CHEAT SHEET

63 Volatility: Best Friend or Worst Enemy?

42 Testing Vaccines and Trading Strategies

editorial offices: 312.761.4218 ISSN: 2689-5692

FAKE FINANCIAL NEWS

10 Help! I Might Need Somebody!

WELLNESS

45 Breathe Right

printed at Lane Press in Vermont luckboxmagazine.com

Luckbox magazine

TRADER

46 Meet Draye Densmore

LUCKBOX OF THE MONTH

64 Errant Burr

CALENDAR

47 Sell In May and Go Away

57 Recovery Calls for Covered Calls

technical editor mike rechenthin

On the cover: Illustration by Serge Seidlitz

@luckboxmag

2019 Best New Magazine Folio Award for Custom Content

luckbox magazine content is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities and futures can involve high risk and the loss of any funds invested. luckbox magazine, a brand of tastytrade, Inc., does not provide investment or financial advice or make investment recommendations through its content, financial programming or otherwise. The information provided in luckbox magazine may not be appropriate for all individuals, and is provided without respect to any individual’s financial sophistication, financial situation, investing time horizon or risk tolerance. luckbox magazine and tastytrade are not in the business of executing securities or futures transactions, nor do they direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. luckbox magazine and tastytrade are not licensed financial advisers, registered investment advisers, or registered broker-dealers. Options, futures and futures options are not suitable for all investors. Transaction costs (commissions and other fees) are important factors and should be considered when evaluating any securities or futures transaction or trade. For simplicity, the examples and illustrations in these articles may not include transaction costs. Nothing contained in this magazine constitutes a solicitation, recommendation, endorsement, promotion or offer by tastytrade, or any of its subsidiaries, affiliates or assigns. While luckbox magazine and tastytrade believe that the information contained in luckbox magazine is reliable and make efforts to assure its accuracy, the publisher disclaims responsibility for opinions and representation of facts contained herein. Active investing is not easy, so be careful out there!

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luckbox | may 2020

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LIFE AFTER WARTIME This ain’t no party, this ain’t no disco This ain’t no fooling around This ain’t no Mudd Club, or CBGB. I ain’t got time for that now Heard about Houston? Heard about Detroit?

Heard about Pittsburgh, PA? You oughta know not to stand by the window Somebody see you up there I got some groceries, some peanut butter To last a couple of days But I ain’t got no speakers, ain’t got no headphones Ain’t got no records to play —Life During Wartime, Talking Heads (1979) The Luckbox team has been obsessed for a long time with the science and mathematics of immunity and longevity. So it seems inevitable that those subjects would become the theme for an issue.

But just as we embarked upon the project, the coronavirus came along. Would the anxiety, hardships and tragedy of the COVID-19 pandemic make a magazine devoted to health and happiness seem insensitively tone-deaf?

A cautious optimism prevailed that local, state and federal officials would find ways to coordinate effectively with public and private corporations, the healthcare sector and the global scientific community to address the worst global pandemic since the Spanish Flu of 1918.

And when the nation recovers, governmental agencies and nonprofits will have learned valuable lessons in crisis response, and researchers will have developed actionable data sets for better modeling.

Perhaps a vaccine won’t be far behind.

But what about individuals? The forced

leisure wrought by social distancing, self-quarantines and working from home presents an opportunity for everyone sequestered at home to capitalize on the newfound abundance of time.

They might consider doing more than catching up with spring cleaning, FaceTiming and binge-watching. The pandemic offers a rare chance to make lifestyle changes and finish overdue chores.

Some might save some money by cutting the cord to the cable provider, as Luckbox advocated in the May 2019 issue. Or they could take up an income-producing side hustle, as outlined in last December’s issue.

Certainly, now could be the time to take more control of an investment portfolio, as taught online daily on the tastytrade network.

And this respite from routine also provides an opportunity to take action proven to decrease the immune system’s vulnerability to infection and disease. That could launch the journey to a healthier, happier and longer life.

Now’s the time, and Luckbox is here to help. For the current How Not to Die

issue, the magazine called upon acclaimed authorities on nutrition, immunity and longevity. Their expert perspectives, founded on evidence-based research, should prove vitally important.

The issue was inspired by Dan Buettner, the author who popularized the notion of Blue Zones, where people live longer lives than most of the earth’s inhabitants. The issue’s name, How Not to Die, was borrowed from a book by Michael Greger, a friend and colleague of Buettner’s. Rounding out the issue’s panel of health experts is immunologist Jenna Macciochi, biomedical gerontologist Aubrey de Grey and yogi Elaine Gavalas.

All of the panelists caution that maintaining good health requires long-term commitment but also agree that it’s never too late to start. As a Chinese proverb says: “The best time to plant a tree was 20 years ago.

The second best time is now.”

Ed McKinley editor-in-chief

Jeff Joseph editorial director

Thinking Inside the Luckbox Luckbox is dedicated to helping hard-working, active investors achieve skill-derived, outlier results. How? Check out the following tips: 1 Tune out the noise and false prophets in the investment world and take control.

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2 Probability is the key to improving outcomes in the markets and in life.

3 Timely investment themes, sectors and stocks matter only because they tend to produce greater volatility.

4 Greater volatility brings greater opportunity.

5 Options are the best vehicle to manage risk and exploit market volatility.

6 Don’t rely on luck—know your options—luck smiles upon the prepared.

luckbox | may 2020

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Luckbox Reader Survey

We poll the readers every issue. Here are some recent responses.

How would you assess the job that the White House Coronavirus Task Force is doing? Rank 1–10 (highest) 6 Have you been paying more attention to your investments?

Yes 46% No 6% About the same 48% Has your level of stress increased or decreased as a result of the pandemic?

Increased 66% Decreased 6% About the same 28%

Are you willing to substantially change your diet, sleep, activity and/or exercise regimes to add years to your life?

Yes 57% No 7% Maybe 36% Who do you believe will be the 2020 Democratic vice presidential nominee?

Amy Klobuchar 21% Other 20% Kamala Harris 18% Andrew Cuomo 13% Elizabeth Warren 11% Hillary Clinton 7% Tulsi Gabbard 7% Gretchen Whitmer 3%

At press time, the prediction markets are pricing Harris, Klobuchar and Whitmer as each having a 20% or greater probability of becoming the Democratic vice presidential nominee for 2020.

Luckbox has introduced The Political Trade, a new political prediction market podcast (See p. 33). Visit thepoliticaltrade.com

HELP WITH THE NEXT ISSUE! Please take the reader poll at luckboxmagazine.com/survey

I enjoy the mag! I’ve learned a lot from Luckbox and the tastytrade crew! I’m not an active day trader, but I do apply the basic strategies and math that I have learned to my portfolio.

For example, I’ve learned how to transfer my 401(k) S&P index fund and company stock fund into the equivalent delta of SPY and deltas of the companies’ public stock. Then I beta weight all to SPY so that I know exactly how much risk I have in the market. Having this knowledge and clarity of my portfolio has saved me thousands of dollars. So, stay healthy, stock up on whiskey and cigars, and keep on keeping on!

—Gary Foster, Cedar Rapids, IA I just love the Trades and Tactics sections of Luckbox. More would be appreciated.

—Gerry Schacher, Edmonton, Alberta Gerry—Great to hear that you enjoy the those sections. The markets move faster than print, so we focus on the long game at Luckbox—the bigger-picture investment themes and trends in economics, politics and technology that influence market directionality and volatility. For more timely and actionable trading ideas, check out our daily blog posts at luckboxmagazine.com and tune into the tastytrade financial network at tastytrade.com for eight hours of daily, real-time trading advice and techniques.

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SHORT INTEREST

HOW NOT TO DIE

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U.S. rank in life expectancy among 173 countries

76.1

Life expectancy (at birth) for American men

81.1

for American women

81.9

for men in No. 1-ranked Hong Kong

87.6

for women in No. 1-ranked Hong Kong

“ … a greater number of daily steps was significantly associated with lower all-cause mortality. There was no significant association between step intensity and mortality after adjusting for total steps per day.”

—National Cancer Institute’s Division of Cancer Epidemiology and Genetics (March 2020)

—WorldData.info

SEE PAGE 12

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Walk, and live longer. A recent study revealed that adding 4,000 steps to a typical day reduces the risk of dying early from heart disease, cancer or other natural causes by 50% or more. The 10-year study did not establish a link between the intensity of the additional steps and a reduced risk of dying early. —Luckbox

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“There isn’t a prescribed amount of water that everyone should drink, but everyone should endeavor to get enough.

Dehydration damages the mucus that lines the airways and the gut, which allows germs to enter the body and thus increases susceptibility to some infections.”

—Dr. Jenna Macciochi, author of Immunity: The Science of Staying Well

Neighborhoods without fastfood billboard advertising have 10% lower rates of obesity than those without billboard ads.

Having more than six fast-food restaurants within a quartermile of home makes people 40% more likely to be obese than those in neighborhoods with fewer than three.

SEE PAGE 20

Source: Dan Buettner, Blue Zones

SEE PAGE 40

“Always keep a smile.

I attribute my long life to that. I believe I will die laughing. That’s part of my program.”

—Jeanne Calment, French supercentenarian and the oldest person ever to live whose age could be verified. She was 122 years and 164 days old when she passed in 1997.

may 2020 | luckbox

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FAKE FINANCIAL NEWS

Help!

I Might Need Somebody!

During the pandemic-mandated quarantine, loners and socialites alike can enjoy a longevity-related bestseller

By Vonetta Logan

W

hat sticks with me is the brightly colored pieces of tape on the floors of every retail establishment deemed “essential” and therefore still open.

Swaths of blue, red and black tape were hastily applied to the aisles, lanes and registers where people used to congregate.

The tape serves as a visceral reminder to maintain a distance of six feet from the person in front of you who is also anxiously purchasing toilet paper, Little Debbie snack cakes and enough wine to make a sailor proud.

The light jazz Muzak of the overhead store speakers has been replaced with the drone of a dubiously helpful voice reminding us to “please maintain a distance of six feet from the person in front of you.

We’re all in this together.”

I pull my makeshift face mask, a brightly colored purple scarf, closer around my face, shuffle out to my car with my week’s rations and take a deep breath as I apply hand sanitizer before I start the engine and head home on empty roads.

I put away my meager supplies and look at my dining room table as a bright blue book beckons. It’s called The Blue Zones of Happiness by Dan Buettner. I wash my hands (again) and read the first few pages.

“This is a book about designing your life to make it happier,” the introduction says. “No matter where you live, what challenges you

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might be facing, or what aspirations you might hold for you and your family.”

Oh really? You’re on, Dan! As I keep reading, I learn about the three pillars of happiness: pride, purpose and pleasure. But what about pandemics? Are there lessons about self-help in the time of a global health and financial crisis?

Here’s how the author lays out his “Happiness Power of Nine.” Let’s look at each lesson.

Lesson 1: Love Someone Whoo, boy. Really Dan? Have you ever tried swiping right in a pandemic? It’s not exactly #relationshipgoals. Buettner writes: “Research shows that you’re more likely to be happy if you’re married or in a committed relationship. Loners are mostly unhappy.”

Like Pee-wee Herman, I, too, “Am a loner, Dottie, a rebel.” I do see the merit of having someone to help ride out this quarantine. My chihuahua is tired of playing Aaron Burr to my Alexander Hamilton in the re-creation of the hit Broadway musical “Hamilton.”

But I’m also not stuck indoors fighting with someone or compromising my personality to make peace. It’s why I always get to sing lead.

Lesson 2: Inner Circle Buettner suggests forming an Inner Circle.

“Create a circle of at least three friends

with whom you can have meaningful conversations, who you can call on a bad day for help and who are generally happy.” I guess you really are the company you keep. It’s been fun to see the inventive ways friend groups have developed to stay in touch with virtual happy hours, synchronized movie watching or just a heck of a lot of FaceTiming. It all makes a difference. Buettner writes: “For every happy friend who enters your social network, your happiness goes up by 15%.”

Reaching out to friends and family during this time has been vital—everything from goofy FaceTimes with my friends’ kids to a virtual movie night of Cats (you’re going to need that wine you picked up).

Lesson 3: Engage This is where things get tricky in the time of a global pandemic. Buettner writes: “Identify your interests and then join a club, a team or a civic organization that matches them.” This resonated for me because my all-time favorite thing to do is ride my motorcycle through winding back roads while hanging out at greasy spoons and chatting with other twowheeled adventurers. Life under lockdown means all my moto journeys have been virtual, but I’ve been able to engage with motorcycle people all over the country without leaving my house. Have you ever felt like you instantly belonged to a group of people you didn’t even

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know existed? Maybe it’s traders, gardeners or badass biker chicks, but finding your people is a definite stop on the road to happiness.

Lesson 4: Learn Likability Basically, don’t be a jerk. Buettner’s point is that both happiness and unhappiness are contagious, so COVID-19 isn’t the only thing spreading around. Although I must point out that Buettner has some introversion blind spots, like advice to engage socially with people for six hours a day. Still, his lessons are based on copious research.

Lesson 5: Move Naturally This seems obvious yet often gets overlooked, especially when orders to shelter in place make any movement at all seem far from natural. But physical activity is a mood elevator. I relish taking my dog on walks. I even unrolled a slightly dusty yoga mat and have been using that to take yoga classes via the internet. The most fun is trying to learn dance moves online from hip young kids.

You look ridiculous, but you’re not in a fancy, judgmental gym—you’re in the confines of your home. Dance it out, girl!

Lesson 6: Look Forward In the dead, dark cold of winter it often seems that things will never be light, bright or warm again. But, eventually, the days get longer

and the temperature rises. Buettner writes: “Focus on meaningful things, set goals and monitor progress. Research indicates that people who set goals and monitor them are happier in the long run.” No one knows when this pandemic will end, and even when it’s over no one knows if we’ll ever be the same.

But taking time to set goals and make plans for a life that is “normal” is therapeutic.

Lesson 7: Sleep Seven Plus Way ahead of you, Dan! Have you met my friend, “The Depression Nap?” She’s great!

Mentally exhausted, your body powers down like a Commodore 64. I am a champion sleeper. But in these unprecedented times, sleep has been elusive. “Gallup found if you’re sleeping less than six hours per night, you’re about 30% less happy than you would be if you had slept enough,” Buettner writes. Sleep hacks have been working: Like seriously cut it out with the TV and the phone right before bed. Make sure it’s dark, and cold, and I’m a proponent of weighted blankets. It’s like having a man on top of you, but without the toxic masculinity!

Lesson 8: Shape Surroundings The lesson is to set up your home, social life, finances and everything else to favor happiness instead of trying to change your behavior. As an introvert, I have always

considered my home to be my haven I have taken great pains to make my house as comfy as possible, even though I’m the only one who resides there. But boy am I glad I did.

I’m on Day 18 of quarantine as I write this, and I’m not sick of my house yet! Buettner is spot on that happiness comes from as many external forces as internal ones.

Lesson 9: Right Community “Of all the things people can do to try to increase their happiness, the most effective and lasting one is to choose to live in a community that supports well-being,” writes Buettner. Real life has almost become kinder than fiction with news stories and viral videos of people gathering outside of nursing homes, having “drive-by birthday parties” or starting food drives for those who’ve lost jobs. Community is real, even though we take it for granted and don’t know how much we need it—until it shows up for us.

So, can you really find self-help in the time of a pandemic? You can! The book is full of small, actionable steps we can all take to find some measure of happiness in these crazy times. We’ll get through this together.

Just don’t make me talk to people for six hours straight.

Vonetta Logan, a writer and comedian, appears daily on the tastytrade network and hosts the Connect the Dots podcast. @vonettalogan

may 2020 | luckbox

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HOW

NOT DIE The Pandemic, Immunity and Longevity page 14

12

Longevity Lessons From the World’s Happiest People page 20

Eat Plants, Live Long page 24

TO

Combining proper diet, regular exercise and a fitting environment can make life beautiful. Research proves that nearly anyone can achieve happiness, good health and a stronger immune system, regardless of age. This special section shows how.

Increasing Your Immunity page 26

Yoga for Longevity page 28

Living Well Beyond 100 Years page 29

3 Rules for Longevity as an Active Investor page 30

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M

any Americans feel doomed—but doomed by their own unique circumstances, not just by the coronavirus. They dread their daily grind, a burden they shoulder despite a pounding headache, an unsettled belly and an aching back.

Why such gloom? Perhaps because everything most people think they know is wrong, at least when it comes to diet, aging, exercise, immunity, friendship, family, spirituality, community and longevity.

But it doesn’t have to stay that way.

Pessimists can learn about life’s potentially boundless bounty from the contributors to this issue of Luckbox. It’s a chorus of optimism issuing forth from biologists, MDs, immunologists, gurus, yogis, pastors, rabbis, priests, personal trainers and other assorted sages. It’s all depicted on the cover.

Let the sun shine in Despite differing perspectives on health and longevity, the magazine’s contributors agree on some all-important basic tenets. There’s consensus that the building blocks of happiness include a mostly plantbased cuisine, plenty of physical motion, a supportive group of true friends, an environment that encourages healthy choices and a spiritual connection of nearly any stripe.

Notably, this month’s contributors base their pronouncements on cold hard facts, stats, studies and surveys—not some gauzy New Age wistfulness. In this issue, even the ancient, mystical claims of yoga are backed with solid, contemporary academic research.

What’s more, those facts aren’t suspended in thin air. They’re tied to actionable advice that readers can embrace and put into practice.

That begins with practical guidance relating to familiar activities, such as eating, drinking and active trading. It extends to more unfamiliar

pursuits, such as instructions for “complete” breathing and tips for melting away stress.

But no assistance—however rational or well-intended—can ever be all-encompassing. Take the example of eating a meal that comes from the ground instead of from a factory, as one of the issue’s contributors puts it. Following that dictum could be one of the most important choices a person ever makes, he says, adding that it’s still not vital to adhere to it every single day.

Shaking cultural foundations This month’s contributors are changing the world. Their lasting contributions to the public’s understanding of health and longevity can’t be overemphasized.

Take the idea of Blue Zones, the places on the planet where people tend to live the longest, healthiest lives. The zones have earned a prominent place in popular culture and become integral to nearly every discussion of longevity. Talk to someone about old age, and the zones nearly always surface in the conversation.

Blue Zones originator Dan Buettner’s articles on the subject rank among the most-read stories ever published by prestigious outlets that include The New York Times and National Geographic. These days, he continues to churn out books on the zones. He also helps entire cities create environments where residents can’t help but improve their eating, exercising and social habits.

But the revelations don’t end there.

Ever wish a biological “mechanic” could tune up an aging body the

THIS MONTH’S LUCKBOX CONTRIBUTORS ARE CHANGING THE WORLD.

way an automotive technician can restore a vintage car? Then catch one of contributor Dr. Aubrey de Grey’s TED Talks for a crash course on the science behind the notion of living for a thousand years. Researchers could make that dream come true within the next 20 years or so, he says.

It’s an idea radical enough to cause some push-back. Some of de Grey’s peers have doubted his predictions, and one of the nation’s most highly regarded universities once offered a cash reward for proving him wrong.

No one could convincingly contradict him, and the prize remains unclaimed.

While waiting for de Grey’s rejuvenation revolution, readers could avail themselves of more conventional approaches to good health.

Another contributor, Dr. Michael Greger, extols the virtues of eating plants, while cautioning against consuming meat and processed foods. He’s even written a book on diet to ease the transition to eating plants almost exclusively.

Dr. Jenna Macciochi, also a contributor, has written a new book that explains the immune system.

Besides sharing the details of how the system keeps people healthy, she also outlines the steps to take in the quest to keeping it working efficiently for the longest possible time.

Most students of good health practices cite the importance of spirituality to keeping well. Scientific studies show that following just about any religion pays off in health benefits, and that’s where Dr. Elaine Gavalas, a yoga therapist, makes her contribution this issue.

Although yoga’s not exactly a religion and not exactly a philosophy, the ancient practice teaches adherents the connection between the mind, the body and perhaps even the spirit. As such, it’s a steadfast barrier to the coronavirus and a vital element of the How Not To Die issue of Luckbox. —Ed McKinley

may 2020 | luckbox

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DIE TO

T H OW

N

O

The Pandemic, Immunity and the Long Game to Longevity Living to a healthy old age is within reach but requires respect for scientific findings and adherence to good habits, according to a socially-distanced panel of Luckbox contributors

BY E D M C K I N L EY

What can people do in the short term to boost their immune systems to resist COVID-19?

Aubrey de Grey: People would

like to have some kind of quick fix or at least a quick partial fix.

Unfortunately, what they can do right now with lifestyle, nutrition, supplements and so on is only going to have a very slight impact.

Jenna Macciochi: Yes, there’s no scientific way to truly boost your immune system except in the long term. I get what people mean—it’s a case of semantics over science. People want to feel like

they’re invincible and they have an agency over their health, but your immune system is not an on-andoff switch. It’s more like a series of rheostats.

Dan Buettner: Even if we can’t improve immunity right away, self-isolating can provide a number of opportunities. Most of us are at home right now.

According to Gallup, about 30% of us don’t like our jobs or aren’t using our strengths at our jobs. So, we know from both the health and the happiness points of view that getting the right job—since we

To maintain the immune system and achieve good health, rely on proper diet and plenty of natural movement. —Dr. Jenna Macciochi

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spend most of our waking hours working—is constantly important.

Taking this opportunity to reassess your job is not a bad idea.

Elaine Gavalas: Meditate while you self-isolate. Use the time to learn meditation and know all the benefits it’ll bring you. One of them, over time, is immunity. So you’re achieving a lot just by that simple thing, and that would be my prescription.

Michael Greger: After the pandemic, we can get back to longer-term improvements in health. The good news is we have tremendous power over our health destiny and longevity. The vast majority of premature deaths and most disability is preventable with a plant-based diet and other healthy lifestyle behaviors.

Turning to a more general question, life expectancy at birth has increased in the United States from 49 at the beginning of the 20th century to 78 today. What caused the increase?

Buettner: First and foremost, it

was getting infectious disease under control and then the emergence of antibiotics and vaccines. But also public health has gotten a lot better—water sanitation and sewage. Those are the big ones.

Macciochi: I’d agree that the three big things are improving sanitation, vaccination and antibiotics. They’ve been the biggest step-function changes in our health in the last 100 years.

That has eliminated the infections that would kill people in childhood and take people’s lives early.

Greger: A lot of that increase is due to decreases in infant mortality.

But life expectancy at age five is more interesting from a chronic disease standpoint because you made it past those difficult first years. Life expectancy from age five hasn’t increased nearly so much as from birth.

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Meet the Panelists

Dan Buettner, an American explorer, National Geographic Fellow, journalist, producer and author, popularized the Blue Zones—five places where people live the longest, healthiest lives. His Blue Zone Projects organization works with municipalities, employers and insurance companies to introduce people to the beneficial health habits of Blue Zone residents. His books include The Blue Zones: Lessons for Living Longer from the People Who’ve Lived the longest, Thrive: Finding Happiness the Blue Zones Way, The Blue Zones Solution: Eating and Living Like the World’s Healthiest People, and The Blue Zones of Happiness. @danbuettner

Dr. Aubrey de Grey, a British-born biomedical gerontologist, author and professor, has pioneered the field of rejuvenation biotechnology. He maintains that science will soon develop the means to repair the human body and that people will live longer as a result—perhaps for a thousand years.

He’s a founder of the SENS Research Foundation, and his books include Ending Aging: The Rejuvenation Breakthroughs That Could Reverse Aging in Our Lifetime and The Mitochondrial Free Radical Theory of Aging. @aubreydegrey

Dr. Elaine Gavalas, an American holistic health practitioner, yoga therapist, exercise physiologist and founder of galenbotanicals. com, has written 14 books and made numerous videos on yoga, meditation and health, including The Yoga Minibook for Longevity. Her latest book, The Yoga Therapy Guide, is scheduled for release in June.

She emphasizes that science verifies the health benefits of yoga. @elainegavalas

Dr. Michael Greger, an American physician, author and speaker, advocates a wholefood, plant-based diet and opposes animalderived foods. His work demonstrates that the foods he recommends can help prevent or reverse chronic diseases. He’s a founding member of the American College of Lifestyle Medicine and the author of the books How Not To Die, How Not To Diet and The How Not To Die Cookbook. His book How Not To Age is scheduled for publication in 2022.

His nonprofit website, NutritionFacts.org, provides free daily science-based videos and articles. @nutrition_facts

Dr. Jenna Macciochi, a British immunologist, professor, fitness instructor and author, has studied the link between lifestyle and health for more than 20 years. At home, her family puts knowledge of nutrition to good use by cooking meals influenced by her farmto-table Scottish roots and her husband’s Italian culinary heritage. A U.S. edition of her book, Immunity: The Science of Staying Well, is scheduled for publication this year. @drjmacc

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de Grey: The best way to answer

THE MOST CRITICAL DECISION WE CAN MAKE FOR OURSELVES AND OUR FAMILIES IS WHAT WE EAT THREE TIMES A DAY. —Dr. Michael Greger

that question accurately is to divide the 20th century into two halves. The predominant cause of the increase between 1900 and 1950—and indeed starting before 1900—was a reduction in infant mortality as well as mortality not quite so early in life but still early.

That occurred as a result of our increasing ability to stop people from dying of infections, such as tuberculosis and malaria. Back in the middle of the 19th century, more than one-third of babies would die before the age of one, even in the wealthiest countries in the world.

The little things that go wrong at the level of molecules start really early in life, even before we’re born, and have an impact on our health throughout our lives. They essentially lay down damage that gets into a vicious cycle and causes an acceleration of the accumulation of subsequent damage. So the simple fact that in the early years of the 20th century economies in the industrialized world were becoming more prosperous—and therefore the general population was getting better nutrition—translated into progressively increasing life expectancy during the second half of the 20th century.

Life expectancy for men and women decreased in the U.S. from 78.9 years in 2014 to 78.6 years in 2017. Opioids, alcohol and suicide?

Buettner: Part of it was opioids but

a larger part is the increasing rates of obesity, diabetes and dementia.

Until we get those under control, you can’t expect to see life expectancy going up significantly, regardless of all the hype, genetic interventions, hormones and other gimmicks that marketers try to sell us. Diets, exercise programs, pills, supplements, drinks, bone broth, paleo and keto—none of it works for more than a few months.

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Greger: Part of that is due to the opioid epidemic, but the No. 1 cause of death in the United States is the American diet, and it’s the leading cause of disability. It’s now bumping tobacco smoking to No. 2. Cigarettes now kill about a half million Americans every year, and what we eat kills thousands more.

Most deaths are preventable and related to nutrition.

Will life expectancy continue to increase in the long run despite recent setbacks? If so, how much, and when might an increase occur?

Buettner: The best demographics

suggest that the maximum average life expectancy of humans is probably in the lower 90s. So we’re hitting almost 80, but we’re probably losing a dozen or so years as a population because— I argue, disruptively—that it’s our environment. Habits are notoriously difficult or even impossible to change on a population level. Whereas if you change people’s environment, you can get them to mindlessly change their behavior and the value proposition here is about a dozen years.

Macciochi: A lot of the scientific data coming out now seems to show there isn’t a specific limit. It isn’t like once we get to 150 and that’s it. But we’re probably not going to find another big stepfunction change like we’ve seen with things such as improved sanitation, antibiotics and vaccines.

Now we have this chronic disease problem—non-communicable diseases and non-infectious diseases that have a slow burn. de Grey: Within five years, enough evidence will emerge to convince even the skeptics that refurbishing the body is on the horizon. Within 20 years, there’s a 50-50 chance that materials and techniques will be widely available to reverse the health problems associated with aging. But we’re definitely not

going to see any thousand-yearold people for at least another 900 years, whatever happens.

What’s the most important factor in increasing life expectancy — diet, exercise, immunity, scientific advances or something else?

Macciochi: We can’t make a

hierarchy. All of them matter, and it’s the collective power of all of those that is going to be the biggest help to our lifespan. You can have the perfect diet, but if other aspects of your life are not serving you well and you’re very stressed or you’re feeling lonely or you don’t exercise, then the perfect diet is not going to do you much good. There are all these different levers that we have to pull and we’ll all have our own Achilles’ heel.

Greger: Sedentary lifestyles are leading contributors to years of healthy life lost. And so exercise is absolutely important.

Not smoking—also absolutely important. But what we eat is the most important. The most critical decision we can make for ourselves and our families is what we eat three times a day.

Buettner: People in Blue Zones live longer than others but they don’t necessarily have more responsibility or pay more attention to better discipline or better diets. They just live their lives. It’s shocking how much people in Blue Zones are exactly like we are. They live a long time— not because of superior genes—but because they have an environment that promotes good habits, such as walking and avoiding meat.

I have little to no faith in behavioral modification at the population level. Other than teeth brushing, I can’t think of anything that has really worked. Diets, exercise programs, getting people to take their medicines—they all have similar recidivism curves where you can get pretty good

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adherence for a number of months but they fail universally for almost all of the people after a year or so.

When it comes to life expectancy, you’re dealing with behaviors you need to modify for decades, not just a few months.

Gavalas: Yoga and meditation can help. They have been developed over millennia from the work of the first yogis. There was subjective evidence for thousands of years that claims for the benefits of yoga were true, but I’m pleased to say that after multiple studies have been done, many of those claims have been supported medically. One study, for example, found that yoga and meditation increased or maintained telomere lengths in participants. Telomeres lengthening is associated with increasing a cell’s longevity. de Grey: Scientific advances.

Rejuvenation procedures will recondition the body at the cellular and molecular levels.

They will begin with surgery to replace aging organs with new ones grown in the laboratory. That will advance to repairing organs in place with injections. Eventually, oral-administered medicines will repair organs.

What’s the most important action a person can take to increase lifespan?

Greger: The No. 1 thing to do is

eat healthfully because not eating healthfully is the No. 1 cause of death and the leading cause of disability. Eating healthfully means centering your diet around the healthiest foods out there.

That’s food from fields, not factories—real food that grows out of the ground. Legumes are the No. 1 dietary predictor for survival.

The No. 2 thing to do is you stop smoking because that’s the No. 2 leading cause of death.

Gavalas: I prescribe the six ways to move your spine, even if you just did a simple five-minute program

for that, depending upon your limitations.

Macciochi: You can definitely maintain your immune system.

The foundations would be taking care of your stress, getting good quality and quantity of sleep, eating a balanced diet, not being in an energy surplus or an energy deficit, and not having any nutritional deficiencies.

One of the best ways is through exercise and movement. After our 30s, muscle mass starts to decrease at a more accelerated rate, and if we don’t use our muscles we lose them. That means not only doing cardiovascular fitness like walking, running, cycling and swimming but also resistance-based exercise.

If we keep using our muscles doing resistance-based exercise, our muscles produce a special molecule called interleukin 7, which keeps us young and healthy and rejuvenates the thymus gland, which starts to shrink in our 20s.

We can directly tap into that if we keep being regular exercisers.

We also have to look at inflammation. This is one of our immune system’s defense mechanisms that we use to get rid of infections and heal tissues and wounds. But inflammation tends to go up as we age, and as our immune system cells get older they become senescent so they start spitting out inflammation without any sort of proper regulation. This is one of the key things that ages us.

Buettner: Focus not on your lifestyle but on your environment.

You’ll fail if you focus on your lifestyle. At least 97 out of 100 will fail. Take stock of your social situation, your four or five best friends.

If your three best friends are obese and unhealthy, you’re about 150% more likely to be overweight yourself. So you want to curate an immediate social network of people you’re going to see

with some regularity, and those people’s idea of recreation is some physical activity you like. It could be golfing. It could be bicycling.

It could be gardening. It could be walking. It doesn’t matter.

You should have one or two vegan or vegetarian friends.

Beyond a shadow of a doubt, eating plant-based food is going to lower your chance for chronic disease.

Whole, plant-based food—not Oreos or Doritios. Those friends are going to require that when you go out to eat there are plant-based options. When you go to their house, you’re eating plant-based foods and learning how to like it, learning how to cook it.

A number of things have been shown to lower the amount of junk food you eat: Not having a toaster on the counter, not having a junk food drawer, not putting salty snacks on your counter and not having a TV in your kitchen—these things all work at minimizing mindless eating.

Every time you go out to eat, you consume about 200 to 300 more calories than you would if you ate at home. Those calories tend to be higher in sodium and sugar than you would have if you ate at home where you could control the ingredients. Americans eat out on average 110 times a year.

You want friends who care about you on a bad day. We all have lots of friends we can sit around and gossip with or get

Yoga and meditation increase or maintain telomere lengths, which is associated with increasing a cell’s longevity. —Dr. Elaine Gavalas

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business tips or exchange jokes, but when you’ve just been fired or your portfolio is down, you need a couple of friends who care about you no matter what.

Think about setting up your home. I call it “de-conveniencing.”

You don’t want a home that gives you maximum comfort. You want to be nudged into movement. You can engineer a lot of movement by doing something by hand like kneading bread, opening cans, opening your garage door, pruning your garden with hand clippers and shoveling your own snow. de Grey: Look to the future.

Act to hasten research, which inherently will increase not only your chances but everybody else’s chances of living long enough to take advantage of advances that will lead to better health. And that advocacy for research can happen in many ways, depending on who you are. Wealthy people can support the research financially, and scientists can support the

Avoid fixating on longevity and remember that it’s a side effect of good health. —Dr. Aubrey de Grey

research by choosing research areas that have the most impact in this space. Journalists can get experts on air to raise the quality of information that the general public has access to. All these things should be done—everybody can do advocacy.

Where should readers seek advice on lengthening their lives and improving the quality of life as they age?

Buettner: I would get a plant-based

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cookbook. Dr. Greger’s got a good one. I have The Blue Zones Kitchen, which I just published. It doesn’t have to be one of our books—there are lots of good ones out there.

Invest the time to try 10 recipes that you think you’ll like—plantbased recipes, whole food. Learn how to make them, but you need to make enough different ones so you find a handful you love.

Gavalas: Many talented people have made videos to instruct people in simple yoga practices.

Some are on YouTube. Follow along with them, and you don’t even have to be in a specific program. A lot of this you can get for free if you just know where to look and go to a reputable yoga teacher or therapist.

Greger: There’s really only one source of information for something as life-and-death important as how to take care of yourself, and that is the peerreviewed medical literature.

Nothing else comes close. So, rather than having someone tell you what the literature says or cite the literature, the best place to go is to read the original studies themselves. That’s where all our knowledge comes from. They can go to the PubMed website—that’s the database of the National Library of Medicine. It’s free and you can type in any topic.

What should society do to increase longevity? Is it happening?

Macciochi: Your immune system

is a societal issue, really. We can focus on the things that we can control, but we have to have socioeconomic change and psychosocial change to combat things like loneliness— this has been known to disrupt our immune system. Negative emotions and stress are pervasive in our society, and it’s something that we don’t acknowledge as being a detriment to our health and longevity.

Greger: Government could make the default option the healthier option. We taxpayers subsidize the sugar industry and subsidize the corn industry to make corn syrup and dollar-menu burgers raised on cheap feed for livestock.

We subsidize some of the worst possible foods. Why? Because that’s where the political power is within the beltway. But why not subsidize healthier foods?

Why not subsidize fruits and vegetables?

Buettner: In the Blue Zones Projects, we go into cities where both the private and public sectors invite us in. We begin with the central tenet that we’re not going to try to change people’s behavior.

We’re going to change their environment so they’re set up for success. We have three squads in each city. The policy squad works with local government to draft ordinances that support good health, like limiting the number of fast-food restaurants.

A second team issues Blue Zones certifications for schools and businesses that comply with health guidelines. The third team works to convince 15% of the population to sign a pledge to curtail bad habits and thus preserve their health.

We have 30 or so different policies and procedures that cities can implement that will build streets not just for cars, but for humans. There’s something called complete streets—ordinances that require that every five to seven years, streets are redone, and it’s required that when they’re redone they’re assessed for bike lanes, sidewalks and trees. There’s an aesthetic element too. People are way more likely to walk on a beautiful street than they are in an ugly street. We try to favor the pedestrian over the motorist.

So far, we’ve been very successful in Hawaii, Los Angeles, and in Naples, Fla. Fort Worth, Texas, was a big win recently. And

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now we’ve just been hired to go to work in Orlando; Austin, Texas; and Jacksonville, Fla. Our work in Blue Zone Projects occasioned a 3% drop in smoking and about a 6% drop in obesity—all of that accomplished by cities and groups working together. When economists take those numbers and calculate the commensurate drop in lung cancer, heart attacks and rates of diabetes, they can compute the savings from preventing diseases.

A heart attack costs about $120,000, and somebody’s got to pay for that.

Are you particularly annoyed by any one threat to good health?

Buettner: A neighborhood where

there’s no fast-food billboard advertising has about 10% lower rates of obesity than an identical neighborhood with no billboards advertising fast food. If you live in a neighborhood with more than six fast-food restaurants in a quarter mile radius of your home, you’re 40% more likely to be obese than in a same neighborhood where there are fewer than three fastfood restaurants.

And here’s another: All the incentives in America’s health care system are lined up behind mitigating sickness. Nobody makes money when you stay healthy. When you look at places like Costa Rica, their incentives are mostly lined up behind health.

Lo and behold, they have about half the rate of middle-aged cardiovascular mortality we do in the United States, and they spend one-fifteenth the amount we do on health care.

Greger: Most doctors were never taught about the impact health and nutrition can have on the course of illness. So they graduate without this powerful tool in their medical tool box. This is not to say there aren’t institutional barriers, like time constraints and lack of

About 30% of us don’t like our jobs or aren’t using our skills at work. Self-isolating can provide an opportunity to reassess career decisions. —Dan Buettner

reimbursement. But in general, doctors simply aren’t paid for consulting or counseling people on how to take better care of themselves. Drug companies also play a role in influencing medical education. Ask your doctor when she was last taken out to dinner by Big Broccoli. It’s probably been a while. de Grey: A lot of people find it more emotionally acceptable to view aging as some kind of blessing in disguise. So then they don’t have to think about it, even though that has no logic to it whatsoever. There’s a lot to be thought about with regard to a world in which nobody’s dying and everybody is getting older and older even though they are healthy. Where will we put all the people? And dictators will live forever. Remember that longevity is only a side effect of health.

Macciochi: We have to take care of misinformation online and approach the headlines with caution because there’s a lot of airtime to fill. The news media are really quick to jump on any new information that’s coming out.

We should be cautious of anyone who’s selling any sort of snake oil type of solution for coronavirus because the truth is we really just don’t know much about it at the moment.

What else should we be saying about longevity?

Gavalas: The Vedas and other

works from thousands of years ago were just saying move the spine. The ultimate goal was to

produce comfort and live long enough so that you could reach enlightenment. That has grown into what we’re doing now, and so many other benefits could come from it.

Macciochi: The immune system is one of the main drivers of aging.

We should be conscious of it and we should protect it. We only tend to think about it when we get those familiar symptoms of a cold or flu, but it’s actually working hard all the time and we should really be conscious of that.

Buettner: Everybody’s hair is on fire about the coronavirus right now. Some projections say a million or so people who could die this year. But way more people are going to die from a chronic disease, which has completely receded into the background.

Chronic disease is a much bigger health concern for America than infectious disease. I’m not diminishing the coronavirus problem, but we can’t completely shut off the spotlight on chronic disease problems like this. de Grey: Talk about health, not about longevity. The more you talk about longevity, the more people say they’re not interested.

People get so nervous about what increased longevity would make the future look like that they think we should slow down the progress of research to get the health benefits that everyone actually wants.

Greger: I just encourage people to feel free to check out my work. I would love to help people live long healthy lives in any way I can.

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Longevity Lessons From the World’s Happiest People Dan Buettner introduced the world to Blue Zones in his cover story for National Geographic magazine’s November 2005 The Secrets of Long Life edition. The issue became the third-biggest seller in the magazine’s history.

In 2008, Buettner shared his statistically derived findings in his book The Blue Zones: Lessons for Living Longer From the People Who’ve Lived the Longest. It became a New York Times best seller and led to a 2009 TED Talk, which has more than 4 million views. (See THYNG icon, p. 24.)

He then continued to write successful Blue Zones books and initiated the Blue Zones Project, which helps American cities create environments that nurture habits that promote longevity.

Buettner maintains that the message is clear—creating lasting happiness is achieved through optimizing social and physical environments.

The following is excerpted from his 2017 book, The Blue Zones of Happiness.

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BY DA N B EU T T N E R

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n 2002, with a grant from the National Institutes on Aging, I commissioned a team to identify places where people lived the longest.

Together with Michel Poulain, a Belgian demographer, and Dr. Gianni Pes, an Italian physician and medical statistician, we identified five areas that we called the world’s Blue Zones.

Next, with a grant from National Geographic, I recruited teams of experts to help me tease out the characteristics of longevity in these Blue Zones. Remarkably, wherever we found long-lived populations, the same healthy practices seemed to be present. About five years into the project, I was struck with an epiphany: In a place like Okinawa, where I met a 100-year-old teaching karate, no one had ever set out to live forever. None of the spry centenarians that I encountered had resolved at age 50 to adopt a better diet, start exercising or begin taking supplements. Longevity had just happened to them.

In other words, instead of seeing a long, healthy life as a goal that required discipline, effort and a prescribed routine, people in the Blue Zones found that it occurred almost naturally; it flowed from their surroundings. In these places, it seemed, the healthy choice wasn’t just the deliberate choice; it was the unavoidable choice. Grains, greens, and beans—which many studies have linked to healthy, long lives—were the least expensive and most accessible foods in these places. People used time-honored recipes to make food tasty, and their kitchens were set up to allow fast and easy preparation. When friends and neighbors got together, they often shared the same healthy meals as part of their regular social activities. Being lonely wasn’t an option. And in all of the Blue Zones, people had a vocabulary for their purpose in life. People knew why they woke up in the morning. They were able to describe their responsibilities, and they pursued their passions into their 10th decade. They lived not only long lives but also rich, happy ones … these recommendations have become a kind of shorthand for the Blue Zones approach to a better life. In a nutshell, here they are:

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Move Naturally.

The world’s longest-lived people don’t pump iron or run marathons. They live in environments that constantly nudge them into moving. They grow gardens and don’t have mechanical conveniences for yard work. Every trip to work, to a friend’s house occasions a walk.

Wine @5.

People in all Blue Zones (even some Adventists) drink alcohol moderately and regularly. Moderate drinkers outlive nondrinkers. The trick is to drink one to two glasses per day with friends and/or with food.

And no, you can’t save up all week and have 14 drinks on Saturday.

Purpose.

The Okinawans call it ikigai, and the Nicoyans call it plan de vida; for both it translates to “why I wake up in the morning.” In all the Blue Zones, people had something to live for beyond just work. Research has shown that knowing your sense of purpose is worth up to seven years of extra life expectancy.

Belong.

All but five of the 263 centenarians we interviewed belonged to a faith-based community. Denomination doesn’t seem to matter. Research shows that attending faith-based services four times per month will add four to 14 years of life expectancy.

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Downshift.

Even people in the Blue Zones experience stress, which leads to chronic inflammation, associated with every major age-related disease.

The world’s longest-lived people have routines to shed that stress: Okinawans take a few moments each day to remember their ancestors, Adventists pray, Ikarians take a nap, and Sardinians do happy hour.

Loved Ones First.

Successful centenarians in the Blue Zones put their families first.

They keep aging parents and grandparents nearby or in the home, which also lowers the disease and mortality rates of their children. They commit to a life partner (which can add up to three years of life expectancy), and they invest in their children with time and love, which makes the children more likely to be caretakers when the time comes.

The 80% Rule.

Hara hachi bu—the 2,500-yearold Confucian mantra spoken before meals on Okinawa—reminds people to stop eating when their stomachs are 80% full. The 20% gap between not being hungry and feeling full could be the difference between losing weight and gaining it. People in the Blue Zones eat their smallest meal in the late afternoon or early evening, and then they don’t eat any more the rest of the day.

Right Tribe.

The world’s longest-lived people choose, or were born into, social circles that support healthy behaviors. Okinawans create moais—groups of five friends who commit to each other for life.

Research shows that smoking, obesity, happiness and even loneliness are contagious. By contrast, the social networks of long-lived people favorably shape their health behaviors.

Plant Slant.

Beans, including fava, black, soy and lentils, are the cornerstone of most Blue Zones diets. Meat— mostly pork—is eaten on average only five times per month, and in a serving of three to four ounces, about the size of a deck of cards.

Following these nine habits won’t guarantee that you’ll make it to age 100, of course. As I often like to say, you have to win the genetic lottery to become a centenarian. But if you use the Power Nine as daily guidelines, you’ll stand an excellent chance of adding happy years to your life.

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Build Your Own Blue Zone Live with a loving partner Spend 30 minutes of quality time with your kids at least five times a week Own a dog Spend less than one hour watching TV or playing video games per day Have people in your life whom you can confide in after a difficult day Eat at least six servings of fruits or vegetables daily Meditate at least once a week Visit the doctor and dentist at least once per year

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Bring good natural light into your home Live near nature, whether it’s a park close by, houseplants or a fish tank inside, or a window through which you can clearly see outside Articulate your sense of purpose or life mission Care for loved ones, such as sick children or aging parents —Dan Buettner

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In April 2015, Dan Buettner published The Blue Zones Solution: Eating and Living Like the World’s Healthiest People. Four of the zones—the places with the world’s longest life expectancies—are situated in the exotic locales of Ikaria Greece, Okinawa Japan, Sardinia Italy and Costa Rica. The fifth is closer to home in Loma Linda, Calif., where Seventh-Day Adventists “live longer than any other Americans.” The following excerpt reveals part of the regimen of those long-lived Californians—a diet proven to contribute to longevity.

The Longevity Diet of Loma Linda Adventists Avocados High in potassium and low in salt, avocados may help reduce blood pressure and the risk of stroke. Ounce for ounce, an avocado contains 30% more potassium than a banana, a dietary staple for many people with high blood pressure.

Salmon The longest-lived Adventists are pesco-vegetarians.

They eat plant-based food and up to one serving of fish per day, most often salmon, well known for its heart-healthy properties.

Researchers at the Harvard School of Public Health recently concluded that people who eat one to two 3-ounce servings weekly of fish rich in omega-3 fatty acids—the oil that collects in the fatty tissue of coldwater fish—reduced their chance of dying from a heart attack by a third. To play it on the safest side, look for wild-caught Alaska salmon, which contains the fewest contaminants and the most omega-3 fatty acid–rich oils.

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Whole Wheat Bread Like other Americans, Adventists often find themselves eating lunch at school, at work, or on the go. Slices of 100% whole wheat bread are convenient and healthy “packaging” for protein and vegetable fillings, such as avocado or nut butters. True 100% whole wheat breads add only 70 calories per slice to the sandwich, plus small amounts of a wide variety of nutrients. The high fiber content minimizes the need for mid-afternoon snacking, which is often less than healthy.

Beans For vegetarian Adventists, beans and other legumes, such as lentils and peas, represent important daily protein sources. There are at least 70 varieties of beans to choose from and an infinite number of ways to prepare them.

Nuts A study during the 1990s found that Adventists who ate a handful of nuts at least five times a week lived two to three years longer than people who didn’t eat any nuts. More research since then found links between nut-eaters and lower rates of cholesterol, blood pressure, chronic inflammation, diabetes and myriad other troubles that add up to cardiovascular disease.

Oatmeal A staple for Adventists, slow-cooked oatmeal is frequently mentioned as the breakfast for American centenarians everywhere. It provides a balanced portion of fats, complex carbohydrates and plant protein, along with good doses of iron and B vitamins. Its high fiber content makes it filling, and nuts and dried fruits can add fiber, flavor and variety.

Water Ellen G. White, founder of the Adventist Church, prescribed six to eight glasses of water daily.

Apart from its well-known hydrating and toxin-flushing benefits, water consumption promotes better blood flow and less chance of clotting, some studies have suggested. Beyond their health value, six glasses of water a day likely pushes diet sodas, fruit juices, and other sugar-sweetened or artificially sweetened beverages out of the diet.

Soy Milk Adventists use real soy milk (not the sweetened, flavored variety) as a topping for breakfast cereals, a whitener for herbal teas, and an allaround healthy alternative to dairy. High in protein and low in fat, soy milk contains phytoestrogens that may protect against certain types of cancer. Because it’s so versatile, it can figure into daily breakfast, lunch and dinner.

ABOUT DAN BUETTNER Holds three Guinness records for endurance bicycling Dated supermodel Cheryl Tiegs for eight years Befriended writer George Plimpton, who became a major influence Co-produced a documentary that won an Emmy Award Led expeditions to remote locales and shared them digitally with schools

How to Live to be 100+

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Typical Daily Diet of Seventh-Day Adventists

CARELESS EATING HAS CONSEQUENCES

Here’s the average intake of various food groups for the Adventists participating in the Adventist Health Study 2. The data included 513 in the white cohort and 414 in the black cohort. The averages used for this table were weighted proportionally in combining the data to reflect a more accurate average for the total population.

Source: Jaceldo-Siegl et al.

1% Each: Fish, Eggs, Added sugars 2% Nuts and seeds 2% Added fats 4% Meat and poultry

33% Vegetables 7% Grains

10% Dairy

27% Fruits

12% Legumes + soy foods

THE POWER OF CHOICE Think about this for a moment. These are Americans. They live among us. Drive by the same fast-food restaurants, shop in the same grocery stores, breathe the same air and work in the same jobs we do. But they’re living up to a decade longer than the rest of us! —Dan Beuttner

Meat-eaters tend to consume more soda pop, desserts and refined grains than vegetarians.

They also tend to be fatter. If you were to take two men of equal height, one a meat-eater and the other a vegan, the meateater was likely to weigh an extra 20 pounds. The meateater was also likely to die sooner.

Although vegans tended to weigh less, they didn’t live the longest, the study found. That distinction went to pesco-vegetarians, or pescatarians, those who ate a plant-based diet with up to one serving of fish per day.

—Dan Beuttner

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Eat Plants, Live Long Compelling evidence indicates that a plant-based diet supports robust health and promotes maximum longevity.

BY M I C H A E L G R EG E R

A

dhering to just four simple healthy lifestyle factors can have a strong impact on the prevention of chronic diseases: not smoking, not being obese, getting a half hour of exercise a day and eating healthier—defined as consuming more fruits, veggies, and whole grains and less meat.

Those four factors alone were found to account for 78% of chronic disease risk. If you start from scratch and manage to tick off all four, you may be able to wipe out more than 90% of your risk of developing diabetes, more than 80% of your risk of having a heart attack, cut by half your risk of having a No. 2 cancer killer, colon cancer, up to 71% of cases appear to be preventable through a similar portfolio of simple diet and lifestyle changes.

Maybe it’s time we stop blaming genetics and focus on the more

These books explain plantbased eating.

than 70% that is directly under our control. We have the power.

You can take statin drugs for your cholesterol to lower risk of heart attacks, pop different pills and inject insulin for diabetes, and take a slew of diuretics and other blood pressure medications for hypertension. But only one unifying diet helps prevent, arrest or even reverse each of these (leading causes of death) killers.

Unlike with medications, there isn’t one kind of diet for optimal liver function and a different diet to improve our kidneys. A hearthealthy diet is a brain-healthy diet is a lung-healthy diet. The diet that helps prevent cancer just so happens to be the same diet that may help prevent type 2 diabetes and every other cause of death on the Top 15 list.

Unlike drugs—which target only specific functions, can have dangerous side effects and may only treat the symptoms of disease—a healthy diet can benefit all organ systems at once, has good side effects and may treat the underlying cause of illness.

That one unifying diet found to best prevent and treat many of these chronic diseases is a wholefood, plant-based diet, defined as an eating pattern that encourages the consumption of unrefined plant foods and discourages meats, dairy products, eggs and processed foods.

I don’t advocate for a vegetarian diet or a vegan diet. I advocate for an evidence-based diet, and the best available balance of science suggests that the more whole plant foods we eat, the better—both to reap their nutritional benefits and to displace less healthful options.

For most of our leading killers,

nongenetic factors like diet can account for at least 80-90% of cases.

As I noted before, this is based on the fact that the rates of cardiovascular disease and major cancers differ fivefold to a hundred-fold around the world. Migration studies show this is not just genetics. When people move from low- to high-risk areas, their disease risk nearly always shoots up to match the new setting.

As well, dramatic changes in disease rates within a single generation highlight the primacy of external factors. Colon cancer mortality in Japan in the 1950s was less than one-fifth that of the United States (including Americans of Japanese ancestry). But now colon cancer rates in Japan are as bad as they are in the United States, a rise that has been attributed in part to the fivefold increase in meat consumption.

Research has shown that identical twins separated at birth get different diseases based on how they live their lives. A recent American Heart Association–funded study compared the lifestyles and arteries of nearly five hundred twins. It found that diet and lifestyle factors clearly trumped genes. You share 50% of your genes with each of your parents, so if one parent dies of a heart attack, you know you’ve inherited some of that susceptibility.

But even among identical twins who have the exact same genes, one could die early of a heart attack and the other could live a long, healthy life with clean arteries, depending on what she ate and how she lived.

Even if both your parents died with heart disease, you should be able to eat your way to a healthy heart.

Your family history does not have to become your personal destiny.

In a study of more than 600 centenarians, fewer than 2% of the women and not a single one of the men were obese.

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BODY MASS INDEX What does it really mean to be overweight? Obese? In simple terms, being overweight means you have too much body fat, whereas being obese means you have way too much body fat.

In technical terms, obesity is operationally defined as a body mass index (BMI) of 30 or more, while being overweight means you have a BMI of 25 to 29.9. A BMI between 18.5 and 24.9 is considered “ideal weight.”

Calculating your BMI is relatively easy … grab a calculator and calculate it on your own. To do so, multiply your weight in pounds by 703. Then divide that twice by your height in inches. For example, if you weigh 200 pounds and are 71 inches tall (5 foot 11), that would be (200 × 703) ÷ 71 ÷ 71 = 27.9, a BMI indicating that you would be, unfortunately, significantly overweight.

In the medical profession, we used to call a BMI of under 25 “normal weight.”

Sadly, that’s no longer normal. Being overweight became the norm by the late 1980s in the United States and appears to have steadily worsened ever since.

The largest studies in the United States and around the world found that having a normal body mass index, a BMI of 20–25, is associated with the longest life span. Putting together all the best available studies with the longest followup, that can be narrowed down even further to a BMI of 20–22.

Dr. Greger’s Daily Dozen Whole-food, plant-based nutrition—pretty self-explanatory, right? But aren’t some whole foods better than others? For example, you can apparently live for extended periods eating practically nothing but potatoes. That would, by definition, be a whole-food, plantbased diet—but not a very healthy one. All plant foods are not created equal.

Looking over the checklist, you’ll see there are three servings each of beans, fruits, and whole grains, and about twice as many veggies in total than any other food component.

Instead of a big bowl of spaghetti with some veggies and lentils on top, I think of a big bowl of vegetables with some pasta and lentils mixed in. Instead of a big plate of brown rice with some stir-fried vegetables on top, I picture a meal that’s mostly veggies—and oh look!

There’s some rice and beans in there too.

But there’s no need to be obsessive about the Daily Dozen. On hectic travel days when I’ve burned through my snacks and I’m trying to piece together some semblance of a healthy meal at the airport food court, sometimes I’m lucky if I even hit a quarter of my goals. If you eat poorly on one day, just try to eat better the next.

My hope is that the checklist will serve as a helpful reminder to try to eat a variety of the healthiest foods every day.

The Daily Dozen Checklist Unlike waist circumference, body mass index has the advantage of taking height into account. Waist-to-height ratio may offer the best of both worlds, and the cutoff value is the simplest to remember: Keep your waist less than half your height.

The goal is to get a waistto-height ratio under 0.5.

Number of servings

Beans Berries Other fruits Cruciferous vegetables Greens Other vegetables Flaxseeds Nuts Spices Whole grains Beverages Exercise

I ADVOCATE FOR AN EVIDENCE-BASED DIET, AND THE BEST AVAILABLE BALANCE OF SCIENCE SUGGESTS THAT THE MORE WHOLE PLANT FOODS WE EAT, THE BETTER.

Michael Greger, an internationally recognized authority on nutrition, food safety and public health, is a founding member and fellow of the American College of Lifestyle Medicine and the physician behind the wildly popular nutritionfacts. org. Greger relies upon an evidence-based approach for his groundbreaking encyclopedic tomes How Not to Die and How Not to Diet, which explain the only diet scientifically proven to prevent or reverse many of the causes of obesity and disease-related death. He shares his indispensable findings on obesity and longevity in these excerpts from his books.

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Increasing Your Immunity No single factor magically boosts immunity.

To make living longer worth the effort, U.K.-based immunologist Jenna Macciochi concentrates on enhancing “health span” as well as “lifespan.” Her book, Immunity: The Science of Staying Well is scheduled for U.S. release in the near future. Curated insights from an advance copy are excerpted here.

BY J E N N A M ACC I O C H I

W

e have an obsession with looking healthy and being well, and yet we are sicker and unhappier than ever before. That’s because our delicately balanced immunity is compromised by our ever-accelerating pace of life, with its relentless stress, pollution, overconsuming and under-moving.

Today, we’re more likely to die from a lifestyle-related disease than any other cause, and many of these would be preventable if we took better care of our health.

Play the long game to health by having a long-term plan and longterm goals. It’s about doing little things now, and every day, that set you up for the long term.

Numbers to know Germs are no longer the enemy. In

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fact, 99% of those that surround us (and they are everywhere, all the time) do not cause disease.

Because vaccines don’t replicate the natural course of an infection 100%, they don’t all provide the same degree of immunological memory. Research shows 85%–95% are effective for most infections.

A sneeze produces 40,000 droplets, and you can get infected by inhaling just one.

Genetic predisposition accounts for roughly 30% of all autoimmune diseases, and the remaining 70% result of from toxic chemicals, diet, infections, digestive issues, stress and other lifestyle factors.

The long game Preschoolers normally have up to eight illnesses per year. The figure may be even higher for children in

day care or those who have older siblings.

From 1985 to 2001, the prevalence of asthma rose 100%. About 300 million people worldwide have asthma, 255,000 die from it annually and deaths could increase by 20% over the next 10 years.

A startling 74% of children who were given antibiotics before the age of two were, on average, nearly twice as likely to have developed asthma by the time they were eight.

Ageing’s not a programmed process. It’s a question of genes (about 25%), with the rest due to experiences, emotions and environment across the lifespan.

Disease As much as we fear germs, the bugs comprising our microbiota are actually our biggest health allies. Our lifelong task of trying to balance our immunity means relying heavily on certain exposures to good germs for proper calibration.

Every one of us is home to 38,000,000,000,000 (that’s 38 trillion) microbes—our microbiota— accounting for half of each of us (by cell count).

High dietary fiber consumption brings a 30% decrease in death from all causes, particularly some of the top killers, including heart disease and Type 2 diabetes. Eating a fiberrich diet is linked to reduced risk of colon cancer and can reduce inflammation associated with joint pain and arthritis.

Sleep We neglect arguably the most important pillar of health—the foundation upon which all the others sit: sleep. Some good signs of getting enough sleep would be waking up without an alarm clock, not needing caffeine to keep you going and being alert throughout the day.

The definition of good-quality sleep is being asleep for more than 85% of the time you’re in bed, waking up no more than once per

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night and for fewer than 20 minutes.

People experiencing inadequate sleep are also more likely to suffer from chronic diseases, such as hypertension, diabetes, depression and obesity.

A single night of poor sleep can lead to 70% decrease in natural killer cells—our first-line defense against viruses and potentially cancerous cells.

Short sleep, difficulty falling asleep and difficulty staying asleep increase Type 2 diabetes risk by 28% 57% and 84% respectively.

Short sleepers have a 45% increased chance of developing obesity.

Mental health The link between immunity and psychology is a two-way street. We know, for example, that people who have had heart attacks as a result of inflammation in the arteries have a 50% increase in depression. And depression is a risk factor for heart

disease and poor recovery from a heart attack.

In one study, 39% of participants had more than one flare-up of allergy symptoms that correlated with periods of higher stress.

Intelligent movement Moving is one of the best things we can do for our bodies. It is the cornerstone of a proper lifestyle and is (thankfully) seen as indispensable for good health, not just for looking good.

Lifting weights (or any kind of resistance work) is a hugely important part of exercise regimens, particularly as we age. Not only does it have significant functional benefits for healthy bones and joints, it’s also important for our muscle mass, which steeply declines as we age.

The best time to start exercising was 20 years ago—but the secondbest time to start is now. Comparing a group in their 50s who had been training most of their lives to sedentary people who didn’t start until

Food provides much more than just nutrition. Meals bring people together, fulfilling a need for social interaction and sometimes bringing joy.

they were at least 50 showed both can perform to the same level.

Experts recommend at least 150 minutes of moderate aerobic exercise plus two bouts of muscle strength training per week. (A modern hunter–gatherer tribe in Tanzania, the Hadza, have approximately 135 minutes of moderate-to-vigorous physical activity per day.)

90%

Nutrition Vitamin C is a practically unavoidable component of a normal balanced diet and we can obtain our RDA (recommended dietary allowance) easily through consumption of fresh fruit and vegetables.

Vitamin A deficiency is not something we often deal with in developed nations and you can get this immune-nourishing vitamin from sweet potatoes, carrots, kale, spinach, red peppers, apricots, eggs or foods fortified with vitamin A, such as milk or cereal.

Phytonutrients are biologically active chemical compounds found in plants. They act as a natural pesticide, helping to protect plants from predators. So it’s no surprise that regular consumption helps to prevent us from getting sick too.

But food is much more than nutrients. It fulfils a profoundly social urge and is something that is almost always shared: people eat together, mealtimes are events when the whole family or friends come together. The best thing we can do with that information is use it to lead us back to the dinner table and to start enjoying food again.

40%

of people living in Western countries don’t eat enough immuneboosting fiber

The reduction in colds for habitual swimmers

We’re more likely to die from a lifestylerelated disease than any other cause, and many of these would be preventable if we took better care of our health.

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Yoga for Longevity Scientific research verifies the health benefits of ancient yogic and meditation practices.

B Y E L A I N E G AVA L A S

T Yoga for relaxation and stress relief.

Elaine Gavalas, a yoga therapist, has written 14 books on yoga and meditation.

This piece is excerpted from her forthcoming book, The Yoga Therapy Guide.

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he global population is aging at an unprecedented rate. By 2050, over 2 billion people worldwide will be over age 60. This is expected to be accompanied by a rise in age-related degenerative problems, but declining health doesn’t have to be an inevitable part of growing older. Research indicates yoga can help prevent and even reverse the detrimental effects of aging.

Yoga detox—the process of moving blood around the body by practicing yoga poses—can lower risk of obesity, hormonal imbalance, inflammation, diabetes and heart disease for those over 40 years old, according to a landmark study conducted by researchers from institutions that included the University of California, San Diego.

The yoga detox group in the study had measurable decreases in blood-based metabolites associated with maladies that too often come with age. That suggests yoga detox can help manage weight, improve well-being and support longevity in a short period of time.

DNA and longevity Yoga and meditation can protect and even lengthen DNA telomeres, research shows. Telomeres, located

at the tips of DNA chromosomes, shorten with aging and age-related diseases, including cancer, cardiovascular disease and diabetes. As telomeres shorten, cells age and die more quickly. Conversely, telomere lengthening can increase a cell’s longevity.

In the study of 88 breast cancer survivors, researchers at the University of Calgary, Alberta, administered either a yoga and meditation program, supportive group therapy or a one-day stress management seminar. All of the patients suffered from significant emotional stress following cancer treatment.

The yoga group participated in weekly 90-minute yoga sessions for eight weeks. They also practiced the yoga and meditation program at home. The group in supportive therapy participated in weekly 90-minute group session for three months.

The yoga and group therapy participants maintained their telomere length. However, the seminar group had shortened telomeres, the researchers found.

“Together, these changes suggest an effect of the interventions on potentially important biomarkers of psychosocial stress,” the study authors write. “Given the increasingly well-documented association between telomere length and cancer initiation and survival, this finding adds to the literature supporting the potential for stress-reducing interventions to impact important disease-regulating processes and ultimately disease outcome.”

The power of kindness Practitioners of loving-kindness meditation, a Buddhist practice focused on health, happiness and well-being, have longer telomeres than non-meditators, a small but significant study published in the journal Brain, Behavior, and Immunity reports In the study, researchers at Harvard Medical School obtained blood samples from 15 meditators and 22 non-meditators. They extracted chromosomal DNA from

blood cells. The researchers found the meditators had longer telomeres than non-meditators. Furthermore, female meditators had significantly longer telomere length than non-meditators.

“These results offer the intriguing possibility that Loving Kindness Meditation practice, especially in women, might alter relative telomere length, a biomarker associated with longevity,” the study concludes.

Increasing beneficial hormones Daily yoga practice of increasing intensity significantly increased growth hormone (GH) and dehydroepiandrosterone sulphate (DHEAS) and decreased body mass index.

Biochemical markers of healthy aging, GH (somatotropin) is a peptide hormone that promotes cell generation, and DHEAS is an adrenal hormone associated with immunity and health. Their values tend to decline with aging.

Researchers administered a comprehensive yoga program to 45 adults aged 34 to 53 years for six days per week for 12 weeks. The program combined kriya (cleansing exercises), asana (postures), pranayama (breathing exercises) and meditation for an hour or more, increasing in duration and intensity during the course of 12 weeks.

Preventing degeneration Yoga can reverse age-related degeneration of the heart, brain and nervous system, studies show. It can increase levels of brain-derived neurotrophic factor (BDNF), a protein that supports mental health and brain health.

Declining levels of BDNF is associated with aging and increased risk of dementia and Alzheimer’s.

Researchers randomly assigned a daily, one-hour yoga program, including postures, yoga breathing, and meditation, to three groups of healthy active males.

The evidence from these and many other studies leaves only one possible conclusion: Yoga works as advertised.

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Living Well Beyond 100 Years The means for living a millennium seem within reach, says a pioneer of radical approaches to good health.

BY E D M C K I N L EY

T

he first people to live for a thousand years may already have been born, according to English biomedical gerontologist Aubrey de Grey. They’ll thrive for a millennium, he maintains, because scientists are developing medical advances will that maintain and repair the human body like a well-tuned Italian supercar.

It’s a startling message de Grey’s been delivering for more than 20 years in books, articles and lectures.

He’s also labored to make the idea a reality, serving as chief science officer of the SENS Research Foundation he helped found more than a decade ago in California.

SENS stands for Strategies for Engineered Negligible Senescence—an acronym that succinctly describes the foundation’s work and de Grey’s vision. He maintains that “rejuvenation medicine” will soon make aging human organs function the way they did in the prime of life.

Repair or replace Rejuvenation procedures will recondition the body at the cellular and

molecular levels, de Grey tells Luckbox. The therapies will become increasingly refined. In the early days, they’ll begin broadly with arduous and invasive surgery to replace aging organs with new ones grown in a laboratory. They will quickly advance to repairing organs in place with injections of stem-cell therapies and engineered DNA. Eventually, orally administered medicine will repair organs so easily that there’ll be no need for a hospital stay.

For most patients, the therapies would get underway during middle age—before their systems have slid into serious decline. Just the same, sicker patients could also benefit from the procedures, de Grey notes. Either way, most patients will undergo a total overall.

“This medicine needs to be comprehensive—it will be very much a divide and conquer approach where a lot of different things get done to the same people at the same time,” de Grey says. “The overall impact will be to postpone the age at which people get sick and therefore, as a side effect, to postpone the age at which people die.”

When? Soon.

The transformation to rejuvenation medicine is already occurring, in de Grey’s view. Within five years, enough evidence will emerge to convince even the skeptics that refurbishing the body is on the horizon. Within 20 years, there’s a 50-50 chance that materials and techniques will be widely available to reverse the health problems associated with aging, he estimates.

That doesn’t leave much time for the medical profession and society as whole to prepare for literally life-altering change. Hospitals have to reconfigure facilities and healthcare personnel need training. Families will have to re-think insurance, inheritance and living situations.

Fundamental change To ease the transition, everyone involved can put aside the notion of “longevity” and concentrate instead on improving health. The first term engenders doubts ranging from fear of centuries of frailty to the specter of dictators who refuse to die, de Grey notes. People don’t want to deal with the philosophical implications of an unlimited lifespan, but most display unbridled enthusiasm for eradicating disease, decline, weakness and pain.

The healthcare costs of the new era should not present significant hurdles. Administering the new therapies will cost significantly less than caring for an increasingly large proportion of the population that has reached its dotage. “It would be economically suicidal for any country, however capitalist, not to do this,” de Grey says. “So, I am absolutely certain that these therapies will be universally available.”

Culturally, societies will have plenty of time to adjust to the idea and the reality of a generation of individuals who give new meaning to the term “millennials.” As de Grey says: “We’re definitely not going to see any thousand-year-old people for at least another 900 years, whatever happens.”

“WE WILL BE ABLE TO POSTPONE THE AGE AT WHICH PEOPLE GET SICK AND THEREFORE, AS A SIDE EFFECT, POSTPONE THE AGE AT WHICH PEOPLE DIE.”

A TED Talk summarizes de Grey’s fight against aging.

Aubrey de Grey, a trailblaing biomedical gerontologist, has appeared extensively on television and in TED Talks to deliver a message— science will soon rejuvenate aging human bodies.

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Three Rules for Longevity as an Active Investor If you’re in it for the long haul, you need to know the rules— that the news doesn’t matter much, the markets are random and active trading beats long-term investing.

BY M I K E H A RT

J

ust when you think you know it all, you find there’s a lot left to learn. In my case, the lessons began in earnest after I finished my graduate degree in finance and got involved in the markets.

I worked as a trader for 10 years, starting on the floor of the Chicago Stock Exchange and then becoming a proprietary trader when the exchange went electronic. As the years went by, I focused on futures.

I was operating as a market maker, regularly putting thousands of dollars on the line against other traders—for a single tick. I didn’t care if the market went up or down, I just wanted to get that tick … or ticks.

While I didn’t specialize, oil-related trades became one of my favorites. But on any given day I might be long or short on interest rates, soybeans or any one of dozens of other markets.

I paid attention to the news, both financial and non-financial, because I believed that could get me an edge.

If it appeared, for example, that the Saudis would go along with U.S.

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policy, it would influence my trades.

Or if it was really cold in Chicago, I might guess heating oil would go up because Chicago is where the exchange for heating oil is located.

I would buy gold because India and Russia were on a buying spree while other nations were hoarding. Analysis of the news was woven into my days.

It was fun and exciting, but I found that the market is like a teeming city. You can know the roadways and landmarks, but you can never know what people will do or what will happen next.

As a professional trader I learned from experience and developed my sense of the market. But I approached trades with a head full of vague concepts. “The trend is your friend.” “It’s good to push scared money.” “Buy on rumor, sell on news.” “Cut your losses and let your winners ride.” There were probably 50 other old trader sayings.

I had countless conversations with fellow traders about what might happen. We defined issues and pondered the future. Then each of us would make choices and take

a stand. Sometimes we won and sometimes we lost.

In retrospect, maybe I just was gambling. We operated without rules, we analyzed the information we gathered, we made guesses about the direction of the market, we used mechanics to hedge and we laid our money down. Trust your gut—and go for it.

So when I went to work at tastytrade—the financial media company that operates a trading platform, educates traders and owns Luckbox magazine—I saw myself as a certain kind of expert and thought I could contribute by drawing upon experience. I knew how trading worked in the real world.

But then my perspective shifted—I changed from feeling like an expert to realizing (over time) that everything we knew was incomplete.

Some of what we thought was true just wasn’t. It was like getting into a taxi with a destination in mind and the driver takes you somewhere else. tastytrade was created to search for new ways to provide retail traders in a digital world with tools equal to those of a professional trader. The hunt was on to find new programs, rules or maxims that would change risk from arbitrary to defined.

So, if you’re not a professional trader but want to make money from the market, you can learn to do it.

The tastytrade mantra is that somewhere in the math, somewhere in the 0s and 1s of our computers, somewhere between what we know and don’t yet know, there are aspects of trading that we need to identify. The tastytrade research team went to work seeking an edge, an angle or a new kind of trade to get the extra tick. Digging into the data opened doors. We asked different questions and sought better ways to express what we discovered. We sought context in the content.

Our journey resulted in identifying three key rules to making it, and sustaining longevity, as an active investor.

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News doesn’t matter as much as you think All day and throughout the night, reporters and pundits besiege Americans with news and opinion.

It’s captivating and informative, but there’s a problem. While the talking heads and ink-stained reporters usually do a good job of outlining what just happened, they’re often wrong about future market moves.

In one example, a recent article said Elon Musk’s Tesla M-3 is poised to steal market share from BMW and Mercedes. The article was convincing, and you have to think there may be a trade there.

But the tastytrade view is that the M-3’s prospects for success don’t create an opportunity. Instead, opportunity arises because a lot of investors will have opinions on the new model. Their frenzy of buying and selling will increase volatility, and with volatility comes opportunity.

So news is useful but not the key to a successful trade. As seductive as the stories may be, volatility enables us to base predictions on clearly defined mathematical probabilities instead of speculation, guesses, hope or beliefs that are at best a 50-50 proposition—no better than flipping a coin. We base trades on real information and clear probabilities. When we see volatility, we know something is happening.

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Markets are mostly random When I traded futures, one of the big days was when the monthly jobs report was released. Thousands of traders waited at their screens for the news. In the minutes before the announcement, an unbelievable flurry of activity occurred.

Some individuals and entities were betting furiously on the direction.

Others, like me, played the action until it all normalized.

Keep in mind I was putting thousands of dollars on every position. It felt like playing a game of chicken with hundreds of others like me. If 2

I was long, I tried to entice buyers so I could sell into the movement. If I was short, I encouraged the other short players. If I was on the right side, then I played that out. If I was on the wrong side, I had other strategies I would play. It seemed like a video game that lasted for about an hour, but the money was real.

The longer I was there, the more I became convinced that what happens on any given day is unpredictable.

When I was at the screen for the job reports, for example, one month I’d see the market flat when we made the numbers and another month we’d miss and the market would go up. Things like that happened constantly. You could always make up an explanation to put some context around what happened, but why things happened the way they did was never clear.

If it were clear what was going to happen, then everyone would make money (or, more accurately, no one would.) It was the unseen hand, the vote of millions of transactions.

In the moment it’s just a series of purchases and sales. Only afterward can anyone spin a story around it.

I now accept what I didn’t know then. The research we’ve done at tastytrade shows the market does not favor any direction in the long haul.

The market goes up as often as it goes down. In fact, for the purpose of trading, the market is random. That’s not to say a takeover announcement will have a random outcome, or that a black swan event won’t make the market rise or fall. It’s simpler than that: The data shows that what a market does over time equalizes.

And knowing that translates into approaches that help traders.

So, if the market is random, where does a trader find an edge?

Our research team developed these Three Rules to improve the odds. It can be by a combination of trades that provide a hedge, or a thoughtful long or short trade managed if it’s a winner or loser. Maybe it’s timing the market or avoiding

naked trades completely.

Knowing that the market is a flip of a coin despite our beliefs is a reality that can have a profound impact.

Buy often—buy small This might not be a hard, fast rule, but it’s a good thing to know.

You’ll probably violate it sometimes because sometimes you believe you know what’s going to happen. Such thoughts might be right and might be wrong, but the rule “buy often and buy small” will serve you well.

It’s a key to making money, especially from various derivatives available to most traders. A knowledgeable active investor can get significantly better return on a percentage basis than someone who buys and holds.

But trading small and trading often means more than just buying and selling without strategies and tactics.

Back each trade with knowledge of strategies and solid data that increase the probability of success. Use strategies and tactics to manage winners and mitigate losers. Don’t make trades too big for your resources. We have observed and tested this endlessly for years.

In a way, the market resembles a casino. The odds favor the house, but in some games, like poker, knowledge and skill can shift the advantage to the player. Skillful poker players can make a living at the game. The same is true in the market.

It’s a new world where a pocket-sized telephone packs more power than the old-time computers that filled a fairly large room. That gives each of us an equal opportunity to succeed as an active trader as new strategies and tactics dance across the computer screen. You can improve the odds by trading often and trading small. You can push the odds and enjoy the results of the discipline.

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An equities market can seem like a teeming city. You might know the streets and landmarks, but you never know what people will do or what will happen next.

Mike Hart, a former floor trader at the Chicago Stock Exchange and proprietary futures trader, specializes in energy markets and interest rates and is a contributing member of the tastytrade research team. @mikehart79

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trends life, luxury & the pursuit of happiness

THE POLITICAL TRADE

News, Comedy & Gambling on Politics Plus sex, drugs and rock & roll—this podcast has it all!

By Jeff Joseph

The guys at Barstool Sports’ Hard Factor podcast cover a lot of ground, and they’re avid prediction market traders who tie the markets into each of their daily shows. Luckbox sat down with Wes, Mark, Will and Pat to talk about their charttopping podcast and political wagering prowess.

Have any of you done any broadcast work before?

Will: After moving to Austin,

Texas, to pursue independent sketch comedy and filming, we then went into different career paths. Pat had been doing music producing and movie producing.

Mark and I had been in the corporate world, and Wes had been running his own videography company. So professionally, not much broadcast experience. But,

practically, we have been hobbyists at comedy and sketch comedy for a long, long time.

Pat: Yeah, I did a college radio show. I think that’s probably the extent of traditional broadcast.

Will: Also, I was the soccer announcer in high school for the varsity soccer team.

And how did you guys hook up with Barstool?

Will: Wes, Mark and I had a podcast

WES

PAT

WILL MARK

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called Diet Starts Tomorrow for about a year and a half prior to— Mark: Because we’re fat.

Will: Yeah, because we’re fat. When the opportunity with Barstool came around, all four of us came in from having worked together previously, and that’s how we got going with Barstool.

How did you guys discover prediction markets?

Mark: They kind of discovered us.

Someone from PredictIt reached out to us, and it just went from there. We talked about how our demographics lined up, and gambling is something we like to do. We talk about politics, so it just really aligned. When we started using the app, we really liked it so when we were doing the ad reads, we had skin in the game and we really cared about it.

HARD FACTOR’S SOFTER SIDE The Hard Factor news team for Barstool Sports—which includes longtime friends Wes Shephard, Mark Borghi, Will Smith and Pat Cassidy—debuted their show June 6, 2018.

They’ve since recorded more than 400 news- and humor-packed episodes, racking up well over a million downloads a quarter.

Dubbed “news cocaine,” Hard Factor publishes new episodes of the podcast Monday through Friday “to give you just enough information to make you sound knowledgeable at the water cooler, but not knowledgeable enough to put you on a government no-fly list.”

Recurring segments include “Florida Man Friday,” where the team wraps up the week by showcasing some lesser-reported, yet nonetheless captivating crazy crime and misdemeanor stories from the Sunshine State. Past episodes delved into the details behind headlines such as “Multiple Florida Men are Arrested on Nudity and Other Charges,” and “A Florida Man was Caught at Publix Wearing an Idiotic Homemade Hazmat Suit.”

Before long, someone at the prediction market site called PredictIt took notice of the guys’ light-hearted approach to politics and reached out. Shephard, Borghi, Smith and Cassidy have all been active gamblers on the prediction-market platform ever since.

Recently, as guests on Luckbox’s The Political Trade podcast, the team shared which PredictIt markets they were betting on. Shephard said he liked Joe Biden in the Democratic nomination market, a choice that was on the money. Borghi said Republicans would win Texas in the presidential election. Smith has his money on longshot Michelle Obama for the Democratic vice presidential nomination. Cassidy favored a postponement of the Wisconsin primaries that didn’t happen.

Political betting aside, the team strives to spin hard news in a manner that translates into hard laughs, using levity to make otherwise bleak or boring stories more digestible to listeners. The same principles underpin their charitable pursuits.

In response to the COVID-19 pandemic, the Hard Factor team encourages listeners to “Lockdown & Turn Up,” and sells T-shirts bearing the mantra. Proceeds from T-shirt sales are donated to Meals on Wheels and its COVID-19 response fund. (Luckbox grammarians point out “lock down” is two words as a verb phrase.)

Tune in to Hard Factor wherever podcasts are available.

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Previously, who was the most frequent gambler?

Mark: Probably me.

Do any of you trade in the stock market?

Pat: I dabble in the stock market,

and I actually started dabbling with day trading right when we started this job but I’m what they like to call a “bad gambler,” so.

Mark: Yeah, no one’s really a good gambler.

Wes: I’m actually fantastic at betting on golf. I’m up probably $10K over the course of my betting lifetime.

Mark: He’s got, like, a very average IQ, but he’s like Rain Man when it comes to golf.

So, what’s the appeal of prediction markets?

Will: We’re covering politics and

trying to make it relatable to people who generally like to gamble. Our prediction market audience is obviously the Barstool audience.

The fact is that we have a bakedin niche of people at least willing to consider gambling. So when we saw PredictIt, we said, “This is a pretty good match.” And we obviously got into it as well—you have more of a stake in it when you want to play it yourself, and we saw it as a way to relate current events to our audience where they could also play along.

“We were able to get into prediction markets and gamble more like we do on sports, but we have the upside of shorting things or selling our positions if we feel like we’re starting to lose.”

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Pat: The other thing that attracted us to prediction markets is that, again, we’d only dabbled in the stock market and that seemed like such a steep learning curve. We were able to get into prediction markets and gamble more like we do on sports. We have the upside of shorting things or selling our positions if we feel like we’re starting to lose. It’s not just that you win or you lose, which I think is very attractive to us.

Mark: We treat gambling on politics like the news: We like to have fun with it. We’re not running algorithms and spending all hours of all days coming up with spreadsheets on how to bet.

It’s like we treat the news. News is kind of bleak and not fun for most sources. So, we like to give a fun take on the news—have a little fun with it. With PredictIt, we can also do that—spend a little bit of money, but really, it’s enjoyable and we have a little fun with the news with it.

How has the audience responded?

Do you get a lot of feedback?

Mark: We’ve had almost unanimous

positive feedback. Small learning curves, but people love it.

Tough question: Who’s doing the best among you?

Mark: I’d say Pat and myself. I was

doing really, really well— Will: I’m also up this year.

Mark: Will’s a more responsible gambler, which you should be—bet responsibly. Will’s accurate, but he bets with small amounts. I was betting with large amounts and was doing very well, and then recently I’m back down to about average or where I started.

What lessons have you learned that you would pass on to new prediction-market traders?

Mark: Definitely read the rules.

Read all the rules and think ahead as to when the market you’re entering will settle based on the rules. Sometimes you’re going to enter a market that’s not going to settle for a very long time. If you don’t have a lot of money and you want to keep playing, then your money is invested unless you sell at a rate where you might not want to sell. So I would say, once again, read the rules clearly and think about how long it’s going to take for that market to settle. There’s nothing worse than being stuck in a market.

Will: If it looks too good to be true, just like in regular gambling, it usually is. I mean, you’re not smarter than 98% of the market, so don’t trick yourself into

thinking that you are in this case, either.

Pat: Set a gains limit or gains minimum, a daily goal. That’s what I do. I try to make $100 a day. And if I’ve maxed out what I can put into a contract and I make $200 on that, I’m out.

Wes: The biggest mistake I’ve made is panicking. Do not panic. If you get into a market that’s a longer market—like, for example, when Pat and I got into the vice president market with Amy Klobuchar, it was at 8¢. It went down, I panicked, I sold all my stock, and now it’s up to like 30¢. Do not panic.

Any advice on how not to die?

Will: I’ve got a lot of good tips.

“We’re covering politics and trying to make it relatable to people who generally like to gamble.

Our audience is obviously the Barstool audience.”

Here are the ones that I am going with, even though there is soft medical evidence. One is that UV light exposure, masturbation and marijuana are good for you. I mean, the science is loose, but you can connect the dots to say that those could be beneficial. And then, other than that, obviously washing your hands and avoiding people is best.

Mark: The science is loose, Will, but we’re going to give them a few extra case studies, so we’ll see. Our best advice is to lock down, turn up. Donate to charity and make sure that the elderly, mainly, but that everyone stays healthy.

OTHER PREDICTABLY GOOD POLITICAL PODCASTS Truth or Skepticism Tom Sosnoff, entrepreneur, options trader and co-CEO of tastytrade, joins Dylan Ratigan, businessman, author and former host of MSNBC’s The Dylan Ratigan Show, for a weekly podcast covering everything from sports and investing to politics and monetary policy.

One’s an iconoclast, and the other’s a contrarian. Tune in each week find out who is who. It’s unscripted and unpretentious—some like to think of it as rants, but refined.

The Political Trade Hard Factor’s Wes, Mark and Will appeared on Episode #9 of The Political Trade, the only podcast devoted to political freaks and probability geeks seeking fun and profit in political prediction markets. Each week, the podcast interviews elite prediction market traders and political insiders who offer actionable insights on the week’s best predictionmarket trading opportunities.

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THE POLITICAL TRADE

Political Predictions

A pundit with a knack for picking winning trades on Predictit shares his latest best bets

By Derek Phillips

5%+ GDP growth by 2020?

Which party will win the MT Senate race?

Yes

Republican

1¢

3¢

Democratic

No

37¢

56¢

1¢

192K Shares Traded

44¢

3¢

7,241 Shares Traded

Will the U.S. economy hit 5.0%+ GDP growth by year-end 2020?

Which party will win the U.S. Senate election in Montana in 2020?

Buy NO under 35¢ As one trader pointed out, this is essentially betting on the worst recession in American history. Dark as that sounds, this outcome is within the bounds of some of the worstcase scenarios for economic projections. More than that, I’m betting that the economic outlook will continue to be revised lower and lower as the worst of the coronavirus pandemic hits. Most recently, Bank of America scaled back expectations to project GDP contracting by 7%, 30% and 1% in the next three quarters, which leaves only one quarter for recovery. With those projections I am hoping that I can sell in the 70s or 80s and then, perhaps, buy some YES to cheer on an economic comeback for the country.

Buy Republican YES or Democratic NO in the low 50s This bet is more of a hedge against my holds on Democrats having a big election night, including winnig the Senate and White House. If they don’t win both of those, there’s no chance that Steve Bullock can pull it out here, and it will be nice to be able to recoup some of my losses there with a bet against Bullock here. I don’t usually like to throw money away hedging, but there is such a good chance of winning all three bets (Democrats winning the White House and the Senate by way of Arizona, New Hampshire and North Carolina, but not Montana) that this bet seems more than worthwhile.

Who will win the 2020 Alabama Republican Senate primary?

Who’ll win the AL GOP Senate primary?

Tommy Tuberville

79¢

2¢

Jeff Sessions

21¢

1¢

148K Shares Traded

Buy or hold Sessions YES or Tuberville NO in mid 20s I got lucky with my prediction in last month’s issue about Sessions having a decent chance to win the Alabama primary. He’s up about 15¢ off of his low of 10¢ in the immediate aftermath of Trump’s full endorsement of Tommy Tuberville, bolstered by the uncertainty added by the secretary of state’s decision to postpone the primary. I’m holding at this price, betting that the further we get from Trump’s endorsement, the more voters will look for established leadership to help recover from the pandemic, instead of taking a chance on an outsider. I’m still unsure if this will be enough to pull Sessions over the finish line, but I do think the price has plenty of room to improve.

Derek Phillips began trading political futures professionally during the 2016 election, turning $400 into $400,000 in four years. Phillips has appeared in Episodes 5 and 6 of The Political Trade. @dmpfrompi.

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PHOTOGRAPHS: (TUBERVILLE) REUTERS/ USA TODAY NETWORK; (SESSIONS) REUTERS/ELIJAH NOUVELAGE

63¢

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LIQUID ASSETS

Value and Vitality in Good Spirits

A venerable alcohol producer shows the old ways of doing business haven’t gone out of style

By Paul Franke

T

raders might want to consider investing in an old-school Midwestern grain processor and distiller that’s churning out alcohol to fight COVID-19.

Midwest Grain Products (MGPI), also known as MGP Ingredients, is an all-American enterprise with just 340 employees. It began operations in 1941 and now owns plants in Kansas and Indiana, where it produces alcohol, wheat protein and wheat starch that it sells to large food processors, liquor manufacturers and makers of cleaners and sanitizers.

The firm distills “white label” whiskey, bourbon, rye, gin and vodka that 50 other companies buy to bottle and market under their own names. Diageo, the giant London-based liquor manufacturer, is its biggest beverage customer.

MGP describes its wide array of food ingredients as ranging from soft and chewy to crisp and flakey.

Its customers add the company’s protein and starch to end products that include everything from pasta and baked goods to salad dressing and breakfast cereal.

The third generation of MGP’s founding Cray clan maintain that the company still operates on the family values that have sustained the enterprise since the beginning.

Combating the virus MGP was founded to produce alco-

hol for the war effort in World War II, and that legacy is carried on today, the firm’s website says.

These days, the company has ramped up production of industrial alcohol used in hand sanitizers and commercial disinfectants to aid in the nation’s struggle to limit the ravages of the coronavirus that’s running rampant worldwide.

“MGP employees are working around the clock to support the needs of companies that produce these vital products,” the company said in a press release about its contribution to the fight against COVID-19.

Innate conservatism Through good times and bad, MGP

maintains a super-conservative balance sheet, running the business in ways seldom seen these days.

More specifically, the company stockpiles lots of cash, owns plenty of current assets, and carries few debts or liabilities.

Today’s equity market cap of $400 million at a $24 stock price compares favorably to $184 million in cash, receivables and inventory, plus $138 million in plant and equipment, against just $91 million in total liabilities like debt and accounts payable held at the end of 2019.

MGP generated nearly $50 million in cash flow (after subtracting a build in alcohol inventories) and $38 million in profits on $362 million in

MGP IN 2019 $50 million in cash flow $38 million in profits $362 million in revenue

MGP, a grain processor and distiller, maintains headquarters in Atchison, Kan., above, and also operates a plant in Lawrenceburg, Ind.

MGP posts $1 million in sales and $100,000 in net profit per employee. Not many companies achieve that. may 2020 | luckbox

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2019 revenues. Try to find another boring food processing business consistently returning 10% a year in net profit margins. The giant processor and commodities trader Archer Daniels Midland (ADM), for instance, is lucky to hit 5% in a strong year.

More good news The stock is a fallen angel. Dropping from an overvalued and overhyped growth valuationof $96 a share in 2018, all the way down to a crazy low price on operations today, it may be time to take a closer look.

The excuse for the sharp 2018-20 stock decline was entry into a new market, including the overproduction of its own aged whiskey that didn’t sell as expected. The usual formula for success has been alcohol production under contract for larger spirits makers like Diageo.

Insiders own 25% of the company, and directors and management receive some pay in the form of regular stock awards. Forty-two purchases

against no share sales were reported to the Securities and Exchange Commission over the last 12 months.

On top of that, the massive 76% price slide since 2018 has been accomplished largely on the back of a targeted short-selling scheme.

Some 2.6 million shares, 24% of the float, was still short MGP during the exchange report on March 13.

However, overall company profitability has remained stubbornly high. Who doesn’t love a bargain, especially in a stable and conservative 80-year-old food company, selling at a projected 12 times “depressed” earnings by Wall Street analysts during the 2020 recession?

The numbers add up How many other businesses create $1 million in sales and $100,000 in net profit per employee? Not many.

Take the $0.48 annual dividend to the bank each year, easily covered by earnings, for a 2% yield. The incoming CEO, who’s scheduled to ascend to the post this summer, could

double or triple the dividend payout and still have plenty of cash flow to reinvest in accretive capital projects if the company chooses to do so.

Better days look to be coming for MGP shareholders. The first technical move above its 14-day moving average of price, around $26 at this writing, may indicate a turnaround is underway. A short squeeze could auickly ramp the stock another $10 or $20 a share later this year.

A bottom in the U.S. stock market should encourage value investors to get more excited about the company. And a little inflation in food prices from the Federal Reserve printing money, which began in March, should heighten results during 2021.

A price target of $40-$50 a share in 12-18 months seems reasonable if the company is valued like its peers.

Paul Franke has been writing about his trading adventures for 30 years. At the time of this writing he held a long position in MGPI. Find his Bottom-Fishing Club columns on Seeking Alpha.

MGP maintains a super-conservative balance sheet, running the business just like in the old days.

Is your fav whiske orite y from MGP? M the bo aybe. Flip tt look fo le over and r“ Lawren Distilled in ceburg , IN.”

BEHIND THE BRANDS Quite a bit of marketing goes on behind the scenes in the “craft” distillery industry. The fact is that many of the popular craft whiskey brands buy some of their spirits from MGP. Brands rely upon MGP when they need inventory while their own spirits are barrel-aging, or to blend or finish. Often, brands simply bottle MGP whiskey to market as their own “craft” brand.

MGP offers clients five different bourbons and three different rye mashbills—the specific blends of corn, rye or wheat, and malted barley grains. The distillers differentiate the base liquid through their proprietary barrel selection, finish, subsequent aging period, filtration process and source of water added when reducing from barrel strength before bottling. These variables create the unique flavor and character noted by discriminating whiskey drinkers.

MGP provides the spirits to dozens of distillers—many of whom produce exceptional spirits. These three deserve special attention.

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High West Double Rye! A blend of MGP’s 2-year-old 95% rye and 16-year-old 53% rye. A rich and creamy texture with a cinnamon and anise finish. $30

Belle Meade Cognac Cask Bourbon Six- to 9-year-old MGP bourbons blended and then finished in XO cognac French Limousin Oak casks. A fruity bourbon, offset with cinnamon and cigar notes. $69

WhistlePig Old World Rye A 12-year-old MGP 95% rye finished with a combination of port, sauternes and madeira casks. Sweet, dark fruits with a dark chocolate finish— exquisite. $115

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SANITATION DUTY

What goes down …

Midwest Grain Products’ stock has trended downward, while competitors’ stock remained relatively flat. But sound business practices should help bring MGP back up in price.

MGP was founded in 1941 to produce industrial alcohol for World War II. Like many distillers, it also has sold industrial alcohol made from the waste products of its primary production. Some of that output has been a longtime ingredient of sanitizers. The COVID-19 pandemic has increased demand.

Work from home and quarantining has resulted in an increase in year-over-year offpremise (store) sales of more than 25%. But, on-premise (bar and restaurant) revenues have plummeted, forcing producers to divert to producing alcohol for disinfects, following recipes provided by the federal government.

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MGPI MA(50) MA(200) MA(14)

80 70 60 50 40 30

Mar 2019

May 2019

Jul 2019

Sep 2019

Nov 2019

Jan 2020

20

Mar 2020

Ways to get long MGP Ingredients (MGPI) Investors can use this table as a guide to analyze the risk of trading strategies for stock in a conservative company that appears likely to go up in price.

Long Stock

Long Call

Short Put (Selling Naked Puts)

Short Put Spread

About 50/50.

Always less than 50%.

Always higher than 50% and often 60%+.

Short puts have some of the highest probabilities of success. The costs are roughly 1/4 the costs of buying the stock outright, and the probability of making money can be up to 80%.

Can be quite high and 60%+. But it depends on how much premium is made and the spread.

Capital Required (in a margin account)

High: 1/2 the stock price.

Depends on the costs of the calls. The margin is the costs.

Roughly 25% of the stock price.

Spread of the short and long put and then subtract the premium made.

Risk

High: The full price paid.

Your risk is the amount paid for the call.

Right now, it will be expensive because volatility is high and costs are high.

The risk is nearly always less than owning the stock outright. That’s because the option premium made by selling the put lowers the overall costs of using the strategy.

The most that can be lost is the size of the spread minus the amount received from the short put.

Analysis

Great strategy and a foundation of many popular options strategies. Consider selling calls against the stock, thus making it a covered call approach.

That will increase the probability of success.

Please don’t get sucked into buying calls. Resist the urge. It rarely works, especially in periods of high-volatility like the one occurring now, where the the option is so expensive that the price where the stock must land by expiration is extremely high. This makes profitability extremely difficult. IF YOU MUST USE THIS STRATEGY, consider buying a call in-the-money so that the extrinsic value paid is small.

The more bullish one feels, the closer to “atthe-money” the strike should be. Those who are “extremely” bullish might consider going one or two strikes in-the-money when they sell the put. For a higher probability strategy, consider going further out-of-the-money… the drawdown to that higher-probability trade is investors may end up making less money if the stock sees a quick move up.

Selling short puts is one of the most popular ways of making money using options.

This is also an extremely popular strategy. Sell the put, but this time buy a put slightly below to limit the potential loss.

Limited loss and profit.

Example Trade

Buy the stock. Sell a call at the next strike above the current price of the stock.

Avoid.

Short the first put that is below the market.

This is a great strategy, but avoid it since you might end up losing too much of the spread.

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LIQUID ASSETS

Drink and Be Happy Based on the potential benefits of proper hydration, such as reduced bladder cancer risk, how many cups of water should people drink every day?

BLUE ZONES BEVERAGE RULES

GETTING WATER RIGHT

Drink coffee for breakfast, tea in the afternoon, red wine at 5 p.m. and water all day. Never drink soda, including diet soda.

With very few exceptions, people in Blue Zones drink water, coffee, tea and wine. Period. (Soda pop, which accounts for about half of America’s sugar intake, was unknown to most Blue Zone centenarians.) There’s a strong rationale for each.

The often-stated “drink eight glasses of water per day” has very little scientific evidence behind it. Many of the quoted amounts come from studies backed by the bottled water industry. According to Dr. Michael Greger, founder of nutritionfacts. org, the “drink eight glasses of water per day” recommendation has been traced back to a 1921 paper where the author measured his own urine and sweat and determined people lose about 3.4% of their weight each day, which comes out to about eight cups.

So, for the longest time, the water guidelines for humanity were based on just one person. But now evidence indicates that not drinking enough water can be associated with falls and fractures, heatstroke, heart disease, kidney disease, constipation and other negative results.

But generally, it’s healthier people who exercise who drink a lot of water, so who’s to say that people are getting sick because they drink less water versus that they drink less water because they’re sick? Greger adds that no one is going to pay for studies that can answer exactly how much water a person should drink per day because water can’t be patented—so who’s going to pay for the studies? People will have to rely on our own research as individuals to figure it out.

Coffee Sardinians, Ikarians and Nicoyans all drink copious amounts of coffee.

Research indicates coffee drinking may lower rates of dementia and Parkinson’s disease.

Tea People in all of the Blue Zones drink tea. Okinawans nurse green tea all day long—and green tea has been shown to lower the risk of heart disease and several cancers.

Red Wine People who drink—in moderation—

tend to outlive those who don’t.

(That doesn’t mean people should start drinking if they don’t drink now.) Residents of most Blue Zones drink one to three glasses of red wine per day, often with a meal and with friends. Wine helps the system absorb plant-based antioxidants, so it complements a Blue Zones diet. These benefits may come from resveratrol, an antioxidant specific to red wine. But it may also be that a little alcohol at the end of the day reduces stress, which is good for overall health. In any case, more than two to three glasses a day for women and men, respectively, show adverse health effects. For women, the risk of breast cancer increases with less than one drink per day.

Water Adventists explicitly recommend seven glasses of water daily. They point to studies that show that being amply hydrated facilitates blood flow and lessens the chance of a blood clot.

Source: Dan Buettner, The Blue Zones Solution

“Water is the driving force of all nature.”

—Leonardo da Vinci

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HOW MUCH WATER SHOULD YOU BE DRINKING EVERY DAY?

PHOTOGRAPH: (BRADY) SKY CINEMA / SHUTTERSTOCK.COM

Experts say …

About 8-11 cups a day for women and 10-15 cups for men.

People do get water from other sources. Some comes from food and other beverages, such as tea and coffee. So for actual cups of water, it’s more like 4-7 for women and 6-11 for men.

Certain guidelines advise drinking six to eight 8-ounce glasses daily. More individualized instructions suggest drinking 0.5 ounces of water per pound of body weight each day. According to the latter recommendation, someone weighing 140 pounds should drink 70 ounces of water per day.

But, Tom Brady says …

According to his 2017 book, The TB12 Method, Tom Brady drinks 150 ounces (4.4 liters) of water “on a given day” and “close to twice that”—amounting to about 2.3 gallons (8.7 liters), or 37 glasses—when he exercises.

Experts agree that Tom Brady drinks too much water.

This is all part of Brady’s daily nutrition regimen for what he calls “sustained peak performance.” And for readers who would like to hydrate the way he does, he recommends the following: “Drink at least one-half of your body weight in ounces of water every day … ideally, you’ll drink more than that, and with added electrolytes, too.”

Source: livescience.com

Luckbox says …

Drink when thirsty and chug until it feels like enough. However, in rare cases, drinking an extreme amount in a short time can be dangerous. It can cause the level of salt, or sodium, in the blood to drop too low. That’s a condition called hyponatremia. It’s serious and can be fatal. Some refer to it as water intoxication.

HOW MUCH WATER IS TOO MUCH? The kidneys of a healthy adult can flush out 20 to 28 liters of water each day, but they can only get rid of about 1 liter each hour. That makes it difficult for the kidneys to keep up when someone drinks more than 1 liter per hour.

Source: Healthline.com

Drinking too much water causes: 1. Frequent urination 2. Clear urine (it should be light yellow) 3. Cramps 4. Fatigue 5. Swollen hands and feet 6. Headaches 7. Forcing oneself to drink when not thirsty Source: bustle.com

How much water should you drink?

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THE NORMAL DEVIATE

Testing Vaccines and Trading Strategies Yes, active investment strategy has a lot in common with testing vaccines

By Tom Preston

A

s though real-life were imitating a medical drama, COVID19 is providing a glimpse into vaccine development. Testing a vaccine is perhaps the most important step in the process of making it available to the public.

First, researchers don’t want to make someone sick from the test itself. Second, they want it to be effective in preventing people from getting the virus. It’s that second part where it gets interesting, at least from a probability standpoint.

COVID-19 vaccine testing, just one example of the hundreds of thousands of drug and therapy trials in a year, relies on what’s known in the statistics world as hypothesis testing, and the theory behind it has been shown to be sound.

It’s helped create drugs that have extended and enhanced lives for 100 years. But don’t be alarmed that no pharmaceutical gives perfect results.

Most of the time, they work as advertised, but sometimes they don’t. The goal is to keep that difference between predicted results and actual results

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small. The smaller the difference, the more confident patients feel.

Beginning with “null” Statistical hypothesis testing, whether in medicine or finance, starts with what’s called a “null hypothesis.” For a vaccine, the null hypothesis might be “the vaccine makes no difference in whether the people in the test got COVID-19 or not.” The scientists’ goal is to show that the null hypothesis is not true.

In other words, they want to show that the vaccine did prevent people in the test from getting COVID-19 within a certain statistically “significant” level, known as the p-value. The p-value quantifies the confidence in the results of the study, indicating the probability that the results that show the vaccine works are valid, as opposed to occurring by chance.

The idea behind the p-value is that if a drug had no effect at all, the data showing that it did have an effect is far out on the edges of the statistical distribution, indicating a low probability it would occur. That’s why the

Statistical hypothesis testing, whether in medicine or finance, starts with attempting to disprove a “null hypothesis.”

lower a study’s p-value (for example: .05 p-value is lower than .10 p-value, and .01 p-value is lower than .05 p-value), the more confident one can be that the drug will have the effect intended by the pharmaceuticals company. That means that with a small p-value, if 1,000 people took the vacine and did not contract COVID-19, and in reality the vaccine didn’t protect them at all, then those 1,000 people are the human versions of black swans. A numbers guy has to take that vaccine.

That said, two types of errors occur in drug trials to test the hypothesis that the drug works: a false positive, called a Type I error, and a false negative, called a Type II error.

Cataloging the errors A false positive error indicates the null hypothesis that the vaccine doesn’t work is actually true, and that taking the vaccine doesn’t actually protect patients from COVID-19.

A false negative error indicates the null hypothesis is actually false, and means the vaccine doesn’t do any

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good when in reality it does. A Type I false positive error means take the vaccine and then go out into the world and contract the virus. A Type II false negative error pours that valuable vaccine down the drain.

Readers can dig into the details of the statistical methodology and theory of all this, but it’s important to understand the Food and Drug Administration and pharmaceuticals companies accept some error in drugs. Generally, they can reduce Type I errors by choosing small p-values, and they can lessen Type II errors by using bigger sample sizes.

But scientists can’t eliminate all errors. If they insisted upon perfection, doctors would still be using leaches to bleed off excess bile.

Yes, some might not get the benefit of taking the vaccine, but the vast majority does. The human species thrives as a result.

Drowning in stats When it comes to trading and investing, hypothesis testing and p-values can help evaluate strategies. And if they’re good enough for medicine, then they should be good enough for money. Actually, even more so. The reason is that massive amounts of

data is available for studies of finance.

In drug trials, it’s not always possible to test another 1,000 people. But stock, options and futures prices have been recorded for decades. With computers, accessing another 1,000 data points of financial info is trivial.

When the research team at tastytrade creates studies of trading strategies, the p-values are under .01 and the probability of a Type I or Type II error is negligibly small, largely because of the amount of data used.

That’s why investors can feel confident using that research to inform trading decisions.

Long-term trading success isn’t attributable to luck. Look, any single trade based on any logic might make or lose money. That would be a low p-value, high probability of Type I and Type II error scenario. In a large 1,000-plus sample of high probability, positive theta, high liquidity trades, there will be some losers and there’s a chance, albeit small, that the overall result could be a loss.

But that’s true for any trading or investment theory or strategy. The difference comes with having the numbers on one’s side.

Tom Preston, Luckbox features editor, is the purveyor of all things probability-based.

VACCINE MYTHS What’s true and what’s not

Older adults don’t need vaccines.

People never outgrow the need for a yearly flu vaccine.

Plus, grown-ups need otther vaccines, too, including: The shingles vaccine, which is recommended for adults 60 and older.

The two pneumococcal vaccines, which are recommended for those 65 and older.

Vaccines contain harmful levels of toxins.

Vaccines don’t have many other ingredients besides antigens.

For instance, tiny amounts of formaldehyde and thimerosal (a preservative that contains mercury) can be used to kill the virus when the vaccine’s being made. Aluminum is also sometimes used to help the vaccine work better.

I got all my vaccinations as a child, so I’m finished with shots.

Not so. The immunity provided by vaccinations wanes over time.

I don’t need to get vaccinated against diseases that have been wiped out in the United States.

Get vaccinated to help keep those contagious illnesses out of circulation.

Shots can give people the flu because they contain a live virus.

Most types of flu shots are made with a killed version of the virus.

They cannot give people the flu. Plus, one type of flu vaccine is made without using the flu virus.

Source: WebMD

LONGEVITY FACTS 10 to 15 years of research is usually performed before a vaccine is made available to the general public.

Source: N.Y. State Department of Health

2.5 million The number of deaths prevented by vaccines each year.

In the past 60 years, vaccines helped eradicate one disease (smallpox) and are close to eradicating another (polio).

Fast-tracking a vaccine Vaccinations will prevent more than 21 million hospitalizations and 732,000 deaths among children born in the last 20 years.

Source: CDC

In 2013, black Americans had the highest death rate, with 861 deaths per 100,000 people.

Whites had 731, Native Americans or Alaska Natives had 592, and Asian or Pacific Islanders had 405 —the fewest.

Source: CDC

Gender matters: women live, on average, about five years longer than men. Life expectancy for U.S. women born in 2012 is about 81 years; for men, it’s 76 years.

Source: CDC

In late March, Johnson & Johnson (JNJ) selected a lead vaccine candidate for the coronavirus responsible for COVID-19, and announced it would rapidly create enough manufacturing capacity to deliver over 1 billion doses of it—even though the vaccine won’t be ready for human trials until September, and despite any evidence that the vaccine will work.

If clinical trials succeed, the company thinks the vaccine could be ready for emergency use early in 2021—an unprecedentedly short timeline made possible by the FDA’s eagerness to combat the COVID-19 pandemic.

Source: dosomething.org

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BIG NEWS! A NEW EXCHANGE IS FINALLY HERE. The Small Exchange is opening for business. It’s time to trade products that are efficient like futures and simple like stocks.

Learn more about our products.

thesmallexchange.com

Š 2020 Small Exchange, Inc. All rights reserved. Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information presented here is for illustrative purposes only, and is not intended to serve as investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Trading in derivatives and other financial instruments involves risk.

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WELLNESS

Breathe Right

The proper breathing technique can calm the mind, relax the body & improve decision-making

By Lissette Caballero

T

he coronavirus turmoil isn’t conducive to staying mentally present, and the body responds negatively to the resulting stress, triggering the “fight-or-flight” response. It produces shock waves of epinephrine and other hormones that stimulate the production of inflammation through the system.

Fight-or-flight reduces the blood flow to the brain, immune system and digestive tract. Then it revs up blood flow into the limbs and skin.

Now that’s great when there’s a need to lift a car to rescue a baby.

But the response isn’t great if it’s caused by pandemics or market fluctuations. Even a mild fight-orflight response might prevent keeping a level mind and thus interfere with making the right choices in important situations. In addition, a stress-induced state also weak-

ens the body in the fight against the seasonal cold or flu, not to mention the dreaded coronavirus.

What if a yogic technique could help a practitioner call the shots with the fight-or-flight response? What if, over time, that same technique helped one become calmer and more connected with the internal self and thus able to choose responses as opposed to simply reacting.

In yoga, a technique called Ujjayi breathing, pronounced “Oo-jah-ee,” does all of that and more. To practice the technique, breath slowly and deeply, slightly contracting the throat. It makes the breath sound like the ocean. Readers who have taken a yoga class may recognize Ujjayi breathing. It’s one of the key components of producing the feeling of calm that results from a yoga class.

Here’s how it works. In the neck,

just below the jaw, two small organs called the carotid sinuses are situated on either side of the main artery that supplies blood to the brain. The carotid sinuses are baroreceptors that detect any rise or fall in blood pressure. Then they signal the brain to rectify the situation. Ujjayi breathing applies a slight pressure to those sinuses in the neck, causing them to signal the brain that high blood pressure has been detected. The body responds by regulating the heartbeat and returning the blood pressure to normal. It’s a pretty cool tool for keeping calm in hot situations.

To perform Ujjayi breathing, stand or sit up tall with good posture. Close the mouth and breathe in and out only through the nose. Start to slow down and elongate the breath. Practice that for one or two breath cycles. Draw the breath lower into the chest cavity.

Now that the breathing is calm, allow it to make a slight Darth Vader sound in the back of the throat. But remember to keep the mouth closed.

When inhalations and exhalations have a consistent low bass sound, like an air mattress deflating, that’s successful Ujjayi breathing.

When should someone do these exercises and how often? Traditionally, they’re conducted in the morning. To get started, review the technique videos (see the THYNG icon on this page). Then tomorrow, upon awakening, sit up in bed and take 10 deep breaths with the Ujjayi technique. Observe the feeling of the practice. Notice any benefits that arise. Feel calmed, centered and ready to start the day.

And know that it’s just the beginning. Yoga offers many different pranayama breathing techniques that can have a vast array of benefits.

In this system the ancient Rishis— as accomplished and enlightened practitioners were known—developed and shared techniques for optimal health and energetic connection. What’s usually seen in the West is only a small part of what yoga can offer.

Lissette Caballero teaches pilates, yoga and breathwork in Miami. @yogitraveladdict

Live and breathe.

TIP TO REDUCE ANXIETY On the way into a meeting, presentation or other stressful situation, pause for a moment and take three Ujjayi breaths.

Allow enough time for complete breaths.

Count the breaths, feeling the drop in blood pressure and noting the improvement in attitude. Then proceed confidently into the engagement.

To learn more, check out the book A Systematic Course in the Ancient Tantric Techniques of Yoga and Kriya by Swami Saraswati Stayanand.

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TRADER

DRAYE DENSMORE

1

2

Home Houston

3

Age 25 Years trading 4 How did you start trading?

I’ve always been passionate about the markets and had a strong desire to learn how to trade them. I’ve read many books, watched a ton of tastytrade videos and attended various seminars and conferences to educate myself about the world of finance. Once getting a solid base for the market, I then met my current mentor a few years later: hedge fund manager O’Brian Woods. He’s taught me how to trade options and the various strategies to do this, which have now allowed me to trade options exclusively.

Favorite trading strategy for what you trade most?

I mainly trade strangles, credit spreads and iron condors. The products I typically trade are the indexes and futures, such as the SPX, RUT, /ES, /RTY and SPY. I prefer to stay around the 5-10 delta and 30 days to expiration with my trades, sometimes going over to around 45 days and other times slightly less than 30 days.

Average number of trades per day? 3 What percentage of your outcomes do you attribute to luck?

I don’t necessarily attribute any of my outcomes to luck. I think more along the lines of I know unexpected events are going to

46

5

4

happen that affect the market; it’s how you manage your trades to adjust to these events that determines the quality of trader you are. Every time you place a trade you can go off of the delta and determine your chance of success, yet you must do this knowing the delta can change drastically at any moment and it’s your responsibility to react. Some trades will be easier to manage than others, but the market is too complex and affected by too many variables for me to attribute any of my trades to luck.

Favorite trading moment or best trade and why?

My favorite trading moment was when I put my first iron condor on the SPX and watched for hours as it expired out-of-the-money. From then I was hooked. I couldn’t stop trading and had to do it every day.

I’ll never forget that moment as I’d wanted to trade and understand

options my whole life, and I was finally able to do so, which gave me a sense of gratification.

Understanding this gave me great confidence to put on trades I’d always wanted to but never quite knew how to do.

1. Put spread on the SPX index 2. Option chain of the SPY 3. Trading assistant, Bacon 4. Real estate award and medal for being one of the top producers in his office 5. Options trading books

FAVORITE TRADING BOOK

Worst trading moment?

During the wake of the coronavirus pandemic on a Friday at 2:45 when the market was about to close and the S&P 500 shot up 120 in 15 minutes, blowing through my call spread and giving me a max loss.

It was tough to handle initially as it happened so fast I barely had time to react or manage the trade.

I recovered by simply going back to the basics of trading smaller and more often instead of larger and less often. I do believe going through this made me a better trader and allowed me to realize how important discipline is in being a successful trader.

REMINISCENCES OF A STOCK OPERATOR

by Edwin Lefévre $23.86 (Amazon) hardcover (592 pages)

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CALENDAR

PHOTOGRAPHS: (DERBY) USA TODAY NETWORK VIA REUTERS; (NICKS) REUTERS/MIKE SEGAR

SELL IN MAY AND GO AWAY Mark the trading week of May 11-15 on the calendar as a potential real-life representation of the adage “sell in May and go away.” From an astrological perspective, it could bring a significant peak for the stock market as three planets connected to money and the economy all turn retrograde in motion and become a drag.

Indeed, the planetary connections to the natal horoscope of the S&P 500 indicate the last chance for a significant high until after the presidential election in November.

The stock market could be especially sensitive to the double whammy of Venus and Jupiter retrograde together from May 13 through June 25.

In March/April 2017, the last time the overlapping retrograde occurred, the S&P 500 lost 3%; in January/February 2014, it was 6%.

Susan Abbott Gidel, author of Trading In Sync With Commodities—Introducing Astrology To Your Financial Toolbox, also edits Red Letter Trading Days, a monthly newsletter. @susangsays

MAY

2 That’s What She Said* postponed Nashville, TN 2 Rock and Roll Hall of Fame Induction Ceremony postponed to November Cleveland

2 Kentucky Derby postponed to Sept. 5 Louisville, KY

4 Met Gala 2020

postponed indefinitely New York City

5 Indiana Democratic primary postponed to June

5–6 Facebook’s F8 conference in-person component canceled San Jose, CA 10 Mother’s Day Holiday

12–23 Cannes Film Festival canceled, pending Cannes, France

Cancellations and Postponements Because of the outbreak of COVID-19, many events scheduled for the month of May have been canceled, postponed or made virtual. In some examples that didn’t make the calendar, The Rolling Stones have indefinitely postponed a North America tour, and cancelations include the 24th annual Webby Awards, the 65th edition of the Eurovision Song Contest and the Google I/O developer conference.

Microsoft Build Microsoft Build, an annual developer conference scheduled for May 19-21 in Seattle, is going digital on the same dates. Build—often used to showcase changes to Microsoft products and services, such as Windows and Office— will reportedly reveal details about dual-screen plans and Windows 10X.

National Lucky Penny Day 16–17 Exploding Kittens’ “Burning Cat” convention postponed to 2021 Portland, OR 19 Kentucky Democratic primary postponed to June 1 9–21 Microsoft Build Digital event

23 National Lucky Penny Day

24 Indy 500 postponed to Aug. 23 Indianapolis Inductee Stevie Nicks performs during the 2019 Rock and Roll Hall of Fame induction ceremony

2019 Kentucky Derby

24 The French Open

postponed until Sept. 20 Paris *For more information visit tastytrade (events)

It’s easy to walk past a penny lying in the gutter. Odds are— especially in the past few months—the risks that come with picking up strangers’ lost change outweigh the onecent benefits. But on National Lucky Penny Day, all bets are off.

The holiday is simple: You see a penny, you pick it up, and you’re supposed to have good luck all day. Superstition?

Sure. But for anyone who’s lucky, taking the time to pick up some misplaced copper could be worth its weight in gold. After all, there’s always a chance that the penny could be a 1944-S Lincoln Steel Penny, valued at $373,750. And who wouldn’t want to be the new owner of a 1943-D Lincoln Bronze Cent, carrying with it a $1,700,000 valuation?

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trades actionable trading ideas

CHERRY PICKS

R I PE & J U I CY T RADE IDEAS

Two Ways Back In

Sign up for free cherry picks and market insights at info.tastytrade. com/cherrypicks

By Michael Rechenthin

erhaps some traders are looking to “tiptoe” back into the market and make some cautious purchases.

Anyone seeking lower-volatility assets could consider two exchange-traded fund (ETF) sectors: Consumer Staples (XLP) and Healthcare (XLV). Both currently have lower volatility than the S&P 500.

The options market’s volatility—a statistical measure based on an option’s price—is ranked for ETFs in “Volatility take” (right).

The greater the costs of the options, the greater the expected move of the ETF; while a cheaper option has only a small expectation of price movement. Hence XLP and XLV have “cheap” options, while Industrials (XLI) and Energy (XLE) have “expensive” options and therefore have a high expected movement.

Now, take a look at the movement of each of these indexes in the current market and in previous market declines. (See “Look to the past, right.”) In each one, Consumer Staples and Healthcare have been among the lowest-declining stocks.

It’s no surprise that sectors that decline less also tend to have lower volatility What isn’t known is how much the market will decline.

So, any “tiptoeing” back into the markets would ideally be in slightly safer securities.

P

Volatility take The greater the costs of the options, the greater the expected move of the exchange-traded fund.

Volatility (IV)

Price

0.40

$55

The options market suggests these sectors will see *less* volatility than the S&P 500.

Consumer Staples (XLP)

0.45

$87

Healthcare (XLV)

0.46

$247

S&P 500 (SPY)

0.53

$52

Utilities (XLU)

0.54

$77

Tech (XLK)

0.57

$92

Consumer Discretionary (XLY)

0.57

$42

Materials (XLB)

0.62

$64

Real Estate (IYR)

0.67

$20

Financials (XLF)

0.69

$56

Industrials (XLI)

0.87

$30

Energy (XLE)

The options market suggests these sectors will see *higher* volatility than the S&P 500.

The options market suggests these sectors will see *MUCH higher* volatility than the S&P 500.

Look to the past Sectors that decline less also tend to have lower volatility, but by how much?

JUL 1999– OCT 2002

OCT 2007– MAR 2009

APR 2010– JUL 2010

APR 2011– OCT 2011

SEP 2018– DEC 2018

FEB 2020– APR 2020

Industrials (XLI)

-40%

-63%

-18%

-27%

-24%

-33%

Consumer Staples (XLP)

-22%

-31%

-9%

-7%

-11%

-14%

Materials (XLB)

-37%

-58%

-20%

-30%

-22%

-30%

Utilities (XLU)

-51%

-45%

-8%

-1%

-2%

-26%

Financials (XLF)

-29%

-82%

-19%

-31%

-23%

-37%

Two Trade Ideas

S&P 500 (SPY)

-45%

-56%

-16%

-19%

-20%

-27%

XLP Covered Call

XLV Covered Call

Consumer Discretionary (XLY)

-29%

-58%

-19%

-17%

-22%

-30%

Buy 100 shares of XLP and sell 1 call 5 above the current price using the expiration that is 1 month away

Buy 100 shares of XLV and sell 1 call 5 above the current price using the expiration that is 1 month away

Healthcare (XLV)

-14%

-40%

-11%

-13%

-14%

-17%

Energy (XLE)

-30%

-49%

-20%

-30%

-28%

-46%

Tech (XLK)

-74%

-52%

-16%

-14%

-23%

-25%

n/a

-72%

-14%

-22%

-12%

-35%

Real Estate (IYR)

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THE TECHNICIAN

A V E T E RA N T RA D ER TAC K LES T EC HNICALS

Nine Health Stock Trades

By Tim Knight

early one-fifth of the nation’s economy is dedicated to health care and, at this writing, the sector’s stock prices are caught up in the wild market fluctuations spawned by the rapid spread of the novel coronavirus. So, for a long-range look at the performance of some prominent health-related companies, Luckbox is disregarding recent trends. With that in mind, nine publicly traded firms fall into three categories based on historical performance.

N

Rock-solid rock stars The most consistent performers of the group make traders yearn for a time machine because even a relatively modest investment has, over the long haul, grown into a substantial sum.

UnitedHealth Group (UNH) has been one of the strongest and most consistent equities in the entire U.S. market for the past several decades. The trendline anchored at the start point of 1990 has never been broken, and even with the strong selling of early 2020, the prices were never even close to threatening a failure of this uptrend. There are times, such as 20082010, when the price gave back some prior gains, but those were soon replaced by subsequent gains.

Safer bet ResMed’s stock may seem boring, but boring in a good way.

Safest bet Johnson & Johnson’s stock has been cyclical over the long haul.

Safe bet United Healthcare has been strong and consistent for decades.

Over the long haul, an investment in any of the best-performing stocks in the health care sector has grown into a substantial sum.

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ResMed (RMD) has an incredibly boring chart, but in a good way. This is the kind of “one decision” stock that delights long-term holders because it has increased in price literally thousands of percentage points and also because it has done so without any severe reduction in price along the way. The price trend has been unbroken since 1995, and it seems to be in little danger of breaking in the foreseeable future.

Johnson & Johnson (JNJ) has been a rather cyclic stock over the long haul. Generally, the stock has been in an uptrend for decades, but it has been doing so within the confines of a price channel. From 1973 and 1998, the stock was quite high relative to its channel, but present price levels are relatively low (even though the price itself, in absolute terms, is three times higher). Should this channel remain unbroken, it suggests the stock is at a relatively good price.

Merck (MRK) common stock has two principal features. First, a trendline that’s been in place since about 1977 and, in spite of multiple bear markets over the past half century, it has never been broken. The other is two lengthy periods of consolidation in price, each followed by a powerful new ascent. The first consolidation occurred between 1973 and 1984; the second was between 2000 and 2015. Since then, the stock increased in price another 100%.

Solid breakouts The next group features strong performers, but they tend to have periods of consolidation and sink into “the doldrums” before resuming their ascent. Unlike the prior group, which tends to muscle its way higher fairly consistently, these next stocks tend to be either running sideways or pushing higher.

For instance, from 1994 until 2008, Gilead (GILD) was in a steady uptrend, riding along with the strong bull markets of the late 1990s and the years before the financial crisis—even though the bear market of 2000-2002 had little negative effect on the stock.

This steady uptrend gave way to formation of a saucer pattern between 2008 and 2012. The drop in the stock’s price from peak to trough was substantial, a value of approximately 50%, but once the saucer was complete the stock quintupled in price.

More recently, a similar saucer, albeit not quite as lengthy, has been in formation. An “escape” from the peak of this saucer would suggest the beginning of another leg to the longterm uptrend of this security.

Follow the profits Merck’s trendline hasn’t broken in half a century.

Pattern watching An “escape” from this peak pattern suggests another leg to Gilead’s uptrend.

Steadiest bet Eli Lilly has been one of the strongest, steadiest performers of the last half century.

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Eli Lilly (LLY) has been one of the strongest, steadiest performers in the market for half a century. Over this long timespan, the stock has formed three massive saucer patterns, each followed by a prolonged ascent in price. The horizontal lines denote the top of each saucer pattern, and the diagonal line shows the steady uptrend that has been in place since the end of the financial crisis.

Sickly breakdowns These stocks, in spite of periods of impressive performance, are currently looking vulnerable.

Alexion Pharmaceuticals (ALXN) has a fascinating price history. Its price was erratic between 1998 and 2002, but it became a superbly strong performer from 2002 until 2014, hardly dipping at all in those dozen years.

However, in retrospect, it appears that from 2013 to early 2020, a broad range of between $100 and $200 was formed, culminating in a massive reversal pattern. This topping pattern completed in February 2020, and the massive amount of overhead supplies makes it unlikely the stock will return to the triple digits soon.

Boston Scientific Corp. (BSX) has had three massive uptrends since the early 1990s and two equally large downtrends. Over the past couple of years, a substantial reversal pattern has formed and completed, similar to the one it sported during the 2007 market peak. If the behavior following the recent topping pattern mimics that of the one 13 years prior, the descent in price may be massive.

In spite of being a very strong long-term stock, Pfizer (PFE) is in a precarious position at the moment. As illustrated by the reversal pattern from the late 1990s until about 2004, the stock is prone to its own form of bear market, which historically has proven it can shave more than half the price off shares. The ascent from 2009 until 2018 appears to have terminated, giving way to a reversal pattern.

As Luckbox goes to press, the planet is in the throes of the worldwide COVID-19 pandemic, and markets suffered their fastest, most terrible crash in financial history. In spite of this, many of these equities held up astonishingly well, which can be interpreted as a testament to their long-term corporate health.

Alexion Pharmaceutical changes course It’s unlikely this stock will return to the triple digits for years to come.

Boston Scientific needs a change in trend If this stock follows the recent topping pattern, the descent in price may be massive.

Pfizer is protecting its place In spite of a reputation as a strong long-term stock, Pfizer is in a precarious position.

Tim Knight has been using technical analysis to trade the markets for 30 years. He hosts Trading the Close daily on the tastytrade network and offers free access to his charting platform at slopecharts.com.

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DO DILIGENCE

T H E QU I E T FOU N DAT IO N HELPS P ROACT IV E INV ESTO RS U NDERSTAND TH EI R PORTFOLI OS

Healthy ETFs

By James Blakeway

he risks and rewards that investors face when making investment decisions often can lead to more volatility than expected. This concept applies to the biotechnology sector, where the U.S. Food & Drug Administration’s approval can determine a company’s profits and, by extension, its stock price.

Investors who bet on the right biotech horse can reap huge returns, while the less-lucky can see sharp losses. A recent example arose with Inovio Pharmaceuticals (INO), which received a grant to develop a vaccine for COVID-19. Investors bid up the stock from under $4 to $18 in eight days. Invio traded back below $6 two days later.

Even the larger biotech firms are often susceptible to excessive volatility. Take Gilead Sciences (GILD) for example. Gilead, a component

T

of the S&P 500 Index, ranks by all measures as a large corporation with stable income. Despite that, Gilead shares consistently exhibit higher volatility than the overall S&P 500 Index and many of its components.

That volatility has made Gilead a famous (or infamous) trading vehicle for active stock and options traders.

Investors may think that sticking with blue chip pharmaceutical names like UnitedHealth Group (UNH) and Johnson & Johnson (JNJ) reduces pharma-volatility thanks to size and diverse product offerings. In many ways it does, and both companies are components of the S&P 500 and the Dow Jones Industrial Average and exhibit far lower volatility than Gilead or Inovio. However, UnitedHealth and Johnson & Johnson can exhibit excessive moves from stock-specific news. Johnson & Johnson weath-

ered some rough days in the last few years when it faced large-scale lawsuits by plaintiffs who alleged its products caused mesothelioma.

So, regardless of size or product diversity, all of these firms open investors up to stock-specific risk.

While acquisitions and restructuring occur in any industry, healthcare has seen multiple examples in the past decade. It meant investors purchased stock in a particular firm and wound up owning a piece of a completely different entity.

As an extreme example, consider shares of Baxter Inc. (BAX). Baxter investors in 2015 saw their stock split into two as the company separated itself into Baxter and Baxalta (BXLT). One year later, Shire (SHPG) purchased Baxalta outright, so investors held Baxter and Shire shares. Fast forward to 2018 when Takeda (TAK) purchased Shire.

Conservative investors should stick with general healthcare ETFs, while younger or more aggressive investors may be tempted by biotech ETFs.

Get the ETF Exchange-traded funds offer exposure to the broader healthcare and biotechnology industries.

ETF

Symbol

Price

Dividend Yield

Expense Ratio

Number of Stocks Held

2010-2019 Return

Liquid Options Traded?

Vanguard Health Care Index Fund

VHT

$159.17

2.06%

0.10%

388

304%

No

Health Care Select Sector SPDR Fund

XLV

$86.85

2.38%

0.13%

60

284%

Yes

SPDR S&P Biotech

XBI

$68.33

0.00%

0.35%

123

439%

Yes

iShares Nasdaq Biotechnology

IBB

$101.30

0.18%

0.47%

214

345%

Yes

S&P 500 (Benchmark)

SPY

$254.19

1.90%

0.09%

500

247%

Yes

Data as of 3/17/2020

Past performance is no guarantee of future results. Information provided in an EPI Report does not consider the specific profile, objectives or circumstances of any particular investor or suggest any specific course of action.

Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her investment professional. Investment suitability must be independently determined for each individual investor. QF does not make suitability determinations or investment recommendations for investors. EPI utilizes the S&P 500 as its benchmark given that the S&P 500 is considered a barometer of stock performance in the United States. Aspects of the analysis and information found in an EPI Report are based upon simulated and/or hypothetical performance. Simulated and hypothetical performance have inherent limitations and do not represent the actual performance results of any particular investment products. The EPI Report does not guarantee any results or outcomes in the financial markets. Investors should be aware of the methodology used to produce an EPI Report and the inherent limitations when placing reliance on the results. For additional information about EPI Reports, visit the QF website: quietfoundation.com.

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trades

So, investors who bought Baxter stock at the turn of the decade were left with half of their Baxter shares, the new Takeda shares, two rounds of potentially taxable cash and probably a headache.

Typically, investors can limit volatility in long-term positions by diversifying their risk, and the same logic applies to healthcare stocks. Investors who own a basket of biotech and pharmaceutical companies experience lower exposure to large moves in single stocks. The healthcare sector is well represented in the exchange-traded fund (ETF) industry with many choices available.

ETFs offer exposure to the broader healthcare industry and also in biotechnology. (See “Get the ETF,” p. 54.)

The Vanguard Healthcare Index Fund (VHT) and Health Care Select Sector SPDR Fund (XLV) both focus on the broader healthcare industry. Both own many of the same stocks in their top holdings, with Johnson & Johnson and UnitedHealth as the largest holdings in each ETF. Other top stocks in both ETFs include Pfizer (PFE), Merck & Co. (MRK) and Bristol-Meyers Squibb (BMY).

Likewise, the two Biotech ETFs, iShares NASDAQ Biotechnology Index (IBB) and SPDR S&P Biotech (XBI), have similar portfolios. Each has Gilead in their top holdings, and others include Biogen (BIIB), Regeneron Pharmaceuticals (REGN) and Vertex Pharmaceuticals (VRTX).

The broader healthcare ETFs and the biotech ETFs outgrew the S&P 500 over the last decade.

(See “Outgrowing the alternative,” above right.)

What’s more compelling is the comparison between biotech and broad healthcare. Both biotech ETFs outgrew XLV and VHT, but they did so with more volatility.

This means the biotech stocks, even as a basket in an ETF, exhibit higher volatility then a basket of broad

Outgrowing the alternative The broader healthcare ETFs and the biotech ETFs outgrew the S&P 500 over the last decade.

500%

400%

VHT XLV IBB

XBI SPY

300%

200%

100%

Percent return 2010–2019

0% 2010

2011

2012

healthcare stocks.

Investors can use a calculated beta value to compare all four healthcare ETFs to the S&P 500. The beta measures the magnitude of the moves in each ETF compared with the index. A beta value above 1.0 means the ETF experiences larger price fluctuations compared with the index, and a beta value below 1.0 means the ETF experiences a smaller price fluctuation than the index.

Unsurprisingly, both biotech ETFs exhibited betas above 1.0.

XBI averaged a 1.5 beta in 2019, while iShares NASDAQ Biotechnology Index had an average 1.2 beta.

Vanguard Health Care ETF and Health Care SPDR actually exhibited betas below 1.0 in 2019, both approximately 0.9.

The more blue-chip nature of the general healthcare stocks is also apparent in dividends paid by Vanguard Health Care ETF and Health Care SPDR. SPDR S&P

2013

2014

2015

2016

2017

Biotech pays no dividend currently, and the dividend yield of iShares Nasdaq Biotechnology Index is below 0.2%, indicating very fewer biotech stocks are paying dividends than other firms in the healthcare sector.

Taken together, these metrics indicate healthcare stocks offer choices regardless of an investor’s risk profile. The more conservative could stick with the general healthcare ETFs, while younger or more aggressive investors may be tempted by the biotech ETFs. Those willing to accept more risk to seek big potential rewards can move into single stocks and the options traded on the stocks or ETFs. Regardless of product or strategy, investors should, as always, do their due diligence.

James Blakeway serves as CEO of Quiet Foundation, a data science-driven subsidiary of tastytrade that provides fee-free investment analysis services for self-directed investors. @jamesblakeway

2018

2019

Even larger biotech firms are susceptible to excessive volatility, and product diversity won’t always save them.

Evaluate any portfolio with Quiet Foundation.

may 2020 | luckbox

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BECOME A MARKET MASTER!

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tactics

Mana volatilit ging y the CO during VID-1 crisis 9

essential trading strategies

Courte sy Center of the Learn at tasty trade

BASIC

Recovery Calls for Covered Calls The fast and furious COVID-19 downturn provides the perfect prelude for this options strategy

By Michael Rechenthin

W

hat made the 2020 COVID-19 market downturn unusual wasn’t the magnitude—the markets have been down more than 30% before. Instead, it was the speed. The plunge occurred in two months, while previous declines have occurred over several months or even more than a year. (See “Crash timeline,” right.)

To play any recovery in the S&P 500, consider the information found in “Handling the crisis” (below, right).

The E-mini S&P 500 futures (/ES) might be too large for many accounts—a 200-point move in the S&P 500 Index equates to a $10,000 move in the futures. Micro E-mini S&P 500 futures (/MES) are the /ES’s little brother, at 1/10th the size, and move a respectable $1,000 per 200 points, but the lack of options makes it less of a deal for covered call writers.

Instead, consider 100 shares of SPY along with a covered call approach. Not only are prices at a discount, but fear has created opportunity in the options, thus making the covered call a theoretically advantageous strategy.

For example, at the beginning of the year, a covered call would protect the writer only 1% or 2% to the downside over the course of one month. Today, with volatility far outside the norm—and likely to stay outside for several months—the covered call strategy works especially well. A few months ago, an out-of-themoney call could be sold for $200, but as this is written they are selling for $1,200, raising the possibility of an increased cash flow.

Crash timeline Stocks fell more quickly in the 2020 COVID-19 market downturn than in previous crashes.

Crash

Magnitude and time of the decline

Time to recover

1980

28% loss, over 21 months

2 years

1987

32% loss, over 3 months

2 years

2000

35% loss, over 3 years

5 years

2008

47% loss, over 17 months

4 years

2012

18% loss, over 1 month

5 months

2020

30%+ loss, over 2 months

TBD

With volatility far outside the norm, the covered call strategy makes perfect sense.

Handling the crisis Wild volatility appears likely to prevail in the S&P 500 for some time. Stay prepared.

3400 3200 3000 2800 2600 2400 2200 Apr 2018

Jul 2018

Oct 2018

Jan 2019

Apr 2019

July 2019

Oct 2019

Jan 2020

Michael Rechenthin, Ph.D., aka “Dr. Data,” is the head of data science at tastytrade. @mrecenthin

may 2020 | luckbox

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tactics

INTERMEDIATE

Calling on Commodities Just when investors need diversification in the most volatile markets ever, traditional equity products are failing as hedges and diversification tools

By Michael Gough

W

ith the coronavirus sweeping the globe, equity markets are careening from highs to lows and back again with more volatility than ever before. During the last three years the average daily move in the S&P 500 was around 1%, but it’s jumped to more than 3% since the start of 2020.

The wild swings can feel unsettling, but traders can cushion the shock by constructing a diversified portfolio where healthy increases in one product offset dizzying down moves in another.

For many, diversification involves buying stocks from different sectors.

A portfolio of technology, financial and industrial companies, for example, offers more resilience than just owning stock in Apple (AAPL).

But when volatility increases, even portfolios with stocks from every sector feel the pain. Consider “No reprieve” (right), which depicts the percentage change in popular sector exchange-traded funds (ETFs) from January 2019 until present. While most of the time these products move independently, they all experienced a similar decline when the broad equity market took a hit in late February.

From early February to the time of this writing, the worst-performing ETF, Energy Select Sector SPDR (XLE), was down 50%, while the best-performing ETF, Consumer Staples Sector SPDR (XLP), was down 20%. A portfolio of stocks from several sectors hardly offered a reprieve from the equity market decline.

To diversify a portfolio in a vola-

58

tile market, investors might want to consider opening their product mix to include commodities. While stock sectors afford decent diversification under normal market conditions, their correlations converge to one when volatility increases.

The chart in “Keep it rolling” (p. 59), shows the three-month rolling correlation between the S&P 500 Exchange-Traded Fund SPY and the utilities sector ETF Utilities SPDR (XLU). Through most of 2019 and in early 2020, the utilities ETF exhibited a correlation with SPY of between -0.25 and 0.50.

That means it moved largely independent of the broad equity market.

However, just as volatility spiked in February, so too did the correlation.

A product that traditionally moved independent of the market and offered great diversification was now moving nearly point for point with SPY. Just when an investor needs diversification most, the hedging relationship failed.

Commodities, such as gold, bonds, oil, foreign exchange and agricultural products, afford more robust diversification that tends to hold up in choppy markets. For the most

Volatility products explained.

No reprieve Popular sector exchange-traded funds declined significantly from January 2019 through early April

60%

40%

20%

0%

-20%

-40%

XLK XLP

XLU XLV

XLY XLI

XLB XLF

XRT XLE

-60% Jan 2019

Mar 2019

May 2019

Jul 2019

Sep 2019

Nov 2019

Jan 2020

Mar 2020

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direct exposure to commodities, investors can use futures contracts.

Several ETFs that track these markets serve as decent replacements. During the sell-off depicted in “No reprieve� (p. 58), commodity markets moved largely independent of equities. Some traded higher, some lower and others remained unchanged.

Commodities can insulate traders from market volatility during all market scenarios. Two of the most useful for robust diversification are gold and bonds. Today, the threemonth correlation between gold and the S&P 500 is 0.04, while the correlation between bonds and the S&P 500 is -0.60.

That suggests gold moves largely independent of the stock market and bonds move inversely, making them great products to complement an equity portfolio. More

2005-tactics-intermediate.indd 59

Keep it rolling The three-month rolling correlation between the S&P 500 Exchange Traded Fund SPY and the utilities sector Utilities SPDR (XLU) amounted to a failure to hedge.

0.75 0.50 0.25 0.00 -0.25 May 2019

Jul 2019

important, these correlations remain consistent and have done so for the last several years.

For additional ways to diversify, consider incorporating a variety of trading strategies, including futures

Sep 2019

Nov 2019

Jan 2020

Mar 2020

calendars, option spreads and pairs trades.

Michael Gough enjoys retail trading and writing code. He works in business and product development at the Small Exchange.

4/13/20 12:31 PM

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tactics

ADVANCED

How This Sell-Off Stacks Up Stocks declined in value more quickly this year than ever before

By Anton Kulikov

V

olatility had been slowly declining in the markets for the last 11 years, but then the coronavirus-fueled downturn of 2020 struck like a bolt of lightning. Here is some perspective.

Generally, sell-offs in the equity markets cause volatility to increase because markets tend to go up more slowly than they go down.

In other words, the velocity of equity market moves is faster to the downside than the upside, and those rapid down moves translate into higher volatility.

Because the S&P 500 moved roughly 30% to the downside in the four weeks before this was written, the question arises of how quickly volatility expanded. And how does this sell-off compare with previous ones?

A lull is defined as any period when VIX is below 18.5. The expansion period starts when VIX goes above 18.5. The contraction period starts at the recent peak, where the expansion

period ends, and ends when VIX goes below 18.5. (See “VIX check,” below.)

On average, the expansion period lasts the shortest, followed by the contraction period and the lull period—where volatility does nothing—which lasts the longest.

The sell-off at the end of February 2020 caused volatility to expand for 17 days.

So how severe was this sell-off compared to history’s other famous declines? Let’s take a look at “Comparing sell-offs,” (below).

The speed of the 2020 sell-off, meaning the time it took the market to fall a certain percentage, is faster than any sell-off in

history. That’s indicated in the graph because the 2020 sell-off has a steeper descent than any other sell-off.

That could be why volatility in the market has expanded to 2008 levels. The market is down only 30% from the 2020 highs, compared with a decline of roughly 50% at the bottom in 2009, but the severity of the sell-off is much more intense in 2020. The severity of sell-offs—not just the downward movement in the market—leads volatility higher.

Anton Kulikov is a trader, data scientist and research analyst at tastytrade. @antonkulikov97

VIX check On average, a volatility expansion is the shortest period, followed by the contraction and the lull.

VIX State

Lull

Expansion

Contraction

Average Number of Trading Days

42

12

17

Comparing sell-offs The broader market fell more quickly from January until the beginning of April than in previous sell-offs.

The Great Depression 1938 Recession Black Monday Dot-com Bubble 2008 Recession COVID-19 Selloff

C U M U L AT I V E P E R C E N T LO S S

0

-20

-40

-60

-80 0

100

200

300 N U M B E R O F DAYS

400

500

600

Data as of March 20, 2020

At press time, the market’s down 30% from its high— compared with a decline of 50% in 2009—but the severity of the sell-off is much more intense this time around. may 2020 | luckbox

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CHEAT SHEET

Volatility: Best Friend or Worst Enemy?

The VIX quantifies risk and fear: Check it to take the pulse of the market

By Mike Hart and Anton Kulikov

T

he VIX measures implied volatility, making it one of the most important metrics in options trading. It’s determined by the current price of options traded in the market. When volatility climbs higher, option prices are high.

When volatility dips lower, options prices also go low.

Many strategies relate to the level of VIX but, most important, it tells traders how they might expect to see the market move over time.

When VIX goes high, the market is predicting a lot of movement.

But when it’s low, it means just the opposite.

Volatility expands when the market changes. Typically, this move is a move in price. When the price of the market goes down, the

volatility goes up. When the price goes higher, traders see a decrease in volatility.

Some attribute a particular nugget of wisdom to an anonymous trader, who once supposedly said: “When the market is going up, no one is afraid because everyone is making money. When it goes down, though, everyone gets scared.”

Think of VIX as a quantified measurement of risk and fear.

That means traders can check the heartbeat of the market by observing where it is currently trading.

They can tell if it’s a period of fear or relative calm. Knowing that, they can adjust their risk to match market conditions or trade the fear itself.

Volatility can feel like a best

VIX is the one-year expected move in SPX.

friend or worst enemy. This flowchart should help get the message out about this most important metric. Memorize the chart to be a step ahead of most traders.

Anton Kulikov is a trader, data scientist and research analyst at tastytrade.

Mike Hart is a former floor trader at the Chicago Stock Exchange and a proprietary futures trader, specializes in energy markets and interest rates. He’s a member of the tastytrade research team.

Active Invest or Aler Follow t! @m on Twit ikehart79 ter for daily trading ideas & tactics .

VIX is based off of the 30 DTE, at–the-money options.

days to expiration

Four things to know about the VIX The VIX is negatively correlated to the market.

The average VIX level since 1990 is 18.5.

may 2020 | luckbox

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LUCKBOX OF THE MONTH

ERRANT BURR Burr, as chair of the Senate Intelligence Committee, is a full-fledged member of the “gang of eight”—the eight congressional leaders that the executive branch briefs on classified and sensitive intelligence matters.

And the tale gets another twist.

Burr’s stock sales included up to $350,000 in hospitality and travel-dependent stocks, all of which were hit particularly hard by pandemic travel bans and orders for social distancing.

Burr has since self-reported to the Senate Ethics Committee to review his stock sales. He acknowledged the sales came about because of the coronavirus but maintains he relied solely on public news reports from CNBC to inform his decisions.

It’s not the place of Luckbox magazine to say whether Burr is innocent or guilty of violating the STOCK Act but, in either case, he’s still a resounding luckbox.

If innocent, Burr caught perhaps the luckiest break anyone could have in the financial markets, dodging the brunt of the coronacrisis fallout in assets exposed to the worst of the market’s downturns.

If guilty, it’s unlikely much will happen as a result. Only one member of Congress, former Rep. Chris Collins, who represented a district in and around Buffalo, N.Y., has ever been charged with insider trading

U.S. Sen. Richard Burr, R-N.C., shown here in September 2019, has some explaining to do.

since the STOCK Act was enacted.

Collins pleaded guilty and received a 26-month prison sentence and a $200,000 fine this past January.

But Burr maintains his innocence, and proving otherwise could require a massive—and likely fruitless— undertaking. At press time, prediction market traders on predictit.org gave Burr a 94% likelihood of staying in office through May 1.

And while it might seem uncouth to suggest anyone is lucky because of the deadly coronavirus, the widespread news coverage of the once in a hundred years pandemic has pushed Burr’s controversy below fold.

Burr was lucky enough to win election to the Senate. Saving his net worth from being brutalized by the coronacrisis and likely not having to answer for the suspicious nature of his trades has made him May’s Luckbox of the Month.

One lucky bunch “As prominent participants in the government decision-making process, U.S. senators are likely to have knowledge of forthcoming government actions before the information becomes public. That could provide them with an informational advantage over other investors. We test for abnormal returns from the common stock investments of members of the U.S. Senate ... the large difference in the returns of stocks bought and sold (nearly one percentage point per month) is economically large and reliably positive.”

Source: Abnormal Returns from the Common Stock Investments of the U.S. Senate, Journal of Financial and Quantitative Analysis, 2004

64

50% of North Carolinian voters think Burr should resign 24% think he should remain in office 69% say his stock sales give them “very serious” concerns Source: publicpolicypolling.com

Take the reader survey. We may publish your comments!

The last major study of senators’ investment returns reveal they outperformed the S&P 500 by an average of 11.6% per year, over a five-year period.

PHOTOGRAPH: REUTERS/JONATHAN ERNST

W

hen the Stop Trading on Congressional Knowledge Act, or STOCK Act, was passed in 2012, it came as a surprise to many that up until that point insider trading among members of Congress was technically legal.

The framers of the act, which received broad bipartisan support, sought not only to stop employees of Congress from profiting from nonpublic information, but also to increase transparency by calling for detailed financial disclosures. The bill passed the Senate by a 96-3 vote.

Notably, among the three holdouts, and the only one still serving as a member of the Senate, is North Carolina Republican Sen. Richard Burr, who afterward defended his opposing vote by saying the act was “ludicrous” and “political theater.”

Burr, who since 2015 has served as chairman of the Senate Intelligence Committee, dumped somewhere between $628,000 and $1.72 million in stock, representing the bulk of his net worth, in 33 transactions on Feb. 13. The selloff came shortly before the markets took a brutal beating because of increasing concern about the impending COVID-19 pandemic. Great timing for Burr’s portfolio, but his trades— and the circumstances surrounding them—raised eyebrows.

luckbox | may 2020

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