To The Moon

The S&P 500 index fund,  SPY $SPDR S&P 500 ETF Trust(SPY)$ , has celebrated a year of flatness, with a closing price of 415.50 on May 2nd, 2023, the same as it was on the same day in 2022. While this might seem like a lackluster performance, it's important to note that the stock market has been tumultuous over the past 18 months, with many investors seeing significant losses.

For those who are uncertain about which stocks to invest in, the highly recommended SPY ETF might seem like a safe option. However, the only gains these investors would have seen over the past year are the small dividends that were distributed. This leads to a debate that happens regularly between investors and traders: should you hold onto your investments for the long term, or trade in and out of the market to try and capture short-term gains?

Those who advocate for trading might point to the potential gains that could have been made by trading SPY with options over the past year. By using the Wheel Strategy, which involves selling put options to eventually get assigned the underlying shares and then selling covered call options on those shares, one could have made much more than the small dividends earned by simply investing in SPY. Looking at the technical chart, one could have easily done four wheels or more in the past year.

Of course, there's no guarantee that this approach will work in the future, and the stock market has been mirroring the stagnation of the economy. But if the market turns around and the bull takes charge, those who have held onto their investments for the long term will likely see significant gains. The question is, when will the bear retreat and when will the bull take charge? Only time will tell.

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