Thanks for the question, kswep. I will quote from my closing paragraph:
"In closing, I would like to tie together these two tips for comparing ETFs. If you are an investor with, say, a Fidelity brokerage account and are deciding between VWO and EEM, the preferable QDI combined with no commissions on EEM for Fidelity clients will make EEM the cheaper fund. If you are a Vanguard client doing the same comparison, combining EEM's preferable QDI with VWO's no commissions, the scale would still slightly favor VWO from a cost perspective."
While the QDI taxation does reduce the positive benefit from VWO's much lower expense ratio, it does not completely offset it. That's why I noted (in the quote) that VWO still has the edge, especially for Vanguard clients. But for Fidelity clients who dollar-cost average, the $0 commissions on EEM would tip the scale in EEM's favor, offsetting the slight tax advantage of VWO, with a lower cost basis (for EEM).
Seeking Alpha From This High-Yield ETF [View article]
I own 37 individual stocks at this time. If you look through various articles I've written, you'll see many of them mentioned in the disclosures. Here is a selection of some of the tickers: JNJ, LLY, BMY, MRK, FE, PPL, NGG, T, WMT, SYY, CHL, RDS-A, STO, NEM, RTN, SI, and CSCO.
Seeking Alpha From This High-Yield ETF [View article]
Thank you for the kind words, John. I have yet to take a close look at those two funds, so I can't comment on those.
In general, I like funds that pay monthly income, especially in a portfolio that also has quarterly (dividends) or semi-annual (interest from bonds) payouts from the holdings. It helps balance things out.
I don't own any equity ETFs at this time. I do, however, own plenty of individual stocks. I'm not opposed to equity ETFs and have a couple of them on my watch list. For me to actually purchase an equity ETF, I would expect a higher dividend payout than that offered by the S&P 500. Therefore, in general, when I investigate equity ETFs for my watch list, I focus on higher dividend yielding ones.
Seeking Alpha From This High-Yield ETF [View article]
Thanks for the comment, Brad. I looked at PHB in the past and was tempted to purchase it. It's one of those funds that I will take a hard look at during the next recession when corporate bond spreads widen across the board.
You are correct about the yield being lower because of the higher allocation to higher rated bonds. PHB is much more heavily concentrated with BB and higher rated bonds than HYG, JNK, and HYLD.
Avoid These Bonds And Do This Instead [View article]
Hi Gratian,
One thing to keep in mind regarding two year CDs is that if you try to sell those prior to maturity, there is a good chance you will be selling them at slight discounts to par. And depending on the discount, it could negate much of the reason you went with them in the first place. Just something to keep in mind.
But if you plan to hold to maturity, 1.10% is certainly better than other two year yields. Given the Fed's intention to remain on hold until well into 2015, a two year CD is in some respects similar to a T-Bill (though not as liquid).
Apple Options Are The Most Attractive Play For Investors Now [View article]
Hi Brian,
I see the numbers you are referencing under Key Statistics, and they are incorrect. I've also seen errors from Yahoo Finance on other key data points across a bunch of different companies. In general, I would assume Yahoo Finance is in the ballpark on most of the data it presents. Regarding the moving averages, it is better to find their levels through the charting functionality Yahoo provides.
Avoid These Bonds And Do This Instead [View article]
Hi Diver Dave,
What I meant by the statement you quoted is that investors who are nervous about rates heading higher would have focused their attention on shorter-term bonds instead of longer-term bonds. The article then goes on to point out that those investors who are interested in parking cash in shorter-term corporate bonds (because they are nervous about rates heading higher), should instead look at CDs due to the higher yields.
Apple Options Are The Most Attractive Play For Investors Now [View article]
An FYI for readers: I submitted this article for publication with the title, "Stay Away From Apple's Stock For Now." The point of the article is to highlight that Apple is trading in no man's land and that investors should not be putting new money to work at this time.
Despite the title that was ultimately given to the article, I do not believe Apple options are an attractive play for anyone other than institutional money managers who are buying dips in Apple's stock because they are hoping to play catch up to the broader indices in Q4.
That is a very good question. Pages 23 and 24 of EEM's prospectus should be helpful. Here is the link to the prospectus: http://bit.ly/SY2ixW
In terms of VWO, I looked through the "Summary Prospectus," the "Statutory Prospectus" and the SAI and only found this regarding non-U.S. investors on page B-18 of the SAI:
"Tax Matters — Tax Considerations for Non-U.S. Investors. U.S. withholding and estate taxes may apply to any investments made by non-U.S. investors in Vanguard funds."
Don't Rush To Sell Stocks At These Levels [View article]
Congrats on the Editors’ Pick, Ted.
I’d like to remind readers that in my article (linked to above), I presented a table outlining various percentages for pullbacks (not just 40% as mentioned above). The possibilities in the table were 10%, 15%, 20%, 25%, 30%, 35%, and 40%. I also stated the following:
“Even if you don't believe a 50%-plus sell-off is in our future during the next bear market in U.S. stocks, spend some time thinking about what you project a realistic sell-off will be during the next bear market or pullback. Then, in the table below, find the sell-off you would realistically project during the next bear market or pullback. Match this to the corresponding level on the S&P 500 at which the sell-off could begin in order to bring the index down to today's level of 1,416 at some point in the future.”
I also mentioned the following:
“I'm sure there are investors who prefer not to play the game of trying to guess whether the market will trade at or below today's levels at some point in the future. For those investors, I offer a second reason why there is no rush to buy at today's prices. It has to do with put options.”
I then went on to discuss the role that selling deep in-the-money puts can play in buying you time. Being open to selling deep in-the-money puts buys you time if you aren’t sure whether getting long today is a good idea. By keeping in your back pocket the possibility of selling deep in-the-money puts at some point in the future, you allow yourself the possibility of still getting long at today’s price levels, at some point in the future, even if the market has risen in the meantime.
Don't Rush To Buy Stocks At These Levels [View article]
I agree, Frank. I wouldn't sell puts at this time. As I mentioned in the EFA example, "Rather than selling the puts at these levels, simply watch that put option's bid price." For the purpose of this article, selling deep in-the-money puts was described as a "time buying" strategy. It's a strategy that should be kept in your back pocket so that if the market continues higher and you realize you should have gotten long at lower levels (at today's levels for example), you can use the premium from deep in-the-money puts to still get you long at today's prices (despite the fact that the market rose higher from here). By being open to selling deep in-the-money puts, you allow yourself the opportunity to get long at today's prices at some point in the future, if you decide you should have gotten long previously.
To summarize with a quote from the article: "The goal of this strategy would be to buy yourself as much time as possible before getting long at today's prices." The article does not advocate selling puts at these levels.
2 Helpful Tips For Comparing ETFs [View article]
"In closing, I would like to tie together these two tips for comparing ETFs. If you are an investor with, say, a Fidelity brokerage account and are deciding between VWO and EEM, the preferable QDI combined with no commissions on EEM for Fidelity clients will make EEM the cheaper fund. If you are a Vanguard client doing the same comparison, combining EEM's preferable QDI with VWO's no commissions, the scale would still slightly favor VWO from a cost perspective."
While the QDI taxation does reduce the positive benefit from VWO's much lower expense ratio, it does not completely offset it. That's why I noted (in the quote) that VWO still has the edge, especially for Vanguard clients. But for Fidelity clients who dollar-cost average, the $0 commissions on EEM would tip the scale in EEM's favor, offsetting the slight tax advantage of VWO, with a lower cost basis (for EEM).
Regards,
TFL
Seeking Alpha From This High-Yield ETF [View article]
Question 2: The turnover in 2011 was 74%.
Regards,
TFL
Seeking Alpha From This High-Yield ETF [View article]
Regards,
TFL
Seeking Alpha From This High-Yield ETF [View article]
In general, I like funds that pay monthly income, especially in a portfolio that also has quarterly (dividends) or semi-annual (interest from bonds) payouts from the holdings. It helps balance things out.
I don't own any equity ETFs at this time. I do, however, own plenty of individual stocks. I'm not opposed to equity ETFs and have a couple of them on my watch list. For me to actually purchase an equity ETF, I would expect a higher dividend payout than that offered by the S&P 500. Therefore, in general, when I investigate equity ETFs for my watch list, I focus on higher dividend yielding ones.
Thanks again for the comment.
TFL
Seeking Alpha From This High-Yield ETF [View article]
You are correct about the yield being lower because of the higher allocation to higher rated bonds. PHB is much more heavily concentrated with BB and higher rated bonds than HYG, JNK, and HYLD.
Regards,
TFL
Avoid These Bonds And Do This Instead [View article]
One thing to keep in mind regarding two year CDs is that if you try to sell those prior to maturity, there is a good chance you will be selling them at slight discounts to par. And depending on the discount, it could negate much of the reason you went with them in the first place. Just something to keep in mind.
But if you plan to hold to maturity, 1.10% is certainly better than other two year yields. Given the Fed's intention to remain on hold until well into 2015, a two year CD is in some respects similar to a T-Bill (though not as liquid).
Regards,
TFL
Apple Options Are The Most Attractive Play For Investors Now [View article]
I see the numbers you are referencing under Key Statistics, and they are incorrect. I've also seen errors from Yahoo Finance on other key data points across a bunch of different companies. In general, I would assume Yahoo Finance is in the ballpark on most of the data it presents. Regarding the moving averages, it is better to find their levels through the charting functionality Yahoo provides.
Regards,
TFL
Avoid These Bonds And Do This Instead [View article]
What I meant by the statement you quoted is that investors who are nervous about rates heading higher would have focused their attention on shorter-term bonds instead of longer-term bonds. The article then goes on to point out that those investors who are interested in parking cash in shorter-term corporate bonds (because they are nervous about rates heading higher), should instead look at CDs due to the higher yields.
Regards,
TFL
Apple Options Are The Most Attractive Play For Investors Now [View article]
Did you perhaps type in a different number than 200 as the data point?
Regards,
TFL
Apple Options Are The Most Attractive Play For Investors Now [View article]
Despite the title that was ultimately given to the article, I do not believe Apple options are an attractive play for anyone other than institutional money managers who are buying dips in Apple's stock because they are hoping to play catch up to the broader indices in Q4.
2 Helpful Tips For Comparing ETFs [View article]
In terms of VWO, I looked through the "Summary Prospectus," the "Statutory Prospectus" and the SAI and only found this regarding non-U.S. investors on page B-18 of the SAI:
"Tax Matters — Tax Considerations for Non-U.S. Investors. U.S. withholding and estate taxes may apply to any investments made by non-U.S. investors in Vanguard funds."
Regards,
TFL
Take A Look At These 4% To 8% Yielders [View article]
Don't Rush To Sell Stocks At These Levels [View article]
I’d like to remind readers that in my article (linked to above), I presented a table outlining various percentages for pullbacks (not just 40% as mentioned above). The possibilities in the table were 10%, 15%, 20%, 25%, 30%, 35%, and 40%. I also stated the following:
“Even if you don't believe a 50%-plus sell-off is in our future during the next bear market in U.S. stocks, spend some time thinking about what you project a realistic sell-off will be during the next bear market or pullback. Then, in the table below, find the sell-off you would realistically project during the next bear market or pullback. Match this to the corresponding level on the S&P 500 at which the sell-off could begin in order to bring the index down to today's level of 1,416 at some point in the future.”
I also mentioned the following:
“I'm sure there are investors who prefer not to play the game of trying to guess whether the market will trade at or below today's levels at some point in the future. For those investors, I offer a second reason why there is no rush to buy at today's prices. It has to do with put options.”
I then went on to discuss the role that selling deep in-the-money puts can play in buying you time. Being open to selling deep in-the-money puts buys you time if you aren’t sure whether getting long today is a good idea. By keeping in your back pocket the possibility of selling deep in-the-money puts at some point in the future, you allow yourself the possibility of still getting long at today’s price levels, at some point in the future, even if the market has risen in the meantime.
I hope this helps clear things up.
Regards,
TFL
Don't Rush To Buy Stocks At These Levels [View article]
To summarize with a quote from the article: "The goal of this strategy would be to buy yourself as much time as possible before getting long at today's prices." The article does not advocate selling puts at these levels.
Regards,
TFL
Don't Rush To Buy Stocks At These Levels [View article]
http://bit.ly/P9WWdl