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  • CEFL's Closed-End Funds' Discounts To Book Value Defy Logic  [View article]
    YYY is an ETF that uses the same CEF index, so using YYY tax statement is a shortcut to see how much is ROC- This is the classification of YYY's distribution from its end-of-year statement:
    Investment Income (2,960,452)
    Capital Gains (80,164)
    Return of Capital (2,063,048)
    Total Dividends and Distributions to Shareholders (5,103,664)
    Unless my math is wrong, 40.42% of the dividend was ROC.
    Sep 28, 2015. 06:20 PM | Likes Like |Link to Comment
  • ETN Showdown: Fed Chair Janet Yellen To MORL's Rescue  [View article]
    I probably phrased it badly. I used the un-levered ETF MORT, which as a fund must provide a tax statement on the nature of its distributions, as a shortcut to find ROC from the index components. For example, it is easy to find that a lot of YYY's distribution was ROC from its end-of-year statement:
    Investment Income (2,960,452)
    Capital Gains (80,164)
    Return of Capital (2,063,048)
    Total Dividends and Distributions to Shareholders (5,103,664), so you know that ROC will also be a drain on total return to the leveraged note, CEFL, that tracks the same index.
    But I cannot find evidence of the un-levered ETF MORT showing ROC on its tax statement http://tinyurl.com/o5x.... I found evidence in REM (which underperforms MORT), but that fund uses a slightly different index...
    I am not a fan of ROC, which is just getting your own money back now to reduce future returns, especially since it is taxed as interest if channeled through the ETN. So, if somebody claims to have found return of capital in the components of MORL's underlying index (I plugged in index components manually before deciding, "ain't nobody got time for that"), then I would be interested in his findings.
    Sep 27, 2015. 08:01 PM | 1 Like Like |Link to Comment
  • ETN Showdown: Fed Chair Janet Yellen To MORL's Rescue  [View article]
    "If ROC is part of your justification then that is between you and you." CEFL's amount of ROC (via the underlying index components) has been calculated, but where can I find the figures for how much of MORL's underlying index's distribution is return of capital? I checked the character of distributions page for MORT, the un-levered version, here http://tinyurl.com/nrn... and see no return of capital.
    Return of capital, which is abnormal for a REIT, would be damaging to returns- can you link to where you found ROC in MORL?
    Sep 27, 2015. 01:26 PM | 1 Like Like |Link to Comment
  • ETN Showdown: Fed Chair Janet Yellen To MORL's Rescue  [View article]
    Vassk, best comment all week. I had done that exact -5% to account for volatility (except assuming that I hold it to the maturity date) and I repeat it whenever I get tense about the red on the screen.
    Sep 27, 2015. 01:08 PM | 1 Like Like |Link to Comment
  • Build Your Own Leveraged ETF (ETRACS Edition)  [View article]
    Love your stuff! I would remind potential investors, even though many people have already commented on it, that there is decay in CEFL, because the underlying CEFs in the index have some return of capital, which lowers the NAV of the index, which is what the distributions are calculated from. Indicative value and eventually distributions therefore slowly but inexorably decline over time. Check the distributions of YYY, the unlevered twin, to see how distributions decline, and plug the index components into CEFconnect to see their NAV drop since inception... If one bought CEFL cheaply enough, say $14.44, then it will not matter.
    Also, the newer ETNs were introduced during all-time market highs with all-time interest rates lows. That means that a new ETN might be doomed to drop at twice market (assuming we are not at the start of another multi-year bull run), then get hurt yet again if rates go up.
    Volatility is your friend, sort of a scary buy-one, get-one-free sale.
    Sep 25, 2015. 07:24 PM | 1 Like Like |Link to Comment
  • BDCL Still Attractive With A 20.8% Yield  [View article]
    My bad, I don't know why I wrote "half" instead of "quarter." Still, if 23% of a 23% distribution is ROC, then you are really getting an 18% distribution, and since subsequent distributions are based on the NAV of the index, future distributions will decline. According to UBS, 2014 distributions for CEFL were $4.7447, but 2015 annualizes out to $3.9833. If you go to YYY to see a year farther back, you see a continuous decline from there, as well http://bit.ly/1KH8D7j.
    From http://seekingalpha.co..., "Of the projected September CEFL 2015 dividend of $0.2829, $0.0638 is a return of capital. This represents about a quarter if the monthly dividend."
    Some of that ROC is a non-destructive form from options, but it still causes a decline in net asset value for half of the index components. Plug the individual components into CEFconnect and look at the NAV chart *since inception.*
    A quick & dirty way to see it for a shorter, less clear period is to look at NAV of the un-leveraged ETF, YYY. http://bit.ly/1KH8D7l The only two times its NAV rose were during the rebound from the interest rate flip, and the rebound from the 2013 interest rate market change. But it's still enough to see that NAV has declined since inception.
    Sep 25, 2015. 11:30 AM | Likes Like |Link to Comment
  • Bored With The Diversity And 2X Leverage Of MORL? Does Buying MORL On Margin (4X) Leave You Feeling Flat? Meet The Red Bull Of Income Portfolios Or The $150,000 Portfolio That Generates 72.68% - 83.68% ROI.  [View instapost]
    911 Turbo S, 911 GT3 RS. You can drive them to the grocery store or the vacation rental- total sleepers compared to a McLaren.
    Sep 23, 2015. 12:51 PM | Likes Like |Link to Comment
  • Bored With The Diversity And 2X Leverage Of MORL? Does Buying MORL On Margin (4X) Leave You Feeling Flat? Meet The Red Bull Of Income Portfolios Or The $150,000 Portfolio That Generates 72.68% - 83.68% ROI.  [View instapost]
    Haha, one would hope... but I've seen concerning questions asked in comments before!
    Sep 23, 2015. 12:48 PM | Likes Like |Link to Comment
  • Bored With The Diversity And 2X Leverage Of MORL? Does Buying MORL On Margin (4X) Leave You Feeling Flat? Meet The Red Bull Of Income Portfolios Or The $150,000 Portfolio That Generates 72.68% - 83.68% ROI.  [View instapost]
    This is brilliant, but people should remember to not treat this as a buy & hold strategy. Margin calls are still a danger, since margin requirements are often "subject to change."
    Plus, if one of these dropped their dividend, there could be a problem: For example, ARR has negative operating income and cash from operations. (Of course, at this return rate, you'd probably make your money back by the time it tanks, share selling at a share price loss would still be a net profit.)
    Sep 23, 2015. 11:53 AM | Likes Like |Link to Comment
  • ETN Showdown: Fed Chair Janet Yellen To MORL's Rescue  [View article]
    Yellen shirts say it all: http://bit.ly/1KOCOwV
    Sep 23, 2015. 09:32 AM | 1 Like Like |Link to Comment
  • ETN Showdown: Fed Chair Janet Yellen To MORL's Rescue  [View article]
    When I was bursar, the BLS came by (two people, in person, not very efficient) every year to get the tuition stats. I was the only person in their region who gave the real cost with fees included. The number they wanted was tuition, but the biggest % increases at most college are the flat "fees." The real cost of everything is a lot higher than CPI.
    If you factor in non-essentials, like cell phones and frufru coffee, inflation is even higher: http://bit.ly/ZixFZJ.
    Sep 23, 2015. 09:26 AM | 2 Likes Like |Link to Comment
  • ETN Showdown: Fed Chair Janet Yellen To MORL's Rescue  [View article]
    I think BLS goes through a lot of machinations to keep CPI down, since that it what determines SSA colas. The BLS removes outliers, even though we must buy bread & milk, pay rent, etc. Then they do a "revised" inflation number a week later every month. They claim that rent is not high http://bit.ly/1V86jAL, even though http://bloom.bg/1V86iwp, and even though individual home ownership is remarkably low.
    mREITs will not soar unless the worker participation ratio & percentage of full-time workers improve, creating a demand for more residential mortgages, which would creat a demand for retail mortgages, etc... But I'm a buyer if it goes much lower.
    Sep 22, 2015. 03:09 PM | 2 Likes Like |Link to Comment
  • BDCL Still Attractive With A 20.8% Yield  [View article]
    Bert Mariani should have been credited for the change in how projections for distributions are calculated.
    Sep 22, 2015. 10:34 AM | Likes Like |Link to Comment
  • MORL Dividends Decline But The 25% Yield Is Still Compelling  [View article]
    These articles are 90% copy-paste.
    Sep 22, 2015. 10:27 AM | 6 Likes Like |Link to Comment
  • BDCL Still Attractive With A 20.8% Yield  [View article]
    I saw that, too, and it's not the first time it has been said. According to investspy, there is only a 76% correlation between CEFL & SPY, with a maximum drawdown 51% worse for CEFL than SPY.
    Sep 22, 2015. 10:20 AM | 1 Like Like |Link to Comment
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