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  • The Center Of Gravity For Retirees [View article]
    yep-Income wins, value fluctuates. The real story is getting retirees over the value is everything marketing trap.
    Mar 31, 2015. 03:13 AM | Likes Like |Link to Comment
  • The Center Of Gravity For Retirees [View article]
    Please what would Rockefeller or the billionaires have paid for a modern Hyndai equipped with a cell phone?- can't say can ya because there is no comparing what we buy now. We live in a different world, in some ways better, in some ways worse- but the "value " of it-compared to the past- LOL. Pure opinion. Monet is fluid like water, not solid like dirt. It flows and moves. Would be of little use if it did not.

    You did hit on the salient point, a portfolio for most retirees has to have real cash flow to buy real things. "Value" crap is just that. Give me flow all day long, as a man retired already 15 years.

    Retirees need to know they have been sold a bill of goods if value is there only concentration. Maybe if you are truly so rich, you never need the real Income generated from your investments and want to keep the dynasty going.

    The Income is the deal. Income does not mean just highest yield, it also means ability to grow and keep on coming. Betting retirement on "value" is Wall St marketing. Obsessing over value is WHAT drives volatility and no one eats value. Income matters, opinions on value do not. Volatility does not change earnings and payout %. It is an easy tool to scare old people to say they have "lost money" on a down price day, or gained money on an up. Pure fairy dust, that just drives fees for advisers to "manage the volatility" of people stampeding around and playing the buy low sell hi game, and oh goody we get trading fees. Only one loser-people that sell because price goes down. They lose the real Div, Interest, Distribution INCOME.

    Get a yield high enough to supplement your Income from many things and sectors, with DGR higher than inflation and just stop looking at value, it does not effect the Income. Watch earnings once a quarter and learn to give up on being the richest guy in the graveyard.
    Mar 31, 2015. 03:07 AM | 1 Like Like |Link to Comment
  • Income Investing Strategy: Are You A Closet Market Timer? [View article]
    yep Adam. pretty smart guys on the long bonds, ten year is still cheap, means someone thinks we are not looking at a fast or soon rise. equity side is constantly trying to pump fear of---something, to get volatility they need. If not rates, then Greece or politico's, oh well, when the herd panics, I pounce.

    My Incomes value may or may not change as rates eventually go up, but the spendability will still be increasing from compounding and DGR. Don't really care about the herds opinion anyway.
    Mar 31, 2015. 02:06 AM | 1 Like Like |Link to Comment
  • Income Investing Strategy: Are You A Closet Market Timer? [View article]
    False conundrum, if I may opine. I keep almost no cash, I have credit.

    Long as the opportunity offers significant yield spread, and that bty is exactly how an Income investor should be thinking- Income over cost, there is no conundrum.

    the use of options offers significant flex ability to both buying and pricing and add to my ability to buy shares with the Premiums.. My longs stay pumping Income, again to buy shares-or beer and vacations while I can still enjoy them-lol..

    I constantly have Puts getting ready to strike each month, if the market corrects suddenly, I can roll to later months on the existing and out farther capturing the new long price in my new net buy-albeit later and with time premium, and at the same time giving me a real cash bump. I can also sell even lower $ Puts that are even better Net prices. It is slow motion and delayed satisfaction but pricing is locked. People obsess over the realized loss with rolls and ignore the real cash flow bump and new Net buy price and the reality of that net buys YOC to Income. Since most my options are not realized loss's the occasional loss is not terrible.

    On playing with Capital, my preferred method is to first buy the lower price, then IF the % of Income is too high, or if I want to reduce I can always sell the higher priced for a greater YOC. My taxable is set to always sell highest priced. I build Income with shares, I seldom sell unless I see a problem with the Income fundamentals. So I try not to have a realized loss on the higher and volatility usually allows that for a patient investor. Just saying it is far easier to wait for a price uptake with a nice yield to off load the high price shares than sell a high price share, lose the Income, and hope for a downturn, especially if you have done the due on the real Income.

    Price is price, it is only good for getting better YOC to me. Unreal gains are in fact of little value to an Income investor, why I don't play "Total Return" games with traders. We have different goals, mine is real Income growth.
    Mar 31, 2015. 01:45 AM | 1 Like Like |Link to Comment
  • How I Lowered My Cost Basis On A Recent Enterprise Products Partners, LP Purchase [View article]
    IRA's and Roth's are best for high yield, low div growth IMO and ordinary taxation. Div growth will mean price growth and unrealized gains that get taxed at ordinary rates when withdrawn. The last thing you need in a standard IRA is a bunch of unrealized gains triggering high RMD's. Much better to have high yield ( excess ability to pay RMD$ ) and less unreal gains forcing high RMD$.
    Mar 30, 2015. 08:39 PM | Likes Like |Link to Comment
  • Why Dividend Investors Could Withdraw More Than 4% Of Their Portfolio [View article]
    I normally use chicken and eggs.

    I seldom eat chickens, I eat eggs and I let some eggs become chickens (DRIP). Just eating chickens as a withdrawal rate is crazy IMHO. It may be possible to eat a few or maybe trade one fat for two skinny ( price fluctuations is skinny or fat ) and eat one and let the other one produce eggs, what I think the author means. I would not be comfortable doing that.
    Mar 30, 2015. 08:31 PM | 1 Like Like |Link to Comment
  • Why Dividend Investors Could Withdraw More Than 4% Of Their Portfolio [View article]
    Brian and TF, you are intermixing value and flow into withdrawal. The ONLY way a Div/INCOME portfolio can run out of money is if the REAL Income is withdrawn faster than it is replenished. IE the "RISK" is Div CUTS, NOT "Value".

    The POINT, actually.

    Just flat wrong to say some possible variation of "value" has much to do with it. Call it whatever you want. I as a point of fact I receive a YOInvestment of 10.65% on the money I have put in my taxable account. Looking at the net, after paying my Interest costs, on the 2/3 leveraged, my CASH I have in my taxable it is over 25%. Since it is an Amortizing loan that pays itself off leaving me with whatever "value" the herd decides at that point, it is hard to imagine a scenario where the over 50 infrastructure based companies would be valued less than my original cash, since they are currently valued over 4X my cash in. Yes that's right "value " is double the cash, but NOT a big deal IMO, the INCOME growth is! Assuming no div cuts- and that is the ONLY and a non "value" based thing that matters!

    Again a well diversified portfolio means long term div cuts for an entire portfolio are HIGHLY unlikely- again zero to do with "value", especially short term.

    There is ZERO chance I will outdraw what my portfolio ORGANICALLY bears as REAL fruit. NO branch cutting! JUST "fruit" picking. IF some of the fruit itself goes bad-ie div cut- THEN and ONLY then, will REAL Income be affected.

    "Value" is a BS way to look at retirement funding. It is opinion and constantly changes. Sure traders can profit and make money, not saying that. I am saying it is pure Wall St bs to think people can retire and know with the surety of REAL Income, what future sells may be "worth" and ACTUALLY fund the retirement with. It is how they market the need to monitor value constantly and pump trading and management fees. Fear and greed over price/values.

    Future earnings and ability to pay/grow the div is a guess, but is a HECK of a lot surer than guessing on price! Just not even in the same risk category at all! If anything it is a ratio that would correctly be a 20% yield has a 1 in 5 chance of a real Income cut while a 5% yield has 1 in 20, 2% 1 in 50. Pure price alone is pure guessing, something Wall St tries very hard to obfuscate.
    Mar 30, 2015. 07:49 PM | Likes Like |Link to Comment
  • How I Lowered My Cost Basis On A Recent Enterprise Products Partners, LP Purchase [View article]
    I also look at divs ex, but it is a small consideration for Puts since I usually just buy and hold.

    Rolling Calls is actually dangerous IMO. Price does what it does, but with good solid earnings and div/distrib increases the trend line is up. By selling Calls you are betting against the trend line. By selling Puts you are betting with the trend line. Yes price gyrates wherever the herd wants, but fighting trend lines based on good earnings, which hopefully is what all your stocks are, is not a good idea with options. Very different animal to roll Puts and rolling Calls.

    I talked of the Put scenario, in a price downward case, win, win ,win. But a Call, in a price upward case, does not have the same good things going. Your Net Sell has a better chance of getting worse, your Annualized yield could get worse and you still get a realized loss. Lose, lose, lose.
    Mar 30, 2015. 07:10 PM | Likes Like |Link to Comment
  • How I Lowered My Cost Basis On A Recent Enterprise Products Partners, LP Purchase [View article]
    I also commented above, a roll is always on the table and many times it is a very good thing. Better net buy price that gets buried till the sale, more real cash flow as they usually receive more than they cost, and a taxable loss to offset other Premiums gains. Not a bad thing at all.
    Mar 30, 2015. 06:58 PM | Likes Like |Link to Comment
  • How I Lowered My Cost Basis On A Recent Enterprise Products Partners, LP Purchase [View article]
    that time premium deteriorating is exactly why it is better to sell Puts. Usually it is a trader protecting profits or a money manager who wants the portfolio NAV to look good that buy Puts. Their fear is my profit. Know your customer to make money. These are just price insurance.
    Mar 30, 2015. 06:52 PM | 1 Like Like |Link to Comment
  • How I Lowered My Cost Basis On A Recent Enterprise Products Partners, LP Purchase [View article]
    Gotta say, I tried TT for the first time and agree it is worth the extra money for a trained pro to do it for you if you have very many units or more than one or two MLP's.

    I trade my accountant and have rentals, so it is a no brainer for me. But I found TT tough to get all the correct info in from the K1's. It is not just the K1 info, it is the schedules that go with it. I had both KMP and EPD, so I know the pain. ??? the SDRL loss took some sting out??? haha.
    Mar 30, 2015. 06:48 PM | 1 Like Like |Link to Comment
  • How I Lowered My Cost Basis On A Recent Enterprise Products Partners, LP Purchase [View article]
    Agree Dirk. Calls need to be short. IMO, Puts are better long. I like LEAPS, usually 6 mo, but I have some in 2017. Will be glad when the new months get here. I have my September quota filled. Had O 55$ Calls last month, bought back early for A Yield of 13.1% but waiting to get a feel for the new up leg on it before selling more. I don't sell Calls on MLP's usually because the tax consequences are ugly, but REIT's, BDC's, C corp's no problem.

    EPD is already a my largest MLP position with the OILT merger, but I did pick up some GEL this month @42.81$ NET and missed the ARCC 17$ by .03c, while rolling several other stocks and some different priced GEL's to Sept. Consider GEL to be almost as good as far as distrib growth and no GP IDR's and general outlook in a low oil price environment.
    Mar 30, 2015. 06:41 PM | Likes Like |Link to Comment
  • How I Lowered My Cost Basis On A Recent Enterprise Products Partners, LP Purchase [View article]
    Author really should also present what happens with a roll.

    " If EPD had dropped in price well below the $32.50 strike price, say $20/unit, I would still have been obligated to buy the 300 units of EPD at $32.50. In that case, I would not have been happy because I'd be sitting on a big loss."
    Is only technically correct and does not represent the total truth, rolls are always on the possibility plate and actually very useful.

    I use Puts extensively and feel it is remiss to not state there are in fact 3 options, you get the stock Put to you, you collect the Premium, or you Roll the contract to another future month.

    In his scenario, where price was below his net, he could always roll. Yes that is a taxable loss, but a roll is also a new contract, later with a better net cost by definition. By rolling you could both get the stock later a better net cost and you get a tax loss to offset the gains from other Premiums that expired out of the money, and you get more real cash in your account. Win, win, win.

    I use my margin and go "naked" for my secured cost. It really means, if i do not quite have the cash for all. I really only need enough cash for the ones coming due I intend to have Put to me that month. I have several every month and only have Put to me what my cash can handle. That means I pay no interest, but since my Margin is roughly based on half my current long stocks NAV I am in fact receiving Premiums on my margin secured @ a current unrealized 17.21% and that is not annualized. Just cash from premiums received for future dates and is about same as what I project with my divs for the next year. It effectively doubles my ability to buy shares, but it is volatile and not what I base my Income projections on. Buy giving me more buying power, it does mean after I buy the long stocks, I will get more real Income growth. Why my Income based portfolio can have both a 8.31% YOC and a Income growth rate this year over last on divs of 6.6%, so far this year.

    You just have to let go of believing price volatility means anything to actual div Income or that a solid company with a good yield like EPD can get get back to the 32.50$ price as an example, if EPD had gone down.

    Volatility and short term taxable profit/loss is not the end game for me or the driver of anything except option premiums.

    IMO, also important to figure the A.Yield on how long you tie up your money. It is simple, just find the number of days till the strike date from when you sold the contract and see how many time that goes in a year. Times that number by the premium you received. Then divide by cash being held. You end up with an annualized yield. If he had sold his 32.50$ Put for 225$ Premium and it was 1 month away the math for A.Yield = ( 12 X 225$ )/9,750$ =27.69% if the time was 6 months it's (2 X 225 )/9750=4.62%
    Mar 30, 2015. 05:48 PM | 1 Like Like |Link to Comment
  • Kinder Morgan: How To Get A 10% Yield [View article]
    Inn- although I mostly agree with Rip, I would not be discouraged. Just keep what Rip say's in mind and maybe try selling the highest profit shares with some stuff maybe at a loss, that you no longer like the Income prospects from as well, to keep taxes down. I look at Capital as just something that has to be managed. It can be done to increase Income, while extracting, but Really IMO the goal can still be Increasing the Income. Just be careful you factor in the DGR of anything you sell for a profit. Div Growth Rates is a big deal also. I balance the loss of Capital, the loss of DGR, and always try to still grow Income next year.

    If you are willing to invest some time in learning about options, they can be a way to generate some Capital with out selling shares and thus retaining the Income you have. It is not for everyone, but it is a way to play price volatility without necessarily having a sale. It does take time to learn and it is work, just an option-ha.
    Mar 30, 2015. 04:08 PM | 1 Like Like |Link to Comment
  • Kinder Morgan: How To Get A 10% Yield [View article]
    gg-agree, tried TT for the first time this year, and basically did not like it.

    Very tricky to get prior years passive deducted from gain correctly. I fill out the sales net adjusted cost, then my accountant double checks the gain $ for the final reported Cap gain.

    I trade my accountant, and have rental depreciation's also, so for me it is definitely worth it. But even if I had to pay I would say it is worth it to hire a pro with multiple K1's or any large number of shares. Just my opinion. Investors village had a good forum for some stuff.
    Mar 30, 2015. 03:54 PM | Likes Like |Link to Comment