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nivramkoorb

nivramkoorb
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  • Retirement Income: Protect Your Capital [View article]
    ggrin-

    How you report your tax transactions is, for me, different than how I view the success of my investment. I am already being taxed on my dividends(not the ROC part) in my taxable account. Obviously, if new dividend reinvestment results in share drops than selling my entire 1219 would not show the profit that I have from my initial investment. Taxes are a different story. Option income CEFS have tax advantages because of how they treat the option income.
    Jun 28 11:29 AM | 1 Like Like |Link to Comment
  • Retirement Income: Protect Your Capital [View article]
    Remember- You are handling money for clients. That is totally different than an individual such as myself who can create his own criteria for performance. I tend to not look at individual performance from a how i do to the cost. I treat each new CEF purchase as part of my income portfolio and how it fits into my cash flow stream. As long as my portfolio income increase by inflation or slightly better I am happy. Obviously a continuing drop in the portfolio valuation would be a concern. Now that I have reached a high income level($75k), I am going to be building cash reserves and probably holding new money until I see major buying opportunities in CEFS. I have enough option income CEFS and will be concentrating on Mreits and high yield in the future. I am going to look for less yield but also less leverage. Ultimately, interest rates will rise and that will hurt leveraged CEFS(also Mreits but their high yields are worth the risk).
    No matter what you do with your dividend income(reinvest in the same CEF or buy something new), as long as there is no new money coming in, for me results still relate back to the initial investment. It is all about the entire portfolio, not individual holdings.
    Jun 28 11:23 AM | 1 Like Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    It is about my investment fitting my needs. Not about meeting their managment's stated goal. Investing is done by individuals. You are writing an article to establish a point about JPZ versus S&P. Even with reinvesting the 2% dividend that the S&P pays out, JPZ with reinvested dividends is far ahead of the S&P since my investment began. I am sorry you don't care about initial investment in 2007 but that is all I care about. If you were managing my money, I would expect you to care about my performance and not how some CEF did against some S&P ETF. You should notice that I bought JPZ before the downturn. The reason JPZ has not come back to its 2007 price is that the downturn reduced the price like everything else and they tried to maintain their dividend in the 8%+ range that their investors want. Had they paid a much lower yield like McDonalds etc. then their share price would be higher. My results are simple. I invested $11k in 2007 and with reinvested dividends I now have $14.3k. A simple 30% return. Dispute that.
    Jun 26 02:19 PM | Likes Like |Link to Comment
  • Retirement Income: Protect Your Capital [View article]
    Doug-

    Responded to you on JPZ on a previous article. Your premise is that dividends you receive become new capital and create a new cost basis. For accounting purposes that may be true but from my own investor perspective, I see dividends received as getting value from my initial investment. Growth companies do not usually distribute dividends so their dividend component stays buried in the stock price and does not benefit the owner until the sale. Dividends are a release of the benefit on a periodic basis. Unlike you I do not view them as new capital. They are part of my original investment. In the case of JPZ I bought 761 shares at $14.45 on 11/07(an $11k investment) and currently hold 1219 at $11.77(worth $14.3K). All of this is dividend reinvestment with no new infusions of cash by me. You can talk about my reinvested dividends being new capital and that my return is not up 30% during that time but of course it is. By taking dividend reinvestment and annualizing the performance of each new dividend reinvestment you distort the total picture for JPZ. You are mixing tax issues with performance issues. Let's face it. If Apple paid a 6-7% dividend yield, then there would be smaller growth in its stock price which currently contains lots of the cash that Apple is holding(and could be distributing through a higher dividend payout). Creating charts of shares prices without clearly show the total return including distributions is a distortion of performance. I also have AOD which I will admit is a dog, but because I currently get 15% yield on my capital, I continue to keep it.
    Jun 26 02:03 PM | 1 Like Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    What you are missing is that the S&P index at the end of 2004 was 1211 and on 3/31/2012 is was 1404. This is a little over a 15% increase so until you come up with correct numbers, nothing you are saying makes sense to me. In addition I consider comparing things over a time frame is so arbitrary. You can pick any moment in time to pick your point. Why not respond to the issue I raised about my initial investment in 2007 and its current value? Compare that to the S&P index. That is my reality and how I judge the performance. What do I care about JPZ during a timeframe when I didn't hold it?
    Jun 25 12:26 PM | Likes Like |Link to Comment
  • Yield On Cost Vs. 4% For Your Retirement Income Stream [View article]
    Thanks Smarty_Pants-

    I have tried to get it across to Jeff that I believe in dividend investing but that his example was full of errors and overly optimistic. I totally agree with you that when you try to make a point in a public forum like SA you should be showing a credible example. Hopefully, Jeff will realize that when you show a specific example to prove an assertion make sure that it is reasonable.
    Jun 25 12:10 PM | Likes Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    I never said that I earned 9.2% on the investment. What I said was that I invested $11k in 11/2007 and that is currently worth $14.4k. You seem hung up on the return on each reinvested dividend. My portfolio originally had 761 shares and now has 1219 shares. Lets pretend that I still have 761 shares(no new acquisition through dividend reinvestment) and that JPZ never paid a dividend but instead just continued to see stock price appreciation(sort of like a growth stock that doesn't pay dividends). So today I would have $14.4k in value but only 761 shares. In my example each share is worth $18.92 instead of today's value of $11.77. My original share price was $14.45. If JPZ had appreciated from $14.45 to $18.92 during that time, you would look at it and say that I achieved a 5.9% annualized return. Instead you look at my current 1219 shares at 11.77 and claim that my return is only 1%. It is all how you look at it Those of us who believe in cash flow analysis and initial investment versus current holdings accept my view that $11k turning into $14.4 K over 4.8 years is an annualized return of 5.9%. Looking at your analysis based on adding the dividends back into the initial investment makes my investment look worse than it is.
    Jun 23 09:05 PM | 1 Like Like |Link to Comment
  • Picking The Best Option-Income Closed End Fund [View article]
    Doug-

    I still continue to view my returns on my CEFS this way. If I invest $10k in 2007 in a CEF and get 500 shares and 5 years later the value of my holdings are $13k but I have more shares but less value per share, than I am still have a $3K gain. Lately I have been having this debate with an SA reader who insists that I look at the return I get off of my reinvested dividends to compute the proper yield. I disagree. As long a I do not put new outside money in my CEF, my only concern is current value. I also look at the NAV to make sure that my discounts are intact and I am not having a NAV erosion. Continue to make your positive and educational comments to those who really don't get CEFS(especially option income).
    Jun 23 07:36 PM | Likes Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    Twist it any way you want. I invested only $11k and 4.5 years later I have $14.4 K. You obviously missed my point on investing. The interim movements of dividends via reinvestment or alternative investments do not concern me. What concerns me is the condition of my initial investment in that CEF and it is currently continuing to generate the yield that I want. On both issues that CEF is meeting my needs. In addition it is part of a total portfolio of lots of different income generating investments with various degrees of risk and income. How would you explain buying a home for $100k in year 1 and putting no new capital into it and selling it in year 10 for $200k. However during the 10 years you pulled money via refi etc but at the end of the 10 years you end up with $100k in profit. That is how I look at my CEF investment. I agree that if you look at the rate of return on each incremental dividend reinvestment you can end up showing a lower annual return. As I stated previously that is not how I view my own personal wealth performance. To each is own. My way which is sort of aYOC concept that works for me. If you don't want JPZ then don't own it. It works for me.
    Jun 21 03:03 PM | Likes Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    ggrins-

    JPZ is an option income fund which derives most of its income from selling covered calls not from dividends.
    Jun 19 09:10 PM | 1 Like Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    ggrin-

    It all depends on how you look at it. I only look at my initial investment. Pretend that JPZ never paid a dividend but somehow during the timeframe I used it grew from the level I paid for it to its current level.You would say that I did okay What you are doing is looking at the trees and how the trees did(reinvested dividends are nothing more than income to me and whatever they grow or lose they give me more than I had before they were paid). I look at the how the forest is doing and my forest has grown quite well since 11/01/2007.
    Using your line of reasoning, we should all the take proceeds from any stock sale and figure in how the future new purchase does to really asses how well the initial investment did. Of course, you wouldn't do that so why do it with my JPZ dividends just because I reinvest them in JPZ. My YOC which a lot of SA people use as a metric is now 11% compared to the 8.3% when I bought JPZ.
    I extend my approach to income investing to my entire portfolio of 50 holdings. I look at my current yield which is 7.5% and realize that I have not put one new penny into my income investments in 10 years but someone my income and total assets have grown in excess of the S&P during the same time frame. It is by using high yields(8-10%) and reinvesting them to acquire another 8-10% in shares that pay 8-10%. There may be some cuts along the way but the CEF universe has 650 choices. You must remember that high yielders give all their earnings away via their dividend. That is why people have trouble with the size of the yield. Mreits do that and I am more than happy to take my dividends from NLY and AGNC.
    Jun 19 09:09 PM | 1 Like Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    Elliot-

    I'll it by run you as I did with Doug. Option income is ROC only in an accounting sense. It is simply the premium received that is distributed before the covered call expires. Remember that my NAV is above market value. I also reinvest my dividends which gives me more shares which gives me more income. My numbers on JPZ confirm my performance during the last 4.5 years. All CEFS that do option income show a lot of ROC in their distributions. They are part of my portfolio and I have no problem dealing with the issues that you raised. That is why I have 35-40 CEFS.
    Jun 19 08:50 PM | 1 Like Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    Much of what you call eating away assets is nothing more than ROC. This ROC is actually premium option income that is not categorized as income at the time of distribution but in actuality is. The key thing is look at NAV performace. It sounds like you would be more comfortable not being in option income CEFS or at least get a greater understanding on how they make up their distributions.
    Jun 19 09:49 AM | 1 Like Like |Link to Comment
  • Yield On Cost Vs. 4% For Your Retirement Income Stream [View article]
    All you established is that your YOC after year 1 is 4.32%. Simply look at what you are saying. In year one you have $389 of dividends. In year 32 you have $52926 in income. That is an annualized dividend increase of 16.5%. That is not possible. Forget YOC for a second. If the dividend only goes up 6% a year and the reinvestment can't rise more than the dividend yield(3.9%) then a 17% increase each year is impossible. You seem to only answer the questions that you want to prove your point. My original response pointed out that in year 32 your yield is 19% on your holdings. How do you explain that? Also your original cost is $10,000. Stick with that whole number and don't keep reducing your base by subtracting the reinvested shares. Simply put, you cannot go from $389 a year in dividends to $53k in year 32 without is rising by 16.5% a year. I would assume that there are other SA people that can see that point.
    Jun 18 10:54 AM | 3 Likes Like |Link to Comment
  • Retirement Income: High Yield Is High Risk [View article]
    Doug-

    I disagree on money is money. Everybody's portfolio changes everyday. Why get hung up on the day to day? Dividends are making your holdings be like a business that produces cash flow. Are you in business for yourself? If so do you really know the valuation of your business on a daily basis? Do you care? What you care about is cash flow that your business produces. Eventually you may want to sell the business or the stock. That is when value is important. But you should choose that time when things look best.
    Jun 17 04:56 PM | 1 Like Like |Link to Comment
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