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FrankEllis

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  • CEFL January Dividend Gives Yield Of 23% [View article]
    Thank you.
    Jan 3, 2015. 04:06 PM | Likes Like |Link to Comment
  • CEFL January Dividend Gives Yield Of 23% [View article]
    17% is a drop in the bucket compared to 23% Yield? Yes, the decrease in portfolio value does hit a panic button. Yes, these falling into the loss category when indexes are reaching new highs hits a panic button. On the other hand, a long term view shows that reinvested dividends at a 23% yield will double in about three years. In favor. Out of favor. Stocks fluctuate. If I was buying the stock for price appreciation, I'd be concerned. Since I own these UBS 2X high yield Notes for income, I actually perform better when the price is lower because distributions buy more shares which pay more dividends, which buy more shares. If income was declining instead of stock price, then I would be concerned. Understanding the purpose of the purchase before I buy is the critical decision. If I'm buying for price appreciation, I put a stop loss order on the stock. If I'm buying for income, I applaud the price drop in the sure and certain knowledge that I am deriving more and more long term income. For income I look at the increasing number of income paying shares, not the price compared to original purchase price. Each dividend is subtracted from the price, meaning that the closing price on the day before ex-date is reduced by the amount of the dividend to determine the opening price on ex-date. CEFL pays approximately $4.8812 per year. Add $4.8812 to the present price and determine if it is less or more than originally paid. Then compute the additional income above and beyond the $4.8812 resulting from additional shares purchased by reinvesting the year's worth of payments, compounding it monthly or quarterly according to the frequency of pay dates. If one reinvests the income in additional shares, for the sake of over simplification one would have 1.23 shares at year end for each share purchased at the beginning. Thus, moving forward, one would receive 1.23 times the $4.8812 distributions, or about $6.00 per year for each original share. The next year this compounds again to about 1.51 times the $4.8812 so that one is receiving about $7.38 per original share, and more if price drops. A price increase is the income investor's worst case scenario, because fewer additional shares are added with each subsequent distribution. The basic company values and fundamentals of the CEF's have not changed because some of the owners panicked and sold more supply than was demanded. Those who hold steadfast, keeping their shares, reinvesting the distributions, ever growing their income, are happy that the unknowing caused them to have an increase in number of income producing shares by panicking. Those who perceive the glass half empty help to fill the glass of those who see it is half full and filling in a compounded 23% per year. Its all about perception, for only perception changes the present price as buyers perceive more or less value. High Yielders are among the least understood items in the stock market because the vast majority perceive them as stock prices rather than as income producers. Those who understand the potential of high yield income investments, look to the long term to grow income. Those who know not look at the price and have negative thoughts, fears, worry, and sell off their golden eggs. How many stocks double in price every three years? How many double income every three years without selling any shares?

    Long and reinvesting all distributions in MORL. NYMT, OXLC, BDCL, CEFL, NMM, DVHL, and MLPL. Compounding to grow future income. Long term choice or short term perception.
    Dec 29, 2014. 08:00 PM | 12 Likes Like |Link to Comment
  • CEFL January Dividend Gives Yield Of 23% [View article]
    <<The recent lower prices for CEFL makes it still a compelling buy for yield oriented investors.>>
    LANCE,
    I think you said in one of your original articles on the UBS 2X ETN's that price factored into the UBS computation of distribution.
    Did You say that lower price increased, and higher price decreased what the Note holders receive?I'm still long and reinvesting, increasing number of shares, decreasing cost per share, increasing yield on original investment, thankful for present lower prices allowing reinvestment to buy more shares, more distributions, more compounding.
    Thanks for your clarification.
    Dec 29, 2014. 01:14 PM | 1 Like Like |Link to Comment
  • S&P 500 Sector Trading Range Charts [View article]
    Great charts and info! Thanks.
    Dec 23, 2014. 06:25 PM | Likes Like |Link to Comment
  • Jobless Claims Better Than Expected [View article]
    Excellent communication of longterm and how present fits. I appreciate and applaud your reporting.
    Dec 20, 2014. 07:49 PM | Likes Like |Link to Comment
  • What Happened: Conspiracy Theories Abound In November [View article]
    Thank you. Most helpful comment. I agree with your thoughts. I guess we gain something by improving basic materials and selling them, but that does not seem to balance the net.
    Dec 16, 2014. 08:15 PM | Likes Like |Link to Comment
  • Empire Manufacturing Comes Up Short Again [View article]
    Thanks for your article. The most glaring thing to jump out at me is that the six month optimistic expectation, except for one month out of thirteen years, 1 out of 156, is always positive expectation. I love the power of positive thinking. I, too, believe that the best is yet to come, and so look to the long term, the continuing Bull market in spite of the occasional interrupting corrections. It would be interesting to over lay the six month expectation six months later to compare actual versus expectation, thus to check the validity and veracity of the EMR expectation. I also continue to wonder why anyone listens to the babble of the economists who predict an opinion rather than wait for the actual report. Much ado about nothing, proving the "experts" are clueless mouths in motion before putting brains in gear. After discounting the predicting economists as meaningless, the next step is to determine if the six month projection is meaningful, aligned with what actually happens six months later, or whether the whole report should be ignored as meaningless.
    Thanks for your analysis and article. Much appreciated!
    Dec 16, 2014. 07:50 PM | Likes Like |Link to Comment
  • What Happened: Conspiracy Theories Abound In November [View article]
    Thanks for the article. Question: what is the ratio of U.S. use to production. My understanding is that we are a net exporter, so we should be in the driver's seat relative to the wants and wishes of OPEC, but I guess using this fact would require cooperation to use home resourced supply instead of imported supply. Just the cost of shipping from OPEC versus using our internal supply should make sufficient difference to price OPEC out of our market. Perhaps a brief mention of the big picture of supply and demand within the U.S. could be mentioned in a future article. Is there any difference in quality of OPEC versus US crude worth the transportation cost?
    Dec 15, 2014. 05:33 PM | Likes Like |Link to Comment
  • The Case For Navios Maritime Partners' Stock Buybacks [View article]
    I agree. IRA contribution for 2015 is eligible January2, a little something to add my choice in my Roth.
    Dec 15, 2014. 04:41 PM | Likes Like |Link to Comment
  • The Case For Navios Maritime Partners' Stock Buybacks [View article]
    If we have a little willingness, let us understand that companies are not merely buying the Baltic Dry rate, but are willing to pay a premium for optimal, dependable, proven service and reliability. NMM is not imprisoned in the going rate, but has more to offer, and a strong record of providing what clients want. This is not a robot giving the same thing that is rated by the Baltic Dry rate. This is a living entity, superbly managed, going above and beyond in providing a reliable, dependable service through good times and bad, available to those who desire long term two way loyalty. Who among you does not loyally return to businesses that are loyal, customer oriented, reliable, dependable, and proven over time, even if a premium is asked, because the outcome is sure, guaranteed by past experience. And who does not appreciate the loyal distribution announced today, and look forward to the increase on shares on the pay date Jan 26!
    Dec 12, 2014. 07:23 PM | Likes Like |Link to Comment
  • Update: Double-Digit Distribution Portfolio [View article]
    Agree. Speaking to a group is different from specifics for one individual situation. And everything depends on the personal specifics, be it withdrawing only RMD or needing more income, or being able to pay the taxes out of other income or having to withdraw more of an IRA to pay taxes. Even to include income less than $25000 filing single, or 32000 MFJ, so social security is not taxable and RMD does not exceed filing requirement. So I was just giving general figures, but the RMD is not huge, and is no where near the yield of these investments we are discussing, which means that RMD + taxes could be covered and still leave some yield left over to reinvest and grow the income. Simply not going blindly into any retirement situation, but understanding these few variables, could help many. I see way too many who blindly follow whatever their broker does, with income tax withholding taken out of the RMD. If one wants withholding to avoid quarterly estimated payments, so long as they see their own income and tax situation and make the deliberate decision specific for their personal situation, it doesn't matter whether withholding comes out of Social Security, RMD, pension, estimated quarterly payments, or a part time job. As you say, it should not come out of an IRA on top of the RMD, because withholding was not factored in somewhere. And as long as one does not owe over $1000 in balance due income tax on the return, no penalty or interest, so one can "borrow" that amount interest free until April 15, then pay it. The crux is just knowing options, choices, elections, and decisions are available and can be changed at any time, even that free help is available to look at and compute what will happen and when it should happen.
    Dec 10, 2014. 05:24 PM | 1 Like Like |Link to Comment
  • Credit Risk, Equity Returns: Interpreting Oxford Lane Capital's Financial Results [View article]
    Steve,
    Much appreciation for handling and sharing a most difficult and convoluted concept invented by elected politicians. OXLC, through all the gyrations of the temporary owners who know not what they do when they buy high yield RIC's, still fluctuates between 13 and 20. Buyers do not realize that these companies have elected to not pay income tax, therefore are required by IRS regulation to distribute at least 90% of their taxable income to "partners" who do pay income tax on the partnership's taxable income. If a corporation distributed at least 90% of its taxable income instead of paying 40% income tax and saving/reinvesting part of the taxable income, then distributing a 3% dividend, the comparison would be more realistic. Corporations that pay income tax simply cannot be compared to RIC's that do not. The elected officials who decide how the IRS handles these CLO's that lend to companies, thus allowing the economy to grow through the added jobs and sales of small companies, make it complicated, but also make a marvelous income vehicle for investors who own these companies who loan to the small, growth oriented entrepreneurs that make this country great. If it were not for loaners like OXLC and ECC, these companies could not borrow what they require to add jobs and grow their sales and the economy. These CLO's are a very necessary link in the free enterprise economy that makes this country the leader of the free world.

    I am a happy investor in OXLC, reinvesting all distributions in additional shares of OXLC, growing my portfolio as the economy and country grow, and as management grows their own personal worth.

    Understanding the tax shield under which these companies operate in order to grow the American economy, understanding the risk to reward, understanding that I am betting on the management and their ability to navigate the pitfalls and grow my portfolio as managers grow their own portfolio invested in the same investment, I realize I am in the sweet spot, invested in the same instrument as the insiders. If the market or the whimsical stock owners move the stock price downward 10%, do I believe that the real value of my investment, the real value of this company, dropped 10%? No. Price fluctuations are not the determiner of the real value of the assets and management, but merely a misperception allowing me to reinvest distributions at a higher yield and lower price which the market will eventually correct. Let me not perceive the panic selling price drop as reality because insane sellers cannot understand the complexity of this opportunity. Hold and reinvest all distribution. Stay steady the course. Remember that every distribution of income is also a distribution of part of the value of my holding, and compensate by adding shares so that total shares at the lower price equate to the value of my investment before the distribution and additional shares.

    The GAAP versus reality numbers is a smoke screen to scare the unknowing. Let me not be mesmerized by smoke and mirrors that have nothing to do with my real investment. My real focus is the present yield on my original investment. My yield is increased every time I reinvest a distribution in more shares paying more distributions which reinvest in more shares and on and on as my original investment in OXLC doubles in four to five years.
    Dec 5, 2014. 08:31 PM | Likes Like |Link to Comment
  • Update: Double-Digit Distribution Portfolio [View article]
    RMD starts at age 70-1/2 @3.65%. Part of the portfolio in high yield, say a third of the Traditional IRA portfolio yielding 12%, will take care of the RMD.

    I seem in a minority on SA, but I am using reinvested high yield income as my growth. Having been focused in this direction for several years, my current Traditional IRA yield is at 20.96%, sufficient to handle RMD and income tax on the RMD.

    Of course, RMD is based on the December 31 account value, and must be distributed by the following December 31, so it will be a variable dollar base each year.

    Even at age 79, the RMD is only 5.13%. There are certainly a multitude of strong, stable, well managed RIC's, REIT's, CEF's, BDC's, and MLP's that can produce sufficient income to avoid withdrawing the principle. Income producing investments, high yielders, provide income for RMD, and provide income to reinvest to grow the portfolio.
    Dec 2, 2014. 05:45 PM | 2 Likes Like |Link to Comment
  • Update: Double-Digit Distribution Portfolio [View article]
    YES!! And growing the portfolio with 30% of the income adjusts future income for inflation and other increased expenses. Yet, it seems impossible to explain this to readers. I'm in full agreement. Even 20% reinvestment keeps everything perking. Living on a percentage less than total income increases wealth and income.
    Dec 2, 2014. 05:14 PM | 3 Likes Like |Link to Comment
  • Update: Double-Digit Distribution Portfolio [View article]
    If you are not selling it today, the price is of little consequence. Your original investment is still receiving the same yield. The yield is fixed at the original price, unless the distribution changes, or unless reinvestment of distributions buy more shares without adding more capital. If distributions are reinvested, yield will increase with each distribution. If distributions are not reinvested, then capital is being taken out of the portfolio, causing the over all value of the portfolio to decrease. While this is hardly noticeable in common stocks paying normal dividends, the distributions of high yield RIC's makes a substantial difference. A 10% distribution reduces the value of the portfolio to 90% until the distribution is reinvested, or until earnings replace the distribution. Look at the price of high yielders on the day before ex-date, versus ex-date opening.

    If we let your portfolio ride into a longer term, a year, two years, or longer, it will compound the average yield. A 10% yield will double the portfolio in 7.2 years. If the distribution is being taken out of the portfolio as spendable income, not reinvested, then choosing to evaluate the portfolio on the day before ex-date will make it look much better than determining the value on the ex-date or the week following ex-date. The timing of the valuation date is everything in the short term, but of little consequence in the long term.
    The valuation date of Dec 1 immediately followed the largest distribution month, thus causing the maximum distortion to the bottom line value.
    I don't see a cash account or indication of reinvestment, either of which would account for distributions.

    Over all, your portfolio is doing no worse than anyone else's, but you have 10+% income to balance it, whereas a portfolio without income is that much further in the red as of this point in time. You are doing fine. Let it ride and work and produce income, and the market will eventually correct the paper losses. Consider what the value would have been at the bottom of the recent correction, and how much of that paper loss has already be re-corrected.
    Dec 2, 2014. 05:02 PM | 5 Likes Like |Link to Comment
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