cancel
Showing results for 
Search instead for 
Did you mean: 
     
Highlighted
Explorer ○○

Reaching for yield yet again

"More money has been lost reaching for yield than at the point of a gun"

I got burned with risky bond OEFs sempx, vcfax and jmutx. With endless losses and not seeing a path to recovery, I decided to sell them. 

I also took a big loss with a an Mreit preferred stock NYMTN that paid a good yield but dropped a huge amt last week.

It suspended it's dividend and is at risk of going bankrupt. I dumped it today while there was something still left to salvage.

Not learning my lesson about reaching for yield I bought some UTG last week and today. Price was low and yield high. 

I see it lost a lot in 2008 but made a big recovery in 2009. It's holdings are transparent. It has good solid companies for assets. It has a history of increasing dividends. It uses leverage but not excessivily. I has an ROC of 0.

I can take the volatility as long as a recovery can be expected and it keeps paying the dividend. 

Is there anything I'm overlooking with UTG, that might burn me, yet again, reaching for yield. 

 

 

 

0 Kudos
4 Replies
Highlighted
Frequent Contributor

Re: Reaching for yield yet again

         sandman100 - you overlooked not knowing the future maybe it’s time to turn in your crystal ball for a high tech wi-fi version that also takes your pulse. In short you missed nothing and you should expect this each correction or recession. Be ready with idle funds to buy more or look away, it’s ugly. Lol.

          We made a huge commitment to CEF’s in 2009-2010 when they were down in a similar matter to now. No surprise ours have tanked in a similar fashion again. We also received over 500k in real money in between spread in monthly allotments and eliminated any decision making as we aged.

           So our reasoning at the time for my this type of high risk investment:

                  * We received about 8.5% average yield over that time at low cost and made sure this was in a TIRA where tanking in values may be advantageous at RMD time giving us more control of withdrawals. 

                   * We estimated our personal inflation rate for basics would remain around 2.5% in retirement which is still true.

                    * We spent about 300k in that time and auto invested 200k in PONAX which is down 12%+ with a 5%+ yield and generates 10%+/yr in income. We now have the option of reinvesting all that in tanked CEF’s of our choice in the 14%+ range which would then realize about 28k a year in income based on costs. That’s what we did the first time. In retirement we believe we’re set at the present.

                    * Being income investors with half our retirement portfolio that was our limit for risk and commitment. If yields are cut both PONAX and probably all of our CEF’s will still pay more then 2.5%. 
               
                     *With the other half we invested for capital gains taking profits for the last ten years and “saved” in a similar fashion and giving us similar options now. 

0 Kudos
Participant ○○○

Re: Reaching for yield yet again


@sandman100 wrote:

"I can take the volatility as long as a recovery can be expected and it keeps paying the dividend."

Are you sure? The bond OEFs you recently sold had no chance of recovery?

"Is there anything I'm overlooking with UTG, that might burn me, yet again, reaching for yield"

Doesn't it use leverage, or if not, have the ability to use leverage in the future? That's added risk, and CEFs always have more risk of lemmings rushing off the cliff because it's a tiny market. 

 

 

 

 


 

0 Kudos
Highlighted
Explorer ○

Re: Reaching for yield yet again

 

 last time you took someone's so-called advice here and it didn't work out, you blamed them.  now you're asking for advice again.  assuming you get it and take it and the thing goes sour, you going




to play the blame game again?

Highlighted
Contributor ○○

Re: Reaching for yield yet again


@linter wrote:

 

 last time you took someone's so-called advice here and it didn't work out, you blamed them.  now you're asking for advice again.  assuming you get it and take it and the thing goes sour, you going




to play the blame game again?


That's awesome.  

0 Kudos
Announcements