Armchair, you read my mind, I was just looking into TLTW last night. If I recall correctly you have 3 previous videos on this - buy, sell, and oops sold too soon 😂 I won’t personally be buying TLTW because quite frankly, I don’t understand it. But I appreciate the info, keep up the great work!
You're right, I did a few videos on TLTW in 2023. It's not exactly one of my favorites, but it's interesting none the less. Not buying what you don't fully understand is an excellent policy!
I haven't owned TLTW for some time. It has proven impossible to predict the direction of interest rates; a major factor in the performance of this fund. If you'd like to see which stocks/funds I currently hold, my portfolio is available at: armchairinsider.beehiiv.com/subscribe
Good job on your description for TLTW. Just for everybody watching TLTW is based on a10-year bond prices. 10-year bond prices can absolutely go down in price, this is bad for TLTW. When the Fed lower interest rates for the first time, TLTW actually lost money for a few days. Many believe 10 your interest rates can easily go up instead of down. It's just depends on the market and what the Fed does. This is not a no-brainer, win. You could lose money. As of now, 10-year bond prices have been overbought. It might make sense to wait just a little bit to see if 10 year bond prices continue to lose. Don't forget, in order for TLTW to make 11%, investors have to go out and buy 10-year bonds at below 4%. If you think it's worth buying a 10-year bond and today's world at below 4% then you should absolutely buy TLTW. Myself I could easily see tenure bonds going over 4%, with that said probably not much more.
Good video and excellent analysis, as always. I've looked at TLTW in the past and another look at it probably won't hurt me, but I don't see this one fitting my investing plan -- at least not now.
Bought it a couple of weeks ago before the rate cut we all knew was coming. Great minds think alike. Must be the Vegas connection. I like it for the income, diversification, management, and low expenses.
Great analysis of TLTW, it’s definitely not for me. for bond and mixed asset income, I prefer the CEF space, eg, DLY, BCAT, ECAT, NVG, NPFD, NPCT, HIO. As you highlighted in your earlier videos, CEFconnect and CEFdata are good sources for yield and distribution data for this category of products. If you are considering any of these for your portfolio, I’d be very interested in your thoughts.
Agree. Basically half of my income portfolio is based on several CEF and the other half is bsd on several ETF with options overlay. Goal: yield/yr at least 12% to get distributions of min. 1% per month.
Thanks for those tickers, I'll take a look. I'm not familiar with most of them. ECAT/BCAT increased their dividends considerably recently but not sure that it's sustainable. Lots to research there!
@@armchairincomechannel Earlier this year, Saba attempted a take over BCAT, ECAT, and several BlackRock CEFs, claiming these funds were hoarding money instead of giving it to shareholders. BlackRock responded by upping distributions, converting some funds to term limitations, and buying shares (easy to do when their CEFs trade at a deep discount!). BlackRock’s actions demonstrate that Saba’s assessment was right, but by upping its game, BlackRock kept control over its funds. BCAT & ECAT have over $3B AUM between them, and between earlier hoarding and terms now in place, both funds may be able to sustain the distributions for quite a while. Much like CLO funds, we should enjoy the big party have to keep an eye on these in case the party gets out of control.
I don't currently hold it. The issue is that long duration bonds don't always move in the same direction as the Fed Funds rate. Occasionally they go the opposite way...as is the case at the moment because the Fed didn't cut as dramatically as the market anticipated.
Good update. I really don't like TLTW for retirees as it seems the manager can't manage the yield very well. I don't like the strict rules based CC strategy and the considerable fluctuations in yield. I switched my bond allocation to HPYT.U from Harvest as I am in Canada. Much more stable yield strategy for me.
Bond yields have been acting very strange recently. I'm sitting on the sidelines for TLTW until bond prices show signs of appreciation in reaction to Fed rate cuts.
I have been looking at TLTW and LQDW for a few years now. With the Fed lowering rates, this fund will only appreciate in value. (Rates go down, bond prices go up). Plus TLT (its core holding) pays a dividend as well. Then add the option selling premium and this ETF is good as gold.
That's generally true. Although with long term Treasuries, the price movement is affected by the emotion and expectations of the market, so its not an exact science.
I have been carrying 300 shares of tltw for about three months. Just watching to see how it responds to the market changes. Doubt I will put any more money into it.
Thanks for the feedback. I was getting a bit tired of saying the same thing :) Also, I want to clarify that I'm sharing what I'm doing/learning, not claiming to be a guru that tells other people what they should do.
I didn't cover tax on TLTW and BlackRock's website doesn't offer a tax section. Most of the income comes from the covered call premiums and I'm working under the assumption that the premiums are taxed as ordinary income.
Too wild for me. NAV erosion and volatile dividends. If I had a deep understanding of the oil industry I might be able to time it, but oil isn't really my thing.
Falling short term rates (those governed by the Fed) don’t necessarily mean falling long term rates. With an inverted yield curve recently and two Presidential candidates trying to outdo each other increasing federal deficits (Harris by handing out cash and Trump by cutting federal revenue), my expectation is that long term rates aren’t going to fall much and could soon start climbing. This would be consistent with my other expectation that we have passed the nadir in a 40-year rate cycle that began in 1982 and long rates will move generally higher for the next almost 40 years. I would therefore stay away from bonds and bond funds with a duration longer than about 7 years and personally I’m sticking with durations shorter than that (under 5 years) when it comes to vanilla bonds and bond funds.
Thanks for sharing your perspective. You make some great points and long term bonds are complex creatures...moving with the emotions and expectations of the market. If you skip TLTW I totally understand!
I agree with that assessment and one confirmation has been the decline in TLT that started immediately after the Fed cut rates as long term rates moved higher. It obviously remains to be seen how things will develop in the longer timeframe but the fiscal situation is not encouraging, to say the least, with no prospect of improvement any time soon.
But ... The Yield Curve was *inverted* ... Short Term Bonds = Higher Yield Long Term Bonds = Lower Yield To "normalize" the Yield Curve ... Short Term Bonds = *Decrease* Yield Long Term Bonds = *Increase* Yield
Excellent video. New to your channel and been binge watching all your videos and learning a lot. Are there other ETF similar to TLT that have a built in yield with cc on top of it? Thanks
Welcome aboard! Yes, there are plenty. Check the link to Armchair Insider in any recent video Description. It lists every stock/fund in my portfolio and the relevant video. Examples include SPYI, GPIQ, QQQI, BST, etc.
Rates are going down..sort of. 10 year rates are up recently, despite the FED lowering 50 basis points. I’m watching my TLTW closely, really concerned it will get into a NAV spiral. Holding for now. I am much happier with how the price on restricted share ETF’s have acted to recent FED move.
@@klister long bonds like TLT don’t move when the fed changes the rate, they move on the expected rate change in the future. That’s why the 20 year rate is 4.153% and the federal funds effective rate is 4.83%. If investors think the there will be more cuts in 2025/26 TLT will move by 16% now for every 1% they think the rate will be cut in the future
@@andrewd9633I would add that the expected rates in the future have a lot to do with expected inflation in the future and that, in turn depends a lot on federal spending and deficits. Who expects a substantial cut in federal deficits? If the federal government continues deficit spending in the mode of the last 16 years, it’s very hard to see how longer rates can do anything but climb higher, not lower (with occasional corrections as all markets have). I would stay away from anything that goes down when longer rates go up such as this fund.
You're right, it's not that simple.... long term treasury prices don't move exactly in the inverse to the Fed's rate changes. The market sentiment and expectations play a role too.
Enjoyed the video! Playing bonds with WDI, BGX(run by Blackstone, 9.48% yield), and looking at EHI(sister fund of WDI, 12.19% yield). Ever checked out the last 2? Cheers!
I was just looking at WDI and I think I like EHI better. It has a better discount to nav and longer dividend history, but they both look like good funds. BGX is interesting how is adds shorting to boost returns, will probably watch to see if the dividends continue to drop
I'm still on the sidelines with TLTW as it continues to frustrate me. The price of long duration treasuries is supposed to rise when the Fed cuts rates but the Fed didn't cut as deeply as the market expected so the market reacted by lowering the price of long term treasuries.
They move on expectations more than action. By the time the Fed cut rates, it wasn't a surprise...the market had already made the assumption it was going to happen. TLTW and TLT began moving up before the Fed made the cut for this reason.
There are more bond funds than I could ever research. I'm not aware of a short fund that meets your description, but that doesn't mean it doesn't exist.
I have TLTW in my portfolio. I'm slightly down on the price, but the dividends received compensated that price depreciation. So I'm slightly up in total returns and I suppose TLT, the underlying, will continue to go up since the Fed initiated the pivot last month. But since you can't predict the market... Maybe we go to a full-scale war in the Middle East, Israel versus a coalition of Arab countries, a Yom Kippur war part 2. In that case, oil could rise dramatically. Oil and food would go up in price again, and these two were the main culprits for high inflation in the last years according to the Fed. If inflation spikes up again, Fed may need to raise rates again or not cut further. So you never know. Better be diversified.
Thanks for the suggestion, I'll take a look at it. Both have suffered while waiting for rate cuts. Over the past year, TLTW had done slightly better but at other points in time, LQDQ was doing better.
if you study their Semi-Annual financial statement as of 30Apr2024, they have made a -$52,660,102 loss from their options written, so as much as their dividend income from TLT is good (left to right pocket), perhaps its not such a great fund.
Thanks for pointing that out. This is one to keep a close eye on, because its hard to predict what will happen to long term bonds and unclear to what extent TLTW can profit from them.
I know you can’t give advice but what would you do if you lived in NZ (like me) and found that NZ companies pay dividends around the 4.5% and a lot cut or even stop them, would you not bother with NZ and buy the higher yield ones you have now, I have brought FOF, GOF and SVOL, getting these yields would speed up my retirement plan, I know what you reply is not advice in any way, many thanks,
I don't know the NZ tax system. However, I can say that generally, the IRS treats foreign investors favorably, specifically when it comes to capital gains and interest. I suggest checking 1/ If NZ has a tax treaty with the US 2/ What the dividend withholding rate is. Let's say its 15%, for example. 3/ As a non-US investor, you can pay the withholding rate and do nothing more...I don't recommend that. 4/ Look for a tax accountant in NZ that files US tax returns and ask them how much they charge. If you file a tax return with the IRS, you will be responsible to pay the ACTUAL TAX DUE, instead of the withholding amount. There's a good chance that the actual amount due will be less than 15%. If that's the case, the IRS will refund you the difference. I'm not a tax professional, but I suggest exploring these concepts to determine if investing in the US is a good option for you. All of this is subject to whatever the NZ tax system does in terms of foreign investment tax liability.
Many thanks, I have made an appointment with a local accountant who knows about this stuff, first visit is free, love your channel, keep up the fantastic work
This is the absolute *worst* time to invest in TLTW if you're expecting the price to appreciate, TLT would be much better since the upside is severely capped.
If you'll notice when the Fed Just lowered rates TLT took a significant loss. Just because the Fed lowers rates doesn't mean that The tenure will continue to go up. The only way the 10-year goes up, if many investors are happy with getting 3.7% for 10 years. And as the Fed lowered rates, the investors said no we're not going to buy these 10-year bonds at 3.7%. Will that hold, who knows. If there's any increase in inflation you can expect TLT to drop like a rock once again. For now TLTW might make a lot of sense, because interest rates are not going to drop that much unless the Fed just gets panicky and drops like a rock. I don't think that's going to happen, it doesn't look like we're going into a recession at least not yet. I don't expect the Fed to drop rates quickly. And if that is the case, TLTW makes more sense than TLT
@@JoedisneyTLT follows the 20 year bond, it doesn’t move with the fed rate, which is the rate the banks borrow from. Long bonds are forward looking into the next year and beyond. Prices move with the expected cuts/hikes over that period of time. When the expectations change that’s when you see a change in the price. The effective duration for TLT is 16.67 years which means for every 1% they think the fed will cut/hike it will move the stock 16.67% now. Hope this helps
@@andrewd9633 if I was the 30 and the 10 in which average is 20, they don't do 20 your bonds any longer. But most of the bonds are off of the tenure. They hardly even are doing 30-year bonds. Sorry I'm not trying to be correcting you but this is just facts
@@Joedisney I stand corrected, after looking at the ishares site and looking at some of the cusip#, it’s a 20+ year bond fund holding 30 year bonds for about 10 years (25 year avg)
Just wanted to thank you for the info. Since discovering high yield investing and covered call etf´s, I have been able to increase my income and decrease my risk and anxiety. Also, I wanted to get your opinion on products such as yield max with super high yields with concordant risk of nav depletion. My thinking is if the total return is significant then using these types of productes in a tax free or deferred account utilizing a drip may provide significant upside. Do you have any thoughts or inputs regarding this type of strategy?
Thanks for your feedback and I'm glad the channel has been informative. I like high yield but not crazy high yield! I don't own any Yieldmax funds because they (mostly) lack diversification, and there's too much NAV erosion. The ones that have done well track tech stocks that have been successful recently, but I don't want to bet on that long term for my income.
There are a lot of moving parts. The income increases when the market is unstable, which is good, but if TLT appreciates faster than 2% per month, the gains are capped (not ideal).
I'm not exactly a raving fan of TLTW. I've bought and sold it more than any other fund because my timing was off. It's not an essential part of an income portfolio. I just like sprinkling in a little diversification sometimes.
Snowball Dividend Tracker (Create a Free Account, and the 10% Discount will appear under "Subscribe"):
armchairincome.link/snow
Armchair, you read my mind, I was just looking into TLTW last night. If I recall correctly you have 3 previous videos on this - buy, sell, and oops sold too soon 😂 I won’t personally be buying TLTW because quite frankly, I don’t understand it. But I appreciate the info, keep up the great work!
You're right, I did a few videos on TLTW in 2023. It's not exactly one of my favorites, but it's interesting none the less. Not buying what you don't fully understand is an excellent policy!
I'm writing on Dec 29 2024. TLTW has fallen approximately 14% since this video was uploaded.
I haven't owned TLTW for some time. It has proven impossible to predict the direction of interest rates; a major factor in the performance of this fund. If you'd like to see which stocks/funds I currently hold, my portfolio is available at: armchairinsider.beehiiv.com/subscribe
Good job on your description for TLTW.
Just for everybody watching TLTW is based on a10-year bond prices. 10-year bond prices can absolutely go down in price, this is bad for TLTW. When the Fed lower interest rates for the first time, TLTW actually lost money for a few days. Many believe 10 your interest rates can easily go up instead of down. It's just depends on the market and what the Fed does. This is not a no-brainer, win. You could lose money.
As of now, 10-year bond prices have been overbought. It might make sense to wait just a little bit to see if 10 year bond prices continue to lose. Don't forget, in order for TLTW to make 11%, investors have to go out and buy 10-year bonds at below 4%. If you think it's worth buying a 10-year bond and today's world at below 4% then you should absolutely buy TLTW. Myself I could easily see tenure bonds going over 4%, with that said probably not much more.
Thanks for breaking that down. I agree that market expectations play a huge role when it comes to long duration bonds.
Patience pays off. I didn’t sell and dollar cost averaged TLTW. She's break even if not positive and pays the 14.9% dividends
I'm glad its working out for you. Thanks for sharing your experience!
@@armchairincomechannel thanks for your channel. Also, you corrected me in that the 11% return is probably more accurate. 👍
Glad you brought TLTW back into the field of consideration. I owned it some time ago and sold it when i was disappointed with the results. Good video.
Thanks! I don't like trading and TLTW does require a lot of monitoring so I've been a bit hot and cold on it.
Thanks for the rundown, always appreciate your insights
I always appreciate you watching :)
Thanks for the updated review! Bonds have been behaving in all sorts of ways this past year, too unstable for me.
I agree that bonds are not easy to follow; a lot of moving parts. I wouldn't say TLTW is a core holding.
Good video and excellent analysis, as always.
I've looked at TLTW in the past and another look at it probably won't hurt me, but I don't see this one fitting my investing plan -- at least not now.
If the info is useful then I've done my job, even if it gets you to a "not for me" conclusion. (also...I don't have a job)
not just TLTW, I bought TMF it is 4.4% yield plus a massive upside potential
I don't hold TLTW anymore, but thanks for sharing your thoughts on TMF.
Been buying TLTW since this past Spring - great dividend yield and now the NAV increase is providing appreciation.
Sounds like good timing. Thanks for watching :)
GOF also seems interesting. It is a bond based CEF that has done well over the last year.
If GOF wasn't trading at 31% over its NAV I'd take a larger position.
Bought it a couple of weeks ago before the rate cut we all knew was coming. Great minds think alike. Must be the Vegas connection. I like it for the income, diversification, management, and low expenses.
Nice timing!
Nicely timed, I was just looking to increase my TLTW position. I’m also waiting for volatility to increase so I can add more SVOL
Yep, *SVOL.* 😊 One of my favourites as well (since 2 yrs). 🎉
I prefer SVOL to TLTW; will keep the TLTW position fairly small.
Same here with TLTW. Currently at a little less than 1%. Hoping that the environment continues to improve for it but I doubt I'll ever really love it.
Agreed. It's not love.
most likely not good for a buy and forget port
Yes, we're on the same page.
Bought some TLTW a few weeks will add more soon
I'm planning to add some but its risky. Rate cuts are likely but not guaranteed!
Good episode ! I’ll have a look as 10-11% on bonds is good, until rates stops to go down !
Yes, it's not a forever hold!
I've had TLTW since inception.......quite a ride 😮
Wow, you held on to a wild roller coaster!
Great analysis of TLTW, it’s definitely not for me. for bond and mixed asset income, I prefer the CEF space, eg, DLY, BCAT, ECAT, NVG, NPFD, NPCT, HIO. As you highlighted in your earlier videos, CEFconnect and CEFdata are good sources for yield and distribution data for this category of products. If you are considering any of these for your portfolio, I’d be very interested in your thoughts.
Agree. Basically half of my income portfolio is based on several CEF and the other half is bsd on several ETF with options overlay. Goal: yield/yr at least 12% to get distributions of min. 1% per month.
Thanks for those tickers, I'll take a look. I'm not familiar with most of them. ECAT/BCAT increased their dividends considerably recently but not sure that it's sustainable. Lots to research there!
@@armchairincomechannel Earlier this year, Saba attempted a take over BCAT, ECAT, and several BlackRock CEFs, claiming these funds were hoarding money instead of giving it to shareholders. BlackRock responded by upping distributions, converting some funds to term limitations, and buying shares (easy to do when their CEFs trade at a deep discount!). BlackRock’s actions demonstrate that Saba’s assessment was right, but by upping its game, BlackRock kept control over its funds. BCAT & ECAT have over $3B AUM between them, and between earlier hoarding and terms now in place, both funds may be able to sustain the distributions for quite a while. Much like CLO funds, we should enjoy the big party have to keep an eye on these in case the party gets out of control.
Great update
Thanks
You're most welcome!
Now that it’s gone down a lot I’m buying in
I don't currently hold it. The issue is that long duration bonds don't always move in the same direction as the Fed Funds rate. Occasionally they go the opposite way...as is the case at the moment because the Fed didn't cut as dramatically as the market anticipated.
Good update. I really don't like TLTW for retirees as it seems the manager can't manage the yield very well. I don't like the strict rules based CC strategy and the considerable fluctuations in yield. I switched my bond allocation to HPYT.U from Harvest as I am in Canada. Much more stable yield strategy for me.
I agree that the unstable yield is a big negative for retirees.
If it stays over 10% I’m good. I’ll hold forever basically. I’m going to use this to refill my emergency fund
Bond yields have been acting very strange recently. I'm sitting on the sidelines for TLTW until bond prices show signs of appreciation in reaction to Fed rate cuts.
I have been looking at TLTW and LQDW for a few years now. With the Fed lowering rates, this fund will only appreciate in value. (Rates go down, bond prices go up). Plus TLT (its core holding) pays a dividend as well. Then add the option selling premium and this ETF is good as gold.
That's generally true. Although with long term Treasuries, the price movement is affected by the emotion and expectations of the market, so its not an exact science.
I have been carrying 300 shares of tltw for about three months. Just watching to see how it responds to the market changes. Doubt I will put any more money into it.
I don't think its worth going heavy into either. There's definitely risk!
I prefer "Now, they pay everything" instead of "and this channel is where i share what i've learned" but i respect your opinion.
Thanks for the feedback. I was getting a bit tired of saying the same thing :) Also, I want to clarify that I'm sharing what I'm doing/learning, not claiming to be a guru that tells other people what they should do.
Did we discuss the tax implications for TLTW? Don’t remember hearing taxes mentioned. (Yes, I’m aware bonds tend to have little to no Fed taxes).
I didn't cover tax on TLTW and BlackRock's website doesn't offer a tax section. Most of the income comes from the covered call premiums and I'm working under the assumption that the premiums are taxed as ordinary income.
Have you ever looked into USOI? I wonder what your thoughts are on this stock. The yield is sky high and I've owned it for a while.
Too wild for me. NAV erosion and volatile dividends. If I had a deep understanding of the oil industry I might be able to time it, but oil isn't really my thing.
Falling short term rates (those governed by the Fed) don’t necessarily mean falling long term rates. With an inverted yield curve recently and two Presidential candidates trying to outdo each other increasing federal deficits (Harris by handing out cash and Trump by cutting federal revenue), my expectation is that long term rates aren’t going to fall much and could soon start climbing. This would be consistent with my other expectation that we have passed the nadir in a 40-year rate cycle that began in 1982 and long rates will move generally higher for the next almost 40 years. I would therefore stay away from bonds and bond funds with a duration longer than about 7 years and personally I’m sticking with durations shorter than that (under 5 years) when it comes to vanilla bonds and bond funds.
Thanks for sharing your perspective. You make some great points and long term bonds are complex creatures...moving with the emotions and expectations of the market. If you skip TLTW I totally understand!
I agree with that assessment and one confirmation has been the decline in TLT that started immediately after the Fed cut rates as long term rates moved higher. It obviously remains to be seen how things will develop in the longer timeframe but the fiscal situation is not encouraging, to say the least, with no prospect of improvement any time soon.
I bought too much. It tanked ……ouch.
It went ex dividend on Oct 2. That usually results in a price drop to compensate for the monthly payout.
But ...
The Yield Curve was *inverted* ...
Short Term Bonds = Higher Yield
Long Term Bonds = Lower Yield
To "normalize" the Yield Curve ...
Short Term Bonds = *Decrease* Yield
Long Term Bonds = *Increase* Yield
That's a good point. Long term bonds don't always behave in a logical manner. They're subject to the emotions and expectations of the market.
Trying to get a copy of your lasted portfolio, but only saw the version 1.0 dated in May.
The most recent edition came out last week. Here's a link in case you subscribed via email and didn't receive it: armchairinsider.beehiiv.com/
According to yahoo, 3 year return -10%, pass
Yahoo charts don’t show total return, which ignores distributions. Most of the return for this fund is from distributions.
Excellent video. New to your channel and been binge watching all your videos and learning a lot. Are there other ETF similar to TLT that have a built in yield with cc on top of it? Thanks
Welcome aboard! Yes, there are plenty. Check the link to Armchair Insider in any recent video Description. It lists every stock/fund in my portfolio and the relevant video. Examples include SPYI, GPIQ, QQQI, BST, etc.
@@armchairincomechannel Thank you so much. Can you please share your thoughts on 0dte ETFs with Pros and Cons? Thanks
Rates are going down..sort of. 10 year rates are up recently, despite the FED lowering 50 basis points. I’m watching my TLTW closely, really concerned it will get into a NAV spiral. Holding for now. I am much happier with how the price on restricted share ETF’s have acted to recent FED move.
@@klister long bonds like TLT don’t move when the fed changes the rate, they move on the expected rate change in the future. That’s why the 20 year rate is 4.153% and the federal funds effective rate is 4.83%. If investors think the there will be more cuts in 2025/26 TLT will move by 16% now for every 1% they think the rate will be cut in the future
@@andrewd9633I would add that the expected rates in the future have a lot to do with expected inflation in the future and that, in turn depends a lot on federal spending and deficits. Who expects a substantial cut in federal deficits? If the federal government continues deficit spending in the mode of the last 16 years, it’s very hard to see how longer rates can do anything but climb higher, not lower (with occasional corrections as all markets have). I would stay away from anything that goes down when longer rates go up such as this fund.
You're right, it's not that simple.... long term treasury prices don't move exactly in the inverse to the Fed's rate changes. The market sentiment and expectations play a role too.
Enjoyed the video! Playing bonds with WDI, BGX(run by Blackstone, 9.48% yield), and looking at EHI(sister fund of WDI, 12.19% yield). Ever checked out the last 2? Cheers!
Thanks for the feedback. I'm not familiar with those 2 funds, I'll take a look. Blackstone has a lot of funds!
I was just looking at WDI and I think I like EHI better. It has a better discount to nav and longer dividend history, but they both look like good funds. BGX is interesting how is adds shorting to boost returns, will probably watch to see if the dividends continue to drop
What's your take on TLTW's current sluggish performance, thanks
I'm still on the sidelines with TLTW as it continues to frustrate me. The price of long duration treasuries is supposed to rise when the Fed cuts rates but the Fed didn't cut as deeply as the market expected so the market reacted by lowering the price of long term treasuries.
I hate it - its like a roller coaster
I'm not in love with it. The roller coaster is a good metaphor!
Hardest part of investing is filtering out the noise.
I agree!
Why didn't tlt amd tltw go up when they made the big cut?? I'm shocked
They move on expectations more than action. By the time the Fed cut rates, it wasn't a surprise...the market had already made the assumption it was going to happen. TLTW and TLT began moving up before the Fed made the cut for this reason.
@@armchairincomechannel ty for that feedback! I'm holding tltw. It's a good dividend. And I don't see bonds going down.
Is there a short bond etf that has covered calls?
There are more bond funds than I could ever research. I'm not aware of a short fund that meets your description, but that doesn't mean it doesn't exist.
I have TLTW in my portfolio. I'm slightly down on the price, but the dividends received compensated that price depreciation. So I'm slightly up in total returns and I suppose TLT, the underlying, will continue to go up since the Fed initiated the pivot last month.
But since you can't predict the market... Maybe we go to a full-scale war in the Middle East, Israel versus a coalition of Arab countries, a Yom Kippur war part 2. In that case, oil could rise dramatically. Oil and food would go up in price again, and these two were the main culprits for high inflation in the last years according to the Fed. If inflation spikes up again, Fed may need to raise rates again or not cut further.
So you never know. Better be diversified.
I agree, diversification is key. I'm taking advantage of rate cuts to some extent, but not relying on it. You never know!
HYGW needs a video update
Thanks for the suggestion. I haven't reviewed HYGW but I'll take a look...
Another great video; maybe a video of its sibling in the future? LQDW.. (Ishares corporate bond buy write)
Thanks for the suggestion, I'll take a look at it. Both have suffered while waiting for rate cuts. Over the past year, TLTW had done slightly better but at other points in time, LQDQ was doing better.
if you study their Semi-Annual financial statement as of 30Apr2024, they have made a -$52,660,102 loss from their options written, so as much as their dividend income from TLT is good (left to right pocket), perhaps its not such a great fund.
Thanks for pointing that out. This is one to keep a close eye on, because its hard to predict what will happen to long term bonds and unclear to what extent TLTW can profit from them.
20 year is not where you want to be in bonds. Intermediate length is much better place to play.
It's not my favorite area either. A lot of moving parts and market emotions with long duration bonds.
I'm not doing it, again. I don't think Blackrock is good at this stuff.
It does require a few factors to go your way.
I know you can’t give advice but what would you do if you lived in NZ (like me) and found that NZ companies pay dividends around the 4.5% and a lot cut or even stop them, would you not bother with NZ and buy the higher yield ones you have now, I have brought FOF, GOF and SVOL, getting these yields would speed up my retirement plan, I know what you reply is not advice in any way, many thanks,
I don't know the NZ tax system. However, I can say that generally, the IRS treats foreign investors favorably, specifically when it comes to capital gains and interest. I suggest checking 1/ If NZ has a tax treaty with the US 2/ What the dividend withholding rate is. Let's say its 15%, for example. 3/ As a non-US investor, you can pay the withholding rate and do nothing more...I don't recommend that. 4/ Look for a tax accountant in NZ that files US tax returns and ask them how much they charge. If you file a tax return with the IRS, you will be responsible to pay the ACTUAL TAX DUE, instead of the withholding amount. There's a good chance that the actual amount due will be less than 15%. If that's the case, the IRS will refund you the difference. I'm not a tax professional, but I suggest exploring these concepts to determine if investing in the US is a good option for you. All of this is subject to whatever the NZ tax system does in terms of foreign investment tax liability.
Many thanks, I have made an appointment with a local accountant who knows about this stuff, first visit is free, love your channel, keep up the fantastic work
This is the absolute *worst* time to invest in TLTW if you're expecting the price to appreciate, TLT would be much better since the upside is severely capped.
I have a blend of both - one adds income and the other appreciation (TLT)
If you'll notice when the Fed Just lowered rates TLT took a significant loss. Just because the Fed lowers rates doesn't mean that The tenure will continue to go up. The only way the 10-year goes up, if many investors are happy with getting 3.7% for 10 years. And as the Fed lowered rates, the investors said no we're not going to buy these 10-year bonds at 3.7%. Will that hold, who knows. If there's any increase in inflation you can expect TLT to drop like a rock once again. For now TLTW might make a lot of sense, because interest rates are not going to drop that much unless the Fed just gets panicky and drops like a rock. I don't think that's going to happen, it doesn't look like we're going into a recession at least not yet. I don't expect the Fed to drop rates quickly. And if that is the case, TLTW makes more sense than TLT
@@JoedisneyTLT follows the 20 year bond, it doesn’t move with the fed rate, which is the rate the banks borrow from. Long bonds are forward looking into the next year and beyond. Prices move with the expected cuts/hikes over that period of time. When the expectations change that’s when you see a change in the price. The effective duration for TLT is 16.67 years which means for every 1% they think the fed will cut/hike it will move the stock 16.67% now. Hope this helps
@@andrewd9633 if I was the 30 and the 10 in which average is 20, they don't do 20 your bonds any longer. But most of the bonds are off of the tenure. They hardly even are doing 30-year bonds. Sorry I'm not trying to be correcting you but this is just facts
@@Joedisney I stand corrected, after looking at the ishares site and looking at some of the cusip#, it’s a 20+ year bond fund holding 30 year bonds for about 10 years (25 year avg)
Just wanted to thank you for the info. Since discovering high yield investing and covered call etf´s, I have been able to increase my income and decrease my risk and anxiety.
Also, I wanted to get your opinion on products such as yield max with super high yields with concordant risk of nav depletion. My thinking is if the total return is significant then using these types of productes in a tax free or deferred account utilizing a drip may provide significant upside. Do you have any thoughts or inputs regarding this type of strategy?
Thanks for your feedback and I'm glad the channel has been informative. I like high yield but not crazy high yield! I don't own any Yieldmax funds because they (mostly) lack diversification, and there's too much NAV erosion. The ones that have done well track tech stocks that have been successful recently, but I don't want to bet on that long term for my income.
No. TLTW is only appropriate in a stable rate environment.
There are a lot of moving parts. The income increases when the market is unstable, which is good, but if TLT appreciates faster than 2% per month, the gains are capped (not ideal).
Personally i have no interest in tltw. There are better ways to play this asset class.
For example? I've invested in utilities and real estate
@johnspelman8976 yes I much rather invest in those two. There are also fixed income CEF with better performance and yield.
@@jeancarloferreira9770 which CEFs
I'm not exactly a raving fan of TLTW. I've bought and sold it more than any other fund because my timing was off. It's not an essential part of an income portfolio. I just like sprinkling in a little diversification sometimes.
I prefer utilities and real estate too!
first
Speedy Gonzales!