Evidence-based financial education and fun stats. Part research, part ramblings. Tweets ≠ advice. YouTube vids at https://teapawt.net/t.co/Q5xmqlofr3
USA
Joined September 2020
- Tweets10.4K
- Following70
- Followers3.3K
- Likes9.5K
Pinned Tweet
$OVQ is the newer, Nasdaq-100 cousin to $OVL. It holds the NDX via QQQM at 97%, adds a short put spread overlay on the S&P 500, distributes 12% annually, and costs 0.97%.
Is it worth an extra 0.86% fee compared to 95/5 QNDX/TQQQ, which it resembles, for a small option strategy and having your money handed back to you? You decide.
New post here: optimizedportfolio.com/ovq/
SPYI captures more upside than JEPI, but that isn't saying much.
Its ROC benefit maxes out around 0.3%/yr. while its fee is over double that.
Finfluencers' claims about it don't hold water.
I explain all this and more in my newest blog post here: optimizedportfolio.com/spyi/
> "Same mortgage payment covered. The higher the yield, the less capital you need."
When I say income influencers are often purposely misleading, this is what I mean.
$5,000 a month covers the mortgage in most major 🇺🇸 cities
Here's how much you'd need invested to collect that $5,000/month in income in each of these ETFs:
$AIPI = about $172,000 (34.79% yield)
$OMAH = about $400,000 (15.00% yield)
$QQQI = about $411,000 (14.60% yield)
$JEPQ = about $466,000 (12.87% yield)
$SPYI = about $486,000 (12.35% yield)
$JEPI = about $732,000 (8.20% yield)
$SCHD = about $1,818,000 (3.30% yield)
Same mortgage payment covered. The higher the yield, the less capital you need.
Fun fact on GPIQ and GPIX, covered call ETFs from Goldman:
The permitted range of option overwrite is 25-75%, but nowhere in any of the fund literature does it say what informs that percentage.
I thought they might mention the usual terms like market sentiment, directionality, or implied vol (all of which would still be vague). Nope. Nothing.
So these are more discretionarily active than I initially thought. That word "dynamically" could mean anything here.
So far, the average has been about 35%.
Read more at:
optimizedportfolio.com/gpix/
ALT Source: Goldman Sachs. GPIX product page.
Subscribe to my paid newsletter where I tell you which total market index funds are the cheapest and why they'll beat the stock picks from the other newsletters you're paying for. #sarcasm
Reminder: $WEEK continues to be the worst way to own T-bills.
Finfluencers can be sponsored by niche fund houses, shill their high-fee ETFs, and sell newsletters while thinking calling someone a fee-only fiduciary advisor is an insult. FinTwit is upside down.
Reminder: "What the people want" at any given point in time is almost always NOT the best investment, objectively.
Some flowers in the 1600's serve as a salient reminder. More recently, NFT's and memecoins come to mind.
Something hilariously (maybe painfully) ironic:
OVL arguably made way more sense with its old, lower, modest yield of 3% - effectively just juicing the S&P a bit to try to squeeze out more return - but the switch to 10% is what attracted huge inflows. optimizedportfolio.com/ovl/
GPIX is an income ETF from Goldman writing call options on 1/3 of its S&P 500 equity book, less than its competitors, meaning more upside captured, and at a fee lower than competitors.
Thus, it's arguably the least offensive of these products.
New blog: optimizedportfolio.com/gpix/
Dudes are buying high-yield income funds, thereby lowering volatility, and then using margin to ratchet volatility back up, all while reinvesting distributions. The illogic hurts my brain.
Engineer Investor makes a great point here.
A pretty hilarious irony is I often see influencers on here unknowingly contradict their own assertions they're trying to make because they told an LLM to write an engaging tweet but they can't spot its missteps in basic logic and math before posting what it wrote.
The LLM - and thus the person hastily publishing its slop - is often confidently incorrect.
An underrated second-order benefit of LLMs is that they’re extremely effective Dunning–Kruger detectors.
Generating prose that convinces a novice is easy. Spotting and fixing the slop before putting your name on it takes expertise.
Shipping obvious AI slop signals a lack of understanding, or effort. It’s a tell.
And people say AI will replace financial advisors...
$SCHD vs the 4% Rule (Part 2):
Say you retired at the end of 1998 with $1 million.
One retiree buys the Dow Jones U.S. Dividend 100, the index SCHD tracks, and spends every dividend without selling a share. A second buys $VOO or $SPY and follows the 4% rule: $40,000 the first year, raised with inflation. A third also buys the S&P 500 but spends 1.75% + 0.5/CAPE of the portfolio each year, a sensible valuation-based rule.
In 1999 the dividends paid the least, about $28k, against $40k for the 4% rule and $30k for the CAPE rule.
By 2025 the dividend retiree was spending $230k a year. The CAPE rule paid $94k and the 4% rule $77k.
Over 27 years, the dividends paid out $2.6M in total. The 4% rule paid $1.5M and the CAPE rule $1.2M.
The dividend portfolio also ended with the largest portfolio, $5.9M, against $3.5M for the CAPE rule and $1.4M for the 4% rule. The 4% portfolio had to keep selling shares through two bear markets and was down to $497k by the end of 2008, half where it started.
If you've ever wondered what I mean when I say mental accounting bias, this is a quintessential example, courtesy of AI slop:
In October 2022, my portfolio was down 25%.
Everything was red. The headlines said the 60/40 was dead. People were panic-selling into cash at 4%.
My distribution hit anyway.
Same month. Same amount. Right on schedule.
The price is the crowd's opinion of your assets.
The cash flow is the machine's output.
One of those kept paying me while the crowd panicked.
Guess which one I stopped watching.
Not sure how this one ended up blowing up but I love to see it. I'll take any opportunity to push back against misinformation.
So in all seriousness for posterity since some seem to have missed the broader point last time,
1. 12% withdrawal rate is likely unsustainable.
2. The S&P can generate more than 1.3% in income. Comparing just the yields of 2 very different investments is silly. Total return is a thing.
3. The 4% Not-a-Rule™ does not say wait until you're old.
4. If by "tax efficiently" you mean 100% ROC, that advantage is likely 0.25% annualized at best, which is less than the fee of any income ETF I've seen: optimizedportfolio.com/roc-c…
This is how you play tennis without the net.
