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Post by steelpony10 on Dec 21, 2021 18:27:17 GMT
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Post by chang on Dec 21, 2021 21:42:01 GMT
Excellent article, thanks. I will read it again more carefully tonight. This pithy remark caught my attention:
And she said, “We got to be wealthy. What is your point? We can only get unwealthy. That’s all that can happen to us.”
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Post by anitya on Dec 21, 2021 22:00:55 GMT
Did I read that correctly that he is 50% cash?
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Post by chang on Dec 21, 2021 22:03:45 GMT
Did I read that correctly that he is 50% cash? “But when I turned 65, I cut that in half. Before, I had almost no money in cash. So now I have 40 percent in U.S. stock index funds, 5 percent in international, and 5 percent split between gold and cryptocurrency. The other half of my money is in cash.”
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Post by Fearchar on Dec 21, 2021 22:45:07 GMT
Cramer is worth about $100M with 50% in cash due to fear.
Buffett is worth about $100B and plans to give away 99% of it.
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Post by Mustang on Dec 22, 2021 0:25:59 GMT
Did I read that correctly that he is 50% cash? In a link embedded in the article he says he prefers CDs to bonds. Its probably not cash but cash equivalents.
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Post by johntaylor on Dec 22, 2021 2:36:50 GMT
His father lived to almost 92, so the longevity risk issue...
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Post by chang on Dec 22, 2021 3:43:00 GMT
Did I read that correctly that he is 50% cash? In a link embedded in the article he says he prefers CDs to bonds. Its probably not cash but cash equivalents. Interesting. I'm happy with UST for my cash - VUSFX, MINT, GSY, JPST, etc. and I also include RPHIX in this category. I don't know how the yields compare to CDs, but I consider the risk to be essentially negligible, and they're extremely liquid.
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Post by anitya on Dec 22, 2021 4:14:07 GMT
Did I read that correctly that he is 50% cash? “But when I turned 65, I cut that in half. Before, I had almost no money in cash. So now I have 40 percent in U.S. stock index funds, 5 percent in international, and 5 percent split between gold and cryptocurrency. The other half of my money is in cash.” He turned 65 in February 2020. And his equity allocation is in index funds. He makes a living hawking individual stocks. It is a clue to the rest of us, I suppose. Other highlights for me in the article - "People should recognize that stocks no longer really reflect a lot of what’s going on at a company. They really reflect what’s going on in the stock market." "It [relationship between stocks and the company the stock represents] really started changing when people lost so much money in the 2000s. And then they lost even more money in 2007. So a lot of people just decided, “The hell with it. It’s too hard, but I have to save some. So I’ll put money in an index fund.”" So, why is your show so focused on picking winners?
"Well, I try to find the anomalies. But the stocks that can really break out are very few and far between." [underline, bold added]
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Post by anitya on Dec 22, 2021 4:59:47 GMT
Did I read that correctly that he is 50% cash? In a link embedded in the article he says he prefers CDs to bonds. Its probably not cash but cash equivalents. Thanks. I did not expect it to be literal. One can always go to online savings. This year VUSFX, JPST, and their kind probably made less than online savings accounts. At current interest rates, I consider CDs and anything that you can hold to maturity (or which you can redeem at will like iBonds) and has zero credit risk also is cash.
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Post by steelpony10 on Dec 22, 2021 12:48:27 GMT
anitya , Well in Cramers defense, if I’m getting the gist of your comments correctly, that was his career. He also has an online investment club. His viewership seems to be younger then 65. So his opinions are at least backed by years of experience. Personally I agree markets have turned into a casino, read buy, sell, why on forums. I read the book on GameStop. I think that’s what he means. It’s another way of investing I suppose and also one reason I went to indexes whose returns most can’t beat over time with traditional or casino methods. I can’t just pass away and dump a mess on my wife. Three indexes, secure monthly cash flow and a set aside for LTC was easy to explain and demonstrate.
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Deleted
Deleted Member
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Post by Deleted on Dec 22, 2021 13:51:35 GMT
Personally, I don't trust a word he says. I'm sure everyone has seen the classic Daily shows with Jon Stewart. Wow....
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galeno
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KISS & STC
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Post by galeno on Dec 22, 2021 18:33:31 GMT
I agree. Step off the equity gas pedal. If equities and investment grade FI weren't so over valued we'd be 30/70 instead of 50/50.
We prefer to use 90% TWBM + 10% CASH vs Cramer's 100% CASH. Which if kept in laddered CDs might be better than TBM.
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Post by anitya on Dec 22, 2021 19:51:11 GMT
anitya , Well in Cramers defense, if I’m getting the gist of your comments correctly, that was his career. He also has an online investment club. His viewership seems to be younger then 65. So his opinions are at least backed by years of experience. Personally I agree markets have turned into a casino, read buy, sell, why on forums. I read the book on GameStop. I think that’s what he means. It’s another way of investing I suppose and also one reason I went to indexes whose returns most can’t beat over time with traditional or casino methods. I can’t just pass away and dump a mess on my wife. Three indexes, secure monthly cash flow and a set aside for LTC was easy to explain and demonstrate. I was not passing any judgement on Cramer. It is too bad that is what you got out of my post.
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Post by Chahta on Dec 23, 2021 2:05:09 GMT
His JOB is to talk about stocks. He is a performer. Has nothing to do with what he personally does. If I had $100m I would have 50% cash too.
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Post by retiredat48 on Dec 23, 2021 3:34:58 GMT
Cramer recently sold a lot of Bitcoin, and bought a farm in Pennsylvania.
Helps on two fronts. He is exiting a speculation, and buying a potential large tax shelter, in that farms will likely be exempt from "wealth taxes." And he just beat the 1 Jan 2022 date that most tax law changes/restrictions Biden may impose, will be effective 1/1/22 only.
Cramer's wife recently bought a condo in Florida, and has been mostly here since COVID. Did I say FL has no state income taxes?
Cramer never intends to be a farmer.
My spouse is from Newport RI. Walking around the "loop of mansions" (Ocean Drive), it was quite common to see four cows in the hillsides/yards. Four cows qualified as a farm in RI, thus, lower property assessments/taxes. Jackie Kennedy Onassis' father had such a Mansion there. However, my eventual wife was prettier than Mrs. Onassis, so I went with my eventual spouse!
R48
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Post by johntaylor on Dec 25, 2021 15:17:08 GMT
Does the show title "mad money" suggest a small amount for impulsive purchases?
Cramer (JD Harvard) may have wanted a title to show he was not advising re core holdings.
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Post by FD1000 on Dec 26, 2021 22:31:54 GMT
Love or hate him, Kramer had several good points 1) “We got to be wealthy. What is your point? We can only get unwealthy. That’s all that can happen to us.”...You only need to get rich once. We can’t keep risking.” 2) It’s perfectly good for an individual to own an index fund. 3) I’ve been convinced that a huge percentage of other countries just do not enjoy capitalism. They have just been compromised into ways that do not produce great results, and I just got tired of watching this.
The above is similar to what I have been saying for years.bbut
1) I don't agree about cash, I have never owned cash over 1% for over 6 weeks while I owned 1-100% in stocks. 2) I always believed in US stocks to be a huge % of my portfolio. I used other US categories such as SC and sector(financial). 3) CEFs are not a replacement to cash, unless risk/volatility don't bother you. 4) I believe most investors should use indexes for generic US+international stocks, but could use managed funds for EM + bonds.
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Post by steelpony10 on Dec 27, 2021 1:34:48 GMT
FD1000 , Ha. Ha. CEF volatility is my friend in a TIRA so it’s not always bad. I get the 8-9% distribution and control RMD’s longer. If you’re having trouble sleeping I’m going to start backing off CEF’s when I reach 1.5 mil in distributions. I’m running out of places to invest the excess cash. I understand the feeling some people get if riches come to easy though. Although we’re small potatoes I agree with the wife’s reasoning. Someday I’ll drop the auto investments and it will all go to cash.
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Post by FD1000 on Dec 27, 2021 4:21:20 GMT
FD1000 , Ha. Ha. CEF volatility is my friend in a TIRA so it’s not always bad. I get the 8-9% distribution and control RMD’s longer. If you’re having trouble sleeping I’m going to start backing off CEF’s when I reach 1.5 mil in distributions. I’m running out of places to invest the excess cash. I understand the feeling some people get if riches come to easy though. Although we’re small potatoes I agree with the wife’s reasoning. Someday I’ll drop the auto investments and it will all go to cash. My points as always are 1) If volatility doesn't bother you, you should look for the highest performance and why stocks should be your choice. 2) Distributions are only one part of TR. Anybody can generate them by taking any fund (or stocks) and selling a certain amount every month. 3) When you have enough, almost any combo will do, it doesn't matter what you own. You can do it with 100% stocks or 100% CEFs. I'm just looking at the best common sense investing.
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Post by steelpony10 on Dec 27, 2021 12:09:53 GMT
FD1000 , I see stocks and markets as not as reliable as bonds (IOU’s) in general as you do. I’ll take less lucrative but more reliable income in an average 15-20 year retirement. Some type of bond or rising dividend. Depending on needed income we invested less money for higher leveraged professionally managed distributions. As mentioned swings in values can help with RMD’s and we have more to invest in indexes with a large muni to buffer the market affects of both. Combined with SS and recent average cola’s of 2%+ we’re using about 2% of our CEF income to pay the monthly bills and spend freely within reason early in retirement. The rest is reinvested in VTI mostly at this time. Because of our experiences with our parents I see retirement needs as a reverse bell curve. We had the riches at the beginning and now because of Covid are forced into the second stage the bottom of the U and may need all the muni and index money for later life issues if either of us make it to the right side. Meanwhile all the basic expenses are paid at least to age 90 at this slow personal inflation rate. Maybe Cramer needs 50 mil to spend and 50 mil for possible future needs. His health isn’t that good. If he passes first his wife doesn’t have to do anything. I haven’t eliminated that possibility either, cash or near cash and growth. I don’t understand the need to continue with unnecessary volatility until you die either. We’ll back off markets and CEF’s at some point. Other then tweaking we’re already retired investors.
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Post by FD1000 on Dec 27, 2021 21:35:07 GMT
FD1000 , I see stocks and markets as not as reliable as bonds (IOU’s) in general as you do. I’ll take less lucrative but more reliable income in an average 15-20 year retirement. Some type of bond or rising dividend. Depending on needed income we invested less money for higher leveraged professionally managed distributions. As mentioned swings in values can help with RMD’s and we have more to invest in indexes with a large muni to buffer the market affects of both. Combined with SS and recent average cola’s of 2%+ we’re using about 2% of our CEF income to pay the monthly bills and spend freely within reason early in retirement. The rest is reinvested in VTI mostly at this time. Because of our experiences with our parents I see retirement needs as a reverse bell curve. We had the riches at the beginning and now because of Covid are forced into the second stage the bottom of the U and may need all the muni and index money for later life issues if either of us make it to the right side. Meanwhile all the basic expenses are paid at least to age 90 at this slow personal inflation rate. Maybe Cramer needs 50 mil to spend and 50 mil for possible future needs. His health isn’t that good. If he passes first his wife doesn’t have to do anything. I haven’t eliminated that possibility either, cash or near cash and growth. I don’t understand the need to continue with unnecessary volatility until you die either. We’ll back off markets and CEF’s at some point. Other then tweaking we’re already retired investors. The following in nothing about your way of investing, just generic common sense about investing. CEFs holders have the following excuses because they can't dispute simple math numbers. 1) Performance+volatility: 3 years performance as of 11/30/2021 using PV for SPY vs PDI. PV use the price, not the NAV and include all distributions. The price is what counts because you can only trade prices. Why PDI? Because it's managed by one of the best team with various flexible options. It's not pretty, SPY=20.35% annually while PDI=3.1%. But that's not all: SPY had lower SD + Max Draw + much better Sharpe. See (link). Investing is based only on performance of total returns which include all distributions + volatility(SD) if you care. When you lose on both, there is nothing what to talk about.2) Higher distribution is another negligible idea because total returns include all distributions. Let's do a little math again. Suppose 2 investors have 1 million and both want $70K annually from their portfolio in the last 3 years( link). Nothing really change per the above. The SP500 generated easily 70K annual income and actually ended up with 1.42 million, while PDI ended up with only 873K. If 3 years isn't good enough then 5 years of prformance ( link) have similar results. 3) Bonds are more reliable: this is correct if they have lower volatility but CEFs volatility is as high as the SP500 and CEFs higher yield is generates by EXTRA RISK and a huge EXTRA cost called expense ratio. PDI ER=3.72 while VOO(SP500) is only 0.03%. This means every year PDI has to overcome 3.7% just to get even with SP500.
If PDI beat SP500 by about 2% annually, it will take over 9 years just to catch up with the last 3 years.
So again 1) It’s your money you can do what you want, my neighbor has been using over 90% in Munis over 20 years. With over 20 million portfolio, no wonder it worked. 2) I can see a limited use for CEFs. Maybe 20% max and instead of some of your stocks. CEFs are suited for traders, but good traders would do better with stocks. If you see a time when CEFs lose a lot while stocks don't, it would be a good time to buy CEFs. So far, over 10 years, I didn't see it. 3) Lastly, CEFs are older than OEFs. If they are so wonderful, how come the best investors/experts in the world don't use them and/or discuss/recommend them?
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Post by steadyeddy on Dec 27, 2021 23:36:55 GMT
How believable is the AARP article? How do the "followers" of Kramer feel if the contents of the article are in fact true?
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Post by steelpony10 on Dec 28, 2021 0:13:32 GMT
FD1000 , You can always post whatever you want to me. What you say is all true but nuanced. I don’t believe comparing mostly bond CEF’s to equities is valid. Spend down investing is different from income investing. Growth dominates one, cash flow the other. I’d like some to read this stuff and chime in. Well I’m shrinking our CEF percentage over time by equity growth and still making a huge income. How’s that? I’ve had returned then 700k on my glorified professionally managed bond funds, you have to pay these guys, the last 12 years so how does that compare to generic bond funds? Our muni has yielded 2.8-3.2% over that time. Along with a slightly smaller 40 year muni that’s a lot of spendable cash. All our original investment has been returned, 72/8-9%, and it’s someone else’s ROC which is tax free income I’m pretty sure. Add that feature in a taxable account and that puts the distribution higher if you buy and hold. You have to take that all into account. For us it’s all gravy now. I thought you were anti investment experts? Not all the time? None of the charts, studies, experts say or write anything that pertains to our personal preferences or future needs. Our goal was high reliable income to start from which we can backpedal as we age. I don’t invest not to lose but to make money. Otherwise I’d be a way more conservative spend down investor, become a bond and fund guy, 60/40, 50/50, rebalancing, constant market timing, juggling, the market is overvalued, we’re due for a correction, never an end in sight, exciting stuff like that zzzzzz. How can I pass that on or handle that when I don’t know where I left my car keys and shouldn’t be driving? I suppose indexes and a muni now about 2/3 of our portfolio doesn’t allow for some exotic investing in an obscure area, a learning experience? Anyway I totally agree with Cramer’s wife. I think with indexes and a muni I’m 2/3 of the way there. I think of CEF’s as cash cows. In recent times, 10 years, values have varied from 3-10% cap gains. So right now we’re at 3%. 3+8-9+some tax free ROC that’s how I see it.
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Post by retiredat48 on Dec 28, 2021 4:37:36 GMT
Ah FD1000, I think I caught you in a mistake...likely a lack of knowledge!
You posted: " CEFs higher yield is generates by EXTRA RISK and a huge EXTRA cost called expense ratio. PDI ER=3.72 while VOO(SP500) is only 0.03%. This means every year PDI has to overcome 3.7% just to get even with SP500."
-------------------------------------- Incorrect.
PDI and many leveraged CEFs show this high expense ratio because: The SEC rules require that Mutual Funds add to the expense ratio, the annual percent paid towards leverage. This means, if a fund has a 1.00 actual ER, and it pays 2.72% of gross assets in interest on borrowed money, the ER must be reported as the sum, or 3.72%.
Many investors do not understand this, and accordingly shy away from CEFs by these publlshed ERs.
Now I could be wrong, FD, so I trust you will go look this up.
I'm 99% sure you will have learned something!
Good day...
R48
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Post by fishingrod on Dec 28, 2021 11:35:50 GMT
"If executives truly wanted to educate their shareholders and the readers of their annual reports, they would include tables showing the benefits of leverage and the total costs of that leverage. They would also be more transparent about all of their costs and define those costs clearly. There is no need for pro-forma expense ratios."
"Even though interest expense is a true expense, it also brings a benefit: the excess gain achieved from the leverage. To assess the true benefit of the leverage, one must calculate the excess return from the leverage and then subtract the cost of that leverage. Is the leverage actually an expense?.... In fact, as long as the total return of the portfolio exceeds the cost of the leverage, using leverage will be profitable. While interest expense is definitely an expense, it's an expense that can have calculable benefits."
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Post by Fearchar on Dec 28, 2021 12:43:03 GMT
Thanks fishingrod, I didn't realize how nice of a screener Fidelity has.
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Post by yogibearbull on Dec 28, 2021 13:22:53 GMT
M*, CEFConnect, etc do show the breakdown of CEF ERs into management fee and leverage costs (interest, shorting). The CEFs can do that too but they are stuck showing the leverage costs in the ERs. In the 1940s, mutual funds/OEFs were worried that CEFs may look better in bull markets due to their leverage and they campaigned the SEC to force leverage costs into fund ER totals. Then, the OEFs could claim their cost advantage - sneaky. Do realize that CEF leverage as now shown understates their impact for the CEF holders. I will add link to a related thread. community.morningstar.com/s/question/0D53o00005E8XjQCAV/cefs-have-more-risk-than-implied-by-their-reported-leverage-ratios
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Post by FD1000 on Dec 28, 2021 14:16:30 GMT
Ah FD1000, I think I caught you in a mistake...likely a lack of knowledge! You posted: " CEFs higher yield is generates by EXTRA RISK and a huge EXTRA cost called expense ratio. PDI ER=3.72 while VOO(SP500) is only 0.03%. This means every year PDI has to overcome 3.7% just to get even with SP500."-------------------------------------- Incorrect. PDI and many leveraged CEFs show this high expense ratio because: The SEC rules require that Mutual Funds add to the expense ratio, the annual percent paid towards leverage. This means, if a fund has a 1.00 actual ER, and it pays 2.72% of gross assets in interest on borrowed money, the ER must be reported as the sum, or 3.72%. Many investors do not understand this, and accordingly shy away from CEFs by these publlshed ERs. Now I could be wrong, FD, so I trust you will go look this up. I'm 99% sure you will have learned something! Good day... R48 In the is article www.fidelity.com/learning-center/investment-products/closed-end-funds/leverage they expelained it very well. The fund pay $2 for the leverage and made an extra $5. The only problem is that the $2 is a constant while the $5 is a possibility, not a guarantee.As Clinton said, what is is? Maybe instead of an expense, we can call it COST. BTW, I have been commenting about CEFs for at least 5 years and here we are. I used to trash MLP and then they did so bad that nobody talks about them for several years. FI CEFS are a much better product but I just want investors to use them with open eyes. I could use them in the future but I know I will trade them, actually I have already done it in the past, in March 2020. Attachments:
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Post by steelpony10 on Dec 28, 2021 15:27:26 GMT
FD1000 , Ha. Ha. Nothing is ever guaranteed. Maybe you’re familiar with the rest of that saying. Anyway I don’t think anyone talks about MLP’s since Cliff the cash flow guy was on here. All in one investing is too high risk for me though, imagine that. Everyone probably should have some growth and safety also. I do think EPD and MMP are fine income investments for those that lean towards those types of slow growing dividends. I would chose utilities, Aristocrats or maybe REITS. But instead of starting low growing yield and waiting until I’m 80+ to be rich I chose to start rich and go backwards. Maybe because I started with the answer and worked backwards using a compound calculator a U shaped income needs roadmap. I’m down at the bottom of the left side by the way. Spending the riches less (thanks Covid) so they grow, hopefully more, taking me to the right side. One can hope. Pretty nutty huh? 🤪
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