QYLD questions

[ERD50]

Quote:

Originally Posted by SecondAttempt I meant I don't expect the Nasdaq to crash anytime soon. I don't see a dotcom bust coming which is what you showed. The rest of your post about QYLD I still need to investigate. Like I said, I just learned of its existence recently. It seems to be something that will do well in a sideways market but will underperform in rising and falling markets. Does that seem reasonable? We have had a decent runup fueled by the end of the pandemic. I expect some sideways movement for a while until balance is restore in the world economy and trading systems.

It does seem reasonable for a covered call strategy. But the devil's in the details, and the proof of the pudding is in the tasting.

So even though the underlying investment might move sideways in general, that can still have ups/downs month to month (that mostly net out, so looks sideways), and often end the call period with highs that cap the gains, and lows that exceed the call premium.

Now for the pudding - here's that chart again. Set the slider (right click the bar) and set to 'past year', which will be 253 trading days. Now grab the bar and slide it back/forth. It (almost?) never exceeds the return of the underlying QQQ, and as other data has shown, doesn't reduce volatility enough to compensate for its under-performance. You can do the same for a two year period by entering 506 days in that bar.

https://stockcharts.com/freecharts/perf.php?QQQ,QYLD

NOTE: - since QYLD is a covered call play on QQQ, I think the references here to QQQ are relevant, and not against the tone of this sub-forum which is to not compare every stock pick to an index and talk down stock picking.

The only reason I can think of for someone to invest in QYLD versus QQQ direct is that they expect it to fill some other need. For example, if it provided decent returns with lower volatility than you could get with a simple bond mix, that would seem to be a reasonable goal. But QYLD has delivered lower returns and higher volatility, so it really does not seem to have any place in any portfolio, that I can see.

But maybe I missed something. Does anyone hear see a reason to invest in QYLD?

-ERD50

[olyveoil]

Quote:

Originally Posted by ERD50 OK, forget about VTI then. As I showed in post #8, QYLD doesn't seem to get you anything over a blend of QQQ and BND. The 50/50 blend of QQQ/BND provides better returns and lower volatility than QYLD. So what's to like about QYLD? I dug up the data and presented it here, that's hardly 'lazy'. -ERD50

1.) then don't buy QYLD
2.) comparing every active investment to VTI is lazy
3.) QYLD is a new offering. It is not supposed to replace VTI nor QQQ.
4.) I have 8% of my portfolio already in Bonds, 5% in cash (used to be 10%). I took half of my cash and put in QYLD, NUSI, JEPI, RYLD.
Since, I have gotten monthly dividends while my principal has grown slightly. I never ha any intention of trying to beat QQQ or VTI with that part of my portfolio. THAT is the point. This never-ending comparison of anything and everything to VTI is tedious.
I took half my cash and took a risk.

What you don't see me doing is trying to make some absurd argument of comparing QYLD to cash, because it would be....well....absurd.

[olyveoil]

Quote:

Originally Posted by jim584672 5 year total return - QQQ - 239.17% 5 year total return -QYLD - 68.94% QYLD is a dog with fleas. Source stockcharts.com, performance.

Irrelevant comparison.

Source -- Me. Or anyone with different goals than being 100% invested in QQQ.
Do YOU have everything invested in QQQ?

[olyveoil]

Quote:

Originally Posted by ERD50 It does seem reasonable for a covered call strategy. But the devil's in the details, and the proof of the pudding is in the tasting. So even though the underlying investment might move sideways in general, that can still have ups/downs month to month (that mostly net out, so looks sideways), and often end the call period with highs that cap the gains, and lows that exceed the call premium. Now for the pudding - here's that chart again. Set the slider (right click the bar) and set to 'past year', which will be 253 trading days. Now grab the bar and slide it back/forth. It (almost?) never exceeds the return of the underlying QQQ, and as other data has shown, doesn't reduce volatility enough to compensate for its under-performance. You can do the same for a two year period by entering 506 days in that bar. https://stockcharts.com/freecharts/perf.php?QQQ,QYLD NOTE: - since QYLD is a covered call play on QQQ, I think the references here to QQQ are relevant, and not against the tone of this sub-forum which is to not compare every stock pick to an index and talk down stock picking. The only reason I can think of for someone to invest in QYLD versus QQQ direct is that they expect it to fill some other need. For example, if it provided decent returns with lower volatility than you could get with a simple bond mix, that would seem to be a reasonable goal. But QYLD has delivered lower returns and higher volatility, so it really does not seem to have any place in any portfolio, that I can see. But maybe I missed something. Does anyone hear see a reason to invest in QYLD? -ERD50

Broken record.

[ERD50]

Quote:

Originally Posted by olyveoil Irrelevant comparison. Source -- Me. Or anyone with different goals than being 100% invested in QQQ. Do YOU have everything invested in QQQ?

Quote:

Originally Posted by olyveoil Broken record.

I understand people will have different goals, different risk tolerances, etc. But you have not told us what it is you are trying to achieve with QYLD.

This isn't about being 100% invested in anything, not sure why you bring that up. But every investor should be comparing the alternatives within their allocation, be it equities, fixed income, or cash.

If I'm looking into an equity, I compare it to equities, fixed to fixed, cash to cash. If I'm looking at something that is a hybrid, then I compare it to some blend. If that blend doesn't provide a risk adjusted return, then I'm not going to bother.

-ERD50

[jim584672]

Seems like just buying QQQ with some puts under it would be a better solution. You give up some upside (the cost of the puts) for downside protection, but the upside is unlimited. Writing calls you cap your upside for limited downside protection.

[olyveoil]

Quote:

Originally Posted by ERD50 I understand people will have different goals, different risk tolerances, etc. But you have not told us what it is you are trying to achieve with QYLD. This isn't about being 100% invested in anything, not sure why you bring that up. But every investor should be comparing the alternatives within their allocation, be it equities, fixed income, or cash. If I'm looking into an equity, I compare it to equities, fixed to fixed, cash to cash. If I'm looking at something that is a hybrid, then I compare it to some blend. If that blend doesn't provide a risk adjusted return, then I'm not going to bother. -ERD50

No. I don't think you do understand investors have different goals. Else, you would not be a broken record.

Post #22.

I am taking these tedious and lazy comparisons to their logical conclusion.

Yeah. No kidding. Hence blanket comparisons to QQQ, VTI are irrelevant. thanks for finally getting it.

I suggest you don't buy QYLD. Also suggest cease making apples to bowling balls comparisons.

[olyveoil]

Quote:

Originally Posted by jim584672 Seems like just buying QQQ with some puts under it would be a better solution. You give up some upside (the cost of the puts) for downside protection, but the upside is unlimited. Writing calls you cap your upside for limited downside protection.

Might be. Lots of people don't want to nor know how to write puts or covered calls.

[braumeister]

Thanks for the interesting discussion.

https://www.youtube.com/watch?v=gBzJGckMYO4