14 Months and Counting 👍🏻 Proof that covered call ETFs can pay your bills, even when the underlying holdings are down. 💰 This particular portfolio will recover fast when bitcoin does.  https://youtu.be/kJZZudszITI?si=oR1oJj90iq4ic7j9
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6 Comments
ETF Go@etf.go · 17hEdited
You started at $50k? You are at $39k? If that’s right thats a 20% drawdown on your account (in less than 2 years?). To recover and sustain the original account value would require ~25% rally (to recover the $10k price dip) and another ~30% (to account for the next $12k in withdrawals). Thats ‘hoping’ for a 55% jump. 👀 ‘Proof’ of covering bills only requires having $1k/month in the account. But ‘proof’ of a sustainable strategy requires the ability to maintain the actual account value. (I think this is the part that gets missed by many PII investors?). The reality is ‘withdrawals’ dramatically change the portfolio math. Maybe the high risk positions and leverage rip and recovery happens quickly. But the distributions along are already a high hurdle rate when you consider average market returns are 6-8%. What happens IF next year is a repeat of this year? Even a flat year would see another $10k lower to $30k (just on withdrawals)? That would require a $20k price rebound and $12k for bills the following year. So $32k on a $30k account or over 100% gain to breakeven! 🧲🧲 Since PII is your focus I assume you know the riskiness of your holdings. But for everyone else - the ETF mix in the video is extremely risky (leverage on random ‘popular’ tech/crypto picks by various managers) and other heavily concentrated holdings that target volatility so not surprising how volatile they have been. I’m not typing this to be a d*ck. I’m just helping people see the math and risks and hopefully consider what they feel is reasonable. Most of my past comments on PI posts get dismissed - so if history is any indication - instead of discussing further I guess we’ll just let time show us how this experiment ends. 🤷♂️ Hope tech and crypto both rally and hope it works out. 🤞 If not - the positive is this might turn out to be a good case study for what happens when we dismiss the ‘4% rule’ on withdrawals. 👍
Kar Yung Tom@karyungtom · 17h
Loved meeting you and love the clarity of this experiment.
Michel Girard@mccmike · 11h
Hi Paul, I’ve been following you since the beginning. This case study has been an eye opener for me. I am now retire and I will start withdrawing from my RRSP next year. My personal view is this. Do I want to get a fix amount of withdraw per month or do I want to get what the portfolio can give every month. What the portfolio can give me = Yield +\- capital gain. Any withdraw above will bring down my Portfolio. For example : 100 000$ portfolio. 12% yield 6% expected capital gain. The maximum withdraw I should do Is 1500$ per month. This should keep my portfolio value at the same level. If we get in a market pullback, either I reduce my withdraw or I am OK with my portfolio going down. That is what is happening with your portfolio. Your withdraws are too high to keep the portfolio value. Thank you for sharing. I am sure it Will help some people make their own withdraws decision.
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