[reposting as I forgot to tag the topic] Since my Excel template was made for my CONY vs COIN post (https://www.blossomsocial.com/posts/POST-1748807271226-azrmrATJ_pUReiL9phonCe0Bu), might as well use if for more cases. Here is $TSLY vs $TSLA SCENARIO A (orange and green tables) - $TSLY : Spend all money from distribution and keep all shares vs - $TSLA : sell shares to generate same income as $TSLY's distributions each month. RESULTS : As seen on Excel tables attached, if you started with $100K in each you would have had 2,495 shares of $TSLY and 546 shares of $TSLA . First distribution of $TSLY would have paid $1.998/shr so $4,985. You keep your 2,495 shares of TSLY. To generate $4,985 on Jan 10th 2023, you would have had to sell 42 shares of TSLA. You are down to 504 shares. Repeat that 29 more months with exact data (see table), you end up: - Both generated $82,769 that you spent - You are left with 2,495 shares of $TSLY that are worth $22,580 (yup your total return is a whooping 5% over2.5 years) - You are left with 208 shares of $TSLA that are worth $73,118 So both strategies provided you with $82.7K of income over the period but investing in $TSLA and selling shares would have left you with 3.3 times more value at the end or $51K more ! SCENARIO B: (blue and purple tables) - $TSLY : Spend no cash and reinvest all distribution into new shares - $TSLA : Just hold Results : - $TSLY : You end up being able to buy 11,273 more shares The end value of these 13,767 shares is $114,945 - $TSLA : Your 546 shares are now worth $187,129 So you would have ended up $72 richer just holding $TSLA vs buying $TSLY and reinvesting everything. Or made $87K total gains vs $15K gains. SCENARIO C (grey / blue): - $TSLY : You keep $4,000 each month and reinvest the rest - $TSLA : You sell shares to generate $4,000/mo RESULTS: - For both, you spend $84K - $TSLY : after 25 months and taken $102.5K, you end up completely broke in January 2025. - $TSLA : after 30 months and taken $120K, you now have 41 shares left for $18K value and will likely go broke in 4-6 months from now. So you went broke with $TSLY after extracting $102.5K. You extracted $120K so far from $TSLA and are left with $18K worth of shares. High yield or not, you can’t outspend total return.
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19 Comments
Clantosa @clantosa · 1yr
Thanks for all these. This is exactly what we need. Real numbers and real examples
Ed @edsam · 1yr
Thanks for this and the CONY analysis. You took some extreme examples of cc ETFs. These are not the core building blocks of a portfolio. It is only fair if you do the same analysis using examples from the other end of the spectrum. $HTA is a good counterpoint to the two examples. It has been traded for almost 10 years. Performance since inception is 13.95% pa compared to $QQQ 16.95%. Over the same period, the total price performance is 78%. Currently, the yield is 9.8%. It seems you have not had the misfortune of caring for an elder with cognitive decline. These people cannot drive, let alone sell shares. They may live for another 10 to 15 years after their licenses are taken away. One's expiry date is another unknown to plan for the last shares. It takes more than arithmetics to manage a portfolio drawdown.
Tony Si@onemadtony · 1yr
Though I do invest in CC funds, I really enjoy reading your breakdown!
S P@srp79 · 1yr
Thanks for sharing! I would not have taken the time to analyze this at all but makes sense if you are looking for growth, total return and if you have longer time horizon. ✌🏼
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