Can someone see whether they agree with my methodology regarding comparing these two ETFs from an income/low-drawdown perspective? Now, I'm not talking about from a growth perspective. I already have that covered. I've got shit that prints me money when the stock market goes up. Literally, prints as fast as the Fed prints dollars under Biden. But I can't hold too much of it, because it is volatile and can blow your account. So I can only hold so much. The remainder of my account I want to hold in stuff that pumps out cash if possible but, even more importantly, does not have significant drawdowns. Because if it has significant drawdowns it kind of defeats the purpose - if I hold to much it will still cause my account to go pop. So if there was something that just went up, never went down that much, that would be great even if it didn't pay any dividends.
So a very special fund is JEPI. Its a relatively new JP Morgan ETF, but it basically does the same thing an open-ended JP Morgan fund has done for a long time now. So pretty battle tested. It pumps out a roughly 7.5% yield in good times, which ain't all that, but when times get bad it pumps out much more, as high as a 12.5% yield. Distributions are monthly. I own a bunch of JEPI.
JEPI's opponent across the ring is JEPY. It is newer. But it pumps out an INCREDIBLE amount of cash, the yield based on its monthly distributions is like 54%! Its insane. Now, it does drop in value much more than JEPI does. Probably because JEPI sells most out of the money options, JEPY more at or in the money, so it eats into principle more. I have been buying JEPY more recently.
So I wanted to compare the two, to see which might be better as far as minimized draw-downs and bigger AFTER TAX returns on investment. My process was, all data used from finance.yahoo.com:
Since JEPY is newer, I compared to two both starting with JEPY's 9/19/23 start date. For JEPI, if I had put $100 into it on 9/19/23, I would end up with $108.85 (when you add ending value of my stock plus my dividends, deemed reinvested into more JEPI). That is before tax. The max drawdown on my account would have been 6.0%. Now, over that time, the dividends would have totaled $16.46. At a 40.8% tax rate (I'm at the max 37%, plus Obamacare scum-bag 3.8% tax on net investment income), the tax is $6.72. So, $108.85 minus $6.72 is $102.13, the total what I end up with. I could sell to incur some capital loss, but who wants to be selling and re-buying all the time. So really, that effective return is like 3% or something close to it (9/19/23 through 5/13/24 = about 8 months, 8 is 2/3 of 12). Very, very poor.
So, for JEPY, if I had invested over that same period, my $100 goes to $110.08, pre-tax. And my accounts max drawdown is just 3.93%. So far, waaaaay better than JEPI. But when I look at those HUGE dividends, they total to $32.37. And the tax on that at 40.8% is $13.21. Meaning my $110.08 pre-tax turned into only $96.87 after tax. MEANING I ACTUALLY LOST MONEY!!!!!
So, I think I should sell JEPY immediately - losing money on an after-tax basis is no way to make money. And, honestly, probably sell JEPI as well. A 3% after tax return is garbage. Instead, just buy more of my growth stuff, which has almost no dividends so I pay almost no tax (and plan to never sell). And leave plenty of cushion in the account so I can just buy more if and when the market takes a significant hit - dollar cost average into that shit as it tanks for the win!!!
Thoughts? Either on my calculations, of if anyone has some securities that tend to go up in value, even if slowly, but yet don't tank hard when the market crashes, I'm ALL EARS.
Thanks!!!
So a very special fund is JEPI. Its a relatively new JP Morgan ETF, but it basically does the same thing an open-ended JP Morgan fund has done for a long time now. So pretty battle tested. It pumps out a roughly 7.5% yield in good times, which ain't all that, but when times get bad it pumps out much more, as high as a 12.5% yield. Distributions are monthly. I own a bunch of JEPI.
JEPI's opponent across the ring is JEPY. It is newer. But it pumps out an INCREDIBLE amount of cash, the yield based on its monthly distributions is like 54%! Its insane. Now, it does drop in value much more than JEPI does. Probably because JEPI sells most out of the money options, JEPY more at or in the money, so it eats into principle more. I have been buying JEPY more recently.
So I wanted to compare the two, to see which might be better as far as minimized draw-downs and bigger AFTER TAX returns on investment. My process was, all data used from finance.yahoo.com:
Since JEPY is newer, I compared to two both starting with JEPY's 9/19/23 start date. For JEPI, if I had put $100 into it on 9/19/23, I would end up with $108.85 (when you add ending value of my stock plus my dividends, deemed reinvested into more JEPI). That is before tax. The max drawdown on my account would have been 6.0%. Now, over that time, the dividends would have totaled $16.46. At a 40.8% tax rate (I'm at the max 37%, plus Obamacare scum-bag 3.8% tax on net investment income), the tax is $6.72. So, $108.85 minus $6.72 is $102.13, the total what I end up with. I could sell to incur some capital loss, but who wants to be selling and re-buying all the time. So really, that effective return is like 3% or something close to it (9/19/23 through 5/13/24 = about 8 months, 8 is 2/3 of 12). Very, very poor.
So, for JEPY, if I had invested over that same period, my $100 goes to $110.08, pre-tax. And my accounts max drawdown is just 3.93%. So far, waaaaay better than JEPI. But when I look at those HUGE dividends, they total to $32.37. And the tax on that at 40.8% is $13.21. Meaning my $110.08 pre-tax turned into only $96.87 after tax. MEANING I ACTUALLY LOST MONEY!!!!!
So, I think I should sell JEPY immediately - losing money on an after-tax basis is no way to make money. And, honestly, probably sell JEPI as well. A 3% after tax return is garbage. Instead, just buy more of my growth stuff, which has almost no dividends so I pay almost no tax (and plan to never sell). And leave plenty of cushion in the account so I can just buy more if and when the market takes a significant hit - dollar cost average into that shit as it tanks for the win!!!
Thoughts? Either on my calculations, of if anyone has some securities that tend to go up in value, even if slowly, but yet don't tank hard when the market crashes, I'm ALL EARS.
Thanks!!!
