Just when you thought the fiat games couldn’t get any riskier let me introduce you to this product
MST The Weekly Dividend ETF
TL:DW
Key takeaways of this risky Wall Street product:
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It’s a 2x leverage long on Strategy (MSTR) (meaning they are taking on debt to get more returns)
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When saylor says he is selling volatility, here is a perfect example of some fly by night investment firm creating a product that produces income on the stock’s volatility.
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How you may ask? By selling covered calls and credit swaps (whatever that means?)
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The ETF makes money on the event MSTR goes to the moon. Since it is leveraged AND pays out weekly they are advertising this product as better than MSTY
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But the downside risk happens just as quickly when MSTR tanks or even trades sideways (Wall street bros call this Range bound). While you may get income your overall investment will get eaten alive.
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The video tries to pitch this product as it belongs in all portfolios but that’s just BS. It’s for traders and people who may want access to quick income.
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The expense ratio (the fee you pay the firm to sit on their asses and trade covered calls on your behalf) is 1.35% I think while MSTY is a more reasonable 0.99%
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The weekly payout sounds enticing but it’s just a small sum of what an investor would get from a monthly dividend payment.
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Th guest completely dodged the tax question. Since these products pay dividends from different income strategies not everything you receive is considered a qualifying dividend thus will be taxed at a higher rate.
At the end of the video the guy talks about products that might have a DAILY dividend payout which is truly bananas.
I am staying away from this product. I must say it would be a blast to buy this and payout to the stackers I think this product sucks for long term investors. One massive drawdown and boom! Wipeout! If that doesn’t happen over the long term various outcomes will just eat away at your investment.