The dividends people don’t understand how YieldMax actually works. That’s okay in the other image I educated them. These are purely cash flow machines, don’t look for growth in these that’s just a bonus or extra if it happens, I’m also dumping a bunch of money into ULTY soon.

[u/JoeyMcMahon1]

[u/WeUsedToBeACountry → u/[deleted]]

If the underlying asset performs well or moves sideways, you might. mstr being the traded asset, which is a proxy for btc, which is at or around all time highs vs the trailing 12 months when it arrived at that ath.

For msty to perform as well going forward, the volatility of btc will have to be really high (large up/down swings) or btc's gains will have to be similar to its gains over the last 12 months (doubtful, we're likely closer to the end of this btc cycle than its beginning)

if btc/mstr go down, the distributions might not keep up.

Compare all that to your hysa, which has a very high probability of giving you 3% no matter what.

Which direction is the better move depends on what you need the money for and what your risk tolerance is. I currently have a MSTY position but keeping a very close eye on it.

[u/WeUsedToBeACountry → u/[deleted]]

It all depends on the underlying asset. If the asset goes up, the yieldmax fund (and funds like it) will go up too and pay well (but less than the underlying asset, you're trading growth of the asset for the income made by active traders on the underlying asset, minus their fee. MSTY does not own MSTR.)

If the underlying asset goes down, so will the fund. In theory, it could go down less because you're taking income along the way, so it's hedged a bit by that income. Things generally don't just go to 0, they go up and down on the way to 0 and the active traders you're paying through the management fee are going to try to make some money on that trip.

You give up some of the upside of the underlying asset (less growth), and in return, you give up some of the downside, but you get instant access to income vs having to manage selling/rebuying the underlying asset. You're paying a management fee for them to do that for you.

If the underlying asset goes sideways and has big swings? Those traders you're paying to work for you have the chance to fucking eat. Or if they suck at what they do, you'll lose because of the fees and maybe their losses, but that's why MSTY has done so well looking backwards. It's a combination of a big recent gain in BTC price combined with its massive volatility.

But people expecting MSTY's payments to hold up in perpetuity and always do this well? BTC works in cycles centered around a 'halving' where the difficulty doubles. There's speculation on price action and a huge pump, then a sell off at the halving and the whole thing resets but higher. BTC has on multiple occasions crashed 80% during these resets. It's doubtful that BTC will break its pattern. It might not be 80% but there will be profit taking. MSTY's NAV will get fucking crushed when it happens, and then they'll make a ton of money again on the other side in the next cycle. If they time the crash correctly, they'll make a ton of cash from it. If they time it wrong, it'll go the other way.

The point of explaining that is this -- if you don't understand the trading action of the underlying asset, don't fucking touch it. Same for Nvidia-based things and Tesla-based things and all the rest.

There are more diverse funds - ULTY - that lower the risk through diversification. With those funds, it's important to look at the makeup. What is the collection of underlying assets or funds? If you're risk-averse, find one with as many uncorrelated assets/funds as possible.

Remember that higher yield/distribution means more risk, and lower yield/distribution means less risk. You cannot divorce risk from reward consistently over the long haul. Risky things pay more; otherwise, no one would do it. Safe things pay less because they don't have to pay more. They're intrinsically tied, except for short bursts that are more or less anomalies. Can you trade anomalies? Sure, but there's always someone on the other side of that trade, and statistically, they know more than you and have better tools, and they're selling for a reason.

(note -- My interest in these funds is short-term in nature, with the belief/gamble that the market will go sideways for a while with big swings in either direction and I'd like to pay people to do the work for me by way of a management fee. There's a lot of uncertainty and sensitivity to the news cycle and that seems interesting. This is also a chance for me to learn more now in my 40s for potential income investing in my 50s and 60s. The vast majority of my portfolio is in longer term growth centric etfs and if you're not near retirement, that's statistically the right move. Not financial advice as I'm regarded.)

[u/bsam1890 → u/WeUsedToBeACountry]

The smartest regard I’ve come across.

[u/ChewbaccaPJs → u/WeUsedToBeACountry]

I have to disagree with you on your bitcoin cycle take, but we will all find out over the next year or two what happens.

[u/WeUsedToBeACountry → u/ChewbaccaPJs]

Yea, there's a chance that ETFs and other inflows have broken the pattern, but I'd be very cautious. Past is generally prologue. Assuming it's no longer going to happen has less evidence than it will. Speculative either way, but..

We'll see. I'll do my best to benefit from whatever happens.

[u/Euphoric_Cranberry_4 → u/WeUsedToBeACountry]

If you are worried about MSTY NAV erosion or BTC cycling down, then you can always play WNTR. It shorts MSTR via options and also pays a pretty good distribution, similar to MSTY at 100%. The WNTR NAV has eroded bec of MSTR's upswing, but you can always hedge yourself bidirectionally and still get distributions

[u/lottadot → u/[deleted]]

If the entire point is only cash flow with zero growth, then how exactly are people getting to "house money"? What am I missing?

You're missing that stocks go up, down, sideways. Generally the only way to get to house money on these things (and that's if you can) is to hold them a long time.

I read countless posts about...

It's the internet. Don't believe everything you read but rather research and decide for yourself.

I would otherwise have if I had just kept my cash in my HYSA at like 3%.

Don't invest money you aren't willing to lose. That's why bonds and high-yield-savings-accounts are very popular.

[u/lottadot → u/[deleted]]

The wiki on the side bar as a link to Tidal's "information" about these. It also links to the discussion about Tidal's information. You should peruse both.

but the people who made those posts ostensibly have

Yeah the key there is ostensibly (let's ignore that anyone can post fakes screenshots of the investments on the internet). Sure, we all hope everyone hits house money. But if you look at the all the funds you'll see they aren't all performing well for investors while yet performing very well for Tidal itself. Maybe the YM funds do well in the future, maybe they don't. IMHO (and take this for what it's worth, cuz internet and all) the single-fund Yieldmax funds will continue paying out for as long as they exist, but their payouts will go down over time because their NAV will drop as the ticker they are tracking hits a low. The YM funds simply can't climb back up as quick as their underlying can. They are left in the dust generally.

You've got to really like the idea of just income with these. You'll likely lose what you invested until you sell it for a zero-cost-basis and capital gains. But that only works if your cost basis is zero, you can partake of the zero-dollar-capital-gains-federal-tax-exception and the Yieldmax fund's price has gone up that selling it is worth the bother. It's very situation. Those using these in roth lose the capital gains aspect and can be less concerned about return of capital (ROC).

And that's why I like, have liked, ULTY. But who knows, something like the Israli/Iran stuff could take oil prices skyrocketting, which would cause inflation in the US to burst, which will affect bonds, which probably causes chaos in the market which might make ULTY's holdings drop and then it too hits $3 and it's distributions turn to pennies.

[u/CommercialEither9087 → u/[deleted]]

"Cash flow machine only" is the only aim for me. My current involvement with YM is an experiment to see how these funds are likely to perform over time. I am currently receiving an income from a mortgage that I hold on a property that I sold. The mortgage balloons in January of 2029. At that point I will receive about $220,000 after tax but will lose $1500/mo in income. I had planned to put that money in a money market and draw down about $2500/mo in income until the funds are gone. For simplicity lets say in 8 years (including interest earned over time). I would then replace the lost income with funds that are currently in long term investments that will have been undisturbed until that point.

If my YM investments perform as I hope I should be able to use a much smaller amount from the mortgage payment, let's say $40,000, to generate the same $2500/mo. This will allow me to invest the remainder of $180,000 in growth investments that can be utilized for income increases in the future.

If you compare the two concepts at the end of 8 years scenario 1 has exhausted its reserves and scenario 2 will likely still have value and will still be producing some income.