Animal Spirits Podcast

Talk Your Book: Yield at What Cost?

Oct 14, 2024
Join Jonathan Molchan, Managing Partner at STF Management, as he dives into the world of unique investment strategies. He discusses the intriguing principles of trend following and how they perform through various market cycles. Discover the challenges of traditional call option writing and innovative solutions like Tug and TugN products. The conversation also touches on navigating market downturns and the importance of emotional discipline in investing. Perfect for anyone seeking fresh insights into the rapidly evolving ETF landscape!
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INSIGHT

Covered Call Risk

  • The biggest risk with covered call strategies isn't unlimited downside, but slow principal recovery.
  • Recouping losses after a sell-off can take a very long time, exceeding potential gains during recovery.
ANECDOTE

2022 Market Performance

  • In 2022, both the NASDAQ and long bonds experienced significant losses, challenging traditional risk-off strategies.
  • Passive covered call strategies underperformed during the subsequent market recovery in 2023.
INSIGHT

Yield vs. Total Return

  • Investors should carefully consider the potential trade-off between high yield and total return.
  • Chasing double-digit yields might come at the cost of sacrificing overall investment growth.
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