Hi Chowder ....
I read your recent sells and buys for the Young Folk Portfolio TMO, TU, WSM, LYB, ASG (a CEF) and a different post you wrote about the purchase of GOF (a CEF yielding over 11%).
Why would you not also buy a small position in GOF for the Young Portfolio? It's hard to reliably get 11% per year and GOF has an outstanding record of never reducing the distribution since inception (which predates the global financial crisis). In fact, it's raised the distribution.
Whereas ROC is thought of as being bad, it's only bad if it's truly a return of invested capital. Getting to the bottom of ROC in any CEF is tough to do (for the lay person) but not all ROC is bad because not all ROC means you are getting your own capital back.
ROC can be from pass-through (from master limited partnership investments, primarily), constructive (from unrealized capital gains), and destructive (investors are literally receiving their own capital, minus expenses).
Said another way, it's complicated. From an accounting point of view, it lowers your cost basis regardless of the source of ROC so in a taxable account one day you will have a zero cost basis and from then on pay capital gains taxes.
I read about GOF and like it. I bought small positions (0.5% each) in three IRA accounts: mine, someone in his early 40s, and someone in her 60s.
I may never get to read your reply to be because I don't know how to find it on SI. I'll try to go back to my "sends" and hope your reply is linked. I'll also hunt on your profile page, here:
Member 7630127
Thank you,
Paul |
