05-18-2015, 09:47 AM
It is a totally bogus way to look at things, but sure is very feel good. Today, it is making me feel very good!
A position in TNK was opened May 2014. Since then, I've traded around the edges, sold calls, sold puts, collected dividends, and after this week-end am back down to my core position of 2000 shares. Cost of shares, minus trading gains and dividends equals $1156(market value $13,500). That equals a total out of pocket cost of 57.8 cents for each share. The paltry dividend is 12 cents per share. But calculating your 'yield on cost' that so many love, the yield is now 20.8%. With shipping rates and profits doing very well this year, TNK could easily have a substantial dividend increase.
Like I say, totally meaningless calculation, but ah, surely does feel good!
That gets me to another bogus metric/concept, 'playing with the house's money'. Folks who subscribe to that would say that I'm mostly playing with the house's money at this point, having only $1156 invested in assets that are worth $13,500. I'll smile and enjoy that on this one as well, but at the same time fully realizing that the 2000 shares represent $13,500 of my own money. There is no such thing as 'the house's money' in investing.
A position in TNK was opened May 2014. Since then, I've traded around the edges, sold calls, sold puts, collected dividends, and after this week-end am back down to my core position of 2000 shares. Cost of shares, minus trading gains and dividends equals $1156(market value $13,500). That equals a total out of pocket cost of 57.8 cents for each share. The paltry dividend is 12 cents per share. But calculating your 'yield on cost' that so many love, the yield is now 20.8%. With shipping rates and profits doing very well this year, TNK could easily have a substantial dividend increase.
Like I say, totally meaningless calculation, but ah, surely does feel good!
That gets me to another bogus metric/concept, 'playing with the house's money'. Folks who subscribe to that would say that I'm mostly playing with the house's money at this point, having only $1156 invested in assets that are worth $13,500. I'll smile and enjoy that on this one as well, but at the same time fully realizing that the 2000 shares represent $13,500 of my own money. There is no such thing as 'the house's money' in investing.
Alex