A REIT is never going to call you at 9pm on a Sunday night to tell you the heat is out because there’s a foot of water in the basement.
A REIT is never going to cause the cops call you to tell you that you need to secure your building because they had to kick the door in to haul a tenant having a breakdown to the mental hospital.
A REIT’s tenants are never going to call you every 10 minutes to yell at you because the snowplow hasn’t shown up yet.
You won’t get personally sued if a REIT’s tenant slips and falls and injures themselves in a snowstorm.
If a tenant’s guest’s gun accidentally discharges into a neighboring apartment, the REIT’s shareholders don’t get the call.
Is a drop in share price a bigger or smaller headache than stuff like this?
I didn’t know the depreciation recapture was taxed at 25 percent. I don’t like that too much.
You have to figure how much the appreciation is because of the land?
There are downsides with REITS.
You aren’t going to buy a reit with nothing down either.
It could be worse, it could be taxed at ordinary rates.
And I believe so-called “additional depreciation”, which if you are taking accelerated deprecation is the amount of depreciation you’ve taken in excess of straight-line depreciation, is taxed at ordinary income rates.
No, it doesn’t work that way. Recaptured depreciation goes against the gain of the entire property. not just the land or the building. When you buy the building you have to allocate between the non-depreciable (land) and depreciable (building etc) components, but you don’t get to redo that when you sell it.
This blog has been inactive for a bit. With some “play money”, I decided to but a vxx 6/17 17 - 20 call spread for 1.28, with a potential gain of 1.72. I’m playing this since we seem to be in the upper portion of a trading range which may start back down with increased volatility. The VXX right now is at 19.9, not particularly high. The Brexit vote is June 23rd which may also increase volatility. What do you think go forward?
I’m going to check by doing a correlation analysis. Perhaps I’m dreaming, but I remember that vxx and vix plots never looked at all similar, now they do. I’m not sure why this is the case yet.
The correlation over the last 3 months is .8936. However if you look at the plots, the vix moves are somewhat larger but they play toegether when moving up and down.
Looking at the charts, the correlation looks good since last August but prior to that not good at all. Perhaps the way the futures work, correlation is good over short times like 3 months but not so good over longer periods. I’ve never done this either but I only bought 10 contracts so I’m not sweating it,
The spread between different futures months changes. That effects the pricing of vxx. I am not 100 percent sure about this because I am not watching vxx futures. I am pretty sure.
Also, isn’t the volatilty running higher since August compared to a couple of years prior to last August? I know there was a drop in volatility recently, but generally, isn’t that true?
I am not watching that closely so my certainty level isn’t 100 percent.
I remember this story. I guess the way it is being reported is fraud because I continuously roll out options and collect premium. I’ve been rolling aapl put options since last August starting at 116, now I’ve got some at 95 and 97.5.
97.92. However my options are expiring in Oct. I just had a horrific discovery. My spreadsheet that has all my trades with details seems to have been deleted. I only have it backed up through March. I don’t understand how that happened.
@DocT, if you sell (sold) puts and the stock went down you have to book a loss when you buy back the put and sell another lower strike with a longer expiration, no? I have been selling options on TLT since March. Sold puts, got assigned, sold calls, got exercised, repeated. I will get exercised on my 131 calls since TLT closed today at 133.23, not exactly a profit maximizing strategy but it beats the 2.5% current yield on long bonds. My view on interest rates is very simple. I don’t see how the Fed can raise rates while several countries currently have negative rates.
I guess I’m not completely understanding you. Yes, when I buy back the puts, I’m taking technically taking a loss but when I roll them out and collect on the new position, I’m immediately positive. Of course, when those drop, I have to repeat the process. As an example, I bought spy put spreads that expired sometime in February and sold spy put spreads to pay for it. With the market dive, the put spreads that I sold were deep in the money and I had huge paper losses. Those were rolled out a few times and will now expire 6/17. Those put spreads are 175/150 spreads. I’m pretty confident that spy will not be below 175 in 2 weeks. So now, not only did I make money on the put spreads that I bought, I’ve made a ton on the ones that I sold, much more than if the market hadn’t dropped. I’m up ~9% for the year so far. The paper losses are sometimes pretty hard to stomach however during the process.
I should point out that I wouldn’t normally do this with a stock except maybe aapl which I have confidence in. Companies can go out of business etc and their stock go to 0. I’m pretty confident that spy over time will go up.
DH has retired, so this week we had to move his 401k. The financial institution that handles the management of the plan while you are an employee does not handle things once you get to the withdrawing stage. This account is a large part of our net worth, so it was a big decision. For now it will be divided into three large Vanguard funds. I’m just very relieved that we didn’t have to make this move during a down market.
