MORL CEFL and MRRL
I have been looking at these “Stock” Mutual Funds which are traded as stocks, but the underline assets are Mortgages and other investments, these “Stocks” pay 20% annual dividend, which is very high. Why they are not very well traded like most high volume stocks and cannot understand the returns. I need some one who knows more about it to give me some guidance.
I don’t personally invest in individual stocks or (most) active mutual funds, but googled a bit.
Here is why Motley Fool thinks you should avoid MORL. http://www.fool.com/investing/general/2012/12/05/stay-away-from-this-25-dividend-yield.aspx
As a more general answer: don’t ever invest in anything you don’t understand. There be dragons.
^^Yup. Both Warren Buffett and Bill Gates agree. 
They are all borrowing short term at low rates to “multiply” the return that you would get from the underlying assets that generate the actual return. That also multiplies the risk you take with market movements regarding interest rates, and credit changes.
I’d steer clear of these. There is enough risk available to you in the broad market without multiplying it to get what looks like a great return.
I can understand that. However, for those who play in the commodity or stock option market is this more “Conservative”?
I am not saying I will buy these but just for argument saying.
@dstark where are you?
Aren’t you in the real estate business? I’d avoid investing in the same industry that generates the rest of my income - too much concentration of risk. If it crashes, everything fails - your investment income and your work income.
Also, anything that throws off that much in dividends is pretty tax inefficient. I’s rather have something that appreciates but doesn’t generate anything that goes anywhere on my 1040. When I need the money and can pay the taxes I’ll sell it, but no taxes until then.