![]() You lose voting rights unless you recall the shares. Cash distributions paid on securities borrowed over the dividend record date are credited as a “cash-in-lieu” payment, which may have a different tax treatment than the actual dividend from the issuer. Shares on loan are not covered under Securities Investor Protection Corporation (SIPC). Other issues that Fidelity and other stock brokers downplay: It can also end up artificially creating more shares of a company than actually exist due to the settlement rules for stock transactions. It’s short sellers who needs the shares ‘loaned’ to them, but if the broker is using regular investors shares, suddenly you are a temporary partner in a covered call options trade that you never signed up for and may not be properly compensated for.Īs we saw in 2021 with meme stocks, this lending of shares is a way for market manipulators to pressure the market with less risk to them. I don’t like the lending programs because they are used to cover broker’s shady practices and make market manipulations much easier. ![]() Nowhere near the $479 a month example.Īdd in the fact that PARA is the only security being lent out in my entire portolio, and my securities lending income is currently working out to a pro-rate amount of less than 0.0004%, or 0.04 basis points. At that rate, even if I had $100,000 worth of Paramount, I’d be making roughly 77 cents a day, or $23 a month. So… basically I was making 10 cents a day lending out my $13,000 of Paramount shares. Here are my real-world stats on Paramount:Īctual income: $1.91 (only borrowed for 19 days) (Although, Berkshire does own 10% or so of Paramount…) Paramount is more of a value/cheap P/E and/or dividend play. You don’t really see a lot of people shorting Berkshire Hathaway. This mostly makes sense in retrospect, as I tend to buy larger, high-quality companies when they are temporarily out of fashion. bubbletea110399 3 years ago (-1) Hey Great game, but I might have a bug. Viewing most recent comments 833 to 853 of 853 Out of all my stock holdings, the only one to garner any lending interest was Paramount. NSFW 18+ Earn Your Freedom 0.20 Return to game. Still, over $400 a month of extra income from a $100,000 balance? I have a six-figure taxable Fidelity account, so I figured I was leaving money on the table! Let’s go! In December 2021, Fidelity was showing this as an example scenario:Īs of March 2023, the example scenario on the official Fidelity page shows a significantly lower income rate: I previously wrote about earning some extra income via Fully Paid Lending Programs in general, including that from Fidelity. I had been getting a lot of transaction notifications where all my shares of Paramount (PARA) were being lend out to somebody (most likely to short it).Įxpectation. ![]() Reality” meme when I looked at my monthly report from my Fidelity Investments securities lending activities, where I lend out my stock shares and get paid interest. I just experienced my own version of the “Expectation vs.
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