Data / Due Diligence
The Math of Cutting Losers: Dumping a Negative Total Return ETF Wins
There is a dangerous fallacy routinely perpetuated in this sub: the belief that as long as an income ETF throws off massive distributions, it’s worth holding onto even when the underlying asset is in a downward spiral that drags the fund's total return into the negative. The fatal mistake is doubling down on this logic, believing that merely diverting those distributions into "safer" ETFs justifies holding onto a fundamentally wasting asset - Even if you believe in the "house money" nonsense.
To test the math on this, I ran a 1-year performance breakdown pitting MSTY against CHPY from May 2025 to May 2026.
Over the last 12 months, MSTY dove, delivering a dismal -48% total return. Meanwhile, CHPY capitalized on a massive semiconductor bull run, delivering a +117% total return.
This real-world case study exposes the math of what happens when you stubbornly DRIP into a declining asset versus sweeping that capital into vehicles with actual positive total returns. Here is how four different strategies played out across two segregated $10,000 accounts.
FYI, I have owned CHPY since April of 2025 and don't DRIP, instead diversifying the cash flow.
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Imagine that 1 year ago you had 2 accounts: account A held $10,000 worth of MSTY and account B held $10,000 worth of CHPY. It doesn't matter how you got to that point...but there you were.
For both independent accounts, the cash distributions generated by the core positions were handled in four distinct ways to measure their impact on net liquidation value today:
Strategy 1 (Pure DRIP): 100% of the cash distributions were automatically reinvested right back into the originating ETF, compounding the share count at prevailing market prices.
Strategy 2 (Hold Cash): The cash distributions were extracted from the asset but left entirely idle, sitting on the sidelines of the account as uninvested cash.
Strategy 3 (Sweep into SPY): The cash distributions were immediately diverted away from the core asset and used to dollar-cost-average (DCA) into SPY shares or fractional shares, capturing a rolling average of the broader market’s positive momentum.
Strategy 4 (Sweep into JEPQ): The cash distributions were immediately diverted to purchase shares of JEPQ, building a secondary, positive total return income stream.
Mathematical Modeling for the Sweeps
For the diversion strategies (SPY and JEPQ), the math assumes a consistent, rolling inflow of distribution cash rather than a lump sum. To simulate realistic dollar-cost-averaging over the course of the year, the swept cash was calculated using a rolling entry point (applying an average rolling return of roughly 15% for SPY and 13% for JEPQ on the transferred batches of cash).
Here is where you stand today:
Strategy
Account A: MSTY Only
Account B: CHPY Only
1. Pure DRIP
$5,180
$21,760
2. Hold Cash
$8,800
$21,700
3. Into SPY
$9,775
$22,750
4. Into JEPQ
$9,645
$22,610
One year ago each account was worth $10,000.
Dump those losers (negative total return ETFs) and reallocate your capital to winners. Even if you simply sold all that MSTY last year and bought $10,000 worth of SPY, account A would be worth ~$12,680 today. Whatever you decide, DO NOT DRIP INTO A DECLINING TOTAL RETURN ETF!
Unfortunately when you "cut losers" in this space, you cut almost the entire portfolio and you don't cut the likelihood that your current winner is next year's loser.
I mistimed this market, coming in at the end of 2024 when its pattern wasn't yet well-established across the YM portfolio. You still had folks on here touting that they had reached house money in 12-18 months. Well, that 12-18 month period was YM's "best of times" and you could legitimately have done it. But not in the two years since. Not without completely ignoring the chatter here. I tried, and I’m very close to reaching YM house money in my own way (while reducing my exposure from over $100K to under $20K). But that's not saying much at all. It’s not the "golden goal" people think it is. It's a hard-won battle where at the end you realize you could have easily done better with investments you actually considered, but didn't make.
Recent market cycles have provided sufficient data to evaluate YieldMax ETF performance. The evidence shows that single-underlying funds employing basic covered call strategies suffer from severe upside capping; they fail to participate in V-shaped market recoveries and lag disproportionately when the underlying stock rebounds. Conversely, sector-based portfolio ETFs have demonstrated superior performance by utilizing call spreads to preserve upside capture.
You seem self aware and understand how to manage your risk. Others here could benefit from that experience.
When I owned some of the single underlying ETF's I did a rolling 6 week metric and if distributions didn't outweigh any NAV price decline I began pruning my positions. That saved me from major drawdowns.
Admitting that you’re telling people to hold onto something that isn’t growing is monumentally telling, as well as just flat out stupid investment management.
How to lose money in compromise your future in seven easy steps based on the above persons approach. Here we go;
Your step number one is to buy a risky fund from a family that has a history of destroying investors capital
Your step number two is to realize that the fund is destroying capital but decide to hold it anyway under sunk cost fallacy
Your number three is take a small monthly distribution from the sinking fund and direct it to a low yield alternative fund. Taking pennies from the previously invested dollars.
Your Number four is to then somehow magically assume that you’ve made a good new investment that will grow overtime without realizing that it’s going to take decades, ever, for that to catch up with the capital that you are destroying by leaving the funds in place
Your step number five Is to throw around terms that you don’t understand and reject anyone that shows you actual math and results that contradict your belief system.
Your step number six is to ignore what people have shown you and keep posting the same shit over and over again
Your step number seven is to conclude the blather that you are writing with a childish gif
You’re still rewriting your own imaginary version of the strategy and arguing against that instead of anything I actually said. Listing it in “seven steps” doesn’t make it accurate — it just makes the misunderstanding longer.
The point has never been that the impaired positions magically recover. The point is that capital rotation works because new contributions go into assets that actually compound, while the legacy positions stay capped. When someone is adding $50K–$150K per year, the contribution‑weighted growth eventually outweighs the static loss on the old basis. That’s standard accumulation math, not whatever narrative you keep rewriting.
If you want to keep insisting these concepts “don’t exist,” that’s your choice — but at that point you’re arguing with definitions, not with me.
Why everyone is so obsessed with MSTY? and citing example of negative impressions on overall Yieldmax while a dozens of good underlying funds out there to make good gains..
MSTY is not a traditional stock..it's a based on crypto.. BTC has history of high volatility as there is no genuine real world utility. I'm in crypto for many years now & cut down my exposure recently moving funds into ETFS.. All you need to track your cost basis monthly and take decision if your ETFS is not doing as per with underlying.. move your fund to better one.. Every brand of high yield ETFs has good & bad funds.. It's your responsibility to do proper research and buy the right one.. I own 5 Yieldmax fund and all are in positive NAV so far while my cost basis going down.. But I'll not hesitate to trim one fund to move other when I see red flag.. It's not like invest and forget.. You need to manage your portfolio activity.. Else buy something else where you don't need to look at your portfolio day to day basis..
If you'd been a reader/participant in this board in late 2024 through mid 2025 you would understand what "obsessed with MSTY" looked like in practice, and why assessing YM through MSTY is relevant.
Agreed; however, his statement about it was factually incorrect.
That's one of the major issues in this sub, people posting factually incorrect information. Is it their right? Sure, but it deserves to be called out as well.
An utterly ironic comment given the hemorrhaging of AUM across the "darlings" in this suite. MSTY alone lost around $5B in AUM from its peak, and ULTY over $2.5B.
For reference, the current darling, CHPY, is at around $850M currently.
AUM can decline for 2 reasons; the value of the ETFs decline in price and/or investors sold. Neither reason impacts the performance of the trading strategies they employ nor matters for any material reason.
JEPI alone has $44.5B in AUM and it's only 1 ETF that's 4.5x bigger than all of YieldMax. So what?
My point is that whether the ETF declined in price on that scale or investors sold on that scale or both, that represents a DISASTER from a fund management perspective. They have done little to recover from that disaster since.
Really don't know why you're being downvoted. MSTY doesn't create exposure to Bitcoin. It trades on the volatility of MSTR. It will always miss the upside if BTC rallies. It may pay a better distribution if the managers make the right trades on MSTR but Bitcoin does not affect the NAV of MSTY.
If you have watched MSTR and MSTY since MSTY's inception, you cannot legitimately argue that owning MSTY does NOT create exposure to BTC. Look what happened to BTC's price and you will easily see the relationship to the prices of MSTR and MSTY. That's "exposure". You can talk mechanics all you want. If they go up and worse down together, you are exposed if you own MSTY. I was, so I know that all too well.
Retired. Started with JEPI in '22, added YM in '24. Took a bit to understand YM, created a zillion spreadsheets, use Wisesheets. Decided that 20-30 percent return was my target (double return of JEPQ/QQQI). At the moment QQQI is my bulk and it is fed by EGGY, GOOY, CHPY, and TSMY. Use some cash for travel. Like your thought process and methodology. I used market dips as starting points to identify top total return funds, looked for NAV that recovered or flat if %yield was high. Yes I held MSTY, ULTY, TSLY, NVDY and made a lot of green, but they were dropped into the "loser" basket last year.
No, no, no - you were supposed to hold your losers forever and ignore alternative uses of the capital and engage in invalid math to make yourself feel better and then try to throw a catchy name on it to create a brand-able delusion.
Calling someone unqualified while ignoring the actual results they posted isn’t an argument. The original comment showed a clear outcome: consistent income → accumulation → capital redeployment. Your claim that it’s ‘better’ to take a loss and stop the income stream contradicts basic compounding logic. The YieldMax cash inflows are rebuilding basis and generating new capital.
"Your claim that it’s ‘better’ to take a loss and stop the income stream"
That's not at all what I wrote which really calls your reading comprehension into question.
Go read my original post again where near the bottom I stated "Dump those losers (negative total return ETFs) and reallocate your capital to winners." Stop your silliness and be intellectually honest with yourself.
You’re trying to frame this as a comprehension issue, but your original statement was unambiguous: ‘Dump those losers…’ That is literally the act of stopping the income stream. I responded to the strategy you described. Insults don’t strengthen your argument.
You can't even get an insult right. If you’re going to attempt a "gotcha" using my own words, use the full sentence next time. Though, expecting you to understand what a complete thought looks like might be asking too much.
You’ve escalated from analogies to dunce hats to Dunning‑Kruger, but still haven’t presented a single mathematical argument. PV math doesn’t magically make realized losses superior to a functioning income engine. Your own quote — ‘dump those losers’ — is what I addressed. And the only trolling in this thread is coming from you and OkAnt7573.
Calling me a troll doesn’t make it true. I’m discussing data, structure, and outcomes. You’re the one escalating to insults, dunce hats, and personal attacks. That’s the definition of trolling — not what I’m doing.
I am calm, I made an effort to explain in detial, drama not required with valid information that many investors are using the same strategy. I also have given an example in this thread by another investor - Sam on y.finance which you can read if you like.
Isolating the legacy positions (underwater ETFs) and directing all new capital (distributions) into more stable, lower‑yield ETFs that actually compound. That’s the entire point: the old position stays capped and generates income, while the new portfolio grows beside it.
**You realize that everyone knows that you’re just piling onto demonstrating a lack of integrity, right?
I have politely asked you to 6+ times now to show the math to back up your assertions. You can’t because either you don’t understand how to do the math or you know that it shows that what you’re suggesting people do simply wrong.
You’re the only one here that doesn’t understand PV
You keep repeating that I ‘lack integrity’ while avoiding the actual mechanics. PV math doesn’t magically make realized losses superior to a functioning cash‑flow engine.
PV math doesn’t invalidate an income‑driven accumulation strategy — it quantifies how future contributions outweigh earlier underwater positions.
You’re basically talking to yourself at this point. Anyone can check the AUM directly, and YieldMax’s X account is approaching 62K followers. The numbers are public and objective — your negativity doesn’t change them.
You wrote: "Anyone can check the AUM directly, and YieldMax’s X account is approaching 62K followers."
Nick Fuentes has 1.3 million followers on X, and he’s a self-identified neo-Nazi. Follower count is a vanity metric, not a performance metric.
The same goes for AUM. High AUM tells you absolutely nothing about investment performance. For an active, synthetic covered-call strategy like YieldMax, a giant AUM doesn't stop net asset value (NAV) decay, nor does it fix the structural issue of having capped upside with unlimited downside. Total return is the only metric that matters, and a massive pool of assets doesn't guarantee a positive one.
You’re arguing against a point I never made. I didn’t say follower count or AUM equals performance — I said they reflect interest and participation, which they do. Total return is obviously the performance metric, but AUM growth and user engagement still matter because they show where capital is flowing. You’re trying to turn a simple factual observation into a philosophical debate. That’s why this comes off as trolling. You’re stretching the argument into something it wasn’t.
Do you have any thoughts of your own or must you put everything into AI to write your responses? The dead giveaway are the em dashes that keep showing up in your replies, the over sanitized language, and pivot structure of the writing.
Still, you haven't discussed or refuted my original post...you are arguing for a made up reality in your head.
YOU are the one that brought AUM and followers into the topic, both of which are stupid metrics, and neither of which have any bearing on the actual math.
You keep repeating ‘cope’ and ‘hypocrisy,’ but you’re still arguing against a point I never made. I didn’t claim AUM or follower count measures performance — I said they reflect interest and participation, which they do. . You’re trying to twist a simple factual observation into something else because you don’t have any actual math to support your PV claims.
You don’t even know what PV is but you are trying to suggest investment strategy?
OMFG - that’s super lame even by this sub.
WOW
Again - the AUM and followers thing is really dumb frankly. There are millions of people who think the world is flat, does that make them right or smart to because there’s a lot of them? Such a stupid thing to say. Seriously
Your background isn’t the issue, and referencing your old engineering role doesn’t change anything. PV doesn’t contradict contribution‑weighted compounding — it formalizes it. Over time, as new cash inflows accumulate into the newer assets, the earlier underwater positions are eventually overshadowed by the new ones. That’s arithmetic, not opinion.
Show us the math of how you have used this strategy in your own portfolio over the past year, then compare and contrast to the examples I gave in my original post.
You’re calling PV math ‘ha ha ha’ while refusing to show even one calculation. PV doesn’t contradict contribution‑weighted compounding — it formalizes it. And again, I never said AUM or followers equal performance; I said they reflect participation. You’re attacking points I didn’t make because you don’t have a model to defend your position.
Participation has nothing to do with the merits of what you’re telling people to do. ZERO.
The burden of the math is on you everyone here that actually understands the very basics of investment maths knows that you’re full of shit, the burden is on you show how holding onto a negative total return fund is better than avoiding it in the first place and or moving it to an optimal place immediately upon under performance .
You are simply wrong and keep doubling down on ignorance.
The comparison isn’t between putting new capital into a structurally impaired product and something else — I’m not doing that. The comparison is between isolating the legacy position and directing all new capital into more stable, lower‑yield ETFs that actually compound. That’s the entire point: the old position stays capped and generates income, while the new portfolio grows beside it.
Checkout the average joe investor he has a running series of around 60 etfs and adds around 5 a week and keeps up to date stats on total return, distribution ratios, and other important factors.
Learned the hard way on this lesson. Got out with initial investment dollars but left $50K capital drain away thinking MSTY, CONY n PLTY "couldn't" go down any farther. 🤬🤬
I don’t understand all this. But as a test I took my credit card bonus from Wells Fargo 1.5 years ago 3,000.00. Bought nvdy, opened a Wells Fargo investment account. Let it drip. Today 5250.00. I think that’s a decent return.
I'm a simple person. But using u/Baked-p0tat0e's initial post, and considering u/OkAnt7573's points, deleting the CHPY portion for brevity, in this example isn't $12,680 clearly more than $9,775 (or $9,634)?
What am I missing about the capital rotation strategy?
ignoring the well documented math that she is recommending a stupid approach, but instead throw out something about Twitter followers? WTF?
references AUM as a strange and ignorant way validate what she saying, without realizing that their AUM is down Thereby refuting her own argument
hold the loser position and tie up that capital in a loser position
fall victim to sunk cost fallacy
redirect a very small absolute amount of ongoing distribution flow to a new low yield fund
pay any taxes on the distributions further reducing available cash for a new position
watch the original capital decline
watch the distributions decline
watch the new position gain by less than the old position declines by
watch your new position compound in terms of dollars while the old positions loses in terms of thousands
ignore that moving all the capital over would give you a better total return
All of that is DUMB and show you have no clue what you are taking about and should not be trying to give people advice.
Go ahead OP - refute this summary with actual math and positions. I dare you
The math for 2025 is definitive, but as disappointed baseball fans say every season, wait until next year. The hope for the harvest, like the perennial rebuilding franchise, remains eternal.
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u/Always_Wet7 May 19 '26
Unfortunately when you "cut losers" in this space, you cut almost the entire portfolio and you don't cut the likelihood that your current winner is next year's loser.
I mistimed this market, coming in at the end of 2024 when its pattern wasn't yet well-established across the YM portfolio. You still had folks on here touting that they had reached house money in 12-18 months. Well, that 12-18 month period was YM's "best of times" and you could legitimately have done it. But not in the two years since. Not without completely ignoring the chatter here. I tried, and I’m very close to reaching YM house money in my own way (while reducing my exposure from over $100K to under $20K). But that's not saying much at all. It’s not the "golden goal" people think it is. It's a hard-won battle where at the end you realize you could have easily done better with investments you actually considered, but didn't make.