Veilnode AI & Finance Digest

  Why Leverage Is More Dangerous Than It Looks Disclaimer:  The content on this site is provided solely for informational and educational purposes and should not be construed as financial, investment, tax, or legal advice. All strategies, examples, and opinions expressed are based on general market observations and personal interpretation, and may not be suitable for your individual financial situation. Before making any financial, investment, tax, or legal decisions, you should seek advice from a qualified and licensed professional who fully understands your specific circumstances. Reliance on any information provided here is solely at your own risk, and neither the author nor this website accepts any liability for your investment outcomes. Understanding Structural Risk Every Investor Should Know Leverage is the use of debt to increase the size of an investment position. At first glance, it seems like a tool to amplify returns. But in reality, it’s a mechanism where  the...

Does a Low VIX Mean High-Yield ETFs Are Safe?:Low VIX As I continue learning about investing myself, I often find myself genuinely shocked by what I discover along the way. There is rarely a truly “comfortable” day in investing, and most of us eventually realize how difficult it really is. In many ways, it feels like navigating an unpredictable ocean — not unlike life itself. Because of that, I don’t see investing as a fixed formula. I see it as a series of tactical decisions that change depending on the situation. That is why individual experience matters so much, and why sharing perspectives — even imperfect ones — has value. Of course, in a public blog like this, truly sensitive or highly confidential details cannot be shared. However, I try to express important ideas indirectly, using structure and analogy rather than explicit instructions. What you do with that information is ultimately your responsibility. My hope is simply that readers think carefully, protect their capital, and...

The Structural Similarities Between Bad Investments and Bad People A Comparative Analysis Using TLT This essay is not an attack on any specific individual. Rather, it is a structural analysis. By examining a familiar financial instrument— the iShares 20+ Year Treasury Bond ETF (TLT)— we can better understand a recurring pattern that appears not only in portfolios, but also in human relationships. 1. Structural Similarities 1) Persistent Decline: Dead Money TLT: When interest rate conditions turn unfavorable, capital becomes trapped. Hope remains, but progress disappears. In unhealthy relationships: Over time, the cost increases, while the probability of recovery steadily declines. In both cases, the issue is not short-term noise, but a structural problem. 2) The Illusion of “It Will Get Better Eventually” TLT:  “When rates come down, it will recover.” People:  “People can change.” These beliefs are not strategies. They are holding positions backed by hope rather than evidence....

  "If You Ever Meet an Enemy, Recommend TLT." Why Long-Term Bonds Can Be the Cruelest Kind of Kindness There’s an old joke in the investing world: “If you ever meet an enemy, recommend TLT.” On the surface, it sounds harmless. After all, TLT holds U.S. Treasury bonds with maturities over 20 years. Backed by the government. No bankruptcy risk. What could go wrong? The problem is that TLT isn’t dangerous in an obvious way. It’s dangerous in a patient, grinding, psychological way. 1. Why TLT Looks Perfect at First TLT inspires trust by design. U.S. Treasuries. Long-term. Stable. It feels like the opposite of speculation. That’s why the same phrases always appear: “Rates will come down eventually.” “This has to be the bottom.” “Bonds are safe.” The issue is that every one of those statements depends on one word:  eventually . 2. VIX Is Calm — So Why Does TLT Keep Getting Hit? When the VIX sits around 14 or 15, people relax. They assume the market is calm. And if the market is cal...

  For income-focused investors, distributions are the goal—but taxes can quietly erode returns. After reviewing multiple tax filings and applying these strategies in real portfolios, I’ve found that understanding both the problem and the solution is essential for maximizing after-tax income. Part 1: The Hidden Cost of Covered Call ETFs Covered call ETFs are often promoted for their high and consistent distributions. However, the real surprise doesn’t come from performance—it comes from how these distributions are taxed. The Key Question: What Kind of Income Is This? In the U.S., investment income is not taxed uniformly. The tax outcome depends on how the income is classified, not merely on how much is received. Income Type Tax Treatment Common Sources Ordinary Income Marginal income tax rate Option premiums, short-term gains Qualified Dividends Long-term capital gains rates Certain stock dividends Return of Capital (ROC) Not immediately taxable Some ETF distributions Why Covered Ca...

Why Some Investors Still Choose YieldMax Covered Call ETFs—Despite the Risks This article is not an attempt to defend YieldMax covered call ETFs. Their structural weaknesses are well known, and I have written about them extensively. Rather, this is an explanation of why some investors—including myself—still choose to use them, despite fully understanding those risks. The answer is not yield. It is not optimism. And it is certainly not long-term growth expectations. First, Let’s Be Honest About the Downsides YieldMax covered call ETFs come with clear and unavoidable limitations: Upside participation is capped during strong bull markets NAV erosion is common over long holding periods Return of Capital (ROC) often appears in distributions Total return frequently underperforms the underlying asset These are not misunderstandings. They are structural characteristics. Ignoring them is what causes problems—not the products themselves. Why I Still Use YieldMax ET...

Recently, I noticed a familiar pattern while browsing investor communities. People were buying TSYY aggressively, joking about increasing share counts, or timing re-entry based on “Japan’s interest rate situation.” What stood out wasn’t the trades themselves, but how few explanations accompanied them. The buying felt emotional, reactive, and disconnected from structure. That raised a question I hadn’t seriously considered before: Why are Japanese interest rates suddenly being mentioned in conversations about a U.S. income ETF like TSYY? The Hidden Role of Japan in Global Liquidity For decades, Japan has maintained ultra-low interest rates. This made the yen a funding currency for global investors through what is known as the yen carry trade —borrowing cheaply in yen and deploying capital into higher-yielding assets abroad. In practice, Japan’s role in global markets is not limited to trade or equities. For years, ultra-low Japanese interest rates enabled large-scale y...

  Year-End Tax Checklist for Investors: What Actually Matters at Filing Time Why After-Tax Returns Matter More Than You Think In writing this piece, I want to highlight a concept that often gets overlooked— after-tax total return . Many investors are so focused on chasing short-term gains that they ignore what truly stays in their pocket. And I don’t blame them. We live in a world where financial pressure is constant, time is limited, and every decision feels urgent. But the truth is,  without understanding after-tax outcomes , even a well-timed investment can fail to deliver real-life value. This blog series dives into that reality. We’ll walk through emotional traps, misunderstood metrics, and why some “high-yield” products might not be as rewarding as they seem—especially when the VIX is quiet and covered calls dominate the headlines. Let’s begin with a question: Is your portfolio optimized for what you keep, not just what you earn? As tax season approaches, many investors ...

  Why Total Return After Tax Matters More Than Yield (This information is provided for reference purposes only. For personalized or accurate tax advice, please consult a qualified tax professional (CPA).) For many investors, especially those focused on income, headline yield is often the first—and sometimes the only—metric considered. A 10%, 20%, or even 40% distribution rate can look compelling on the surface. However, after navigating multiple tax seasons as an active investor, I have learned that yield alone is an incomplete and often misleading indicator. What ultimately matters is not how much cash an investment distributes, but how much value remains after taxes. In other words,  after-tax total return  is the metric that determines whether an investment genuinely improves long-term financial outcomes. Yield Shows Cash Flow, Not Profit Yield measures how much cash an investment distributes relative to its price. It does not account for price movement, tax treatment,...

The Day My Conviction in AI Covered Call ETFs Finally Cracked This article is a personal record of the day my mental composure truly broke while investing in AI-sector covered call ETFs. It might not qualify as a “huge loss” in absolute terms. But it was undeniably the moment when my entire attitude toward investing changed. It Happened Between November 19 and November 22 Up until that point, I had been investing in AI-sector covered call ETFs for roughly two months. My positions included AMDY, PLTY, TSLY, and NVDY. At the time, I was working as a freelance contractor. During a short break between tasks, I opened my fintech app out of habit. That was when I noticed something felt off. VIX: 19 → 26, and a Portfolio That Warped Too Fast The VIX index surged from 19 to 26 in a very short period of time. Simultaneously, most sectors—including AI—experienced sharp declines, many exceeding 20%. My own portfolio dropped by roughly 10% in a narrow window. What stood ou...

Why High-Dividend ETF Returns Look “Too Good to Be True” People who encounter high-dividend ETFs for the first time often have the same reaction. “30% a year? 50%? Does that even make sense?” Honestly, that’s a perfectly reasonable question. If you have even a little experience in investing, thinking  “Something feels off with numbers like that”  is actually a healthy response. The real problem is this: there aren’t many explanations that clearly show where those  “abnormally high”  numbers come from. The Main Reason High-Dividend ETF Returns Look So High To get straight to the point, the way returns are calculated creates an optical illusion. Most high-dividend ETFs—especially those using covered call strategies—share a similar structure: They pay cash distributions weekly or monthly Those distributions are then annualized And presented as “XX% annual yield” Here’s the key point many people miss: That yield is not total return. It’s a cash distribution–based yield. ...