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Get Richer Obviously


Sometimes there are some easy choices. Don't get me wrong, there is always a risk, and humility in the face of sometimes inscrutable markets is essential. 

Anyway, I just bought Royal Dutch Shell B shares (RDS/B) at $55.98. Royal Dutch is a massive company with an unassailable balance sheet, a huge buyback, and dividends paid from the founding of the company. THE YIELD ON THE COMMON STOCK TODAY IS 6.8%. What more do I need to say? I initially bought RDS/B in the low $60s a few months ago and sold out of the stock as it started to decline. At the inception, I did also put on a small leap option position, buying the January 15, 2021 55 strikes, using RDS/A. I now have a large (for me) position in this option, at an average price of $4.37, and thus a break even of $59.37. Note that the A shares are more liquid and have a far deeper option market, but if exercised, are subject to Dutch withholding, whereas the B shares, domiciled in the UK, do not have withholding.

In a very low interest rate world, I think this investment is in fact, obvious, just like ATT was obvious under $30, with a dividend yield similar to RDS.


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