I picked up a few shares of PPR and GIM for the income dividend and
share price discount to net asset value. How much farther do you think
these two funds can go down? Given the discount is about 10% and 7.6%
for each respectively, what would be a draconian interest rate
increase that would bring these funds down past their discount floor?
<> wrote
>I picked up a few shares of PPR and GIM for the income dividend and
> share price discount to net asset value. How much farther do you think
> these two funds can go down? Given the discount is about 10% and 7.6%
> for each respectively, what would be a draconian interest rate
> increase that would bring these funds down past their discount floor?
The discount can be useful when picking CEF's but these are income funds and
interest rates and the dollar are more important. How much more can they go
down? Lots more. The reason is mostly because other investors are negative
on these funds. Take PPR, compare the NAV returns with the market returns:
You'll see that the fund is up year to date and it was up last year at NAV,
but it was down last year and year to date at market. Investor sentiment
toward these funds is probably the single most important criteria. There's a
lot to consider with these funds, more than just the holdings.
Thanks for the reply Ed. I was using the NAV discount as a "buffer". I
do not own much in these income funds, as I bought them for the
dividend first and safety was a second criteria. Investor sentiment
has been dismal on these, I assume due to interest rate increases. How
low can they go is what I am scratching my head about if they are
actively managed and have assets that will not go bankrupt anytime
soon. It was a risky purchase I guess as the share price can decline
alot more, maybe enough to cause owning it not a wise long-term holding
( -ie- takes years for price to recover versus dividend stream
offsetting it). Of course, if the underlying NAV gets way too
discounted versus share price, shrewd investor(s) would step in and
buy up shares at sales prices? I understand that funds that are NAV
discounted are a contrarian play in some market circles. Would you call
funds like PPR such?
<> wrote in message
news:
> Thanks for the reply Ed. I was using the NAV discount as a "buffer". I
> do not own much in these income funds, as I bought them for the
> dividend first and safety was a second criteria. Investor sentiment
> has been dismal on these, I assume due to interest rate increases. How
> low can they go is what I am scratching my head about if they are
> actively managed and have assets that will not go bankrupt anytime
> soon. It was a risky purchase I guess as the share price can decline
> alot more, maybe enough to cause owning it not a wise long-term holding
> ( -ie- takes years for price to recover versus dividend stream
> offsetting it). Of course, if the underlying NAV gets way too
> discounted versus share price, shrewd investor(s) would step in and
> buy up shares at sales prices? I understand that funds that are NAV
> discounted are a contrarian play in some market circles. Would you call
> funds like PPR such?
No, not yet. I do a lot of buying and selling with CEF's and I would wait
for the trend to change. You don't want to lose too much. You know how the
math works, lose 50% and you need to go up 100% to get back to even. I think
a lot of the money made in stocks during the 1990's was due to interest
rates trending lower for the entire decade. If they reverse and trend higher
for the next decade this fund will be a poor performer.
I'm not really a TA guy but this chart is pathetic.
Yep, the chart shows bleeding. Take it from me folks, when I buy,
sell! LOL. No, but this whole interest rate market aspect is always a
wildcard spoiler when everything else looks tempting. Like I said, not
much $$ in the funds. More of income stream and foothold into possible
yearly purchases. Time will tell. I have I bonds I bought at wrong
time too maybe . Bought them in 2003 after they had a 1% rate. Missed
the big 5% rate the prior year. Did that because I only had an AE card
and they only accepted Mastercard or Visa at the time ( could buy on
treasury.org w/ credit card, so convenient and get a 1% rebate for the
purchase). So, diversifying is my aim in long term. Bonds suck. Income
sucks. Stocks suck. LOL!
What I like better than either of your choices right now, if you're
interested:
IXG, XLF, FUND, EWW, PZI, FDM. These are ETF's, FUND is a CEF.
What's hot right now:
AAI, SKYW, CAL. These are airline stocks.
CEF's I like:
FUND, TKF, FF, MXF, LDF.
Check them out. Buy at your own risk.
<> wrote in message
news:
> Yep, the chart shows bleeding. Take it from me folks, when I buy,
> sell! LOL. No, but this whole interest rate market aspect is always a
> wildcard spoiler when everything else looks tempting. Like I said, not
> much $$ in the funds. More of income stream and foothold into possible
> yearly purchases. Time will tell. I have I bonds I bought at wrong
> time too maybe . Bought them in 2003 after they had a 1% rate. Missed
> the big 5% rate the prior year. Did that because I only had an AE card
> and they only accepted Mastercard or Visa at the time ( could buy on
> treasury.org w/ credit card, so convenient and get a 1% rebate for the
> purchase). So, diversifying is my aim in long term. Bonds suck. Income
> sucks. Stocks suck. LOL!
Jimmy Rogers, a guy I think highly of, says "it ain't easy getting rich".
I agree.
Another Rogers, Will, said "buy land, they don't make it anymore". Was he
right on the money or what.