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Post by rhythmmethod on Sept 26, 2022 18:21:20 GMT
The PIMCO folks attempt to establish a “trend” and exploit it with swaps, etc. It’s complicated stuff. If you dig deeper into these things, you probably won’t want to go there. Me, I hold some and spend the money. Perhaps @steelpony or others have more insight. Good luck. What does it mean for PIMCO to "establish a trend" in this context? And I'd love to go there. I want to learn as much as possible about how these CEFs work. If anyone wants to inform me how these swaps work, or how high rates benefit certain CEFs, feel free to chip in! This might help - www.investopedia.com/terms/b/bondswap.asp-RM |
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Post by ECE Prof on Sept 26, 2022 18:24:36 GMT
If I had learned what PIMCO guys do, I would be a billionaire now. I have heard about "Argentine Crisis," "Lebanon Crisis," "Pandemic," and recently the "Russian Crisis." I started buying several thousand shares of PCI during the "Argentine crisis." There were many sellers of PCI during that time, when we were all participating in the M* forum. That was my start. Somehow, the PIMCO guys keep making money for me, and I keep buying more shares. It seems that there is another sell-off of PDI today by the "experts." Sell baby, sell.
Add/Edit: I forgot the current crisis. "FED-induced deleverage."
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rumi
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Post by rumi on Sept 26, 2022 22:11:26 GMT
Thanks for sharing. So a "bond swap" is simply selling one bond in order to buy another. It always amazes me how the finance folks need to make up fancy jargon to feel better about themselves. Difference becomes delta. A portion becomes a tranche. Etc. |
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Post by richardsok on Sept 27, 2022 9:28:02 GMT
I keep wanting to leap back in, but so far haven't. Every time they drop further astonishes all over again. Reminds me the old line from DINER. "Did you ever get the feeling something's going on that you don't know about?"
Can't tell if we're watching "small investor panic" or the whiff of earnings deterioration. I think this is a moment for serious self-discipline and not try to time the absolute bottom.
All we know for sure is that there's loads of cash on the sidelines. When these puppies pop, they're apt to pop big & fast.
-----------------------
Look on the bright side. For a whole month now, no one has been giving you gag reflexes repeating the old, "Be greedy when others are fearful" quote.
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Post by chang on Sept 27, 2022 10:31:12 GMT
“Can't tell if we're watching "small investor panic" or the whiff of earnings deterioration.”
That always struck me as a paradox. On the one hand, the only people who even know that CEFs exist and what they are, are fairly intelligent and experienced investors. On the other hand, CEFs show the kind of extreme volatility associated with inexperience and panic.
That’s why I won’t get interested until a discount surpasses 10-15% or more.
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Post by Norbert on Sept 27, 2022 10:59:40 GMT
I keep wanting to leap back in, but so far haven't. Every time they drop further astonishes all over again. Reminds me the old line from DINER. "Did you ever get the feeling something's going on that you don't know about?" Can't tell if we're watching "small investor panic" or the whiff of earnings deterioration. I think this is a moment for serious self-discipline and not try to time the absolute bottom. All we know for sure is that there's loads of cash on the sidelines. When these puppies pop, they're apt to pop big & fast. ----------------------- Look on the bright side. For a whole month now, no one has been giving you gag reflexes repeating the old, "Be greedy when others are fearful" quote. Lots more of them are here in case you get the urge: www.brainyquote.com/authors/warren-buffett-quotes"Rule 1: never lose money. Rule 2: never forget rule 1." Damn, do I hate that quote! |
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Post by Deleted on Sept 28, 2022 1:10:01 GMT
Someone from Capecod posted the following (after having sold some PDI last week): "Bought a tiny bit of PAXS to keep it visible/so I don't forget it. Noted over the weekend that the PAXS portfolio was constructed about a year after PDO as yields had started up. MAYBE the fundamental portfolio had a superior starting yield and is managed using the same broad strategies. IMO worth (a little) watching." ------------------------------------------ I have PAXS on my watch list.Likely my next buy of CEFs. R48 Here's a quote from CapeCod made earlier today, in response to seekingalpha.com/article/4543347-cef-market-update-drawdown" Excellent analysis. However from a technical rather than fundamental perspective, income CEFs STILL AMAZINGLY look dangerous. Weekly MACDs have flashed a usually reliable sell signal --- despite (for example) PDI generating NII on NAV around 19%....-PDO around 16%. This warns me that fundamental values are at least momentarily irrelevant in the big flush. (LOL at self: I'll be waiting to add to AGNCL!) Regards, Dick " --- Frank |
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Post by richardsok on Sept 28, 2022 1:54:30 GMT
fp & r Thanks for the post. Good to get other perspectives.
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Post by retiredat48 on Sept 28, 2022 5:39:15 GMT
Couple points on CEFs like PDI.
--If you look at charts from the 2008/9 bear markets, leveraged FI CEFs went way down...followed equities. Then rallied very sharply recovering off the bottom. Distributions were always paid. Expect extreme volatility.
--Unlike a mutual fund, where, when you sell, you are transacting with the fund...at a closing market price of underlying holdings. With CEFs you are transacting with another individual; hence they may be selling out of fear, panic etc, thus driving down prices.
--I use a term with myself called "standback buyers". Means this. No one is forced to buy things; but investors sometimes have to sell things for many reasons. Thus in market severe down moves, the buyers can simply "standback and watch...wait"...while there is always a seller. This can get exacerbated, with new lows being far lower than imagined. Then the assets rebound fast when the buyers return. CEFs are thinly traded and thus more prone to standback buyer downdrafts.
--CEFs with mortgage backed securities are now very interesting. Yes, mortgage rates went up fastest in history...like from 3% to now 7% yesterday on 30 year. This lessens the value of existing mortgages (mark-to-market). Many now below par. Hovever when mortgage is repaid early, it is not at the discount value, but at face value, hence gains if paid early. However, with the sharp rise in rates, existing home sellers feel "locked-in"--will not give up a 3% mortgage to take on a 7% one. So they stay put---increasing the average mortgage maturity from 7 years; thus increasing the duration; thus increasing the negative effects if mortgage rates rise. Another however...unlike financial crisis of 09, homeowners will not be defaulting, with home values at new highs. And if they do default, the home will be easily sold and PIMCO gets its full value returned, with a cap gain.
--Where CEFs hold low quality corporate or country bonds, a severe depression etc will increase default rate, and could hinder asset values and distributions. Fed just took a risky step in increasing terminal or final funds rate by about a point recently...increasing likelyhood of a severe recession.
R48
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Post by anitya on Sept 28, 2022 5:43:56 GMT
Someone from Capecod posted the following (after having sold some PDI last week): "Bought a tiny bit of PAXS to keep it visible/so I don't forget it. Noted over the weekend that the PAXS portfolio was constructed about a year after PDO as yields had started up. MAYBE the fundamental portfolio had a superior starting yield and is managed using the same broad strategies. IMO worth (a little) watching." ------------------------------------------ I have PAXS on my watch list.Likely my next buy of CEFs. R48 Here's a quote from CapeCod made earlier today, in response to seekingalpha.com/article/4543347-cef-market-update-drawdown" Excellent analysis. However from a technical rather than fundamental perspective, income CEFs STILL AMAZINGLY look dangerous. Weekly MACDs have flashed a usually reliable sell signal --- despite (for example) PDI generating NII on NAV around 19%....-PDO around 16%. This warns me that fundamental values are at least momentarily irrelevant in the big flush. (LOL at self: I'll be waiting to add to AGNCL!) Regards, Dick " --- Frank Thanks for posting. I was thinking during my walk today if I should start setting up some buy limit orders. I obviously am not smart like CapeCod to do technical analysis - So, I usually end up being early. I guess I will hold off. |
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Post by retiredat48 on Sept 28, 2022 17:06:38 GMT
Here's a quote from CapeCod made earlier today, in response to seekingalpha.com/article/4543347-cef-market-update-drawdown" Excellent analysis. However from a technical rather than fundamental perspective, income CEFs STILL AMAZINGLY look dangerous. Weekly MACDs have flashed a usually reliable sell signal --- despite (for example) PDI generating NII on NAV around 19%....-PDO around 16%. This warns me that fundamental values are at least momentarily irrelevant in the big flush. (LOL at self: I'll be waiting to add to AGNCL!) Regards, Dick " --- Frank Thanks for posting. I was thinking during my walk today if I should start setting up some buy limit orders. I obviously am not smart like CapeCod to do technical analysis - So, I usually end up being early. I guess I will hold off. PDI and PDO...strong price rebounds underway today! |
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Post by anitya on Sept 29, 2022 5:05:37 GMT
Two days of positive prices greeted with negative NAV Prints on both days. Did I miss something? I do not see compelling discounts. Does Not seem like a start of an intermediate uptrend. Wise to keep them on a short leash.
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Post by steelpony10 on Sept 29, 2022 10:36:42 GMT
anitya , moneyfortherestofus.com/closed-end-funds/ CEF’s have been around since the late 1800’s before OEF’s. All I can add is they provide what they seem to be providing or amateur investors can wait and wait until world markets and central banks resolve their issues with inflation. This situation has been telegraphed as a possibility at the beginning or during retirement for years to be a real danger to spend down investors. Retirees got through Stagflation, 1999-2010 and could get through this with income investments. The staying fully invested amateurs plus only equity and conventional bond holders would have to sell devalued investments for any CEF investments. The flee to cash CD crowd fighting? high inflation would never invest in them. Being stuck with indecision for an indefinite period or going into skinflint mode is the result of poor portfolio management.
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Post by anitya on Oct 2, 2022 23:20:30 GMT
I could not make any sense of the PIMCO multisector CEFs' Friday price action. They varied from -1.12% (PDO) to +4.28% (PAXS) while each one of them had a negative NAV change. PDI and PTY were up more than 2% while their trading volume was below average.
If any of you have an explanation or guess, please share.
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Post by yogibearbull on Oct 3, 2022 0:05:31 GMT
The newest term-structure PAXS (2022- ) had a huge increase in its distribution. Keep in mind that PAXS is deploying new money into this terrible bond market.
I posted this in Fido Inv Community in response to "Analysis Paralysis" by a poster,
In general, if YOU think that some thing may be a decent buy (regardless of what others say), buy half-position and buy the rest later (waiting with limit-order or by selling puts). This is called half-and-half.
Remember that the Fed directly controls only the short-term rates. Longer-term rates are market-based and may reflect several Fed moves in advance.
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Post by liftlock on Oct 4, 2022 0:51:34 GMT
I could not make any sense of the PIMCO multisector CEFs' Friday price action. They varied from -1.12% (PDO) to +4.28% (PAXS) while each one of them had a negative NAV change. PDI and PTY were up more than 2% while their trading volume was below average. If any of you have an explanation or guess, please share. This strikes me as a good example of human behavior at work. There was more investor demand for shares of PAXS than there were for PDO. It's a good example of the market and CEFs being inefficient. |
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Post by johnsmith on Oct 4, 2022 12:25:07 GMT
The newest term-structure PAXS (2022- ) had a huge increase in its distribution. Keep in mind that PAXS is deploying new money into this terrible bond market.
I posted this in Fido Inv Community in response to "Analysis Paralysis" by a poster, In general, if YOU think that some thing may be a decent buy (regardless of what others say), buy half-position and buy the rest later (waiting with limit-order or by selling puts). This is called half-and-half. Remember that the Fed directly controls only the short-term rates. Longer-term rates are market-based and may reflect several Fed moves in advance.
This may not be true anymore. They have maxed out leverage and therefore are probably fully invested at this time,
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Post by Deleted on Oct 4, 2022 12:59:12 GMT
The newest term-structure PAXS (2022- ) had a huge increase in its distribution. Keep in mind that PAXS is deploying new money into this terrible bond market.
I posted this in Fido Inv Community in response to "Analysis Paralysis" by a poster, In general, if YOU think that some thing may be a decent buy (regardless of what others say), buy half-position and buy the rest later (waiting with limit-order or by selling puts). This is called half-and-half. Remember that the Fed directly controls only the short-term rates. Longer-term rates are market-based and may reflect several Fed moves in advance.
This may not be true anymore. They have maxed out leverage and therefore are probably fully invested at this time,
Leverage in CEFs is measured based on value of assets, so if value of assets (NAV) increases, leverage can increase proportionately (The reverse is also true). Recommend reading Nuveen's "Understanding Leverage in Closed-End Funds." |
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Post by ECE Prof on Oct 4, 2022 13:55:00 GMT
Does the leverage ratio also depend on the assets, based on the NAV or the price? People are scooping the shares of PDI in the past three business days, and the premium is shooting up, probably again back to 9% (approx) today. Talk about gain in three days. I wanted to buy more shares of PDI today. But, the premium is beyond my level. It seems that many are expecting a big payoff in December.
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Post by Deleted on Oct 4, 2022 14:10:07 GMT
Does the leverage ratio also depend on the assets, based on the NAV or the price? Any, people are scooping the shares of PDI in the past three business days, and the premium is shooting up, probably again back to 9% (approx) today. Talk about gain in three days. I wanted to buy more shares of PDI today. But, the premium is beyond my level. It seems that many are expecting a big payoff in December. There may be correlation between price and NAV in some instances. NAV is based on fundamentals while price is a measure of buyer sentiment. I believe there is actual leverage and effective leverage re: duration. Possibly others. YBB would know more about leverage than I. |
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Post by chang on Oct 13, 2022 19:18:30 GMT
PDO opened at an all time low. PDI close. I see no harm in waiting until we see some meaningful discounts.
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Post by anitya on Oct 14, 2022 2:42:26 GMT
PDO opened at an all time low. PDI close. I see no harm in waiting until we see some meaningful discounts. Only two of them (both newly minted) are at a discount and PDI is not. Strangely or understandably, depending on one's perspective, the NAVs of these things are nearly 10% lower (not including four monthly dividends) than they were in mid-June while S&P 500 is at the same or slightly higher price. If you believe fixed income ("Credit") is smarter than equities, may be we are yet to see the worse in equities but that does not tell us where we are in the Credit cycle. We are on a potentially long tough road ahead, given low white collar unemployment (keeps services inflation high) and a war unlike we have seen since 1975. Above all, with one's cash, it seems it is better to enjoy what is available in the market (4.5% risk free returns?) than fight for what is not available. |
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Post by chang on Oct 14, 2022 21:10:35 GMT
I promise I won’t make a habit of it, but PDO and PDI hit new all-time lows today. I really believe it’s too early to rush in.
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Post by ECE Prof on Oct 14, 2022 22:08:26 GMT
The PDI investment is not any riskier than with the equities right now, while the cash flow is coming in every month. I have made a lot of money in the last 5 years. I made the mistake of shuffling all the cash into equities instead of growing the shares and lost most of it. Look at the coverage ratio and the UNII. Income can also substitute growth. I started with something like 200 shares of PCI, and I own close to 22000 shares of PDI. I know one blogger in the Armchair forum who mentioned that he has 40000 shares. Talk about comfortable retirement. He is the guy. Of course, @steelpony is also there.
In fact, last year at this time, my original PCI investment had Capital gain. That means that people were paying more money for income. Now, people have to pay less money for every dollar of income. Great deal.
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Post by richardsok on Oct 14, 2022 23:21:37 GMT
The PDI investment is not any riskier than with the equities right now, while the cash flow is coming in every month. I have made a lot of money in the last 5 years. I made the mistake of shuffling all the cash into equities instead of growing the shares and lost most of it. Look at the coverage ratio and the UNII. Income can also substitute growth. I started with something like 200 shares of PCI, and I own close to 22000 shares of PDI. I know one blogger in the Armchair forum who mentioned that he has 40000 shares. Talk about comfortable retirement. He is the guy. Of course, @steelpony is also there. In fact, last year at this time, my original PCI investment had Capital gain. That means that people were paying more money for income. Now, people have to pay less money for every dollar of income. Great deal.
No one gives a rat's ass for the size of your positions. Nor do we know if you are as adept at lying as you are at bragging. |
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Post by ECE Prof on Oct 14, 2022 23:33:34 GMT
The PDI investment is not any riskier than with the equities right now, while the cash flow is coming in every month. I have made a lot of money in the last 5 years. I made the mistake of shuffling all the cash into equities instead of growing the shares and lost most of it. Look at the coverage ratio and the UNII. Income can also substitute growth. I started with something like 200 shares of PCI, and I own close to 22000 shares of PDI. I know one blogger in the Armchair forum who mentioned that he has 40000 shares. Talk about comfortable retirement. He is the guy. Of course, @steelpony is also there. In fact, last year at this time, my original PCI investment had Capital gain. That means that people were paying more money for income. Now, people have to pay less money for every dollar of income. Great deal.
No one gives a rat's ass for the size of your positions. Nor do we know if you are as adept at lying as you are at bragging. I have no idea what you are saying. I did not say anything about you or posts. The feelings are mutual. |
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Post by Deleted on Oct 14, 2022 23:53:59 GMT
What ECE Prof and Steelpony share about their investment history is helpful. It ranks up there with uncleharley TA posts.
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Post by ECE Prof on Oct 15, 2022 1:16:48 GMT
What ECE Prof and Steelpony share about their investment history is helpful. It ranks up there with uncleharley TA posts. Thanks. I also follow uncleharley. |
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Post by johnsmith on Oct 15, 2022 4:54:30 GMT
I think it's not a good idea to post numbers of shares - as it can be easily translated into $ figures. The internet is a scary place and with all the personal information we post here, it's fairly easy to find the "real person" and then possibly putting oneself at risk.
It's better to say something like:
- I increased my position in XXX by 10%.
- I sold 50% of my equity holdings.
- I would buy more of XXX at $15
- I want to increase my position in XXX by 2X
it gives enough colour on what moves one has made.
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Post by chang on Oct 15, 2022 5:48:34 GMT
The issue is not so much security as it is etiquette. And the individual in question has been advised of this before.
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