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Post by Chahta on Oct 29, 2021 12:07:28 GMT
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Post by Fearchar on Oct 29, 2021 13:33:11 GMT
The Forbes article is bad.
It's almost as if they are using Seeking Alpha type articles.
The Author sells a newsletter; so wow! He's very biased.
Great article by Rekenthaler.
He's considerate; not biased!
I've owned CEFs in the past, but not now.
They can drop like a rock; after which they become reasonably priced.
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Post by Fearchar on Oct 29, 2021 13:55:21 GMT
Just ran an analysis of those CEFs: ASG, GAB & GLO.
Over the last 20 years, a portfolio made of equal amounts
of each would have a CAGR of 9.5%, but a max drawdown of 58%.
Of the 3 funds, ASG is clearly superior; 12.5% CAGR.
However, even that fund suffered a 57% max drawdown.
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Post by rhythmmethod on Oct 29, 2021 14:38:08 GMT
The article is a cheap sales pitch. Rekenthaler's rebuttal is typical "I don't like anything", from him, IMO. The use of CEFs - if one chooses to explore them - isn't black and white as portrayed. They can have a place in a diversified PF. In the days of almost no interest, I'm choosing to take risk in some CEFs for income and hold "real cash' not "cash like" to deploy, even if for groceries. Is it better, who knows? Edit to add - I'm up nicely on my purchases of PTY and GOF and haven't even collected any dist yet. |
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Post by Chahta on Oct 29, 2021 15:35:38 GMT
rhythmmethod I agree. Need to hold some of each since they all suck on their own.
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Post by richardsok on Oct 31, 2021 10:25:51 GMT
I don't think it's too early to start thinking of this year's "New Years Rally" in CEFs -- a popular annual tactic that has worked quite well in the past.
For those not familiar, late in the autumn you're apt to see further weakness in CEFs that have already fallen earlier in the year as small investors trim their portfolios to capture EOY tax losses. The selling often ends from Dec 15 - 22 or thereabouts as sly buyers start to come in to claim beaten-down opportunities. Rallies are often quite vigorous from about Dec 20 - to Jan 15.
The trick is to find good CEFs that are sharply hammered down from earlier levels the current year. I'm thinking PTY for 2021.
(Sorry if I'm drifting somewhat off topic but for some reason I can't find my "new thread" button.)
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Post by steelpony10 on Oct 31, 2021 11:13:26 GMT
Chahta , Fearchar , rhythmmethod , richardsok , All I can add is I have received 700k of illusionary money and all my initial investment back since the bank recession with little dependence on the wall of woe. Of course not spending it all I now have a larger backup stash invested in an overvalued? growth market waiting for a correction or worse (always worse) occurrence that’s a prognostication of the clairvoyant. Everything went down in value in 2020 and in hindsight I would have been better off all in with equities. So I’m stuck now getting my 8-9% to supplement SS in a low yield environment and maybe a real shaky equity phase. What a dunderhead move. But on the upside all spending should be replaced each month like the last 12 years and the wall of woe remains intact festooned with the 3 unknowns. The only facts I see are conventional bonds are providing negative returns at the moment and natural inflation during an economic recovery continues. I”ll still favor the bird in hand. No one seems to notice the cash is an illusion.
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Post by Chahta on Oct 31, 2021 12:21:59 GMT
richardsok , looks as though some CEFs (PTY) may be "seasonal" as munis are, using the "Seasonality" choice at SharpCharts.
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Post by yogibearbull on Oct 31, 2021 13:17:19 GMT
For CEFs, a look at Financial Highlights section is quite revealing. From Gabelli GAB Financial Highlights (6/30/21), pg 17-18, gab-semi-annuals.s3.us-east-2.amazonaws.com/GAB06302021.pdf6-mo distributions per share include $0.03 (income) + $0.12 (realized CG) + $0.15 (ROC) = $0.30/share for 6 months. Fund has managed-distribution policy, so the ROC takes up any slack from income and CGs. Markets have been good, but check what happened in a bad year when the NAV takes a huge hit from distributions that are then not supported by investment results. Portfolio income is only 0.95% annualized (it says so in the bottom line on pg 17), so the high distribution has to come from realized CGs and ROC. GAB stated regulatory leverage is 20.62% (debt as % of total assets), but holders see/feel 1.26x effect (total assets/net assets) or 26% (debt as % of net assets). I have posted on this elsewhere that the stated regulatory leverage understates leverage that holders experience and may mislead. CEFs are complex and their presentation and evaluation often depends on author's point of view. |
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Post by xray on Oct 31, 2021 19:36:05 GMT
yogibearbull, Your: For CEFs, a look at Financial Highlights section is quite revealing. From Gabelli GAB Financial Highlights (6/30/21), pg 17-18, gab-semi-annuals.s3.us-east-2.amazonaws.com/GAB06302021.pdf --------- Very familiar with GAB and won't be my cup of tea anytime soon. Many of us fell in love with "GAB" back in the 1990's and onward with their "continual" RO's at $7 [with continual runups to $10 where many of us sold the excess and reloaded at $7. Add to this that they have spun off many different CEF's [GAB, GGT, GRX] with "free shares" to current shareholders. In effect you would find it hard to complain. That was yesteryear, now it is just another non performing [IMHO] CEF who has trouble ever again reaching $7. Some years back, I deleted it from my watch list [as a current non-player]. GAB normally trades at premium and is living off "yesteryear" performance [IMHO]. and will probably never pay the previous distribution amount we received each year [in the very near future].... Bottom Line: When Mario Gabelli left the CEF and turned it over to three other Managers, it appears it was doomed for performance and will never be the same [going forward]. Don't get me wrong, because of previous performance before 2006 [and Mario Gabelli], I look at it periodically.... Live Long and Prosper....
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sgra
Lieutenant
Posts: 64
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Post by sgra on Nov 1, 2021 4:19:28 GMT
I think both articles (Forbes and Morningstar) are flawed. I wrote to Rekenthaler and said that his critique of the Forbes was valid but that his article came across as a hit piece on CEFs in general. He wrote back and said that was not his intention.
12% of my portfolio is in CEFs primarily for income to supplement pension and SS. The balance of port is in more standard fare. CEFs have their quirks that can be played to advantage.
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Post by steelpony10 on Nov 1, 2021 10:47:13 GMT
sgra , Exactly. We use them the same way and as a source of ready income to DCA monthly into growth.
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Post by Fearchar on Nov 1, 2021 12:26:56 GMT
steelpony10, I've had success with CEF's in the past. I just don't currently own any because spreads between quality and junk debt is so narrow right now. Of course, not all CEFs correlate with junk. So, there may be some that are worthy as long term holdings. The main point of the criticism is that they are not universally safe choices; especially for retiree's looking for a secure income stream.
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Post by steelpony10 on Nov 1, 2021 16:08:49 GMT
Chahta , sgra , Fearchar , I also contacted the author this morning. He acquiesced that CEF’s would be a valid investment to supplement SS or as part of a diverse income stream. He emphasized he wasn’t trashing CEF’s as mentioned but just pointing out in his opinion they weren’t appropriate for retirees as an entire portfolio. So for me that opinion varies. But certainly not for spend down investors. They are stuck with conventional bonds and/or 10-30% tanking equities. In my opinion diversification, allocation or foreign investments are no help either. Fearchar , I hold the opposite opinion believing that well managed CEF’s offer way more secure income but are less lucrative long term then Mr. Market and the everyday shenanigans that go on there. In the present low yield enviornment when conventional bonds have negative returns and some believe equities are overvalued and have no place to go but down it’s nice to have our 8-9% monthly cash flow as part of an all weather portfolio if equities are indeed teetering and our muni fund is factually a liability at this time.
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Post by Fearchar on Nov 1, 2021 16:29:19 GMT
9% is sweet until it's cut and you lose 15% of your capital!
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Post by steelpony10 on Nov 1, 2021 18:56:06 GMT
9% is sweet until it's cut and you lose 15% of your capital! Well most was invested during the bank crisis with another 20% added during 2020. So all those early investments are on the plus side. I mentioned I received all those early investments back (72 12-14% then) and dumped all the excess income into growth indexes that have returned over 100% since then. So cap gains during a typical retirement of 15-20 years was achieved by dumb luck. Excess income is still rolling in and DCA’d into growth each month. In plain language it’s a reliable money machine to date not dependent on cap gains or much on markets that initially distributed 4 times+ our personal inflation rate and whose excess has been compounded at 10%+ for over 12 years. So someone would rather artificially diversify, allocate, spend down, market time, dip watch, create dead foreign investments and hope Biden doesn’t kick it or a worse event happen? Any conventional bonds investors hold are slow death cash at the moment and conventional investors are at the mercy of world events and headlines their whole retirement. I’ll take varying distributions (they go up also) and any growth is covered as mentioned but I agree the pressure is down like equities and conventional bonds at this time. Compounding at equity rates of return if there are any is higher then the 3-5% of dividend stocks or practically non existent fund increases. The whole purpose of this scheme was to risk more now and build up a growing reserve to hopefully avoid taking on risk later at an advanced age if expenses like home care or worse suddenly occur. Be too conservative, invest just enough to get by, concentrate on each investment’s flaws and your finances could be toast. You might be addled and your wife, relative or paid professional might be the new financial manager. Yikes. Times a wastin.😂 |
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Post by Chahta on Nov 1, 2021 19:32:19 GMT
Just as it is not smart to own all equities at our advanced ages, it is not smart to own all CEFs either. But some up to your tolerance may be just right. The Forbes article was overboard one way and the M* article was pretty biased the other.
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