This blog is produced by David Merkel CFA, a registered representative of Finacorp Securities as an outside business activity. As such, Finacorp Securities does not review or approve materials presented herein. By viewing or participating in discussion on this blog, you understand that the opinions expressed within do not reflect the opinions or recommendations of Finacorp Securities, but are the opinions of the author and individual participants. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security or other instrument. Before investing, consider your investment objectives, risks, charges and expenses. Any purchase or sale activity in any securities instrument should be based upon your own analysis and conclusions. Past performance is not indicative of future results. Finacorp Securities is a member FINRA and SIPC.
At my blog there are two main purposes: teaching investors about better investing through risk control, and tying all of the markets into a coherent whole.
Subscribe in a reader (comments)
I have resisted writing this for some time, but there are certain points in the bond market where yield is poisonous. I have a rule of thumb that says when spread relationships get too tight, give up yield to gain possible capital gains in the future. That’s why I made the post at RealMoney late yesterday. When everyone is grasping for yield, that is the time to avoid it, and aim for capital gains. That is what I am doing now.
Copyright David Merkel (c) 2007-2008
Disclaimer: David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, or in my writings at RealMoney is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here or on RealMoney is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.The Aleph Blog is proudly powered by WordPress
Entries (RSS)
and Comments (RSS). Design by Salatti.NET
February 22nd, 20077:28 pm at
This is a subject that has concerned me of late. I have several closed end income funds that were purchased at a discount, that are now trading at nice premium. One for example, ZTR which has gone from a 10% discount to a 10% premium giving me over years worth of income in the capital gain. Although the income is still attractive, does your rule of thumb call for a rebalancing when the premiums reach a certain level.
Enjoy your artcles in RM and look forward to this new site
February 23rd, 200712:40 am at
Ed, thanks for the kind comments. I have been rebalancing from closed end funds that I bought at a discount, that now trade at premiums, to ETFs that do roughly the same thing. You can see my bond portfolio (for the balanced funds, at Stockpickr.com.
At present, many closed-end funds are trading at premiums to NAV. To some degree, that is a negative sign for the market as a whole, but that is just one indicator among many. This is a time to be satisfied with lower income levels. Ah, to be back in mid-2002, when the panic was thick, and spreads were too. I had the courage to act then, but few others did. That time will come again; as for now, we aren’t losing a lot to move up in quality.