GRX is an excellent trading CEF due to its small size and low # of shares traded daily. We saw a 10% swing (+6% yesterday for awhile and -4% this morning) in market price over the last two days even though its NAV will be virtually unchanged over the same time period!
GRX is up 21.5% on its NAV YTD, one of the best of any CEF. This is a fund you want to stay long in this market environment but you can certainly trade around at times too!
GGN's NAV is down -13.9% YTD, worst of all equity CEFs I follow, though that is better than the ETF fund GLD which is down -17.3%.
Nonetheless, it is all but inevitable that Gabelli will have to cut GGN's distribution again with a 13.3% NAV yield. The question is when and what affect it may have on the fund. GGN is very volatile and certainly, it will bounce with gold prices, but it will also be a prime candidate for tax-loss selling at the end of this year. Keep an eye on its discount/premium for opportunities, which there will undoubtedly be.
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Little confused why you would want to hold GGN at a 4% premium and sell DPO at a -6% discount. GGN's NAV performance YTD is -12.4% and they are in dire need of another distribution cut, whereas DPO's NAV performance YTD is up 17.6%. That's exactly a 30% difference.
I'm guessing you think the DJIA is fully priced and gold is a good hedge now. If that's the case, I believe there are better ways to play that then selling DPO and holding GGN.
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Yes, didn't realize that PEO utilized as much of a covered call option strategy as they do until I saw their Form N-Q report dated 4/19/13. Also sell out of the money put options as well.
If The Dow Goes Up, Eventually DPO Goes Up Too... [View instapost]
It's up to you how much you want to hedge but you don't want to limit your upside either. I believe that 1/3 gives you enough downside protection but you're certainly welcome to go higher. I would then add to DPO's position on any 1% to 2% increase in the discount.
Don't use annual returns from inception on the fund's market price. No option-income fund will look good. First, they all started 5% higher than their NAVs and most are at discounts from their NAVs now. Second, they all lost a lot of NAV value during the financial crisis and maintained too high an NAV yield for too long afterward. This hurt both their NAV and market prices.
All of these funds have since reduced distributions so that they are back to their inception NAV yields. This has helped their NAV and market prices to perform better but they will still lag the leveraged funds and broader market averages during a bull market. These fund's are really designed for flat to trendless up and down markets and until we get back to that market environment, you have to expect them to underperform a bit. Think of them as the bond portion of your portfolio with much higher yields.
DJIA up 0.89%, DPO's NAV up 0.95% and DPO up only 0.08%. What's wrong with that picture? I think someone was nervous ahead of the employment # tomorrow. I've seen this before but it usually makes for a good buying opportunity.
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What are you talking about? Nuveen DOES include all distributions in their calendar and annualized returns on their website. Go to this link or copy and paste.
Equity CEFs: How To Buy The Dow Jones Industrial Average At A -6% Discount [View article]
The other option, and one that I use, is to just add on market price weakness. Wait until the discount gets to a target, say -7%, and keep adding every -1% or so drop. This requires you keep a closer eye on the fund but you can get an even better total return over time than reinvesting the distributions. Plus, this is a guaranteed way to increase your overall market yield.
This reason why this works is because even if the DJIA drops 10% and the discount widens to -12% or more, you may be underperforming for a period of time but you will recover a lot faster when the markets come back and I have NEVER seen an equity CEF not come back with the markets, especially a fund like DPO which is so tied to the performance of the DJIA. Of course, if we go into a bear market, than all bets are off but I can think of a lot worse funds to own than DPO in such a scenario.
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Is that what you meant? The last bullet point seems at odds with the others.
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GRX is up 21.5% on its NAV YTD, one of the best of any CEF. This is a fund you want to stay long in this market environment but you can certainly trade around at times too!
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Nonetheless, it is all but inevitable that Gabelli will have to cut GGN's distribution again with a 13.3% NAV yield. The question is when and what affect it may have on the fund. GGN is very volatile and certainly, it will bounce with gold prices, but it will also be a prime candidate for tax-loss selling at the end of this year. Keep an eye on its discount/premium for opportunities, which there will undoubtedly be.
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I'm guessing you think the DJIA is fully priced and gold is a good hedge now. If that's the case, I believe there are better ways to play that then selling DPO and holding GGN.
Equity CEFs: 4 Funds To Buy And 4 Funds To Sell [View article]
If The Dow Goes Up, Eventually DPO Goes Up Too... [View instapost]
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All of these funds have since reduced distributions so that they are back to their inception NAV yields. This has helped their NAV and market prices to perform better but they will still lag the leveraged funds and broader market averages during a bull market. These fund's are really designed for flat to trendless up and down markets and until we get back to that market environment, you have to expect them to underperform a bit. Think of them as the bond portion of your portfolio with much higher yields.
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http://bit.ly/o4ngfR
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Opportunity On DPO [View instapost]
Equity CEFs: How To Buy The Dow Jones Industrial Average At A -6% Discount [View article]
http://bit.ly/100GQaO
Then compare with your website's NAV "total return." See the difference?
Equity CEFs: How To Buy The Dow Jones Industrial Average At A -6% Discount [View article]
This reason why this works is because even if the DJIA drops 10% and the discount widens to -12% or more, you may be underperforming for a period of time but you will recover a lot faster when the markets come back and I have NEVER seen an equity CEF not come back with the markets, especially a fund like DPO which is so tied to the performance of the DJIA. Of course, if we go into a bear market, than all bets are off but I can think of a lot worse funds to own than DPO in such a scenario.