So, we got through earnings season OK.

Next Major Signpost: The next major issue confronting investors will likely be the impact of the government’s fiscal and monetary credit expansion on the economy. Will such a credit expansion lead to an increase or acceleration of inflation? What will the impact of inflation have on equity valuations?

CEF Weekly Review: The 13 closed end fund (CEF) types on average nudged into positive territory posting a 0.2% increase for the week ending 11/20/09. On an aggregate, unweighted basis, the weekly average price change for the 496 CEFs remained unchanged.

Having the privilege to have met Sir John Templeton, the founder of The Templeton Funds, I was stuck not only by his crushing intellect but also by his sense of optimism regarding investing. Warren Buffett, a fellow optimist, who upon acquiring Burlington Northern Santa Fe Corp. (BNI) for $26.3 billion said, “It was a bet on America”.

Optimistic Investing: Being an unblinking optimist has been a helpful personal affliction for successful investing post-WWII. The S&P 500 is up 65 times since 1950. On a weekly basis it has advanced 56% of the time. Prior to the most recent stock market peak in Oct ’07, you would have made money even if you were unfortunate enough to have purchased the DJIA at any of its peaks since 1900 (see accompanying chart). It was the equivalent of throwing darts at a dartboard with nothing but a “bull’s eye” on it.

CEF Weekly Review: The 13 closed end fund (CEF) types on average squeezed into positive territory posting a 0.1% increase for the week ending 11/13/09. On an aggregate, unweighted basis, the weekly average price change for the 496 CEFs straddled the flat line as it declined by 0.1%.

The weighted 49 CEFs comprising the Claymore CEF Index registered an average advance of 1.7% for the week. The S&P 500, as measured by the SPDR S&P 500 ETF (SPY), extended last week’s 3.4% advance by tacking on an additional 2.3%.

Adams Express Company (ADX) is a closed-end fund (CEF) that has traded at a persistent discount to its NAV. (For background on the case, see the previous report dated 3/2/09 entitled: “The Case for Tender, Liquidation or Conversion of ADX” (pdf).)

The unfortunate aspect of ADX’s persistent discount is the managers of this internally managed CEF have done a reasonably good job of meeting its benchmark returns.

CEF Weekly Review: The 13 closed end fund (CEF) types on average were up 1.7% for the week ending 11/6/09. On an aggregate, unweighted basis, the weekly average price change for the 488 CEFs was up 1.6%.

The weighted 49 CEFs comprising the Claymore CEF Index registered an average advance of 3.4% for the week. The S&P 500, as measured by the SPDR S&P 500 ETF (SPY), increased 3.4%. The S&P 500 more than reversed its loss from the previous week.

CEF Weekly Review: The 13 closed end fund (CEF) types on average were down 3.5% for the week ending 10/30/09. On an aggregate, unweighted basis, the weekly average price change for 493 CEFs was down 3.1%.

The weighted 49 CEFs comprising the Claymore CEF Index registered an average decline of 5.6% for the week; First Trust CEF Composite Index was down 4.2%. The S&P 500, as measured by the SPDR S&P 500 ETF (SPY), registered a decline of 4.2%. Not a pretty picture.

Summary: There have been 17 stock market cycles (April ’42 first trough) and 12 US economic cycles (Oct ’45 first trough) since the early 1940s.

click to enlarge

CEF Weekly Review: The 13 closed end fund (CEF) types on average were up 0.6% for the week ending 10/23/09.

On an aggregate, unweighted basis, the weekly average price change for 514 CEFs was up 0.7%.

The 13 closed end fund (CEF) types on average were down 0.8% for the week ending 10/16/09. On an aggregate unweighted basis, the weekly average price change for 618 CEFs was down 1.6%.

The weighted 49 CEFs comprising the Claymore CEF Index registered an average advance of 1.0% for the week.

CEF Weekly Review: The 13 closed end fund (CEF) types on average were up 2.0% for the week ending 10/9/09. On an aggregate, unweighted basis, the weekly average price change for 523 CEFs was also up 2.0%. The weighted 49 CEFs comprising the Claymore CEF Index registered an average advance of 3.9% for the week. The S&P 500, as measured by the SPDR S&P 500 ETF (SPY), registered a surge of 4.7%.

(Click here for YTD CEF performance. The table is based on a 275 CEF sample size as all the data fields are not available for the CEF universe.)

Preface: Kudos to Nuveen and Morningstar for updating CEF stock pricing on Saturday for Friday’s close on CEFConnect.com.

CEF Weekly Review: The 13 closed end fund (CEF) types on average were down 0.3% for the week ending 10/2/09.

The average price change for the 13 CEF fund types for the 3^rd quarter ’09 was 15.5%. The unweighted average price change for the 617 CEFs was 16.5%. Both exceeded the S&P 500, as measured by the SPDRs’ ETF (SPY), of 14.8%.

LoanPartFnds and GenEqFnds were the percentage fund type leaders with approximately 21% price appreciation. USMrtgBndFnds was the laggards despite a respectable advance of 9.5%. GenEqFnds was pulled up by a small fund, Engex Inc. (EGX), which was the best performer for the 3Q, up 190.8%.

R.I.P.: Prior to the CEF Weekly Review, it is altogether fitting and proper for serious CEFs investors to take a moment to morn the untimely death (execution style) of a good friend: ETFconnect.com.

This unfortunate passing will create a hole in the knowledge base and likely result in the diminished interest in the CEF market segment.

Things must be tough at Nuveen.

It looks as though in an effort to cut costs they’ve replaced a superior ETFConnect.com with an inferior CEFConnect.com. It also appears that they replaced Lipper, which I believe was the previous data provider for ETFConnect.com, with Morningstar.

The 13 closed end fund (CEF) types on average were up 2.5% for the week ending 9/18/09. On an aggregate, unweighted basis, the weekly average price increase for 627 CEFs was up 2.3%. The weighted 49 CEFs as of 9/18/09 comprising the Claymore CEF Index registered an average increase of 3.1% for the week. The S&P 500, as measured by the SPDR S&P 500 ETF (SPY), registered an increase of 1.9%.

Preface: I believe I have clearly stated my case with supporting data for the overvaluation of PHK. Furthermore, I feel there is nothing I can add beyond what’s been written.

So, this will be the last comment I have on PHK until there is a major corporate event that proves me either right or wrong. As one commenter put it, it now sounds like I’m “ragging” on it. That was never my intent. I was seeking evidence to the contrary.

The 13 closed end fund (CEF) types on average were up 1.9% for the week ending 9/11/09. On an aggregate, unweighted basis, the weekly average price increase for 628 CEFs was also up 1.9%. The weighted 49 CEFs as of 9/11/09 comprising the Claymore CEF Index registered an average increase of 3.2% for the week. The S&P 500, as measured by the SPDR S&P 500 ETF (SPY), registered an increase of 2.7%.
The 628 CEFs’ aggregate, unweighted current distribution yield is 7.3% and is trading at a 4.4% discount (7.4% versus 4.5% the previous week, respectively). Year-to-date, CEFs on average have extended their price appreciation to 43.4%. (Click here for YTD CEF performance. The table is based on a 276 CEF sample size as all the data fields are not available for CEF universe.)

The Eqcome CEF Fear Index projected little fear on the part of CEF investors. The unweighted average price change was up 1.9% versus 0.2% for the related NAV. The CBOE Volatility Index (VIX), which typically moves inversely with the stock market, was down 4.4% as the S&P 500 (SPY) logged in an advance of 2.7%.

Recent investors in Pimco High Income Fund (PHK) may not be as dumb as I initially suspected. That honor may be duly shared by Pimco and Bill Gross who may have placed themselves in an untenable position.

Consider the following:

The 13 closed end fund (CEF) types on average were up 0.2% for the week ending 9/4/09. The S&P 500, as measured by the SPDR S&P 500 ETF (SPY), registered a decline of 1.3%. On an aggregate, unweighted basis, the weekly price increase for 630 CEFs was up 0.6%. The weighted 51 CEFs comprising the Claymore CEF Index registered an average decrease of 0.3% for the week.