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Joe Eqcome

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  • Why Large Cap CEFs Are Significantly Undervalued: ADX, GDV, TY, And ZF [View article]
    David at Imperial Beach

    I agree with your first point that the days of large cap stocks owned in a CEFs are probably less efficient than owning them as an ETF or index fund.

    However, if investors thought large cap CEFs would change form to an ETF or liquidate, the likely investor response would be to narrow the discount as such a discount would be eliminated as in either case investors would get value of the NAV.

    We've seen this numerous times with smaller CEFs. The larger CEFs will not voluntarily convert for some of the reasons mentioned earlier in another comment.

    The catalyst for conversion is usually some investors forcing the conversion. However, given the size of the large cap CEFs, you'll need a lot of firepower to obtain enough stock to make your voice heard.

    Jul 11 09:55 PM | Likes Like |Link to Comment
  • Why Large Cap CEFs Are Significantly Undervalued: ADX, GDV, TY, And ZF [View article]

    ADX does a meager buy- back program that it re-authorizes annually--more as eyewash than a serious attempt to repatriate value to shareholders.

    As far as converting to a ETF or mutual fund, the firm runs the risk of having assets dissipate as assets rise and fall with subscription and redemptions either as a mutual fund or an ETF.

    With a CEF your assets are fixed and you're saved from having investors pull them out. You charge the same fee based upon that fixed level of assets.


    Jul 11 09:45 PM | Likes Like |Link to Comment
  • Maximizing Retirement Returns Through Social Security Elections [View instapost]
    a fat panda,

    Thank you for your comment and observations.

    Let me see if I can expand on my initial comments for the purpose of clarification.

    Point 1: Social Security Carries Risk. This is quite correct. However, this risk is moderate for current retirees compared to private pension fund assumptions of actuarial returns of 7.5% or greater understate their liabilities by $100's of billions.

    Given the choice between choice of opting for the GM retirement fund--or for that matter a state pension fund, versus Social Security, I'd choose the latter.

    Point 2: Social Security May Not Last Until 2033. This date represents the date in which full benefits may cease. As you're aware, S.S. in a "pay-go" system. S.S. benefits will not be eliminated but reduced to approximately 75% of full benefits. I dispute your linking Medicare and Social Security together as they represent two different sources of revenues. However, I'd entertain your logic for such a position.

    Point 3: "Don't Sell Outside Assets to Concentrate on Social Security": There is no implication that your non-S.S.retirement savings or portfolio management are mutually inclusive.

    What the article states is that without changing any of your retirement savings behavior, there are ways to maximizing Soc Sec benefits by planning carefully within the rules and regulations that guide such benefits.

    Even if Soc.Sec. reduces benefits it will likely be sometime in the late '2020's or early '2030's. Therefore odds for a reduction are fairly low in the next 10-to-15 years.

    Point 4: Your Benefits are Whatever Congress Says They Are: Any of the proposals to reduce S.S. benefits pretty much "grandfather's" in people over 55. The political will to take on seniors who have been paying into the system for 30 to 40 years would be suicidal.

    Having said all of that, your points are valid. However, the likelihood of a vast change in S.S.for the current group of seniors 60 and older is in our opinion remote.

    Therefore taking time to select your benefits in a valuable and profitable exercise.

    Jul 5 04:29 PM | Likes Like |Link to Comment
  • CEF Weekly Review: IDE Goes Ex-Dividend Monday [View article]

    You'll find some excellent information on the issues that you raised at the following website:

    Jul 1 10:47 PM | Likes Like |Link to Comment
  • CEF Weekly Review: Staying Alive [View article]

    The most important thing to consider when you're looking at return of capital distributions is those asset that generate non-cash charges such as depreciation, as in real estate, or depletion as in extraction industries such as oil, gas and timber (natural resources). So any of the CEFs that fall in those categories are prospects for return of capital distributions.

    You want to make sure that these are true non-cash charges by tracking the NAVs to make sure they don't decline with the return of capital distributions.

    The other issue with return of capital distributions is that it can be generate because of the timeing of income recognition.

    For example, in options, a position may have a gain that can't be recognized until the position is closed. Yet, in theory I can generate a distribution that is return of capital if the CEF prior to the closing of the position. (I must admit, I on dangerous ground with regards to option accounting--so proceed with care with some of the buy/write funds or dividend roll-over strategies.

    Again, check the NAV to see if it is deteriorating with return of capital distributions. That usually a good check

    A good source for this information is

    Jun 26 05:32 PM | 1 Like Like |Link to Comment
  • CEF Weekly Review: Staying Alive [View article]

    I agree. I think an investment with a high return of capital that is generated from non-cash expenses, i.e., depreciation or depletion, which doesn't material impact invested capital makes sense in a taxable account.

    Because your heirs would get a "step-up" basis in the stock, should it become a bequest, the reduction in basis as a result of the return of capital distribution will unlikely get recaptured.


    Jun 24 11:15 PM | Likes Like |Link to Comment
  • CEF Weekly Review: Staying Alive [View article]

    The simple answer to your question (remember "The Orient Express") is that SRV would be less attractive than other high yielding securities in a tax-exempt account due to the fact that SRV's distributions are mostly a return of capital and are typically not subject to income taxes at the time of distributions.

    Therefore, if you held it in a tax-exempt account such as an IRA you wouldn't be getting any advantage of the tax deferred nature on its distributions within that account.

    However, this quickly get complicated when considered in a Roth IRA because as a result of SRV's return of capital distribution lowering the cost basis of the stock, I'm not certain when you receive distributions from your Roth IRA if you would have to pay taxes on any recapture in the basis.

    If not, then it is a question of whether the benefits of compounding value of the lower tax basis is better than the loss from sheltering distribution from taxes from a return of capital distribution.

    These are important considerations beyond the scope of my expertise. If this is a meaningful investment decision I would consult a trusted financial advisor or your accountant.

    My knee-jerk reaction is to select something else for your Roth and own this in your taxable account.

    Jun 24 12:33 PM | Likes Like |Link to Comment
  • CEF Weekly Review: Mid-Month Ex-Dividend Mute Price Gains [View article]

    I based my observation on the following chart from Yahoo that shows an annualized monthly distribution of $2.76 per share ($0.23 per share monthly for a yield of over 11.8%. I usually try to corroborate such facts.(

    In going back and looking at the public literature, I. like you, could not find any press release to confirming such a distribution change.

    So, the answer is that there was only one data point and that's why I emphasized the previous distribution rate and yield.

    Thanks for your query.

    Jun 20 02:20 PM | Likes Like |Link to Comment
  • CEF Weekly Review: Mid-Month Ex-Dividend Mute Price Gains [View article]
    Investsor RBL

    Many thanks for providing incrementally important information that help investors to triangulate on some of the issues impacting individual CEFs.

    Jun 17 09:58 AM | 1 Like Like |Link to Comment
  • CEF Weekly Review: Triumph Of Hope Over Experience [View article]

    I respect your opinion.

    Now that you have advanced a conclusion, it would be infinitely more helpful if you could provide the basis for your conclusion.

    Is it that you think the global economy is in a tailspin? Stronger USD? Central banks selling gold?

    Jun 12 09:48 AM | Likes Like |Link to Comment
  • CEF Weekly Review: Land Of Confusion [View article]

    It seems that you're correct regarding the symbol "CEF" being picked up by SA as Central Fund of Canada on a consistent basis.

    However, this time the article did include comments on Central fund of Canada. I guess a broken clock is sometimes right, but I wouldn't use it to tell time.

    Jun 5 10:00 AM | Likes Like |Link to Comment
  • CEF Weekly Review: Land Of Confusion [View article]

    It a matter of taste. PCEF is all taxable fixed-income CEFs and you're excluding tax-exempt and equity CEFs. In a rising interest rate environment it will lag and may be subject to reduction in distributions.

    So, all truths are not for all times.

    Jun 3 10:52 PM | Likes Like |Link to Comment
  • CEF Weekly Review: Land Of Confusion [View article]
    Hi Walt,

    There is a general bias towards the greatest negative spread outperforming the CEF with the highest positive spread. (I'll send you the report separately.)

    However, a couple of things to keep in mind. The reasons a CEF can generate a negative spread is because:

    1) It is temporarily mispriced; or,

    2) The fundamentals are deteriorating and this is the first phase of a longer-term price decline that initially generates the negative spread. (The old "catch a falling knife", i.e., grab it too soon and you'll catch the blade as oppose to the handle.)

    Our conclusion is that like premium and discounts it is a helpful tool. However, when combined with some knowledge about the CEF market sector and the individual CEFs, it becomes a very powerful tool that can help filter out the "noise" in the relative price action and generate alpha.

    Jun 3 04:31 PM | Likes Like |Link to Comment
  • ADX Vs. GUT: Fundamental Analysis Isn't Ideal For CEF Share Price Valuation [View article]
    Rock on!
    May 30 11:27 PM | Likes Like |Link to Comment
  • ADX Vs. GUT: Fundamental Analysis Isn't Ideal For CEF Share Price Valuation [View article]

    I would hope that investors would do a little more research than making an investment decision based upon the name of a company. Can you image all the people who bought Apple and were disappointed to find out that it wasn't an agricultural company?

    However, having said that, if you've ever gone to the track, there are people who bet on horses based on the horses' names.

    This is the difference between betting (gaming) and investing. So, for those individual who make bets on stock, this is a reasonable assumption.

    May 30 08:51 AM | Likes Like |Link to Comment