suburban blues's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/77098/comments http://seekingalpha.com/article/173199-pimco-global-stocksplus-income-fund-looks-overvalued?source=feed#comment-759376 759376

On Nov 13 12:32 PM Joe Eqcome wrote:

> The historically unsupportable CEF premiums you note are illustrative
> of the pricing bubble being built by a continuation of the Fed’s
> zero interest rate policy. I understand and support their policy
> but note the aftershocks it could produce.
>
> The Fed's zero funds rate policy has driven down these CEFs' cost
> of capital to tenths of a percent. As a result it has allowed for
> unprecedented spreads between the asset yield and the cost of capital.
>
>
> This spread translates into attractive, but unsustainable, distribution
> yields accessible by retail buyers in a low yield environment. This
> retail buying of these high yields is driving the share price up
> and unmooring it from NAV. So, there is a disconnection between the
> two and the creation of a valuation bubble.
>
> As I argued here before, unsuccessfully, in the case of the Pimco
> CEFs, Pimco’s managements are the ones valuing the NAV on level I
> & II assets in their CEFs. They’re presumably the best in the
> business and they’re telling you that the stocks are overvalued!
> Nature speaks; it is we who fail to listen.
>
> However, investors have been emboldened by the Fed's declaration
> of a continuation of this policy. Nonetheless, once rates begin to
> rise, these CEF stock prices will plunge like Kamikaze pilots on
> to the decks of the retail investor.
>
> Remember, financial suicide is not illegal.]]> Fri, 13 Nov 2009 17:14:31 -0500

On Nov 13 12:32 PM Joe Eqcome wrote:

> The historically unsupportable CEF premiums you note are illustrative
> of the pricing bubble being built by a continuation of the Fed’s
> zero interest rate policy. I understand and support their policy
> but note the aftershocks it could produce.
>
> The Fed's zero funds rate policy has driven down these CEFs' cost
> of capital to tenths of a percent. As a result it has allowed for
> unprecedented spreads between the asset yield and the cost of capital.
>
>
> This spread translates into attractive, but unsustainable, distribution
> yields accessible by retail buyers in a low yield environment. This
> retail buying of these high yields is driving the share price up
> and unmooring it from NAV. So, there is a disconnection between the
> two and the creation of a valuation bubble.
>
> As I argued here before, unsuccessfully, in the case of the Pimco
> CEFs, Pimco’s managements are the ones valuing the NAV on level I
> & II assets in their CEFs. They’re presumably the best in the
> business and they’re telling you that the stocks are overvalued!
> Nature speaks; it is we who fail to listen.
>
> However, investors have been emboldened by the Fed's declaration
> of a continuation of this policy. Nonetheless, once rates begin to
> rise, these CEF stock prices will plunge like Kamikaze pilots on
> to the decks of the retail investor.
>
> Remember, financial suicide is not illegal.]]> http://seekingalpha.com/article/173199-pimco-global-stocksplus-income-fund-looks-overvalued?source=feed#comment-758489 758489 Fri, 13 Nov 2009 09:36:57 -0500 http://seekingalpha.com/article/103279-11-stocks-selling-below-cash?source=feed#comment-300093 300093 Fri, 07 Nov 2008 10:27:41 -0500 http://seekingalpha.com/article/100462-cramer-s-now-a-market-timer?source=feed#comment-286001 286001 Sun, 19 Oct 2008 23:50:19 -0400 http://seekingalpha.com/article/97679-eight-etfs-to-preserve-your-wealth?source=feed#comment-267465 267465 Sun, 28 Sep 2008 11:15:45 -0400 http://seekingalpha.com/article/97219-india-s-recent-economic-growth-causing-infrastructure-problems?source=feed#comment-264402 264402 Thu, 25 Sep 2008 01:58:38 -0400 http://seekingalpha.com/article/40047-short-seller-prods-internal-accounting-probe-of-focus-media?source=feed#comment-90364 90364 Wed, 04 Jul 2007 13:28:26 -0400 http://seekingalpha.com/article/37064-anatomy-of-a-chinese-bubble-a-checklist-for-spotting-bubble-tops?source=feed#comment-87527 87527 Fri, 01 Jun 2007 23:12:39 -0400