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  • Zen And The Art Of Market Cycle Maintenance [View article]
    I wonder if your "romantic" viewpoint isn't just another take on the "efficient-market hypothesis"? If all publicly available information is priced into the price of the individual stock it is also priced into the market as a whole. So is your left brain rational investor that you call "classical" someone who thinks they can pick stocks to beat the market? Is that really any different than timing the big moves of the market? I am guessing that the "romantic" is someone who realizes that they can't beat the market--they can't pick individual stocks to beat the market nor can they time the big moves to beat the market--they typically invest in low cost index funds and hold through highs and lows. I find myself after 30 years of investing, slowly moving to the side of your romantics.
    Jun 1, 2014. 07:54 AM | 3 Likes Like |Link to Comment
  • Is It Time To Sell These PIMCO Closed-End Funds? [View article]
    One last comment and then I will give it up. Your point is still not clear. We already have an SA author with the name of Factoids. Yes, Gross is a great salesman--that's a major part of his job. And yes, he has an ego as all billionaires probably do. And yes, PIMCO didn't start PDI as a hobby. But how does any of that explain how Gross is buying PDI, not to make money but to do---? Exactly what? When he touts PDI at the Barron's Roundtable isn't he going to pick an investment that is most likely to make him and PIMCO look good in the end of year reviews? When he buys the fund for his personal accounts doesn't he want the same great results? What possible benefit can there be to pushing a poor fund on the public?

    Your comment left the impression that Gross did something underhanded but you leave it just fuzzy enough to get away with. And he is a California Boy!
    May 26, 2014. 04:37 PM | Likes Like |Link to Comment
  • American Realty Capital Properties's Valuation Is Lower Than Its Peers - While Justified, It Still Is A Buy [View article]
    REITs don't have to distribute AFFO as dividends. They have to distibute 90% of taxable income (which has been greatly reduced by depreciation). Most REITs distribute far more than required.
    May 26, 2014. 03:41 PM | 5 Likes Like |Link to Comment
  • Is It Time To Sell These PIMCO Closed-End Funds? [View article]
    The world loves conspiracy theories. PDI has a market cap of $1.5 billion and PIMCO has AUM of close to $2 trillion so PDI is a gnat. And it's a closed end gnat so Gross pushing it doesn't directly gain any assets for PIMCO unless you think they will have a secondary offering.

    Let me suggest a more plausible conspiracy. The small investor you speak of hasn't bid up PDI because its published distribution is less than 7% and many small investors don't bother looking at the actual performance numbers and often aren't aware of special dividends unless they hold the fund. PDIs actual 2013 distribution (and I am guessing for 2014), including special distributions is closer to 10%. After Gross and other insiders make their purchases, what happens if PIMCO announces an increase in the PDI distribution (and elimination of the specials) to 9-10%? I am guessing the premium jumps up into the range that other PIMCO funds with similar distributions/performance numbers have. Those premiums range from 20% to 60%.

    That's a conspiracy worth messing with. I'm along for the ride.
    May 26, 2014. 02:18 PM | 2 Likes Like |Link to Comment
  • Is It Time To Sell These PIMCO Closed-End Funds? [View article]
    Left Banker: It is instructive and valuable to see how different investors can look at the same data and come up with totally different conclusions. You, and a lot of other SA investors, seem to focus on the distribution rate of a CEF (which you call "yield"). Take a closer look at PDI and you will see that in its short two year life the price (& NAV) has gone up from the IPO of $25 to the current price of $33. That tells me that PIMCO could increase the "Yield" quite a bit from the current 7% (if you look at PGP its price is the same $25 now as its IPO price of 2005 which means its 8.9% distribution matches its long term average return).

    The one year return for PDI (14.96%) is almost exactly the same as that of PGP (15.12%) but PGP sells for a 50% premium and PDI sells at it NAV.

    PIMCO, based on past performance, will arrive at a distribution rate for PDI that they think will match its long term real return. They haven't done that yet only because the fund is too new to have a long term return.

    In the short term the distribution rate tells us almost nothing. In the long term it will be determined by its performance and so far PDI's performance is in a class with PGPs--that is why Bill Gross is buying PDI in such large quantity.
    May 26, 2014. 08:30 AM | 5 Likes Like |Link to Comment
  • Shareholder Value Goes Global [View article]
    Left Banker: Thanks for the research and heads up on the two foreign funds. I can probably find out on their site but do you know if the PKW and IPKW stock selections are based on an index or are they actively selected by the managers?
    May 25, 2014. 07:12 PM | Likes Like |Link to Comment
  • How Articles Can Affect The Share Prices Of Stocks Like Sirius XM And Capstone Turbine [View article]
    Crunching: Another way to look at the impact of SA authors--have you ever bought a stock based on an article on SA? You make the point that you seldom "uncover meaningful non public info" and I'm sure that is true but most investors (including me) aren't aware of the vast majority of PUBLIC investment info. An example--before I started reading SA some three years ago I was totally unaware of Business Development Companies (BDC)--now I own three of them. Those articles didn't provide non public info but they did provide information that led to the purchase. Does that not move the market in some small way? Quantifying all those small impacts is a different story.

    If you look at the portfolios of many SA readers you will find far more ownership of MLPs, BDCs, dividend stocks and closed end funds than non SA readers--because those are topics that are heavily followed. On the other hand since SA avoids open end funds like the plague they are probably under owned by SA readers.
    May 22, 2014. 09:35 AM | 1 Like Like |Link to Comment
  • Caution Advised If Investing In Floating Rate Loans CEFs [View article]
    John: You make the statement that none of the distribution "was from ROC". Not sure what you are basing that on unless you are only looking at 2013 or 2014. I looked at the first three on your list on Morningstar and their NAV is far below their IPO price and that tells me that on average their distribution has exceeded their earnings and that to me is ROC. For example, VTA had an IPO of $20 and its current NAV is $13.90 (price $12.89). Now at the time of IPO there is some loss of NAV to grease the palms of the brokerage crowd but nowhere near six bucks. Most of that $6 is ROC. Any thoughts?
    May 21, 2014. 07:28 AM | 1 Like Like |Link to Comment
  • S&P 500 Historical P/E Ratio [View article]
    There have been so many changes to the S&P 500 over the years that I am always surprised at how many investment professionals continue to focus on the historical PE chart you show above. For example, in 2001 the index included it's first REIT. Now there are 14(?) of them in the index. All of us amateur investors know that REITs have very high, artificial PE ratios (typically 30 to 50)--caused by the inclusion of depreciation (which in the real world should be appreciation). Some like Simon Properties have high market caps so greatly impact the index. Including those REITs in the current PE and comparing them to historical PEs (when there were no REITs in the index) gives you a flawed comparison. How many other changes have occurred over the last 50 years to the S&P 500 that impact the PE comparison?
    May 20, 2014. 07:21 PM | 4 Likes Like |Link to Comment
  • How To Find The Best Style ETFs [View article]
    David Trainer: I saw your name mentioned in Barron's a few months back and based on their positive comments I started reading your articles.

    After reading some 10 articles I have arrived at the following conclusions. (1) you think the market is very inefficient. (2) your firm has analyzed some 3000 stocks and rated them (3) using those stock ratings you recommend ETFs that hold the greatest number of your most highly rated stocks and the lowest number of the poorly rated stocks (also taking into account expenses).

    What I struggle with in that process is your chance of finding ETFs that only hold your strongest rated stocks would seem to be close to nil. So the obvious question is why not just introduce your own ETF (or closed end fund) where all the holdings are your firm's strongest picks? Since your firm has already performed the research on the stocks the expenses of such a fund would be minimal.

    The danger, of course, is that if your ETF under performs, your rating system is proved of no value.
    May 20, 2014. 10:44 AM | 1 Like Like |Link to Comment
  • BDC Pricing And The Russell Indices: Part 3 [View article]
    Buzz: I have read many times about the indices removing BDCs but I have never read any explanation of why they took the action. Do you know?
    May 19, 2014. 07:45 AM | Likes Like |Link to Comment
  • Is Source Capital A Better Option For Mid-Cap Growth Than An ETF? [View article]
    Robert: As an owner of SOR it is discouraging to see how difficult it is to beat the ETF index funds. I have always thought of FPA as one of the best mutual fund companies, not hesitating to take the flack of holding a lotta cash when they think the market is overpriced. But SOR doesn't hold cash--Morningstar shows them at zero cash--but at the same time they don't use leverage which IMO is one of the few advantages that the closed end universe has when compared to ETFs. I think your comparison would make SOR look even less attractive if you mentioned after tax returns. ETF index funds have two advantages, taxwise--first they have little turnover so don't generate capital gains and then when they do have to sell (changes to index components) tax law allows them to largely avoid taxes by transferring stock to the big holders as a nontaxable event. You have almost convinced me to sell.

    So it seems to come down to the managers of SOR not being good enough to offset the extra .60% of expenses per year.
    May 17, 2014. 09:32 AM | 1 Like Like |Link to Comment
  • Commodities Today: Good News For Shale And LNG Companies [View article]
    Matthew: According to today's WSJ the reason crude spiked yesterday and today is that the US Energy Secretary (Moniz) made a statement that the "issue of allowing export of crude was under consideration".
    May 14, 2014. 01:27 PM | 1 Like Like |Link to Comment
  • Danger Zone: Rydex Funds [View article]
    David: Thanks for the offer. I have the Solar (TAN) and Spinoffs(CSD). I do know that Morningstar gives the CSD a 5 star rating but think the TAN is unrated.
    May 14, 2014. 01:19 PM | Likes Like |Link to Comment
  • Danger Zone: Rydex Funds [View article]
    I don't own any Rydex funds but I do own two Guggenheim ETF's--do you see any of that same poor stock picking and high expenses in the Guggenheim funds?
    May 14, 2014. 12:26 PM | Likes Like |Link to Comment