Hi Jack, If I were buying the bond funds for capital gains, yes it would make sense to exit the market until the next protracted down trend in interest rates.
However, I own them for their cash flow for living expenses. This makes the logic for owning them different from capital gain. As the price/share drops the yield on new purchases looks better and better. As the price rises, it makes the yield look worse. Since there's no desire to liquidate the holding, it makes sense to add to the position when yield is high and price/share is low.
I use ACM Govt. Securities Fund (symb. GSF) for this purpose. At today's price the yield is about 11.6%. It's selling at a slight discount to NAV, I believe, but would have to check BARRONS or some other publication to be sure.
Over the years I've owned it it's had a price range from the low $7s to maybe as high as $11. So, there's room for AIM to make some very small trades for a bit of capital gain as well. I let the Cash Reserve rise to between 10% and 12% but it doesn't need more than that. I use 5% SAFE (Resistance) on both the buy and sell sides. I'm using a minimum trade size of 5% as well.
So, I don't trade very often with this, but the capital gain from lows to highs is nice and the addition of extra shares and income when prices are down is also nice. By using such a vehicle for my general income needs, I can pretty much leave the rest of the AIM accounts alone to prosper as they will. In other words, I attempt to always live off the INCOME side of Veale's Equity Warehouse and let the PRINCIPAL ride.
Best regards, Tom |
