Hi SAM, The two income funds I own, ACG and CHY, both are in the middle of the range I usually would work for some capital gain trades. So, right now I'm sitting tight. I have cash to buy if they dip and shares to sell if they rise enough.
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(Cash is red, Bond value is blue)
and
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These two examples are from my retirement IRA, so the dividends are accumulating. I use the same funds in my taxable account as living income, so there the cash has remained flat except for buys and sells. As you can see, this isn't exactly day trading! The long bond cycle is huge. The last time I was accumulating shares of ACG was back in 1998 and 1999.
More FED pressure will eventually soften these funds Price/Share. However, the NAV will also be dropping at the same time. So, even when they're priced quite a bit lower, they may still be selling at a "premium" to NAV.
My experience has been that Price/Share "follows" NAV. So, if you were to attempt to "time" the purchase of long bond funds, you'd watch for when the premium switches to discount. After a long decline in the Price/Share, a switch to discount from NAV usually signals the end of the FED tightening.
The last time I was buying ACG, (1999) it was paying an effective yield at those prices of well over 11%. Current price/share is about $8+ and the yield is about 8.5%+. The price/share will drop to somewhere near $6/share when the FED next peaks its short term rates. That will again put the effective yield at around 12%.
How long it will take is anyone's guess.
Best regards, Tom |
