Semi Equipment Analysis Message Board

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Technology Stocks : Semi Equipment Analysis

SOXX 285.23

-3.7%

Dec 17 4:00 PM EST

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To: robert b furman who wrote (67886)	3/16/2015 10:04:01 PM
From: Elroy	Read Replies (1) of 95596

By the way the USA does not need to increase its rates. But the stuff that I follow and own is all behaving like the US is going to increase rates. Since money markets don't pay anything, I put my cash into high income generating vehicles like BDCs, mREITs, etc. and they have all suffered share price declines and trade meaningfully below reported book value. The only way that makes sense in a mildly recovering economy is if rates are expected to rise and thus push book values down toward share prices. BDCs yield 10% on average and trade at 0.9x book value on average. If rates are not going to rise, why would something that pays 10% trade below book value? If rates are going to stay where they are I would think BDCs would trade above book value. $10 of stuff that yields $1 per year should be worth more than $10 cash. But in the market $10 of book value that pays $1 per year is only worth $9. I gotta admit I don't understand it. I've always been a stock guy, and BDCs are more like bonds (I think) than a normal company, so I'm not so familiar with how the bond-like instruments discount the future.

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