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Strategies & Market Trends : Closed End Global and Country Funds
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To: LTK007 who wrote (104)12/27/1997 1:07:00 PM
From: Tommaso  Read Replies (1) of 289
 
I have only just started looking at this thread. Please pardon me if your question of 10 November has long since been answered/

Tri-Continental is possibly the very best of U.S, closed-end funds. Source Capital has also been very good. And general American Investors.

As a confirmed bear on the U.S. stock market, I think that it would be prudent to hedge the holding of Tricontinental by buying BEARX, a fund that holds a portfolio of short positions and put options on indexes.
I suggest hedging instead of selling because the tax liability of selling the Tricontinental holding as described would be large and the calculations almost impossible because of all the reinvestments.

A holding that complex is probably best left intact until heirs can sell it with no capital gains due on it when it becomes part of an estate.

Or so I think.

I do think that you could easily see the value of the fund decline by 40% or more in the bear market that may be coming, whereas a holding of BEARX would go up and could be sold and put back into Tricontinental at a lower price, preserving your mother's capital.

Another alternative would be to see if a broker would let you sell Tricontinental short "against the box," but in that case you would effectively lose the dividend stream.
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