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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (62215)	6/13/1999 10:54:00 AM
From: Tommaso	Read Replies (1) \| Respond to of 132070

In the past, closed-end funds have gone to very deep discounts during steep market declines. I don't know exactly why this is. Maybe a closer look would reveal that they lag behind as the market begins to recover. In any case, there may once again come a time when one can buy things like Adams Express (ADX), Tricontinental (TY), Central Securities (CET, I think), and others at 25-40% discount from net asset value. This means at at the worst, you get dividends that are about 30% higher than owning the same stocks that are in the funds. MKB knows all about these. I did very well with some closed-end funds during the late 70s/early 80s. Another advantage is they can be bought with cheap commissions from discount brokers. No load--and pretty low pmanagement fees. I haven't studied these in a long time, and the universe of these funds is much changed and much larger than it used to be. Some are more specialized--for example, PEO is heavy on oil-related stocks. I don't know any rule about when to start getting into the stocks. In the event of a considerable drop in the general market, one could start dollar-cost averaging, always reserving a good hunk of cash in case the market tanked enough to produce average P/Es of 8 (which seemed normal twenty years ago but now seems impossibly low. As for me, I am too busy studying overvaluations in the present mania and will have a lot of homework to do when valuations change. The closed-end stock funds were an awfully good thing for me. I ought to have simply put all my money in them and left it alone until now--or, given my perception of the markets, at least until the end of 1996.