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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: rgammon who wrote (17050)	10/11/2001 12:10:30 PM
From: Bernie Goldberg	Read Replies (2) \| Respond to of 18931

Hi Robert, It's not market timing at all. Cefs are a totally different beast from stocks. Just before I started typing this response some shares of CSCO were traded at $15.85. Somebody obviously though it was worth that much. Earlier in the day someone else bought some CSCO for $16.24. He/she probably thought CSCO was worth more than the most recent sale. Someone else bought some CSCO for $15.38. None of these folks who have purchased some of the almost 47 million shares of CSCO that have moved today is either right or wrong. There is nobody who can put an exact dollar and cents value on shares of any company with the certainty that that is the value of that company today or tomorrow. CEFs are different. If you read the report I pasted in my post you should understand that as of the date on the report ACG owned 69 different bonds that together are worth approximately 1.4 billion dollars. As Tom has so often said, AIMers don't want to spend $12 on a $10 shirt. part of due diligence is checking whatever it is that you want to buy to make sure that you are getting good value for your money. Mr. Lichello never implied that it didn't make any difference what we bought or what it cost. As a person who has used AIM for over 6 years I am aware that if I purchase a "stock" at too high a price AIM will save my bacon if I wait long enough, providing the company doesn't go out of business. That doesn't mean that I should go out of my way to purchase things at their highest prices when starting an AIM program. You wrote:The support that AIM gives us generally means that we have done the work for stock/fund selection. With CEFs that means checking the discount/premium of the fund as well as the contents of the fund. The Zweig Fund (ZF) is an excellent example of a CEF. It owns Microsoft, Intel and many other stocks that cover a wide spectrum of the market. It pays a quarterly dividend equal to 10% annually of the NAV (the total value of all of the stocks divided by the number of shares). I haven't checked it recently, but I am willing to bet that today it is selling at a discount to that NAV. This isn't market timing, it is smart shopping. Right now you would make about 12% on your money by investing in ZF 20% more that you would get from ACG. I own several thousand shares of ACG. I'm not going to go out and sell them in order to exchange them for ZF. That would be market timing. However the money I would invest today would be invested in ZF or some other CEF that is selling at a discount. If a CEF is selling at a 15% discount and goes to a 10% premium that represents a 30% gain. A CEF selling at 10% premium is most likely not going to get to 50% premium. I don't think you will find too many going at that rate. The shares of ACG that I own were purchased at $6.38 and $7.50, it would be foolhardy to recommend them to someone at $8.75. If you check the discount/premium cycle on CEFs I think you will find that a wait of YEARS!!!! is not terribly likely. Bernie