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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 (17105)	10/17/2001 7:00:31 PM
From: Bernie Goldberg	Read Replies (1) \| Respond to of 18931

Robert, This has nothing to do with AIM or interest payments. It quite simply boils down to this. When you pay a 10% premium for a CEF you quite simply pay $1.10 for each $1 dollar's worth of assets you will be receiving. If you obtain a prospectus from the CEF you could buy everything that was owned by the CEF for 10% less than what the market price is for that CEF. This would not only place you 10% ahead of the CEF at the outset, it would save you an additional 1 to 1 1/2% every year in fund expenses. As AIMers we are supposed to buy from the scared and sell to the greedy. That is 180 degrees from what you are recommending. Tom is right. The fact that a CEF is selling at a discount is no guarantee that it will ever reach a parity or a premium. One still has to do due diligence before investing in anything. Tom is also right when he says that the majority of CEFs sell at a discount to NAV. You should also consider your very own statement. "All too often, we see otherwise knowledgeable investors/buyers scrambling to outbid each other, chasing the price higher and higher, an auction is the wrong place to buy something, bargains are RARE." There are only about 550 CEFs in existence. They are just about the only things on the market where the value is known. Just because some investors chase the price of some of them higher and higher is not justification for purchasing. Bernie