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Strategies & Market Trends : Bonds & Bond Funds -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (11)	12/17/2008 2:04:18 PM
From: peter michaelson	Read Replies (1) \| Respond to of 161

One thought that bugs me is that some of these record spreads persist because of the falling Treasury yields. I'm not sure that is the appropriate basis of comparison today. Those yields are so extraordinarily low, and do not seem to take into account the prospect for future inflation. Seeing those high spreads talked about over and over presses my pavlovian 'deal buttons', but really I probably ought to be looking at spreads vs AAA corporates or somesuch. Maybe the lower grade stuff won't look quite so amazing. On a different topic, I saw that realmoney published a recommendation on FCT, a leveraged senior floating loan participation closed end fund. So, I'm thinking that perhaps the press and popular opinion is starting to find these huge yields attractive - perhaps some confidence that a complete financial catastrophe has been averted. On the other hand, that particular CEF looks way over-leveraged to me, not to mention 3% annual expenses. James Altucher Closed-end fund watch: FCT 12/17/2008 10:55 AM EST In light of what I said earlier: pension funds are going to have to chase yields in places where the govt is not going, I'm buying the closed-end fund FCT, Four Corners Trust : 1) 26% discount to net asset value (average discount is more like 10%) 2) 13% dividend right now 3) they buy bank loans that are senior in the cap structure of the corporations that the banks loan money to. I think the asset values of these bank loans will increase as institutions roll into them. 4) Super investor, Bernie Madoff, had a $1mm position in them. (this last one was a joke but Madoff did have this listed in his holdings). Position: long FCT