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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: gizwick who wrote (51491)	5/7/2013 5:45:03 PM
From: MCsweet	2 Recommendations Read Replies (1) \| Respond to of 78774

It is great income while it lasts, but CEFs (as well as bonds themselves) are at or near historically high valuations and in sell offs CEFs can go from premiums to 10-20% discounts. Then it becomes extremely painful to not only lose on NAV, but to see a big premium fund go to a big discount. The probability of such an occurrence now is unlikely, but when interest rates start rising, fund NAVs will start declining and dividends will get cut (due to higher cost of leverage). At that time, it will be ugly for CEF investors IMO, particularly owners of premium CEFs. It is not a game I would play, but if you do play it don't be the last one out the door. MC

To: gizwick who wrote (51491)	5/7/2013 11:25:46 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78774

MM or CD's yield nothing, might as well put it under the mattress. I don't invest for others but recently my mother who is 70 years old and lives in Germany, asked me what to do with some of her money. Germany is in the same doghouse in terms of interest rates than the US. Most Germans (including my mom) are very concerned about inflation risk, in my opinion rightfully so. She was looking for safe investment, which I pretty much told het does not exist, at least nothing that yield anything. Since she is concerned about inflation, I recommended two stocks to her, that are underpinned by hard assets: SPB.F -Sedlmayr, which is the real estate stub from the Spaten Brauerei after they their brewery operations to Inbev almost a decade ago. They hold real estate assets in Munich and Stuttgart (via Dinkelacker majority). While not cheap on first sight, they own quality assets and are managed via a Kommanditgesellschaft, which means that the owner operator is personally liable. The stocks are fairly thinly traded around 1400 Euro/share and they 30 Euro/share in dividend anually. TOT (FP.PA). They were purchased during the recent slump at 37 Euro, yielding 6%. While somewhat volatile, this integrated oil company has a good balance sheet (debt/capitalization. ~20%) and pays a good dividend. If probably trades for 60c on the $ or Euro. My Mom was concerned about the Euro going to hell and what would happen to Total in that case? I mentioned to her that if she expects the Euro to to hell and oil to become much cheaper in that case, she should not buy Total. She bought the shares a few days after I spoke with her on the phone, somewhat to my own surprise after they hit the 37 Euro limit. She has never purchased any stocks before, not even equity mutual funds. Better late than never :-).