Monday, September 14, 2015

How to Lose Money as a Junk Bagholder

1. Read a whole book on just exchange traded funds.
2. Don't read a single web page on closed-end funds.
3. Invest in a closed-end junk bond fund.

September 14, 2015
are these funds a scam?

I see so much bashing on these funds. Are they really something to steer clear of? I read a whole book on just ETF's and they didn't mention anything about excessive risk with these leveraged bond funds.

This person is asking the questions that others should have been asking last month.

ETFs vs. Closed-End Funds

1. ETFs generally trade close to their net asset value (NAV).
2. By contrast, CEFs are more likely to trade at a premium or discount to their NAV.

Is it a scam to have bought Pimco's High Income Fund at 50% above its net asset value? Is it a scam to buy a new car at 50% above its MSRP? Hey, if you want the fund or the car at any price, then any price it shall be!

PHK lost another 6.2% today. I don't believe it trades above its net asset value any longer (Pimco's site hasn't been updated with today's data yet). The bagholder premium is now gone. Mission accomplished.

Bag investors should have no fear though. I'm confident that there are many, many more bags out there for those who don't know where to look, lol. Sigh.

See Also:
Today's Junk Bagholder Fractal Adventure!
Junk Bagholders
Mister Peabody's Improbable Investment Machine


mab said...

They're not shams or flaws, they're features! And our economy can never have enough features!

Stagflationary Mark said...


There's no rich like feature-rich!

It's not just a bag! It's also a flotation device, a hat, a parachute, a survival tent, *and* a storage unit for other bags!

How much would you pay? What if I told you that if you buy one bag today then we'll throw in a second bag absolutely free! Just pay separate processing and handling.

Each basic bag is enclosed in that plastic that you generally need a jackhammer to to open, so ask our operators about how you can save an additional 30% for the premium free-range naturally-nested bag upgrade!

mab said...

Like I said, they're features:

Stagflationary Mark said...