In determining which specific closed-end fund provides the best buying opportunity, it might appear that the process is exceptionally simple: Just see which one is selling at the widest discount and buy it.
Unfortunately, the process is a bit more complicated. As previously discussed, there are valid reasons for discounts. There is also a wide variety of fund types: equity (stocks in general or in industrial sectors), bonds (different types, such as municipal, corporate, foreign, or U.S. government; all with varying maturities), convertible bonds (combining both bond and stock characteristics), specialty (confining interest to a specific country, a very narrow industry sector, venture capital, or specific private placements), dual-purpose (where the fund seeks both capital gains and income), or anything else that can generate public interest and enough sales to capitalize the fund. Read the rest of this entry »
A eurobond is a debt security handled internationally by syndicates, groups of bankers and/or brokers who underwrite and distribute new issues of securities or large blocks of outstanding issues. It is typically in bearer (non-registered form) and is issued outside the country of the currency in which it is denominated.
Borrowers and lenders are spread around the world, while the intermediaries are spread across Europe, with the majority of business being done from London. The market was founded in the early 1960s and has provided a competitive source of funding for borrowers who can tap discreet but important sources of finance. Japanese banks, pension funds and insurance companies have become important lenders in recent years and there are still plenty of wealthy individuals who prefer the anonymity offered by bearer securities. The eurobond market is the world’s second largest securities market after the US bond market in terms of trading volume and the third largest after the US and Japanese bond markets in terms of debt outstanding. Read the rest of this entry »
Is your advisor or broker honest with you about his motivation and how he is compensated? Beware of brokers who try and sell you that their superior performance and low annual fees will more than compensate you for a 5 percent upfront charge. You should not pay a load or sales charge when buying a mutual fund, but people routinely do.
Similarly, steer clear of advisors who use “soft dollar” commissions to pay for their bills. These commissions encourage advisors to trade your account and create more revenue for their firms. Finally, run from brokers and advisors who push their own in-house funds. They are given incentives to push these funds without regard to their fees or performance. This doesn’t mean that all in-house funds are bad, only that these brokers and advisors are not always considering if they’re the best investments for you.
Sloth can cause you to give any of these advisors a pass or fail to realize what they’re up to. You may also lust after advisors with great reputations and who offer promises of incredible performance, overlooking their fees or questionable tactics. The best way to honor your financial advisor is by choosing one whose only fee is based on a fixed percentage of the assets you have under management and evaluate this individual based on comparisons with a reasonable benchmark. Read the rest of this entry »
To help you manage the three secondary sins just mentioned as well as the seven major ones, I’ve put together a list of ten things you should and should not do. They compliment the sins, in that they are action items as opposed to “warnings.” Just as the ten commandments of biblical fame suggest ways to avoid the seven sins, these commandments function in a similar manner. Keeping a list of these commandments handy next to a list of the sins should provide you with the model you need to maintain your virtuous investment path.
Let’s look at each commandment and how to obey it:
- Thou shall not convert thy neighbor’s investment
- Thou shall not make a killing
- Know thy investments better than thou know thyself
- Thou shall not make unto thee a graven image of profits
- Thou shall not take the name of the Lord in vain or issue nay foul-tempered oaths while investing
- Thou shall not commit adultery chasing some thy little stock of the moment
- Honor they mother, thy father, and the market in good times and bad
- Thou shall not steal from thyself by forgetting about taxes
- Thou shall not worship false idols or deceitful financial advisors
It’s likely that most investors, at some point in their investing careers, buy and sell much too quickly. Perhaps they get caught up in a market upturn or downswing or they are going through a difficult period in their personal lives and turn to day trading as a form of escape. If overactive trading is an anomaly rather than a pattern, then you probably aren’t guilty of this sin. On the other hand, if you find that you periodically fall into the habit of overactive investing, gluttony may be a problem you need to address. Read the rest of this entry »
Institutions obtain administrative and, sometimes, taxation benefits by using mutual funds to manage their own assets. Such funds are invariably not available to the general public. Funds that are authorised to be promoted to the general public (frequently referred to as ‘retail funds‘), usually extol the benefits to the private individual, namely:
1. Small investment required
Although both minimum holdings and minimum initial amounts are usually required, individuals can invest comparatively small sums of money in mutual funds, particularly through plans that accept regular subscriptions. So-called ’small investors‘ can thereby obtain the benefits of worldwide economic activity (hopefully growth) rather than allowing these to be enjoyed by the banks (and their shareholders) and others with whom they deposit their funds in return for an interest income. Read the rest of this entry »
