I'm trying to decide whether or not to sell some of my FAX and GIM. Any comments as to foreign bond CEFs or about these two particular funds would be appreciated. Thank you.
sacob,One rule of thumb for closing any position is that the reasons why you entered the position no longer obtain. Thus, the converse of the evidence that motivated a buying decision becomes the evidence for motivating a selling decision.Also, presumably, when you opened the positions, you determined your exit points, either on fundamental or technical grounds, or both. How close is either one of them now trading to your stops? Also, do you enter and exit all-in/all-out, or do you scale? Also, there's a bit of trading wisdom that goes like this: "Sell down to your sleeping point."I'm well aware that you are asking for a forecast, but forecasting is your job. It's your money that is at risk. Best wishes, Charlie
I hold GIM as a core position since I think it is the best option for high grade non-US sovereign debt. Having said that, the discount to NAV has become vanishingly small. There have been times in the past when it has gone to a fairly fat premium. I am on thefence as to whether I would sell into that sort of foolishness, since I still want the underlying exposure.Why exactly are you considering a sale?
Thank you both for your replies. Why am I considering the sales? Firstly, I am concerned that I have too much invested in these two funds. For me, they are large positions, more so GIM than FAX. Also own small amount of BEGBX as it's more a Euro fund, if you will. I too want the diversifcation of non-US sovereign debt. Perhaps I'm getting myself too mixed up trying to follow currencies and interest rates, etc. In addition, I don't understand the consequences when it is stated that the debt is dollar denominated. Not saying this is the case with FAX or GIM, but I'm not sure, and I've seen this mentioned with other funds. I will keep trying to figure out what is making me uneasy, as I would like to make a conscious decision and not a decision based on the sleep factor which I am sometimes too prone to implement, especially now that I can get a pretty good deal in CDs.
I maintain my GIM position not because of the yield, but because it is a good diversifier. It moves very differently from US equities, US bonds, and foreign equities, yet still has a positive return. It also is a hedge against a USD collapse.I didn't buy it because I have a view on things. I'm not smart enough to forecast currency movements. I bought it for diversification.
sacob, There is a tendency to dismiss fears as "irrational", but recent research (whose source I don't immediately recall, but it is probably in one of Nassim Taleb's books or papers which, in turn, refers to the primary work) suggests the opposite is true, because of the way the various parts of the brain handle various task. The surprising result was that a human being who was totally severed from his emotional centers also wouldn't be able to make any sort of chocies at all, rational, irrational, or otherwise. Therefore, fear-governed decision making is not necessarily a bad thing. Good investors, good traders, pay attention to their emotions and use them as part of the evidence. My suggestion? Plot a chart for the securities, identify support and resistance, and then set a stop. When the market tags the stop, you're out. After the fact, fundamentals can tell you *why* something happened. But they aren't very useful for forecasting *when* something will happen.Best wishes, Charlie
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