The Insider's Guide to Closed-end Funds
By the author of Economics for Dummies
For Just $29.95...
“The Only Book on Trading Closed-end Funds that explains how they can be used to exploit market irrationality..."
"The only guide which gives you detailed and complete strategies--and which has the balls to honestly tell you not only about the potential rewards, but the potential risks as well..."
"Available instantly as a PDF download so that you can start exploiting Closed-end Fund profit opportunities immediately!"
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Dear Friend,
Since the 1920’s, ordinary investors have been able to buy a most extraordinary financial vehicle—the closed-end fund… Closed-end funds are simply mutual funds whose shares trade like stocks on the NYSE and other major stock exchanges… Like regular mutual funds, closed-end funds have actively managed portfolios, benefiting from the latest research and financial analysis, and are run by some of the best portfolio managers on the face of the planet… But unlike regular mutual funds, closed-end funds don’t redeem their own shares… Rather, their shares trade like ordinary stock, giving you an extraordinary opportunity… With closed-end funds you can do two amazing and unique things that you just can’t do with other assets…Simply put, you can,
This book is 138 pages long and I've put literally five years of personal
research results into it.
I'm just a college professor and have no stake in any
closed-end fund or in getting you to invest in any particular fund.
My advice is completely unbiased and uncorrupted by Wall
Street influence.
So please read on and learn what I learned
about these amazing investment vehicles that allow you to profit off of market
irrationality!
--Sean Flynn, Ph.D. |
Not Your Normal Investment
Closed-end funds are the only stocks trading on the NYSE where you can see in plain black and white whether they are under-valued or over-valued…
Just think about it…just imagine what you would do if you KNEW which NYSE stocks were priced too high or too low…
- Imagine if you KNEW that IBM was $5 under valued…
- Imagine if you KNEW that GM was $10 over priced…
- Imagine if you KNEW that Nokia had to fall $20 to be properly priced...
If you KNEW which stocks were under or over valued, you’d stand to make a killing—day in and day out!
Unfortunately, for most NYSE stocks, you just have no way to KNOW if they are over valued or undervalued…
That’s because you don’t know whether the firm is really being well run, whether it has great new technologies, or is even whether it is straight out lying to you and cooking the books…
The truth is…
The Analysts who produce those buy and sell ratings have no idea if they're getting it right!
For the vast majority of NYSE stocks, the analysts are just guessing about the proper value of the stocks they get paid to analyze!
But things are different—very different—with closed-end funds…
That’s because each fund is required by the federal government of the United States to publish the contents of its portfolio weekly…
Every Friday, they tell you exactly what they own and how much its worth…
And unlike some crooked financial officer at a company like Enron, you know that they’re telling you the truth!
That’s because you can simply see for yourself by checking their figures against the numbers in the financial pages of your local newspaper…
Closed-end Funds Can’t Lie about Their Portfolio Values…
Suppose that a fund reports that it owns 100 share of IBM and 500 shares of Yahoo. You just check to see how much a share of IBM costs and how much a share of Yahoo costs. Let’s say that IBM costs $91.38 per share and that Yahoo costs $49.50 per share.
You just multiply things out. The fund’s stake of IBM is worth 100*91.38 = $9,138.00 and the fund’s stake of Yahoo is worth 500*49.50 = $24,750.
You KNOW what the fund’s worth…Because you verify the values yourself..No analyst needed!
What’s more, since you can tell what a fund’s portfolio is worth, you can also tell how much its shares should cost…
Closed-end Funds Can’t Lie About Their Proper Prices…
Suppose that a fund’s portfolio is worth 50 million dollars…and suppose that there are 50 million of the fund’s shares trading on the NYSE…
Then things couldn’t be simpler…
Each share should be worth EXACTLY one dollar. That’s because each share is an equal share of the company. And so if there are 50 million shares and the company is worth $50 million, then each share is worth $1
Closed-end Funds Tell You EXACTLY what they’re worth…
But don’t think that this information is hard to find out…
The Wall Street Journal automates it for you…
Each week, The Journal finds out from every fund what the stocks or bonds in their portfolios are, how many of each stock or bond the fund is holding, and therefore how much each fund’s portfolio is worth…
They call this the fund’s NAV, or Net Asset Value…
It’s simply the value of the fund’s portfolio divided by the number of fund shares outstanding and trading on the stock exchange…
Every Monday, there is a Closed-end Fund section in the Wall Street Journal and they publish this information for everybody to see…
And they also publish…the current market price of the fund’s shares…
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Testimonial Professor Flynn has done an excellent job of providing the theoretical rationale for why a prudent investor should invest in closed-end funds. More importantly, he has convinced me that doing so on a rational basis -- following his advice -- can make me money. I have been involved in the financial industry for several decades both as a principal investor and as an advisor so I approached Closed-end Fund Secrets with a fair bit of skepticism. The author did a great job of anticipating my doubts and providing the answers that I needed. I have nothing but high praise for this delightful treatise. Sincerely,
Robert D. |
The Open Secret of Closed-end Fund Mispricing
Every Monday, the Wall Street Journal tells you the biggest dirty secret in finance…
· Even though everybody knows what each share of a closed-end fund should cost…
· Even though the SEC requires that funds to tell us every week what they are worth…
· Even though everybody in the world could bother reading the Wall Street Journal once a week to find out…
Closed-end funds don’t trade at the correct prices! Simply put, market irrationality drives closed-end fund share prices away from their publicly known, rational values!
Look at some recent examples…funds where their rational prices as given by their Net Asset Values (NAVs) are vastly different from their market prices…
· Equus II stock fund with an NAV of $11.48 but a share price of only $8.48…
· New Germany Fund with an NAV of $9.23 but a share price of only 7.53…
· China Fund with an NAV of $27.58 but a much larger share price of $43.30…
· BlackRock High Yield Trust with an NAV of $7.47 and a much larger share price of $10.88…
As you can see, closed-end funds often sell for either much less or much more than their portfolio values…
This creates amazing trading opportunities that can be exploited in the most direct manner possible by even the small investor…
The most obvious, most direct, and simplest trading opportunities on Wall Street!
· If a fund is overvalued, short it.
· If a fund is undervalued, buy it.
· And if you are really sharp, cover your positions so your profits can't be affected by bull or bear markets!
These strategies work because closed-end funds don't stay mispriced...
The market ALWAYS eventually corrects itself…
The best way to see this is to think in terms of premiums and discounts…
If a fund is trading for more than its NAV, it’s at a premium…
If a fund is trading at less than its NAV, it’s at a discount…
The funds we gave as examples above were, respectively, at discounts of –28.8% and -18.4% and premiums of 57.0% and 46.6%. That is, Equus II and New Germany Funds were at discounts (that’s why they’re negative) and The China Fund and BlackRock were at big premia.
If a fund trades at it’s NAV portfolio value, then it’s at a 0% discount or premium and is said to be trading at par…
Closed-end funds always return to par…
Closed-end funds are in fact largely predictable…
The ones at super deep discounts eventually see those discounts decrease…
The ones at super big premiums always eventually see those premiums decrease…
Can you think of any other stocks trading on the NYSE that are predictable? Fat Chance!
But that’s not because other NYSE stocks aren’t mispriced…Most NYSE stocks are mispriced all the time…
The trouble is that you can never tell when most stocks are over valued are under valued…
Just look at CNBC or MSNBC and see how analysts constantly disagree on valuations…
For every “expert” there is another “expert” who holds exactly the opposite opinion…
One will tell you a stock is overvalued and going to fall…the other that it is undervalued and going to rise…
And you have no way of telling which guy is right…
But that’s the secret to closed-end funds…
There are objective standards…because everyone can see what their portfolio values are worth…and therefore how much each share of the fund is worth…
Closed-end funds are the only stocks trading on the NYSE where any investor can directly, verifiably, and reliably tell if they are over valued or under valued…
This means that they are the only stocks trading on the NYSE where you know whether their prices are truly likely to rise or fall…
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Testimonial Sean: I hope your dad is recovering. I enjoyed Closed End Fund secrets. It helped me to mitigate the risk for one of our clients who had $1.5 million in exposure to CEFs. The text was articulate and easy to understand. Best regards, Larry
B. |
"The Unexploited Profit Opportunity…"
But, you ask, if everybody knows this about closed-end funds…if they are in the Wall Street Journal every Monday…if anybody can see whether they are under or over priced…THEN WHY THE HELL ISN’T EVERYBODY TRADING CLOSED-END FUNDS????
· The major players consider closed-end funds as too small to be worth their while…
· Closed-end funds are completely out marketed by regular mutual funds…
· Investors fear that fund mispricings could get worse in the short run…
Each of these reasons is a trading opportunity that you WILL exploit…
The big investments houses may consider closed-end funds to be too small to be worth their while…but for an individual investor, the potential profits are huge…
The fact that Fidelity, Vanguard, and all the regular mutual fund companies blow such huge amounts of advertising means that there’s not nearly enough investors pursuing closed-end funds…not nearly enough to take all the tasty profits…
And the fear that discounts could get deeper or premiums larger is the risk that allows for such peculiar returns in closed-end funds…
Confidence In Managers—or Lack Thereof—Creates Huge Profit Opportunities...
Closed-end fund discounts and premia are volatile because investors constantly get and lose faith in fund managers…
When investors get very confident in managers…they drive fund prices up relative to NAV…
When investors lose faith in managers…fund prices drop while NAV stays the same…
As investor confidence waxes and wanes, nothing happens to the value of the stocks and bonds inside closed-end fund portfolios…
The only thing that moves are fund share prices…
That is, you can see that the fundamentals are the same…and you can directly see the effects of irrational investor sentiment…
When that sentiment gets hugely too negative and the funds are at super big discounts… you know to buy…
When the sentiment is hugely too positive and the funds are at premia…you know to sell or short…
Your only worry is that investors will keep being stupid and cause even greater mispricings…
But that is where this profit opportunity comes from…
The chance that they drive prices wacky is where we get our profits…
But it is also a warning to be careful…
Which is why every closed-end fund investor needs to know several very important facts about closed-end fund pricing.
Without these facts, you’ll risk being overwhelmed by irrational investors driving closed-end fund prices whacky places—places that ruin what should be a simple and direct chance to both identify and exploit stock market mispricing...
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Testimonial Dear Dr. Flynn, You've accomplished a near-impossible task -- making advanced finance research accessible to the lay reader. People can finally learn about arbitrage opportunites in the closed-end fund universe that finance professors have studied for decades. They can then apply this knowledge and achieve high returns in both up and down markets. You present a well researched strategy in an enjoyable format that will profit investors over the long term. Jeff Harris, MBA |
Closed-end Fund Secrets
Act now and order our complete guide to exploiting the mispricings found in NYSE traded closed-end funds. This complete guide tells you not only when funds are mispriced, but by how much, and how to exploit what you find to your financial advantage. Learn…
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How fast discounts and premiums move back to par—that is, how fast your trading profits will pile up…·
How the rate at which the profits pile up depends directly on the level of the discount or premium…·
How you can tell exactly what the market is thinking using a very simple CLOSED-END FUND PRICING FORMULA…·
The crucial difference between closed-end stock funds and closed-end bond funds…·
How much risk is involved and how it varies convexly with the discount or premium level…Our complete trading guide, Closed-end Fund Secrets, gives you insight into decades of closed-end fund trading data on not only NYSE listed closed-end funds, but also on funds trading on the AMEX, NASDAQ, and foreign stock exchanges…
You’ll learn…
·
How to tell if they are over valued or under valued…·
The appropriate positions to take to exploit any possible mispricing…·
How big the historical risks are to any position you take..Most importantly, you’re going to learn the deep hedge secret that allows investors to do well in ANY MARKET…
How to Profit in Both Bear and Bull Markets
A key point to understand is that any time a closed-end fund discount or premium moves back to par, you make money…
If a fund moves from a discount of –25% to a discount of only –5%, it doesn’t matter if the market is up, if the market is down, if the market is closed…
There is a simple closed-end fund hedge that allows you to…
· Profit no matter what the market is doing…
· Profit no matter how the fund manager is doing…
· Profit no matter how good or badly the fund portfolio is doing…
Does this sound too good to be true? Well look at these recent, 1-year returns, returns that were FULLY INSULATED AND INSURED against overall market movements…
· High Yield Plus Fund with 20.87% in one year…
· Templeton Emerging Markets Fund with 36.66% in one year…
· Cornerstone Total Return Fund with 58.43% in one year…
· Thai Fund with 77.49% in one year…
· China Fund with 136.47% in one year…
And remember…these HUGE returns were fully hedged…it didn’t matter what happened to the overall market or the underlying portfolios…
Quite simply, we’ll show you how to make a PURE PLAY ON "IRRATIONAL EXHUBERANCE"…
Profit solely from movements in investor sentiment about closed-end funds…
· Take advantage of the overly pessimistic…
· Exploit the overly optimistic…
· Hedge your exposure to over-all market movements…
This is a one of a kind trading package and will be offered for a limited time only...
Act now and you will receive everything you need to start trading closed-end funds for huge, market-hedged profits that allow you to exploit market irrationality and asset mispricing without having to worry about how the overall market is doing.
Sincerely Yours,
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