Boring But Profitable

Ignored by the masses for being “too safe” [Altucher Confidential] June 05, 2023 [WEBSITE]( | [UNSUBSCRIBE]( While not the flashiest or the most exciting strategy, I firmly believe it is the safest approach to investing. [Hero_Image] The Investment Strategy Ignored by the Masses By James Altucher We just had the biggest — and most drastic — operational change in our company’s history. I believe it will have profound effects on our editors and readers alike. I’m urging you to listen to a short memo from our VP of Publishing. He explains why, after 20 years, this decision was 100% necessary… […and why this “fix” could have a significant impact on your personal wealth.]( [James Altucher] JAMES ALTUCHER Dear Reader, In 2016, I decided to launch a product about a particular investment strategy that revolves around closed-end funds (CEFs). While not the flashiest or the most exciting strategy, I firmly believe it is the safest approach to investing. Perhaps there are safer ones out there, but I haven't found them yet. Even though I'm a HUGE fan of this strategy, the product didn't attract as many investors as we'd hoped, so we shut it down. Yet, the value of the strategy remains the same, and I think it's worth revisiting and elaborating on it in depth. The Closed-End Fund Strategy So, let's dive into what closed-end funds are all about. CEFs are essentially public companies that dedicate their operations to investing in various assets, including stocks, bonds, and others. They raise capital in a similar fashion to other companies, typically through an initial public offering (IPO). For instance, a CEF might raise $200 million in its IPO, with the predominant use of these funds being to buy bonds. The goal here is to find and invest in safe bonds that provide high yields. In addition, like real estate investment trusts (REITs), CEFs have a mandate to distribute almost all of their profits to shareholders, making them attractive to income-focused investors. One of the interesting aspects of CEFs that set them apart from mutual funds is their pricing mechanism. While the price of a mutual fund is directly linked to the value of its underlying assets, the price of a CEF is determined by traders on a daily basis. This means that during bear markets, when many investors are selling off their shares, CEFs can trade at a significant DISCOUNT to the total value of their assets. To illustrate this concept, let's use Barings Corporate Investors (MCI) as an example. MCI is a CEF that primarily invests in bonds—not the most exciting stuff, but that's where the stability comes from. As of this writing (and for the sake of this example), their share price is $13.35. However, if you were to calculate their "net asset value," which is the combined worth of all their holdings, their share price should be $16.37. This indicates that MCI is trading for almost a 20% discount to what they would be worth if they simply liquidated all their assets and returned the cash to shareholders. [ALC] You might wonder why a company like MCI would be trading at such a large discount. Well, that's part of the beauty of this strategy. As I examined their trading history, I found that they used to trade at a premium to their net asset value before 2020. This means that if you were to buy shares of MCI, you could potentially realize a 25% gain simply if the fund went back to trading at its net asset value, even if the value of their underlying investments doesn't change at all. But the potential returns don't stop there: MCI has an 8.54% dividend yield. So while you're waiting for the market to realize the fund's true value, you're still raking in a hefty dividend each year, even if the value of MCI's investments doesn't grow at all. This outsized dividend yield is due to two factors: firstly, CEFs have a requirement to return nearly all of their profits to shareholders, and secondly, because MCI is trading at a discount to its net asset value, you're effectively getting these dividends at a discount too. Of course, investing in closed-end funds (CEFs) isn’t without risk. But, despite inherent risks, a well-executed CEF investment strategy, with due diligence, patience, and consistent monitoring, can yield stable high returns and significant upside. Attention! Before You Read Any Further… [Click here for more...]( Hey, it’s James. Before you read any further in today’s issue, an urgent situation needs your immediate attention. If you don’t plan on claiming this upgrade to your Altucher’s Investment Network subscription, you’re missing out on a huge opportunity. Right now is your chance to grab one of the biggest (and most valuable) upgrades our company has ever made to a newsletter. I’m taking Altucher’s Investment Network to an entirely new level and I’d hate to see you left behind. [To see how to claim your upgrade, just click here now.]( Once you’re done with that, read on to see today’s issue… How I Learned About This Strategy I researched how Warren Buffett traded his personal money (i.e. he used to trade with some money outside of Berkshire Hathaway; he no longer does that.) for my book, Trade Like Warren Buffett, a book I wrote in 2005, when I stumbled across this investing strategy. Nobody mentions this strategy in any other book about Buffett which is why it’s always useful to study the history of investing. He had been doing this strategy on and off since the 1950s, well before he invested in Berkshire and his other big holdings. Summary: It’s a great strategy, safer than most. But not exciting. No 1,000% gainers (it’s not so bad to have those strategies as well. It’s good to diversify strategies). I loved making this concept into a (very profitable) product in 2016… but we shut it down in 2017 because not enough customers were interested. So instead, here it is for free. You should do it. And make a lot of money. [Ed. note: This is an abridged version of an article featured for Altucher’s Investment Network. Among other things, subscribers get access to EXACTLY how James spots these opportunities with a few clicks of the mouse. But today, James is cooking up an even bigger -- and slightly riskier -- opportunity for readers. The upside potential, even in a bear market, is enormous. In fact, it’s the same opportunity that saved him from financial ruin in 2009. Interested? [Click here for James’ latest videocast]( Best, [James Altucher] James Altucher For Altucher Confidential --------------------------------------------------------------- New LIVE Demo Video STUNS Crypto Investors In [this short 3:28 video…]( Crypto genius James Altucher reveals his most shocking crypto secret yet… A little-known secret that’s delivered over $1,170 in FREE crypto income per month. If you AREN’T using this affordable little device… You’re missing one of the best, easiest ways to earn real cash with cryptos. [Click here to watch this short 3:28 video NOW.]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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