All you non-US bond folks

[brewer12345]

Check it out: as of today, GIM is no loger trading at a premium to NAV. This is an unleveraged, unhedged foreign bond ETF with a long track record. I am not ready to buy right now simply because I don't have the free cash (plus I am hoping for a discount and can afford to wait). But this might be a good time to start buying if you are so inclined.

 

[preben]

Yeah noticed that on my streamer. Tempting to switch from PFUIX/PEBIX (TEI also taking a beating btw) but will probably just watch it rebound. Cheers!

 

[brewer12345]

If you already have the exposure, then I can't see how the swap would make sense at these prices. However, historically GIM has traded at a 5+% average discount to NAV. If we got back to that kind of territory, it might be worth the trade. If we do get to a 5% discount, I will sell off something else (a highly appreciated small cap equity position, probably MINI) in order to get the exposure, since it would be pretty attractive at that point.

 

[charlie]

I bought at 3% premium a little while back.

Cheers,

Charlie

 

[brewer12345]

Sorry, charlie. I want non-US bond exposure, but not enough to pay a premium for it. Look at it this way: you might have the opportunity to average down. In the meantime, sit back and clip your coupons.

 

[ak4195]

Im very happy with our position and the fundamentals that go with it.IMO this is more a function of cefs trading like stock than anything else,herd mania rather than any real fundamental change.Time will tell if theres any news to back it up i guess.-ak

 

[brewer12345]

There is nothing fundamental to back it up, just herd mentality. There hasn't been a huge run on the sovereign bonds of the developed world, it is just lots of idiots all moving the same way at once.

 

[soupcxan]

Other than the closed-end/open-end deal, what's the difference between GIM and BEGBX (American Century International Bd Inv - hedged no more than 25%)? The charts seem to be somewhat correlated with added volatility for GIM.

Also - can I just give all my money to brewer and have him manage it for me? Granted, I don't know anything about him but he's got an honest face. I'm sure he'd craft an interesting portfolio for me, full of CEFs and MLPs and who knows what else!

 

[charlie]

Soup, as pointed out by Hyper in another post,
GIM has a better long term record, higher yield
and lower ER.

Cheers,

Charlie

 

[brewer12345]

Other than the closed-end/open-end deal, what's the difference between GIM and BEGBX (American Century International Bd Inv - hedged no more than 25%)? The charts seem to be somewhat correlated with added volatility for GIM.

Also - can I just give all my money to brewer and have him manage it for me? Granted, I don't know anything about him but he's got an honest face. I'm sure he'd craft an interesting portfolio for me, full of CEFs and MLPs and who knows what else!

I think Charlie nailed it WRT BEGBX vs GIM. I also would suggest that if you are buying GIM at a discount to NAV you are getting "something for nothing", although the discount can persist or even widen over time.

Heheh! I have an honest face, huh? Tell you what: meet me in a street corner with all your cash in small, unmarked bills in a paper bag. I'll manage it for you...

Seriously, I think about going into the financial planning business from time to time, particularly as a second career/PT thing to entertain me in retirement. You know what stops me? I do not have the sales talent necessary to drum up clients. Sadly, this seems to matter a lot more than actual competence in financial planning.

 

[soupcxan]

Re: the sales factor...I interned with a stock broker ("financial advisor" :) one summer and saw that it was all about pushing the product (even if the product was crap). A very valuable lesson...convinced me that the majority of financial advisors don't add any value.

But as for your own aspirations, does the sales factor matter so much? If you weren't counting on it as your sole source of income, you could start small with a few clients and if things go well, pick up some word of mouth advertising...you wouldn't need a $100MM book of business to generate a reasonable amount of extra income, and if you're going to be doing the analysis anyway for your own portfolio, it doesn't seem like too much extra work...you could cherry pick the clients that don't need a lot of hand holding.

 

[brewer12345]

Yeah, I suppose it is possible. However, there would be a fair amount of overhead involved, things like liability/E&O insurance, licensing, Series whatever, etc. Its always a possibility, though, and I kind of keep it in reserve. If I ever get to the point that I am really sick of my current career, I could always become a fee-only planner.

 

[soupcxan]

If you wanted to reduce the overhead and liability concerns, you could publish "Mr. 12345's Investment Newsletter." I'd subscribe, if you include a tirade against 30 year GMAC bonds in the premiere issue.

 

[brewer12345]

If you wanted to reduce the overhead and liability concerns, you could publish "Mr. 12345's Investment Newsletter." I'd subscribe, if you include a tirade against 30 year GMAC bonds in the premiere issue.

Heheh, I am pretty much already doing that except that I am not charging you. How's that for value?

 

[peteyperson]

Im very happy with our position and the fundamentals that go with it.IMO this is more a function of cefs trading like stock than anything else,herd mania rather than any real fundamental change.Time will tell if theres any news to back it up i guess.-ak

There is a risk of herd mentality.

One has to first have a portfolio structure that suits your particular needs. Taking some time to sit quietly and consider what makes sense for you allows one to avoid the herd mentality.

In terms of owning int'l developed bonds, why own them? It could be because you want to own 30% in bonds and wish to diversify your US bonds for credit or currency risk issues. It could be because you think non-US assets will benefit if the US dollar declines and are speading our overweight of non-US assets between equity and bond. It could be because you've calculated that the S&P 500 earnings growth historically at 1.8% real + 1.8% dividends today and adjusting for PEs in the 20s vs historical PE 14-16, this haircut over 10 years delivers 0.77% real return for the S&P 500. If one felt bonds might deliver a higher real return (net of taxes), one might choose to overweight then relative to stocks at those prices. Of course, one could look to small cap globally for opportunities to still add value or the value style for excess returns that could still make equities worth owning.

So one needs to be clear about your objectives first.

Petey