My takeaway on this post? Things are not going to get better until after the FED raises rates or we get solid confirmation that they are not raising rates. Which may not be until Jan 2027.
Yep, everything eventually becomes the "new normal".
If you are a B&H investor AND reinvest all or part of your dividends, things are good now, though not optimal: bondish Pimcos TR NAVs are on a trend up, as are Hy bonds. In the chart below, I show PDI NAV (blue). As long as it stays above its 200 day MA (orange line), its trend is UP. Below: DOWN. Same for the HYG (HY Bond Index). Above 200 MA, UP (as it is now). below down. The faded red chart is the PDI price. I faded it to show how it just looks like a cloud of noise around the PDI NAV, whose trend is the signal you need to track.
Another interesting thing in the chart I showed is that it validates the PDI NAV beta vs HYG calculation I showed before. In english,
, how much does PDI go up or down for every +/- 1% in HYG. The regression chart (line) I showed calculated a 1.81 beta, almost 2 x HYG return, up or down, that is. And looking at the chart above, you see that, for the period posted PDI NAV returned 127% to HYG's 59%, very close to the measured beta. Also, for correlation, which was very strong, at about 0.9, you can visually see that in the chart, with every uptrend and every correction in HYG is perfectly matched in PDI.
You’re an optimist. I’ve seem this too many times before. I’ll game this unknown at least 4 years because no one really cares about the general population except around national elections and first terms.
I figure not until Jan 2027- at the earliest - for CEFs. Not that optimistic. Meanwhile, I also own equities and bond oefs and believe that time horizon could be entirely different. And all of that is assuming that no new variables enter into the equation. Or that the wind direction doesn't change. lol
It looks like PDI will be trading somewhere b/t 16.30---16.00.
I just did a set it and forget it at a lower price, expecting the CPI, shenanigans, and ex div to do my thinking for me. In fact I may drop it to $16.40 before tomorrow. Every penny counts.
I thought about your comment. I was traveling yesterday and could not get on my account. I just canceled the order overnight and will wait for a lower entry price. The divi is less important than a buy low entry price if I am going to try and buy and hold. That was the mistake I made on my first purchase. I got impatient and bought at a higher entry price. I exited with a 1% loss across my PIMCOs. Trying to be smarter this time, as I don’t want to jump in and out.
I did buy some PDI yesterday before the price went down towards the end of the session. I'm ok with that, however, as I know some of that will be reflected in my increased income at the next payment and over time. Some may disagree with my thinking, but when I look at my "losers" one factor I look at is the income they produce over time compared to the unrealized capital loss at that point. If the income is greater than the loss, I'm willing to hold. Low-yielding dividend stocks are a different story...
+1. In the case of PDI the dividend difference between buying at $17 or buying at $15.5 is 1.5% annually.
IMO a 5% 10yr is far more likely to result from curve STEEPENING --- unless one believes Fed will hike its policy rate by 75-100 bps.
I got some unpleasant surprises on some of my TE Muni CEFs at tax time last year because turns out they were doing ROC distributions in spite of CEF Connect indicating the distributions were all from income. I have found more than a few of these distribution characterization errors on CEF Connect so now double check the fund management website Section 19 notices before purchasing new holdings.
Consider also checking out cefdata.com for a rich source of data/analytics on CEFs AND BDCs. D
That is a great way to look at it! If interested in income and aware it will fluctuate. It is hard for some of us to adapt to that thinking, when used to growing a portfolio. Thanks.
Not very good at math, but for the same dollar amount invested, I believe it is closer to 10%.
My math skills are probably worse than yours but here's my logic:
