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The Cure for ‘Stock Inflation’

by | Dec 19, 2023

Dear Fellow Trader: 

You know, I hate what inflation has done to this economy. 

But more importantly, I hate what it’s done to me. Yesterday, I went to one of my favorite restaurants in the country. And the prices of seafood are at nosebleed levels. As I’ve explained, it’s not the restaurant’s fault. The government printed too much money and blamed everyone else for its ineptitude. 

As Milton Freedman once noted, “inflation is always and everywhere a monetary phenomenon.” 

It starts with the supply of money. 

But what if I told you there was a way to get your hands on stocks at a discounted price? I’m talking about great companies with real earnings that produce real things. This isn’t some bizarre universe.

All you need to do is learn about closed-end funds (CEF) and the benefits they can offer investors with knowledge of their potential. 

Understanding Closed-End Funds

CEFs are like a group of friends who pool their money to invest in different things, like stocks and bonds. There are all sorts of funds in this space. There are bond, credit and even energy CEFs. 

But there’s a twist to how they’re structured. Once the money is pooled and the fund is launched, the number of available shares restricts the potential number of investors. 

CEFs have a fixed number of shares, and new shares aren’t created. So you have to buy someone else’s shares if you want to be a member of the club. 

Mutual funds, on the other hand, keep letting in new investors whenever they want.

CEFs are bundled groups of assets, just like your average exchange-traded fund (ETF). They trade like ordinary shares, and prices can rise and fall depending on supply and demand.

But here’s the best part for you…

These funds can trade at a higher or lower value than the actual value of their underlying assets. This value — known as net asset value — is the total value of all the assets in the fund divided by the number of shares.

So, if you have a bundle of stocks and the value of the shares through its “net asset value” is $20… shares can trade higher or lower. 

This doesn’t happen with mutual funds, and it’s rare for ETFs.

When a CEF trades for less than its value, it’s called a “discount.” When they trade for more, it’s called a “premium.” 

Why would they trade at such extremes? 

There can be a few reasons for this phenomenon… First, the market might have a liquidity issue, and investors sell these funds to raise quick cash. In times of fear, CEFs can sell off and create an irrational discount to their real value. 

But sometimes they trade at a premium because the shareholders expect the underlying assets to appreciate in value. 

We keep a close eye on things that are trading at a discount — especially when offering large dividends. This sets up for double-digit upside through dividend reinvestment and compounding over time. 

Difference Between Closed End and Mutual Funds

Mutual Funds are more like an open-door policy club where anyone can join any time.

But they better bring some cash… You can buy or sell shares in a mutual fund at the end of the trading day at the net asset value.

Mutual funds do not trade on stock exchanges. 

You can buy them through the brokerage or provider at the price of the day-ending net asset value.  So, if you want to buy mutual funds on Wednesday, you will fill at the end of the day when the fund “settles.”

Mutual funds are more conservative than CEFs. 

They don’t have wild price fluctuations. That said, CEFs can create incredible discounts that investors should snap up. I’m talking about some of the best companies in the world.

Let’s talk about one I recently uncovered.

Tapping into The Best Name in Finance

At Tactical Wealth Investor, we own three incredible CEFs that provide significant income and appreciation upside. 

In fact, we just bought the mother of all CEFS — one that owns some of the best names owned by the top hedge fund managers, investors like Warren Buffett and Carl Icahn. 

It trades at a 20% discount to its NAV and offers a 4% yield.

We’re tapping into forever companies like JPMorgan Chase & Co. (NYSE: JPM), Microsoft Corp. (Nasdaq: MSFT), NRG Energy Inc. (NYSE: NRG), and Enterprise Product Partners LP (NYSE: EPD). 

Imagine that… buying ribeye steak for the price of strip steak.

Get a very special price today on Tactical Wealth Investor, and build strong long-term capital with great value and income stocks.

Chat soon,

Garrett signature

 

 

Garrett Baldwin

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. 

P.S. Market Shift Created Massive Flipping Opportunities

There was a monumental shift in the markets early last year…

One that made it difficult for the average trader to have an edge.

But this shift opened up a new door for folks to grab their slice of the millions, sometimes even billions of dollars going into specific stocks each day.

Targeting extra cash not in a month, not in a week, but in as little as just one day.

They’re called “Quick Flips” because they FLIP some of Wall Street’s biggest transactions.

Turning them into trades that target an extra $500 in cash or more (based on a $2,500 starting investment on each trade).

And these “Quick Flips” couldn’t be easier to spot…

Learn How to ‘Flip’ Wall Street on Its Ear

From 5/19/22 through 12/6/23 on closed trade signals, the average win rate is 70%. The average return per position (winners and losers) is 5.4% and over a 30.65%.average winner with a 6 day average hold time. Past results are no guarantee of future results and you can lose money.


Market Momentum is GREEN

All sectors are positive. What a time to be alive.

*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

WRITTEN BY<br>Garrett Baldwin

WRITTEN BY
Garrett Baldwin

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