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Aberdeen Asia-Pacific Income Fu Message Board

  • okiedivot okiedivot Jun 21, 2013 1:19 PM Flag

    20 Year Review

    Everyone reads charts a little differently and reach various conclusions, but this is my summation after this mornings charting.

    There have been four major FAX downturns in the past 21 years. July 1992 - April 1995 (-34%), August 1997 - Aug 1998 (-41%), April 1999 - April 2001 (-44%), May 2008 - Nov 2008 (-41%). Investors cab attribute these to everything from dotcom bust to the AUD/USD exchange rate, to the idiots at Lehman Bros. Fact is, they happened. As of today, FAX is +- 20% on the downside from February 2013, which would be at about the halfway point of the historical slides. Certainly, hedging strategies get more robust every year. That has not eased the amount of these downward corrections, but it (or something else) has made the downturns occur in a much shorter period of time, from 3 years to 2 years to 5 months in the 08 slide. So the same 35%-45% retreat is steeper and the upward reversal generally lasts for years instead of months.

    A 40% retreat from the Feb 2013 price would take FAX below $5, which will shake out some loose hands. But those that enter (or dollar cost average) anywhere near the bottom may accrue capital gains + a nice YOC. The more savvy of these will also be watching the AUD/USD.

    Just one view of a cautious investor who thinks that corrections are the easiest times to make money.

    Sentiment: Hold

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    • Yes, and I bought 7/31/97, doubled down at 10/28/98, and again doubled down at 2/23/99.. Great timing, eh? In these past few months I've been thinking I should get out of this issue while I was over basis for a change. Waited too long, I can tell.

      Oh, well, i'm so used to being underwater on FAX I almost done even notice it.

      Sentiment: Hold

    • excellent analysis. Thank you. My idea is to wait until technicals improve for NAV as opposed to PPS. Also keep an eye on currency at the same time. If you were able to time this right, you could make a bundle. Need to get my money back. Sold a hunk at around $7

    • good to read your thoughts! I wish more investors would share their opinions in this message board. as for you review, I do not believe that FAX will fall below 5$ unless there will be a stock market crash, 10y US Treasury notes go to 3.5% until end of year, china or Australian shock and of course unless the Aussie breaks the 0.80s. I started accumulating and have half on my investment in so far. if it falls bellow 6 i plan to buy more. I think 10% down from here is the lowest it can fall. because it's very difficult to find the bottom the strategy is to buy on dips.
      My main concern is that 10y US t-bonds will push yields up all across the bond market by a year end.
      taking into consideration that the stock indexes are at all times high in the US and P/E above average i prefer to be exposed to high rated bonds with medium durations. Many hedge funds claim that there is no where to go but stocks but i dont buy it. when yields go up, stocks are less attractive and some went above and beyond the proper p/e. unless the economy expends rapidly in the next two years the stock market will remain volatility. the flee from bonds may remain for some time but eventually the investors will be back in bonds again..
      with 10% discount on NAV, Aussie at 0.92 gold at 1300, I think the downside potential is very limited..

      Sentiment: Buy

      • 1 Reply to eladnm
      • You make a lot of solid points. There are places other than stocks and commodiites for the second half of 2013. 5 star rated intermediate munis aren't glamorous, but are nearing attractive prices, considering the onerous CG and dividend taxes for this year. AUD is now below .92 and China had another 5% selloff, which is only bad is one plans to sell FAX. $6 pps = 7%. Since so many investors use dividend screeners, 7% will trip a lot of screens and add FAX to their buy lists. Will be an interesting and very short trading week. On the bright side - We aren't in gold!

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