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Prospect Capital Corporation Message Board

  • jadelover8888 jadelover8888 Dec 2, 2011 2:31 PM Flag

    Were they telling the truth about longing PSEC?


    It was amazing that there were quite a few folks recommending PSEC to be included in IRA or non-IRA accounts and said it was a GOOD stock to be included in either account because they had been doing great with it.

    Now I am not questioning the truth of their statements or whether PSEC was a good stock, but I am kind of wondering if they have ever really calculated the REAL return they have received from buying and owning PSEC long-term (I assume they are holding it long-term).

    At today's earlier trading price of PSEC at 9.28 (now just dropped to 9.24), I observed its pricing history all the way back to its inception date of July 1, 2004 (please correct me if I am wrong) and drew an imiginary horizontal straight line with the 9.28 price across the price graph and also using the historical price listed in Yahoo for reference, the only time periods one seemed to be able to purchase PSEC at about $9.28 or below are during these periods:

    On or after 8/3/2011;
    Between 8/19/10 - 8/27/10
    On 5/10/10
    Between 2/10/09 - 7/23/09
    Between 10/8/08 - 11/21/08

    Now of course, I did not really spend a lot of time in looking through every single daily data, therefore I might have inadvertently missed a few of them and you are welcome to list them here for reference.

    But hopefully, you get the point I tried to make because unless you had purchased PSEC during the above time periods for either your IRA or non-IRA account and hold them till today, then your chance in even getting back your original investment is simply not good or highly unlikely. Even inclduing its HIGH dividend, your actual return may be minimal if your original purchase price was too high. The median price of PSEC in this approxmiatly 7-year period is about $12, that means if you have bought it by cost averaging or bought it in any other time periods other than the above periods, then at today's price of about 9.28, you might have suffered as high as a 30% loss (or even higher in some cases) in your capital.

    Of course, this has not taken into any dividend you may receive; it also has not taken into consideration with the fact that PSEC may rise closer to its median price of $12; it will also only be fair to point out similar price pattern may very well apply to other BDCs or stocks.

    However, I just wonder if all those people who said they really did good with PSEC might be just lucky or they were really that good?

    May be they can share how they did end up making money with PSEC, like when they bought them, at what prices, etc. with us. I admit I simply could not figure it out.

    Now I am not saying PSEC is not good for your IRA or non-IRA accounts because if you bought it at today's price of around $ 9.28 and sell it when it reaches $12 and keep all the dividends and profit, you will indeed end up doing very well with it. But its price history so far indicates this may be harder then you may believe.


    Now I guess I am on the right board? But just sending the wrong message? Well, somebody has to say it.

    This topic is deleted.
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    • Jade,

      5 stars for you, not because I agree with you, but because you put thought and used logic in your post. Better than the Buy this, Sell that rant most poster put without the reasoning behind it.

      Me personally I'm on the buy side of PSEC. I did not get in until August and am averaged out around $9. I do hope for the rise back to the $12 mark at which point I will sell probably half and leave the rest to DRIP(dividend re-investment plan) to buy more.

      It seems to me that yes while the price of the stock has stayed releatively within a small range, the dividend seems to have been growing. Using this information, and looking at your research it seems if PSEC goes above $12 sell, and below like it is now, buy.

      All in all, good post.


    • Another way to look at PSEC is that preuming PSEC maintains its dividend, who cares about the price of PSEC. At the current yield you get all of your money back in about 7.5 years. (So if the stock price is just maintained, you double your money in 7.5 years. If you are re-investing the dividends in other stocks, you are fairly soon playing with house money as you have gotten your capital investment in PSEC back.

    • they must continue to print to monitize

      there is only so much gold left in the world to mine and in another 50 years most will be mine.

      Oil will continue to go up with the world supply continuing a long term decline.

      Commodities are the way to go especialy going long agriculture since the world needs to feed 8 billion people.

    • a flat tax added to the state sales tax would in the end only help the rich.

    • Jade, with the market as it is I have been very picky. I bought F and GM
      only because the RR shipping numbers were way up on autos so it was a good play for a quick gain. GM has over 3 months worth of trucks on the lot so you know it too will soon fall as others catch on. BAC was a great play and I captured a tidy sum there. BAC I am a little iffy on as no one really knows where these banks stand in a downturn at this point. If it gets beat up again I might buy back in. The auto sector I am out of completely now and intend to stay out for a while. Cash is King right now so invest only in beaten up stocks that can't go much lower. I unloaded a bunch of GE the other day that I bought at around 14.85. I would look for U.S. stocks with an international footprint like GE. Just wait till you see the price drop. It really is not a buy and hold market today as you well know.

      The overall market forecast is up until April so hopefully one can buy in the dips. Who knows.....

      There is nothing that I would suggest buying today, but will keep you posted if something pops up that I feel looks good. This market is so shaky at this point it is hard to call a winner. Best to wait it out
      and only buy into what looks like a super deal.

      I don't feel this market is going anywhere soon one way or the other.

      The whole thing could hit the crapper quite soon or it could linger on with little if any growth for years. When the fed held overnight interest rates down until 2013 it was a signal of poor growth to come.
      Many other nations have since reduced their interest rates. Inflation has hit the Euro area very hard and yet they are dropping their rates.

      It tells you the governments are very concerned about their own debt and what it will cost them down the road. Every time the market goes up so dose the energy costs which keeps it in check. Something has to change here. Either energy costs have to be kept down long enough for the economy to recover and get a good footing before they increase once again. QE just piled on more debt to the government with the net result of a bump up and then a bump down for the economy. End result was about Zero. The taxes issue is nothing but a political game both parties play. Bottom line is corporations do not pay taxes, consumers do when they buy their product. Any given product would cost 21% less
      today if it were not taxed on the corporate level. The Corporate tax just adds additional costs on the corporations to collect it for the government. We need a flat tax.

      I laugh when I see some of these governments with debt will below there GDP and their bond rates flying off the map. Our debt is near 100% of GDP and out bond rates are low. Go Figure......LOL

      Cash is king because most don't have any and they are in debt up to their ears.

      The corporations that are doing well are holding a ton of cash today. They are not spending it or hiring new people in any numbers. This is a wait and see game with little direction. The changes that are needed will come from the government, not banks, the fed, or some hapless fool willing to bail out the world.

      Jfnh1 Told you that.

    • Well I can speak for myself and say that my return has basically been through dividends.

      I understand the risks involved and am satisfied with the yield I receive in return for that risk.

      I haven't owned since 2004 and if the financial crisis hadn't occured I probably wouldn't own the stock. I own it in my IRA and I own it in a taxable account. At this price I believe its worth owning.

      What I do recommend is that folks use the dividends to then invest in something else once a year. That leads to further diversification and lessens the risk of holding PSEC.

      There is no substitute for receiving cash and in that regard PSEC fits the bill and currently holds the prospects for some capital gains (say a couple of bucks a share) over the next couple of years.

      To each his/her own.

    • I believe that is why the maxim is "buy low" not "buy high". I would expect that most of the people who "bought high" are no longer holding PSEC.

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