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Prospect Capital Corporation Message Board

  • jadelover888888888 jadelover888888888 Nov 9, 2012 4:17 PM Flag

    What are you so afraid of?

    Yes, things in Europe especially in Greece and Spain are not doing too good....

    Yes, China has its problems and will continue to have more QEs.....

    Yes, the market can have a correction between 12-17% in the next six months......

    Yes, the tax rate for capital gains may be raised from the current 15% to 20% or higher....

    But where are you going to put your money, especially if you are one of those baby boomers who already retire or fix to retire in the next five years.....

    Into bond funds?

    Unfortunately, that was exactly most of them had been doing and continued to do because of so called "safety" or what their investment advisers advised them - the amount of your retirement money put into stocks should equal to 110 (some use 100) - your age. That basically will mean the older you are the more % of your retirement will be put into bonds or annuities.

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    • Unlike China, we do not have a national policy in alternate energy and in becoming energy dependent. China has control over many rare metal mines globally and has been investing aggressively in the developing of alternate energy such as solar power, wind power and they have plan to obtain one third of their energy needs from alternate energy in the next ten years. The Chinese solar companies are now out priced most of the US companies by unfair trade practice and they will force our companies into bankruptcies. Without a national energy policy and vast investment of our Fed government, our progress in the developing of alternate energy will fall further behind China and other countries.

      Of course, there is hope that we can become energy dependent from gas fracking or oil sands. However, all these ventures require vast amount of water and the damages to environment are still unsure.

      Unless we can become truly energy dependent in the next decade, we will be forever at the mercy of the middle east oil countries. There will not be any real growth in our country because of the continued rising cost of energy.

    • Tomorrow is another day.It's a well run company.I am holding.things will blow over

    • The only problem is with the Obama's easy money policy and the Fed's continuing to print more paper money, how long do you believe we can hold our interest rate artificially LOW like Japan?
      The primary goal of easy money is to devalue our currencies to the points that we may pay off our debts cheaply....Another goal is the Fed naively believes that by pumping more phoney money (by buying bonds and mortgages), it will stimulate the economy. Unfortunately, this simply will not work and the UK government had just discontinued this practice....

      Well, the good news is Japan did hold their interest rate at zero for 20+ years but the bad news is that their economy is now in contraction and their governments had to borrow money from their banks....They are simply doing POORLY. Also, their own people financed their own debts and therefore they suffer while our debts are held by......Yea, you are correct, the Chinese!!

      Therefore, if you believe our interest rate will continue to be LOW till 2015, just like Bernake had promised, then the better and bigger BDCs should have no troubles in making it. However, sooner or later we MUST raise our interest rate, how long do you believe the FED can continue to tell us "there is no INFLATION" or our inflation is less than 2%? When interest rate starts rising, all H.... is going to break lose and we will face probably the WORSE run away inflation in this country ever since the Great Depression and it will probably happen within this decade or even sooner......When that happens, the bond market will totally collapse and the equity market will probably not fare a lot better and I am not sure there are any GREAT investments anywhere......unless may be rental properties, farms and precious metal/oil (not necessarily in this order)....

      • 3 Replies to jadelover888888888
      • Jade,

        Interest rates are essentially a derivative of economic activity of the country - that is tepid at best. In the US the relative demand for capital is less than the supply. Most businesses - mature ones - are generating excess capital and have no place to deploy it short of dividending it out or buying back shares.

        Government is acting to restrict (regulate, punish and tax) business activity. So don't look for demand from that sector.

        Overall lending by the banking sector is flat to declining for the last three months and if you assume (as I do) that the SBS (shadow banking system) remains in sharp liquidation then overall lending is in sharp decline. This actually is good for the BDC sector since they can raise capital and fund the few businesses that are still growing rapidly. (For the most part the banks are not set up for this type of lending.)

        All of this is possible not because of the Fed (where most point) but because of the huge deficits that the Federal government is running. Federal deficits are essentially funding the huge corporate profits and sustaining sufficient national income to avoid a recession.

        Until there is some reason to expect increasing growth in US GDP, there will be no reason for interest rates to rise significantly.

        Thus, PSEC remains a fine place for HY investors to park their funds.


        Sentiment: Strong Buy

      • I look at the whole BDC sector and right now based on their current prices vs their NAVs, their current yields, their performances and their future ability to sustain their dividends in the next six months, I have to admit that PSEC may be the BEST buy in the BDC sector at this time. Of course, if the BDC sector tanks, PSEC will tank, but if PSEC drops below $10 for any reasons, if would be an ALL IN time......Therefore, you must have a cash reserve when the market drops....

      • I cannot post my complete message here and will try again later.

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