First of all, NCV/NCZ are not alone in this debacle. Looking at their NAV's, they have declined about 40% over the past 12 months. Major junk ETF's like HYG and JNK are down 20% over the same period. What's the conclusion? They were in riskier bonds, by design, or the managers are really bad. I suspect some of both. I had always thought the convertible portion of the portfolio would provide some protection, but hasn't turned out that way. So should we buy? During good times, we all look back at those times when we could have locked in a 15% yield and say "if only I would have bought". They are earning the distribution, so the monthly payment would seem to be secure, for now. The question then becomes the future value of the portfolio. If it continues to crater, then it's a bad buy at these prices. And why would it go down? Is it real defaults, in which the money is gone, or is it a market mark to reflect current expanding junk spreads? Those spreads peak at some time, and then the portfolio value slowly accretes to par. (Rising NAV's, assuming they don't sell). So there is the dilemma. If any industry veterans have an idea when this cycle will end, please weigh in. The safest direction, I believe, is to avoid trying to pick the bottom, and wait until an uptrend starts. Second choice would be to buy 10% of desired position now and wait 2 weeks to start the adding process. Disclosure, I own neither fund, but am thinking about re-entering. Thoughts appreciated.
You need Brent oil for most refineries, they have to import. WTI market is in contango, meaning it is sure profit to buy at spot , store and sell in the future, so production still finds a buyer. (protected with a futures contract). The seeds are sown for higher oil in the future, due to capex cuts and tens of thousands of layoffs. How high it goes depends on the political situation in the world.
The NAV's go down every single quarter, so these "discounts" don't mean much. When junk spreads stop widening, then maybe NAV's can at least stabilize. The BDC's will then bottom when all the actual credit problems are known.
The "risk" in COP is that someone (XOM?) will buy it and it will soar. Much, much cheaper to buy reserves today.
Truly amazing when you see movements like that. I think most people think in terms of a 10 or 20% corrections, but in reality, individual stocks can move much more violently.We are in a viscous bear market. The Verizons, P&G's etc. are holding the averages up.
I'm in XOM at $82, but there is enough premium on the monthly $85 calls to make it worth sticking around. That plus the dividend gets close to 10%.
Also, if you believe in OXLC, you may want to look at OXLCO. It is a cummulative preferred, callable on 6/30/16 at $25. Selling at $22.13 right now, yields 8.29%. They previously announced they are buying it back in the market.
Oil markets are in contango, which means you buy at spot, store and lock in you price with a futures contract. Right now, the July futures are priced 20% higher than the spot. Assuming you storage cost is less than 20%, it is a risk free bet. Ever wonder who is buying all that oil that really doesn't need to be pumped? The producers can not pump and store, they need the cash flow. Take away the contango and production drops and prices stabilize.
I often wondered if Putin, with his economic back to the wall, might threaten to take out some Saudi oil infrastructure as a way of "balancing" supply. At the end of the day, this is economic war. I also doubt that the Saudi's believe that the U.S. would help.
Rally off $28 is short covering based on Russian/OPEC cut rumors. Charts look like we can get to $38 or so. The question then is what will the re-test look like. I would like to see a higher low, safely above $30. While no one expects prices anywhere near the old highs, the oil imbalance is amazingly fragile. (think Venezuela, Nigeria, Angola, Iraq, Iran etc.). The oversupply could be "shocked" away quickly.
Slick posts very specific technical data regarding positions. Go to a daily chart of SCO and you can see the sell signal he mentioned at $232. He has shown that he has the knowledge needed for such trades. Why would he waste that knowledge just so he can post on meaningless Yahoo boards? We all have our methods and indicators to guide our investing. All are different so this post means no disrespect to you. i just feel that Slick is in another league compared to most Yahoo posters.
All that matters right now is perceived credit risk. Anything besides Treasuries and some A rated corporates are deemed risky. I believe that oil must bottom before we see any relief.
Unfortunately, production capacity, primarily in commodities, ramped up for that explosive Chinese growth (whatever the real number is). We need bankruptcies, lots of them, to get supply and demand back in balance. Then the strong can pick through the assets and put them away for better times.