While I am not in a position to give financial advice, I would say one does not buy these funds to spend the distributions as dividends. You buy them to participate in the discounted share dividend reinvestment program. In contrast to most cefs, CLM and CRF only work out to the investor's favor by taking advantage of the discrepancy between the premium and the nav. The longer you reinvest the distributions at the net asset value, the lower your breakeven gets. However, because of one painful all in "risk on" trade I did in September, my portfolio dropped 30% by Oct 20.
Due to lack of significant movement,I reduced my position significantly in CLM and CRF and reallocated 95% of my remaining capital to obliterated leveraged sovereign and corporate emerging market closed end bond funds like EDF,EDI,TEI,FCO,CHW,MSD, mreits, floating rate bdcs, generating 15% up to 59% returns(excluding distributions/dividends) on various positions, plus focusing on floating rate CLO debt and equity, (ECC,OXLC,XFLT,)developed world bond funds, leveraged MLP etns, leveraged etns by Etracs-UBS-that track the Solactive index like SMHB, HDLB, commodity related etns that track the performance of writing covered calls on the USO index like USOI, covered calls on silver and gold futures like SLVO and GLDI by Credit Suisse. 400 pages of trading history later, I was able to recuperate 20% of a 30% loss by January 20, excluding withdrawals. From down 30% Oct 20 to down 10% Jan 20. What would typically take 5 years or more to recover,I was able to do within 3 months. The emerging and developed market bond.funds,mreits, CLO
-related assets have topped out in my opinion, after giving back 2% of reculerated losses thus far in mid February There are, in my opinion, buying opportunities in gold and silver, so Ive cost averaged down on those positions and reallocated 13% of portfolio to CLM as a potential very short term trade,depending on whether or not an N-2 is filed with the SEC within the next 2 weeks.
While I have given back 2% of recuperated losses this February, now down 12% as of today, this excludes withdrawals. When factoring in total return, cash withdrawals from dividends/distributions, I am actually only down 9.4%. Who cares if CLM is gimmicky if you know how to game these funds? It makes a huge difference when you kow what you are investing in.
It took a 25% capital gain on the Oct 20 balance to recuperate 20% of losses within 3 months.
I am not some dumb naive investor that confuses CLM payout with income. I sit on my butt trading the stock market for a living. The fact that it took under 4 months to recuperate most of my losses should give you a good idea that you're not dealing with some naive idiot,falling for a gimmick. I managed to recuperate roughly 2/3rds of losses before a bull market is even remotely likely in the near future. I know what CLM and CRF are and how to trade them. They offer a managed payout policy that should not be confused with portfolio performance, yield or income. The Cornerstone funds are pure premium plays and of Brad Matthews, one of the principals of Cornerstone Advisors considers 8.15/share a buying opportunity,so do I. Let's not forget Sit & Associates just purchased 18 million shares in December. I don't need to buy an index fund. I have no problem doing my research and most importantly monitoring trading ranges. I also maintain a portfolio yield of 14-20%. When it drops under 14%,I rebalance.
My ultimate goal is to recuperate the remaining losses in my portfolio within the next 3 months,including any cash withdrawals. This way returns are magnified when the bull market emerges again
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