Why David Isn't Podcasting This Week and Our New Closed-End Fund Course
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Hi, this is David Stein in Money for the Rest of Us, and there's no regular episode of the podcast this week because I'm out fly fishing. I promised myself when I left the investment business and called myself retired about a decade ago, I would learn to fly fish. Not because I have a great love for fishing, more out of curiosity.

For years, as I traveled around the country, clients would razz me about living a short drive from several world-renowned fly-fishing rivers, and I had never fly-fished.

The closest I had come is my son and I took a casting class. Ten years ago this month, I fly fished for the first time. A couple of friends and I camped at Yellowstone National Park and fished the Firehole River. I caught two fish, which took my lifetime total catch to five fish. But my pride in that catch dissipated after reading the following sentence from Renee Harrop's book, Learning on the Water.

He wrote, In less than 20 words, my achievement had been downsized in my mind to an incidental catch of an immature fish. Beginner's luck.

A few weeks later, I fished the Henry Fork River at Harriman State Park in Idaho. A skilled fly fisherman I spoke with on that Yellowstone trip who had retired in Cody, Wyoming, he was from Connecticut. He retired to Wyoming so he could fish. And he said he had not yet tried the Henry's Fork because he was too intimidated.

The trout in Henry's Fork are big, 19 inches and longer, and they are incredibly smart. And they have a very wide river that they can swim, they can dodge, they can jump into the weeds if they get caught. On that first trip to Henry's Fork in Harriman, it lasted about 12 hours. I saw two fish make riffles in the water, break the surface so you can see that they were feeding on the surface. I presented my fly to one of those riffles six times. I couldn't

I caught nothing. In fact, it would take me three years to catch a Henry's Fork trout. All that standing around by the river looking for a fish feeding on the surface gave me time to reflect on how fly fishing can help us become better investors. My first realization, I realized how wrong I had been the first time I used fly fishing as an investment analogy.

Several years earlier, I spoke at a PACT investment conference and mentioned that purchasing hundreds of undervalued securities through an exchange-traded fund was like blanketing the river with thousands of fishing lines. Eventually, you would catch a fish, and it didn't matter which line it was. After I spoke, a guy came up and pointed out to me that if I threw a thousand fishing lines into the river, I would scare away all the trout and wouldn't catch anything.

That's the problem when you use an analogy based on an experience you've never had. Having fished the Henry's Fork and other rivers, I realized that man was correct.

A more appropriate investment lesson to take from fly fishing is to patiently wait for the right opportunity. At one point on that first trip on the Henry's Fork, I counted 12 people in the river. No one was casting. They were all just watching and waiting for a little riffle. Over the past decade, I have fished the Henry's Fork dozens of times, usually with my friend and mentor who is in his 80th year. He has patiently shared with me his decades of fly fishing wisdom.

as well as his insights and experience on numerous other topics. I catch only a few trout each year on that stretch of river. It's that difficult. But I also don't bother casting to incidental, immature fish. Only to big fish, as my friend describes him. As in, when he sees a disturbance on the water's surface, he can tell and he says, that's a big fish.

Harriman State Park opens to fly fishing each year on June 15th. That opener is why I typically have not released a Money for the Rest of Us episode. That's where I am today as this audio is released.

I learned to fly fish from an incredibly experienced mentor. And I've also learned much about investing from mentors, many of which are virtual mentors. I have watched and observed how they invested over the years from both their successes and their mistakes. I try to do the same in teaching others.

It's why I share my portfolio holdings and trades on Money for the Rest of Us Plus. Today, I want to introduce you to a new course we are offering on Money for the Rest of Us. The course is on my favorite investment vehicle, closed-end funds, an area of the market that I have successfully invested for over 15 years. I want to start by sharing the audio of the first lesson of the course. Afterwards, I'll share more detail.

Hi, I'm David Stein of Money for the Rest of Us, and today I want to share with you about our most recent course, How to Invest in Closed-End Funds. Closed-end funds are a type of investment vehicle. An investment vehicle is a container that holds underlying securities. An investment vehicle you might be familiar with are exchange-traded funds or open-end mutual funds that you find in your defined contribution account.

But today I want to talk about closed-end funds. This is an investment vehicle many people have not heard of, yet it is one of the best investment vehicles we can use as individual investors. And here's why. When I was in high school, I played tennis and I was a mediocre tennis player. I lost way more than I won, and yet I was our high school's best tennis player. Now, as a mediocre tennis player, I would never consider picking up a racket,

and going and competing against a professional. I would get absolutely killed. Yet that's what people do in the investment arena. In my book, Money for the Rest of Us, 10 Questions to Master Successful Investing, that was published a couple of years ago by McGraw-Hill, I listed out 10 questions to ask before we should invest in anything. And one of those questions was, who is on the other side of the trade? Investment markets are markets where there are buyers and sellers. They're auction markets.

So if we're buying something, an asset, someone is selling it to us. And with most investment securities, the individual or the entity selling us that particular asset is an institution. It could be a hedge fund. It could be a bot. It could be

a broker, but it's someone that more than likely has some type of informational edge that knows more than us about that particular security. That's not the case with closed-end funds. Most holders of closed-end funds are individual investors that get fearful and maybe don't really understand what they own.

And as a result, we can purchase these closed-end funds at a discount. There's a mechanism within closed-end funds that you can buy an asset for $80 and you can see that it's actually worth $100. You can't do that with exchange-traded funds, nor can you do it with open-end mutual funds. But the

But the way that closed-end funds are structured, and we go into much more detail on that in the course, you can purchase them at a discount. And you're not competing against institutional investors.

Another benefit of closed-end funds is high income. You can get dividend yields of 6%, 7%, 8%, 9% or higher. Closed-end funds are excellent investment vehicles for trading. If you want to be a trader, why not trade in an inefficient asset class where you're competing against other individual investors as opposed to trading currency, options, or other strategies where you're competing against hedge funds and will probably lose.

You can hold closed-end funds as part of a trading strategy, but they can also be used as a long-term buy-and-hold strategy, even for retirement income. And we'll look at the different strategies in this course.

Now, here's my experience in closed-end funds. I purchased my first closed-end fund in 1994. I was out of MBA school. I had my MBA in finance. I was working in corporate finance. I hadn't moved into the investment field yet. And we were experiencing the Mexican peso crisis. And the Mexican stock market was getting killed. And I used to live in Mexico. I thought I knew Mexico. So I thought, I'm going to buy an investment in Mexico.

So I bought a Mexican closed-end fund. I called up my broker for my self-directed 401k and I bought MXF. It was a closed-end fund. I didn't even know it was a closed-end fund. I didn't know how closed-end funds work. And so I can tell you, I didn't buy it at a discount. I paid a premium for it. I probably paid $1.10 for a dollar worth of assets. And that investment didn't go very well.

After that experience, I moved into the investment field and eventually became a senior partner at an investment management organization. I was our chief investment strategist, our chief portfolio manager, and I spent many, many hours, days, weeks, months, and years managing assets for institutions. Now, we didn't buy closed-end funds, but I was very aware of closed-end funds and began buying them in earnest during the great financial crisis.

We didn't buy closed-end funds as asset managers because we were institutional managers and we couldn't get enough exposure to those assets because it's a small market. It's a market for individual investors. But now I've been trading and investing in closed-end funds for over 15 years. And it is by far my favorite investment vehicles. When markets are selling off, I'm analyzing closed-end funds and see if I can pick up a bargain.

And I want to share with you how to do that.

Here's what the course covers. We'll start with this introduction, which is this lesson, and then we'll provide an overview of closed-end funds. We'll talk about investment vehicles. We'll look at what net asset values are, which is how we know what a particular closed-end fund is worth and can compare that to the price. And that's why we'll spend some time looking at closed-end fund pricing. We'll look at how closed-end funds distributions work and how do you know whether a particular closed-end fund can sustain its

It's high dividend. We'll look at closed-end fund expenses and find out why the expenses are so high and how you can sort of work around those high expenses. We'll look at the leverage that closed-end funds use, how they borrow money in order to magnify their returns and some of the risk of that leverage and how to mitigate it.

We'll look at the different ways to go about investing in closed-end funds, the strategies, including strategies that you can invest in an ETF or a closed-end fund that invests in other closed-end funds.

We'll take a deep dive into how to analyze closed-end funds. I'll share with you the tools that I use. We'll screen for some closed-end funds. We'll take a look at the underlying financial statements of those closed-end funds to make sure we understand what it is and why we think it would be a good investment. And then I'll show you how to buy and sell those closed-end funds to use limit pricing and when should we sell a closed-end fund after we buy it.

And finally, we'll look at closed-end funds and how they fit in your portfolio. This is everything I know about closed-end funds. In over 90 minutes, I share what I've learned over 15 years of investing in closed-end funds. And the reason I want to do that is so that you can have the ability and the confidence to screen, analyze, buy, sell, and earn significant profits investing in closed-end funds.

I want closed-end funds to be your favorite investment vehicle also. So please join me then in this journey as we explore the incredible world of closed-end fund investing.

That's the course introduction. Hopefully it's given you insight about what the course is about. There are two ways you can access this closed-end fund course. First, if you are a member of Money for the Rest of Us Plus, you can access the course for free and you will have continued access to that course and the other asset allocation and portfolio tools and lessons on Money for the Rest of Us Plus as long as you continue your Plus membership.

Alternatively, if you want lifetime access to this closed-end fund investing course, you can purchase that at moneyfortherestofus.com slash CEF. That's CEF, the initials, it's short for closed-end funds, moneyfortherestofus.com slash CEF. The regular price for lifetime access to this course is $100. How

However, between now and the end of June, you can purchase lifetime access to the Closed-End Fund Investing course. This is a nine-lesson course. There are transcripts and a summary Closed-End Fund cheat sheet. $75, 25% off the regular price between now and the end of June. So please join us on this Closed-End Fund Investing journey by going to moneyfortherestofus.com slash CEF. All

Remember, between now and the end of June 2022, you can purchase lifetime access to the course for $75, 25% off the regular price. Or again, you can just become a Plus member and you'll get the course for free. Thanks.