Two quick items today.
First up is a closed end fund that I don't think we've looked at before; PIMCO Corporate & Income Strategy Fund (PCN). It was mentioned in an article on Yahoo Finance that was so bad I'm not even going to link to it. PCN has done well relative to closed end funds and to AGG. Its total return has compounded at 9.15% over the last 23 years compared to 2.92% for iShares Aggregate (AGG). The yield over that time has been about 10.5% but the yield has had some variability, CEFconnect shows the yield currently at just over 12% and the leverage shows 22%.
On a price only basis it has compounded negatively at 1.44% for a cumulative negative 28%. The negative compounding isn't necessarily a deal breaker when sized correctly. At 10 or 11% it is providing a disproportionate amount of yield for anyone who wants distributions out of their portfolio.
The tradeoff is a lot of volatility which is to be expected with closed end funds. They have some brutal drawdowns.
The drawdown chart hovers over the financial crisis low when it was down 66%. I highlighted a bunch of other big declines that happened along the way. The back test I built looks pretty good and if we played around with other backtests they'd probably look good too but man. Putting 30% into PCN is a hyperbolic example that I think would invite frequent misery. While a small slice is probably more palatable, I think you really have to look long and hard in the mirror for these. Barron's writes frequently about closed end funds but they don't hit on the occasional massive declines that go with the space.
The Wall Street Journal had a doozy of an article; How To Prepare For A 60 Year Career & Save For Retirement. The tone of the comments, always read the comments, could be summed up with 60 years? GFY.
The idea of planning to work until 80 is ridiculous but is there a bigger message that might be more useful? I think there are two points. If they had replaced the word career with income steams, it would have been more useful because I think many readers took the 60 year idea literally. If someone is 80, enjoys painting and sells paintings, that seems like a great outcome compared to commuting to an office job everyday all through your 70's because you have to. A former fire board member here in Walker is a sculptor, sells pieces and until recently worked one day a week at the artists co-op in town. He's 78.
The other point for me was about optionality in case you have to work not until 80 but longer than you were planning to work. If someone is 65 and financially needs to keep at it for a little while to make their math work, it would nice to be able to do that.
Repeating from a couple of hundred other posts;
- Eat less sugar
- Eat less processed food
I think it is vital to lift weights. Plenty of people do not enjoy lifting but it is vital. It can be very quick and simple to make improvements even if not a thorough full body workout.
- Deadlift
- Squat
- Farmers Carry
- Pushups
The picture is of a landmine squat which has very little chance of injury compared to resting the barbell on the back of your neck.
There are substitutes for deadlifts like bent over rows or dumbbells that again, greatly reduce the odds of injury.
The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.
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