I love it when I can find a way to buy a dollar for 80 cents as an investor...
When I'm certain the deal is legit, I get fired up. Making money is hard. Free money like that is nice.
Discounts like this are hard to find in the stock market, though...
That's because the market is pretty darn "efficient." Whenever a too-good-to-be-true opportunity pops up, it soon evaporates as investors take advantage of it. It often happens quicker than you can imagine.
But one of these opportunities has just popped up for us...
And it just so happens to be a fund that invests in my favorite opportunity for the next five years...
This fund is a unique type, called a "closed-end fund."
Closed-end funds are interesting to me for one unique reason – they can trade at big discounts (or premiums) to their liquidation values.
Typically, closed-end funds trade at a small discount to their liquidation values. Those small discounts are not enough to get me interested.
I do get interested when those discounts get big... and when I'm interested in the fund's objective.
We have that situation today – with the Morgan Stanley China A Share Fund (CAF).
Today, this fund trades at the largest discount to liquidation value of all closed-end funds valued at $200 million or more.
More than 300 closed-end funds have market values that high. And right now, this one particular fund is trading at the largest discount of all of them.
As I write, the Morgan Stanley China A Share Fund trades at a 16%-plus discount to its liquidation value.
I'm a buyer whenever the discount is greater than 15%. And I'm a seller whenever the discount narrows dramatically, like it did over the summer (when index-provider MSCI announced it will include Chinese A-shares in its major indexes).
The easiest free way to track (and screen) for closed-end funds trading at a discount is at
www.CEFConnect.com. To track this fund, type "CAF" in the box at the top right, and you can see the discount and its history.
Chinese A-shares are my top investing idea for the next five years. China is the world's second-largest economy and second-largest stock market... Yet until recently, its locally traded A-shares were completely left out of MSCI's major indexes.
Thanks to MSCI's decision last summer and other developments in China, I believe more than $1 trillion will flow into Chinese stocks during the coming years.
CAF gives you a way to get in on this idea, at a 16% discount. Check it out...
Good investing,
Steve
THIS OIL GIANT IS SOARING
Today's chart highlights one of our favorite strategies at work...
As longtime DailyWealth readers know, commodities are incredibly cyclical. If you catch one of these big cycles at the wrong time, you can lose a fortune. But the opposite is also true. And right now, we're seeing a quiet but powerful uptrend in one of the world's largest oil companies...
We're talking about Royal Dutch Shell (RDS-A) – known more commonly as Shell. The multinational company operates in nearly all aspects of the oil and gas industry, from exploration to distribution. With a market cap of around $310 billion, Shell is one of the largest publicly traded companies in the world. And as oil prices have crept higher, so have Shell shares.
As you can see in the chart below, shares have broken out over the last six months. They're now trading at new 52-week highs and are up 30% over the past year alone. If oil prices stay in an uptrend, so should Shell shares...
