HiIf it makes you feel any better, many, perhaps majority of...

Hi

If it makes you feel any better, many, perhaps majority of current holders would have bought at or near the issue price, and held on. I have certainly done that in the past.
This time I bought REU and RAT at about 1/2 NTA and thought I was being smart.
I holding, but am not in position to buy any more.

It has to be said there is a lot of uncertainty.
But lets say there is
1/3 chance that these trusts go belly up.
1/3 They go to 1/3 NTA (ie about 35c).
1/3 They go to 2/3 NTA (ie about 70c).
Then the expected result in say 1 year would be 35c vs current sp of 17c
(These probabilities are just my guesses)

On that basis, it would be worthwhile taking risk and buying more IF YOU CAN AFFORD (AND ARE COMFORTABLE WITH) THE EXPOSURE.

It does also depend on your tax position. Sometimes it is worthwhile realising a loss to reduce tax.

So to some extent what you should do depends on your own financial position.

Here is an article from The Intelligent Investor which might prompt further research.

Wednesday, February 27, 2008
Chris Browne, in his Little Book of Value Investing, suggests that catching falling knives, contrary to popular wisdom, can be a very profitable investing strategy. Despite ‘a bankruptcy and failure rate four times that of the market as a whole’ Browne points out, ‘as a group they far outperformed the market over one-, two-, and three-year holding periods.’

He’d have no shortage of knives to choose from on the Australian stock market at the moment. The list of stocks subject to dramatic share price falls includes RHG (the old RAMS), Centro Properties, MFS, Allco Finance Group and, just this week, ABC Learning. ...
It then goes on to suggest sub to The Intelligent Investor (of course)

PS some advice that I got, and ignored to my cost, I'll pass on to you.
1) Never have more than 10% of your investment exposed to any one organisation (ie max 5% RAT, 5% REU as common manager)
2) If your share price drops by 5% sell - stop loss.