Agreed peejay2. ALF has done nothing, and nor has cash. I'm approaching retirement so am fairly risk averse, hence I hold a significant percentage of cash as insurance against a possible market downturn/crash. However, I seek out low cost liquid funds as an alternative to just having deposits in the bank to improve yield somewhat. The key to this strategy of course is that the funds should not correlate to the general market.
When I bought into ALF this time it was already equal weighted long/short and trading well below NTA, which is what re-attracted my interest. I also got into the USD ETF at the same time for the same purpose. Neither has done much, but at least I'm ahead of where cash only would have been. Of course I can only hope that a crash does lift ALF and USD, or at least not take them down.
What surprises me is not that ALF is trading below NTA, but that it was not that long ago that it was trading above NTA. That suggests that a lot of people were very happy with the manager's performance at the time. The contrarian in me saw that as a warning sign.
Now of course ALF is probably only holding above $1 because of the buyback, and they can only keep buying back their shares if they are trading below NTA. Hence my hope that this provides an additional backstop. NTA has been holding steady for a while, but if it starts to fall then I will have to reevaluate and probably take a (hopefully small) loss.
As for the likelihood of a crash, my crystal ball is very hazy, but that may just be the dark clouds gathering on the horizon...
ALF Price at posting:
$1.03 Sentiment: Hold Disclosure: Held
