Equity CEF Performances: Updated Through Feb. 25, 2022

***Every weekend, I put out an Equity CEF Performance update and spreadsheet for my subscribers, though this weekend was much more about global events. I believe overall portfolio management means a lot more than just writing about CEFs and ETFs so that is why I wanted to share this last weekend’s update with all 11,000+ of my followers***

Below is your YTD Equity CEF Performance spreadsheet link updated through February 25th, 2022:

2022CEFPerformance.2.25.22.xlsx

I hope you have been following my subscriber releases over the past week as we are currently witnessing one of the most profound geo-political events in recent history. Here are this week’s releases in case you missed them:

Tuesday, Feb 22nd – Equity CEFs/ETFs: Waiting For The Woosh

Wednesday, Feb 23rd – Equity CEFs: Buys From Yesterday

Wednesday, Feb 23rd – Equity CEFs/ETFs: Selling Some Hedges Finally

Thursday, Feb 24th – Equity CEFs/ETFs: Some Positives When There’s Nothing But Negatives

The purpose of these articles and indeed, articles going back to earlier this year even, was to warn subscribers that 2022 was probably not going to be a buy-and-hold type year and that you were going to have to pay attention to take advantages of opportunities to buy and sell.

That was first predicated on the pivot earlier this year in the Federal Reserve’s bias from accommodative and providing liquidity to hawkish and removing liquidity while beginning to raise interest rates. More recently, the events in the Ukraine and Russia have just double-downed the need to pay close attention to breaking news as volatility spikes of +/- 2% to 3% in ETFs and +/- 3% to 5% in equity CEFs will probably become even more and more common.

Trying to ride out these ups-and-downs with the approach that the markets will always go up over time may have worked in years past, but I doubt that will work this year or at least over the near term. You will leave a lot of opportunities on the table if you take a laissez-faire approach with your portfolio and in a worst-case scenario, you could still lose significant value.

For example, as of Thursday’s lows when the Nasdaq-100 (QQQ), $345.77 current market price, hit $318, that is not far from where the QQQ’s ended 2020 at $313.74. In other words, by Thursday of this week, the NASDAQ-100 had given up virtually all of its gains in 2021.

Last week reminded me a lot of the week starting on March 16th, 2020 when COVID-19 brought the market to its bear market lows. During that week and the week prior, I put out far more buy recommendations to subscribers than I had in any other two-week period. However, this week was quite a bit different as the Federal Reserve is not in a position to save the markets and in fact, is a liability to the markets with their current hawkish stance.

This is why I’m more focused on adding and removing hedges and though yes, I’m still making long buy recommendations when I see extreme dislocations, like in the AllianzGI Artificial Intelligence & Technology Opportunities fund (AIO), $21.55 current market price, in this article this week, I believe the down bias in the markets will now be as opportunistic as the upward bias has been in the markets over the years.

This means I will probably be making more hedging recommendations than usual with the goal of having positions that can work in both up and down market environments. Again, this will not only be for taking advantage of market volatility but also to protect portfolio downside in what is increasingly becoming a very dangerous market.

Equity CEFs

With the focus more on macro/global events in the markets, I don’t really have a lot to add to the YTD Equity CEF Performance spreadsheet link above. Certainly, oil and energy continues to be the safest sector to invest in and I’ll have more on this tomorrow when I come out with the updated Equity CEF/ETF Portfolio.

Conclusion

Like the COVID-19 pandemic which started two years ago, the 2022 Russian invasion of Ukraine will have an effect on all of us to one-degree or another. For most of us, it will just mean inconveniences, like wearing masks during COVID-19, or higher cost-of-living expenses like in gas and food prices today. But for many others, starting back from the start of the pandemic, it has already cost them their lives.

It’s hard to know, and even harder to focus on right now, what the longer-term ramifications will be to the global economy and what the new world order will be as events are unfolding in real time. Frankly though, this does not bode well and could easily spiral out of control depending on how Putin’s mind works.

I’m not going to try and predict what will happen next in the Russia/Ukraine affair since I did not think Putin would actually invade Ukraine and that he was more interested in exacting security concessions from NATO and keeping energy prices high for as long as possible. That would have been a pragmatic approach but obviously, Putin was aiming for much more.

With it looking less and less likely that a cease fire will occur before this weekend is out, the “sound of cannons” may continue for a while longer and may even spread beyond the borders of Ukraine. I would not, however, take that as a continued buying opportunity since once you consider what is at stake and the impact this will have on the global growth economy, a two-day bounce in the markets may be looked back upon as nothing more than a “patriotic rally” in support of Ukraine and the US, similar to what happened for a limited time after 9/11 too.

I, for one, will welcome the day when we actually hear the “sound of trumpets” and we can all give a sigh of relief that peace and understanding between countries and governments can prevail. That may still be a far-off dream but that will be the sound I will be listening for as the real buying opportunity.