Discounts and the Use of Company Assets

by David Jenyns on October 27, 2008

Perhaps oddly, general “feelings” surrounding the stock market, such as positivism and pessimism, tend to have a measurable effect on the value of stocks. A general peculiarity is that, in the past, the discount at which closed-end-company shares sold has generally been larger at low levels of the stock market.

The discount tended to shrink as stock prices rose and greater positivism prevailed. In several years past, a few closed-end investment company stocks (other than those with little or no asset value) have been selling at a premium or close to net asset value. Among these are stocks of investment companies, which have had a conspicuously favorable record.

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