Looking Out For Investment Trouble Spots

by David Jenyns on August 11, 2008

A fundamental problem of investment policy is illustrated by a question that owners of investment company stocks often ask: “From your comment about economic conditions and the outlook, you obviously believe stock prices are high. Why don’t you sell stocks with the idea of repurchasing at lower prices? The businessman also should be aware of a problem confronting open-end investment company managements.

This problem affects both current stockholders and new purchasers of open-end company shares. There has been a fairly well defined tendency for sales of open-end-company shares to be higher in strong, active markets than in periods of dull, declining markets. A number of closed-end investment company shares sell at a discount from net asset value.

Businessmen often accept management’s decision to issue new stocks, and this can be to the benefit of both the company and the shareholder.

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