I usually don’t recommend shorting a closed-end fund (CEF), but if I were to do so, the 3 I’m about to show you would top my list.
I don’t like shorting CEFs for two simple reasons: first, you’re responsible for paying out the dividends on a shorted stock. So if a CEF pays a 10% yield, you have to pay out 10% while shorting it. No thanks!
Second, the CEF market is extremely irrational. For this reason, CEFs can remain overvalued for a long time, meaning you’ll need to short for far too long before you get your payouts.
Still, there are some CEFs that are so absurdly overbought that shorting becomes really tempting.…
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