Many investors hear the word “leverage” and immediately get nervous—but the truth is, borrowed cash is actually vital to big closed-end fund (CEF) returns.
I’ll show you why—and how a huge misunderstanding about leverage will lead to big gains for CEFs this year—in a moment.
Before we get to that, though, we need to understand why this one simple word sends investors into a cold sweat in the first place.
A 90-Year Old Tale
The cloud hanging over leverage stretches back to the crash of 1929, and tales of stockbrokers who borrowed too much cash before the collapse and then leaped out their office windows.… Read more