Trading Closed-End Funds
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This has to be one of the best kept secrets on Wall Street. I have
been trading closed-end funds since 1989. They are, for the most
part, boringly predictable, which is just what you want if you want
to make money. You would think that all traders, especially professional
traders, would know about trading closed-end funds, but this
is not the case.
One day after trading, several colleagues got together to talk
about the market and what we had planned for the next day. (I'm
convinced that the real reason we got together at this particular
place was because of the delicious hors d'oeuvres.) One of the
traders for another firm asked me what I was trading, and I told him
closed-end funds. "What for?" he said. "They don't have any volatility.
How can you make any money doing that?" He then proceeded
to give me a 15-minute lecture on the error of my ways. After sharing
his wisdom with me, he made a strategic move toward the hors
d'oeuvres table, where I overheard him giving some other misguided
trader the benefit of his advice. I just did not have the heart
to tell him that I had made enough money trading those boring
closed-ends funds to buy hors d'oeuvres for the next 10,000 years!
Even on Wall Street, traders become victims of their own egos
and lack of knowledge. The same is true with electronic trading.
This has to be one of the best kept secrets on Wall Street. I have
been trading closed-end funds since 1989. They are, for the most
part, boringly predictable, which is just what you want if you want
to make money. You would think that all traders, especially professional
traders, would know about trading closed-end funds, but this
is not the case.
One day after trading, several colleagues got together to talk
about the market and what we had planned for the next day. (I'm
convinced that the real reason we got together at this particular
place was because of the delicious hors d'oeuvres.) One of the
traders for another firm asked me what I was trading, and I told him
closed-end funds. "What for?" he said. "They don't have any volatility.
How can you make any money doing that?" He then proceeded
to give me a 15-minute lecture on the error of my ways. After sharing
his wisdom with me, he made a strategic move toward the hors
d'oeuvres table, where I overheard him giving some other misguided
trader the benefit of his advice. I just did not have the heart
to tell him that I had made enough money trading those boring
closed-ends funds to buy hors d'oeuvres for the next 10,000 years!
Even on Wall Street, traders become victims of their own egos
and lack of knowledge. The same is true with electronic trading.