NEW YORK (Real Money) — Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.
This past week, Kass talks about why he — who invests on fundamental — was right to pay attention to what the technical charts were telling us about leadership in the market, and his gradually shifting feelings on municipal bond funds.
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A Vote for Technicals
Originally published Sept. 22 at 3:32 p.m. EDT
I am a fundamentalist by choice and experience, but I utilize common sense technical analysis in attempting to isolate inflection points and change of direction.
In that regard, there is one thing I am certain about.
That is this: In my Diary I have frequently expressed concern and have showed the light upon the technical deterioration in breadth and leadership that began in late 2014 and continued into early 2015 … and anticipated the market schmeissing we have recently embarked upon.
I Still Like Muni-Bond Funds (But Less So)
Originally published Sept. 22 at 8:48 a.m. EDT
The core of my bullish thesis for closed-end municipal bonds since December 2013 has been my outside-of-consensus view that:
Closed-end muni-bond fund prices stem from some of the following factors:
The above factors have all been generally positive for the sector over the last two years, although the next two years are less certain.
A sharp run-up in the group in late 2014 and early 2015 (the mirror image of a December 2013 selloff where I instituted most of my buys) was likely caused by a resumption of fund inflows following a period of large outflows.
Clearly, retail psychology had a profound impact in both cases on valuations. I underestimated the salutary effect that a reversal early this year from outflows to inflows had on higher fund pricing and a narrowing relationship between prices to net asset values.
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