I have a friend who's really bad with "timing."
Tell him that the party starts at 7 p.m., and he arrives at 8:16, still getting dressed in the car - tucking his shirt in as he enters the door.
Just recently, he called me and asked what I thought of the 10-year Treasury bond.
"Is 2.1% on your money a decent return for the next 10 years?" I asked him by way of an answer. "Treasuries are dynamite - if your goal is to lose money to inflation while loaning money to an irresponsible, spendthrift government."
As I write this, the U.S. 10-year bond has fallen from 2.13% to just 2.08%. We had a brief, unconvincing rally on Tuesday, but that wasn't enough to stop investors making a beeline out of global equities markets and into the safe haven of America's bond markets.
To use an overused phrase, these (understandably) safety-seeking investors are "rearranging deck chairs on the Titanic," or "fixing the barn door after the horses have bolted."
Put another way, those investors will find, to their chagrin, that the "conventional" safe-haven investments are either underwhelming or - let's face it - underwater.
Still, we need to be safe. Stocks can rally some more, but mark my words: We won't have to wait long before another Trump tweet - or geopolitical punch-up, or trade war, or scandal - sends stocks hurtling to the floor again.
So we'd better make a beeline ourselves, to these shares I'm about to show you. They're safe - ironclad, even - they throw off yield like it's going out of style.
And best of all, it's on sale at a double-digit discount...
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Yeah, about those "conventional" safe havens I mentioned...
Going to cash is going to yield you precisely zero return in whatever checking account you park it in.
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A savings account is little better; it's criminal what banks have gotten away with regarding savings account yields since the Great Recession.
These banks have made untold trillions borrowing at low rates from the Fed, the better to fatten their margins when they jack up interest rates on credit cards and other forms of credit. But if you open a savings account with these banks, you get a pittance.
You can't really call it "safety" when going to cash means you can't even keep up with inflation.
Treasury bonds aren't any safer - especially when you consider the fact that the U.S. government is debasing its own currency and rates are - you guessed it - barely holding up with inflation.
Fortunately, we've got a choice. It's anything but conventional, but it's one of the safest holdings you can own...
It's called the GDL Fund (NYSE: GDL), and it's operated by Gabelli Funds, a subsidiary of Gamco Investors Inc. (NYSE: GBL), one of the top management firms in the industry.
GDL is what's called a closed-end fund (CEF). CEFs are like mutual funds, but they trade on an exchange. You can't redeem shares from the fund itself; rather, you buy and sell them on the exchange, just like a stock.
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Since these funds are exposed to investors' and traders' psychological ups and downs, they can sell at a premium or a discount to the net asset value (NAV) of the fund itself.
GDL is a basket of U.S. bonds and corporate assets. It's 29% invested in U.S. obligations, with healthy exposure to the healthcare, software, and financial services industries. So the GDL Fund is effectively a "bond substitute" - one with higher annual payments and the benefit of potential upside due to its sharp discount to its net asset value.
It's currently yielding 4.36% - more than double the 10-year bond yield.
Not only does the fund pay stronger dividends - payouts that you can reinvest to juice your returns - but it trades at a discount. This means that the share price can appreciate and close the discount window as more investors flock to the safety it provides.
GDL's current discount to NAV sits at 18.35%. If the company ever decided to close that fund, you'd automatically receive a more than 18% gain just for being there.
The fund's stated goal is to provide stability and security in any market conditions, and it does precisely that. You won't find a more secure, cheaper, or more effective safe harbor anywhere in the market.
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