Saturday, October 18, 2014

SeekingAlpha Instablog Discussion of 50 Share ARCC Purchase

One of the trades discussed in that deleted post was a 50 share purchase of ARCC at $15.41. I elected to rewrite that discussion and publish it at SeekingAlpha. Bought 50 ARCC At $15.41-A Typical Small Lot Purchase Of An Externally Managed BDC Stock - southgent1951 | Seeking Alpha

The primary purpose is to highlight the balancing of potential risks and rewards inherent in externally managed BDCs. To accomplish that task, information needs to be acquired and evaluated on the potential risks. Most individual investors probably have never read the voluminous risk disclosures contained in a BDC's annual report. 

Instead of assessing the risks, a number of individual investors focus too much on the current dividend yield without assessing or even acknowledging the risks which includes net asset value destruction over time and dividend slashes during recessions. 

It is difficult to harvest gains on the shares. Easier said than done is my motto in this sector. My trading strategy designed for BDCs is based on a recognition of their many disadvantages and risks and the likely capital losses for long term owners.  


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