A Fast 8% You Can Bank Over And Over Again

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-596366985&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/596366985/960x0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Photo Credit: Getty

Today I&a;rsquo;m going to show you a quick trade you can repeat &l;i&g;over and over&l;/i&g; for an 8% gain in just over 2 months (or 40% annualized!).

How do I know?

Because this is &l;i&g;exactly&l;/i&g; what happened with the &l;b&g;PIMCO&l;/b&g; &l;b&g;Global StocksPlus &a;amp; Income Fund, &l;/b&g;which I urged Contrarian Outlook readers to &l;a href=&q;https://contrarianoutlook.com/the-amazing-10-9-dividend-left-for-dead-time-to-buy/&q; target=&q;_blank&q;&g;buy in June&l;/a&g; and then &l;a href=&q;https://contrarianoutlook.com/this-94-dividend-is-a-trap-sell/&q; target=&q;_blank&q;&g;sell in August&l;/a&g;.

So how was this win so easy to call the last time around, and how can we ride PGP and other funds to the same&a;mdash;and even bigger&a;mdash;gains in the future?

Let&a;rsquo;s start at the beginning.

&l;b&g;Inside a 40% Annualized Gain&l;/b&g;

PGP is one of PIMCO&a;rsquo;s most popular &l;a href=&q;https://contrarianoutlook.com/why-you-need-to-invest-in-closed-end-funds/&q; target=&q;_blank&q;&g;closed-end funds (CEFs)&l;/a&g;, which is saying a lot, since the company is the most popular CEF manager out there. Where most CEFs trade at a discount to their net asset value (NAV, or the value of their underlying portfolios), PIMCO&a;rsquo;s funds almost always trade at a premium.

And those premiums can get really high, like the totally absurd 100% markup PGP attracted in 2016!

This ridiculous premium was a record for PGP: while this fund has historically traded at a high premium, it never went this high. And it&a;rsquo;s never been that high since.

This, by the way, points to a mistake &a;ldquo;first-level&a;rdquo; CEF investors make all the time: they&a;rsquo;ll latch onto a fund, bid it up to the breaking point, then hold on and take a big hit when the premium collapses.

That 8.2% return we got from June to August? It&a;rsquo;s mostly disappeared since&a;mdash;if you didn&a;rsquo;t sell when I urged you to, you&a;rsquo;d be facing nearly 8% in capital losses!

But luckily we were tipped off to this loss ahead of time by the very same indicator we used to buy in the first place: the premium to NAV.

Over a long time period, individual CEFs tend to follow a predictable pattern unique to that particular fund. For PGP, it&a;rsquo;s obvious. Look at the premium-to-NAV trend in the last 5 years.

There&a;rsquo;s a clear oscillation from a very high premium to a lower one and back again.

Crucially, there&a;rsquo;s a proportional relationship between the percentage loss in the premium from peak to trough that determines how high the premium will go when it bounces higher the next time.

In the case of PGP, you just have to add in one more element you can&a;rsquo;t see on the chart above to make this crystal clear: average returns in the junk-bond market, to which the fund&a;rsquo;s portfolio is most closely linked.

For instance, in late 2015, the fund saw a relatively moderate decline in its 80%-ish premium to NAV, to around 30%, when the junk-bond market was in a free-fall because of the Federal Reserve&a;rsquo;s first interest-rate hike. Investors (incorrectly) saw this as resilience in demand for PGP in 2016, causing the premium to soar to its absurd 100%+ level.

Conversely, when that massive premium collapsed in early 2017, even when junk bonds were doing well, the new premium PGP could command by mid-2017 was its lowest peak premium in 5 years.

&l;b&g;When to Move on PGP Again&l;/b&g;

So is now the time to buy?

The answer is no, but it may be soon.

Since PGP&a;rsquo;s peak premium to NAV was so low last time, despite a low but still positive return for junk bonds, the market isn&a;rsquo;t showing enough confidence in PGP to ensure that the trough of this pricing cycle is higher than the last one. And that means we need to wait until PGP&a;rsquo;s premium to NAV widens to around 25% before considering a move into it.

If we continue to track PGP, we can find more opportunities to buy when its premium has reached its lowest point, then hold for a few months and cash out with a 40% annualized return in a matter of weeks.

Identifying this pattern, both here and in other CEFs (something I do for you in my &l;i&g;CEF Insider&l;/i&g; service), is key to locking in both fast upside and a secure 7%+ income stream from these funds over the long haul.

Finally, to show you just how important timing is with a fund like PGP, if you&a;rsquo;d bought it 5 years ago, you&a;rsquo;d have a measly 6.7% total return &l;i&g;for the whole 5-year holding period&l;/i&g;.

Imagine getting a lower return &l;i&g;over 5 years &l;/i&g;than we got in just over 2 months with the same fund!

In markets, as in life, timing is crucial.

Disclosure: none

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Most Americans Would Move for a Job

Just because the job market has been strong does not mean that your dream job, or even your next opportunity, will be local. It's possible that landing the position that will advance your career will require moving -- and that's something the majority of Americans are willing to do, according to a new survey from Robert Half.

Over half (52%) of the 2,800 U.S. office workers surveyed said they were willing to move for a job. Younger workers, as you might imagine, were the most willing to move. Over three quarters (76%) of 18-34-year-old professionals were willing to relocate for a job, while only 62% of those aged 35-54 and 40% of respondents 55 and older felt the same way. More men (67%) were willing to move than women (59%).

Most Americans would be willing to move for a job. Image source: Getty Images.

What does this mean?

Workers were all over the map when it came to their top reason they would be willing to move. Better pay and perks (44%) led the way, followed by family/personal reasons (17%), then cost of living and career advancement, which tied at 16% each. The reality is that most workers are open to moving if the job they want is not in the city where they live. But that does not mean companies should take it for granted that workers will move.

"In today's competitive hiring environment, many employers are finding it challenging to locate skilled professionals in their immediate area," said Robert Half Senior Executive Director Paul McDonald in a press release. "As a result, organizations are open to considering candidates in other cities and offering attractive relocation packages to secure that talent."

A separate Robert Half survey showed that at least some companies are stepping up their game when it comes to recruiting out of town talent. That study, which interviewed more than 2,800 senior managers at companies with at least 20 employees, showed that in the past five years 34% of companies have improved their relocation packages. Still, 30% of respondents said their companies don't offer any incentives for moving.

What can both sides do?

Workers who are open to moving should be met in the middle by companies looking to make those moves as easy as possible. That means taking a more individualized approach to filling jobs, as well as offering relocation packages. A package might be more generous, for example, for a position that a company has struggled to fill locally, while it might be less generous for workers who already express a willingness to make a location change.

If a worker applies to out-of-market jobs and expresses a desire to move to that area (maybe for family or quality-of-life reasons) then companies should be willing to consider them -- especially if that results in a superior hire. When possible, employees should also be as open as they can to moving if it means advancing their careers or landing opportunities that are not available where they are.

In many ways this is a supply and demand problem. There may not be enough qualified employees to fill every available top job. There certainly aren't enough quality workers who happen to live in the right places given the current labor shortage. That means that both employers and employees are going to have to be flexible when it comes to filling/taking jobs in some of the highest-demand fields.