Well, its that time of year again and Iâm starting to look at the CEFâs (closed end funds) again. Last year in the midst of the credit crisis, there was a complete meltdown in levered CEFâs because of the failure of the ARPS system which many levered bond CEFâs depend upon to goose their yields (and management fees). Combined with liquidity issues, and the rumors of hedge fund selling to raise cash for redemptions, these CEFâs took a historical dump and were trading at discounts of approximately 30-40% of NAV (but realistically who knew where NAV was then?). Take BSD for example. Sold off on 10/10/08. Steadily the discount has narrowed and the fund has returned to a more reasonable 4% discount over time with rising NAV and rising distributions. Still levered municipals. So, what do you know, exactly one year later we have a big selloff in BSD â down 5% at the bottom for the day (presumably for tax purposes). What a surprise. Yes, we had a big move in the 30 yr the other day but that wasnât really unexpected. I think its folks getting out of a trade they made a killing in â I was considering doing the same. Remember, these CEFâs are relatively illiquid. Volume today 5X average volume last 3 mos. Chart enclosed. As of Friday was at 6.7% non-taxable yield. You make up your own mind. Full Disclosure: Long BSD, NPI, NAD Above discussion is for informational purposes only and is not a reccomendation to buy or sell any security. I do not hold myself out as a financial professional and you are advised to consult your financial, legal, and tax advisors for specifics pertaining to your individual trading situation. DYODD. Your mileage may vary.