Friday, December 11, 2009

TEI -- odd candle pattern

a number of long shadows in a row have been recorded on TEI, the Templeton Emerging Markets Income Fund.



I am not exactly sure what that pattern portends, actually. I just thought it unusual, maybe there is a trade waiting for someone willing to examine the situation more closely.

the present uncertainty aside, this closed end fund has been a real winner for investors over the years. here is the price history adjusted for distributions since 1995:



the diagonal lines represent different annual compounded rates of return for TEI since August 1995. from the beginning to the most recent highs the fund has returned around 19% yearly. that's impressive, though I'm not sure how sustainable that will be in the years to come.

by comparison, the total returns on SPY, the S&P 500 index ETF, have been about 6% a year over the same period and Newmont Mining (NEM) right around 2%. Gold Bullion has appreciated at around 8% a year on average over the period in question.

now obviously all these examples depend heavily on the period in question, but that just reinforces how important it is to buy things at the proper points of the cycle. market timing (in the broad sense), whether based on 'technical' or 'fundamental' or other considerations, seems essential to achieving long-term returns above the mean, or benchmark.