Boxcars is the (American) slang for throwing double sixes in a game of craps or backgammon. For those of us outside the United States a boxcar is a railway freight wagon and apparently the six pattern looks like one – no, I don’t think so either.
While we are on American slang, a reader in Connecticut was in touch and wrote “dawn over Marblehead”. She thoughtfully provided an explanation, namely that Marblehead is a coastal town north of Boston and being so easterly is one of the first places to see the sun rise. The expression means that something has suddenly become clear, like saying “it dawned on me”. Anyway, I digress.
Double sixes are usually a good throw in backgammon and they are a great rule to follow investing money if you need to squeeze a bigger income from your capital. Find an investment trust that trades on a 6% discount to net asset value and yields 6% income annually. I told you about one earlier this year, Murray International, but now it trades at a premium to net asset value so we must look elsewhere. How about the Merchants Trust? It was founded in 1889 and has assets of £610 million – old enough and big enough to make me feel comfy. It yields 5.97% and trades at a discount of 6.7% to NAV. I have been a shareholder since 2010.
It invests in UK companies and delivers capital growth as well as a high income, although there hasn’t been any capital growth for the last few years, in line with the FTSE. It is a safe bet if you are a long-term investor. As it is fully invested in shares, in the short-term if the UK market falls, you will see the share price fall so be aware of that risk. Right now I cannot see another investment trust that meets my double six criteria, unless it has an unacceptable level of risk. The sort of words that scare me are High Income, Latin America, Special Situations, even Emerging Markets although in the long run that is the direction in which we must look.
Meanwhile it’s Monday morning.