Closed-End Funds Offer the Best Bargains

Keep your eye on closed-end funds.

If this week's market turmoil turns into something more serious, that's where some of the best opportunities may spring up.

Even better, they might be opportunities that even a conservative investor could jump on with a reasonable margin of safety.

We're not there yet, however. This week's market plunge came as no surprise to anyone who has been following the fund-management world closely. As reported here in mid-February, there were plenty of warning signs for emerging markets and for stock markets in general. Fund managers were way too bullish.

If the shakeout wasn't a total shock, neither was the meager "rally" that followed. Big money managers were simply out of bullets. As was also reported here two weeks ago, cash balances had fallen toward record lows.

There are plenty of reasons to think the turbulence may continue. Among them is the obvious point that there are almost bound to be some "semi-pro" hedge fund managers somewhere who got into trouble. They will be forced sellers of shares, and then the managers will go back to the jobs they held before -- selling Jacuzzis, probably.

Half-hidden behind the news about the market was some bad economic news as well. The key figure from Wednesday's house-price survey was this: The number of new homes that have been completed but are still unsold has jumped 47% from this time last year.

Forty-seven percent.