Successfully trading closed-end funds does not require a doctorate in higher math, but, as the old joke goes, it doesn't hurt. After retiring as chief of mathematical research for the National Security Agency in 1995, Richard Shaker started Shaker Financial Services in order to focus his quant skills on trading closed-end funds. And while Masters of the Universe like New York Mayor Mike Bloomberg and New Jersey Sen. John Corzine have traditionally used their banking bundles to launch second careers in politics, Shaker says his reverse course from Washington to Wall Street has proven both intellectually and financially rewarding. Based in Annapolis, Md., Shaker Financial Services manages more than $45 million in assets for high net-worth investors, up from $3 million in 1995 and $24 million in 2002. TheStreet.com asked Shaker for a quick seminar on the often misunderstood topic of closed-end funds. What are the advantages/disadvantages of closed-end funds vs. open-end mutual funds? The advantage in buying an open-end fund is knowing that no matter what day you choose to sell, your payout will equal net asset value. An advantage for long-term investors in buying closed-end funds is the ability to buy at a discount. Dividends, capital gain distributions and tenders are paid at 100% on the dollar, whereas the purchase cost was at less than 100% on the dollar. For a trader, the advantage is to be able to buy the fund when, temporarily, the discount is greater than it typically is, or when the premium is less. This is because there is an empirical proposition that a fund's discount will revert to its average. There are some studies that challenge this principle, but I believe it to be true from experience and, indeed, it is the basis for most of my success as a money manager.