smurphny

Ten Top Value Traps with Unreasonably High Dividends

Selling got overdone on many of the oil/gas trusts. At current prices, even with expectation that distribution will fluctuate, these represent good values. Crude is also nearer bottom than top. Crude at 10=depression and even cash will not be safe unless it's in gold under your bed. Barring this nightmare scenario , it's probably time to start adding these before they DO get to a point of higher risk. The "trap" may be in waiting until too late because when the general market turns up, which will precede the recovery, the value of these will soar.

Don't Be Scammed by Madoff Investor Sob Stories

I am not surprised that many of the hedge fund investors did not see a scam. These thieves did not even need to be clever in hiding their activities because the SEC was out to lunch, asleep at the switch, in the pocket of special interests. Nonetheless, I find it difficult to feel sorry for the elbow rubbing rich. Hedge funds need strict, enforced regulation. There should be no sector of the economy which can negatively affect everyone's financial well-being that is not completely transparent. Default swaps, bundled securities, reporting agency verification guidelines, executive compensation, etc. all should be strictly and completely transparent.

Wall Street Breakfast: Must-Know News

So the "BIG THREE" need to shut down??? So what? Sounds like good business policy, maybe the best idea they've had in decades. We need to ignore the scare tactics that are stampeding Americans like sheep into giving these failed businesses our hard earned tax dollars. Let them find other ways like this to survive or let them go under. Maybe they can sell their assets to someone responsible who will be able to produce a decent American vehicle.

Great Depression Not Imminent, But Inevitable

The idea that failure of institutions who took unclear and extraordinary risks will cause a depression is questionable. The "bubble" has obviously been the level of risk, the assessments of which became pure fiction. Sound financial basics were ignored and no one from government (SEC) was even trying to watch. We are all waiting to hear just WHO was involved in the neglect of duty in this organization which is funded by tax dollars to do, well...nothing. If government should be involved at all right now, it should be to regulate the orderly dissolution of both sides of this CDS folly. Debt needs to be permanently lowered across the board, in all sectors of the financial world, from credit cards, corporate paper, to interbank loans. Debt needs to be strictly regulated by very clear rules and issued only with minimal risk, collateralized with sound assets. We need to go back to this old, sound mentality of debt and remove highly speculative bets from the debt world. Our government should be arranging the transitions/bankruptci... of the AIGs, FNMs, and future insolvent financial companies, complete with the firing of ALL persons involved in the policy-making decisions, not their refunding with my tax dollars. Entities like Moody's, Fitch, and S&P should be closed down immediately for malfeasance (since no credit is being issued at present anyway), cleaned of all people who willingly went along with or actively promoted fraud, and executive offices filled with some of the people who quit these companies because they saw the fraud going on. WHY ARE THE EXECS. OF THESE COMPANIES STILL WALKING THE STREETS??? Confidence is the issue right now and no confidence will be restored until the rot is thoroughly removed from the wood, perp walks highlighted during prime time, and a clear new direction adopted. This is NOT happening at present and if it does not happen, as more shoes start to drop, the BEST outcome may be a depression.

6 Natural Investments in Natural Gas

Yes, if anything, NG is closer to its long term average than oil if you eliminate the irrational '07 spike. I can see oil going down to or lower than $35 because of the apparent accumulation of supplies on tankers that has been hinted at. We may well discover that, as after the '70s spike, the world is awash in oil.


On Dec 13 10:31 AM long_on_oil wrote:

> The ratio of oil to natural gas energy wise is 6:1 so eventually
> both will settle on prices that reflect the ratio. So $7 nat gas
> equates to $42 oil etc. If you are investing in natural gas that
> is a very important ratio to remember.
> Natural gas is now $5.88 that translates to $35 oil or if natural
> gas comes back to the current price of oil it would be at $7.60.
> The two have been drifting towards the ratio for the past 3 months.

6 Natural Investments in Natural Gas

I would add WTU and DOM, smaller gas trusts, as high payout ideas. DOM has been relatively stable and WTU still has a three years left with a long record of stable payouts and then the possibility of a substantial final payout once the remaining assets are auctioned off. Both are low volume but seem to have some staunch holders and a low turnover rate.

Does Anyone Care About Alternative Energy Anymore?

As occurred after the 1970s oil bubble, alternative energy and technology is dead as long as oil is cheap.

Ratio of Oil to Natural Gas Falls

This is not surprising. Oil and NG are mostly different commodities. It MAY suggest that oil IS oversold but I wouldn't bet on it. The longer term charts seem to suggest that, eliminating the irrational spike in '07, oil is still above it's long term average while gas is about where it should be and maybe a little below it's return to reality.

Expect OPEC to Cut Production

OPEC will "announce" cuts that never happen. and that no one who matters takes seriously...as usual. The price of crude will fluctuate a little and then continue on down because anyone who trades this commodity KNOWS OPEC is too diverse, political, and dysfunctional. Sell oil plays on this rumor (probably tomorrow) because oil is still rapidly heading south to the $20s before finally stabilizing at about $45 IMO.

Where Is Penn West Energy Trust Going?

Caveat Emptor for damned sure. The very existence of the Canadian oil trusts is questionable at $20 crude which is a VERY real possibility. There may be no money to distribute and no way for the more heavily financed trusts to pay their note holders when crude becomes priced less than the cost to extract it. U.S. oil and gas trusts, with no debt are better energy bets right now because they will at least avoid bankruptcy while supplying a necessary commodity at reduced levels. Some of the CANROYS will probably be ok because they have small amounts of debt but others like HTE may be in trouble should the likely scenario of a depression continue to unfold. Averaging down to a final price of 0 IS NOT a good idea. "Cheap" at $5 does not look like cheap when it falls to $2.50 and the distribution is little help. Trade these things right now without regard for distributions because getting fixated on them can cost you much more than you will ever make back in distributions.

How Long Will The Price of Oil Remain This Low?

As "engineer" above has noticed, the % fall in crude prices is way out of line with decreases in consumption. The run-up in price was manipulated to unrealistic levels by people who have nothing to do with crude oil and could not possibly take delivery or use it. Regulation is needed to remove the gamblers out of this essential commodity. This is not coffee or pork bellies, it's a national necessity that should have a different set of rules to trade it. In any case, now that all useful parameters and fundamental valuations have been trashed, oil will probably swing down to equally ridiculous levels. On my inflation adjusted long-term chart, if you take out the 2 major spikes and just draw an average line, it looks like oil should probably be trading around $35/brl. If you figure in general inflation using the 10X rule, it looks like oil should be around $40. I think companies like Exxon keep oil on their books at $45 or so. These numbers are probably somewhere around what a "fair" price should be and probably where it will finally settle. Let's hope there is some sort of sensible regulation put in place to take Vegas out of oil markets so this does not happen again. There ARE places for government, this is one of them.

Citigroup Forecasts High Distribution Cuts By Canadian Royalty Trusts

The real issue with the CANROYs and Amer. oil trusts is the price of oil and the potential decreases in share price. Dividends are a side story. The bear market in crude is not close to being over yet. Irrationality may bring oil down to $20/brl, as far on the downside as it went on the upside. That will be the time to get back into these trusts. If oil plummets further, Canroys may all trade in the single digits for some time. Remember, with the concept of "cheap" : from $5 to $2.50 is a 50% loss. Hold for now because there will be a tremendous opportunity later. I think there WILL be clear signs that the bottom in crude has been reached. Look for news hints that supply is dwindling, refining capacity has been hurt by abandoning new projects (HTE), or reserves are leveling off. If OPEC suddenly comes up with a way for members to comply with reasonable quotas would be another signal. As with any investment, confidence is needed. Right now there is none and no clarity. The oil-driven economy of the world is not going away any time soon but for now, the bear is alive and well.

Canadian Royalty Trusts Will Never Return to Their Former Glory

One thing that needs to be mentioned is the future of the dollar/loonie ratio. When the billions of fresh new US dollars start to chase a dwindling supply of oil (and other commodities), the value of oil in US dollars will likely skyrocket. The impending inflation debacle should make owning oil in the ground a safe place even with reduced distributions. These companies are just that : companies with loyal employees and management who want to maintain their businesses, unlike their US counterparts which are entirely different paper entities with no real corporate identity or spirit. I am looking forward to them converting to corp. status. ** The coming US search for tax dollars from "the wealthy," (right!) by a populist, liberal Congress DOES worry me.**

Six Reasons for Cloudy Skies on the Solar Energy Industry

This situation reminds me of the big alt. energy mania in the 70s. Lines at gas pumps, oil "shortages," etc. had people, including me, getting into solar heat, passive solar houses, the same thing we have now. Then the price of oil came down (because there never has really been a shortage) and solar DIED. History repeats. Don't get sucked into any bets on energy, "green" technology because the oil sector will not let that happen. Exxon has carried oil on their books (I believe it's about $45 now) at realistic prices through all these fads and manipulated markets. They are very wise.

Oil Breaks Below $60

There is just no telling how low oil can go right now because the markets are working on emotion and not the partial logic they sometimes display. Crude is just a mirror of the Dow which is in a panic driven tailspin, predicting deep financial declines. It may be overblown but who can know? There will probably be some "capitulation" event but it has not yet happened. The deluge of daily bad news will keep driving everything down. There is no good news. Keep a good percentage of cash, be in dividend stocks (oil and gas trusts) that will at least add cash as you wait for share prices to recover. When a bottom is finally reached, usually no one wants to own stocks anymore and only insiders are able to profit from quick rallies. By the time the investing public realizes the trend has actually reversed and is brave enough to put money back to work, it is usually too late. This will happen before any real good news. For this reason I think averaging down and adding to dividend yielding shares is a good (but risky) idea.