SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Cogito Ergo Sum who wrote (1784)11/7/2001 4:47:29 PM
From: stan_hughes  Read Replies (1) of 11633
 
Kastel - Without debating your figures per se, what you haven't taken into account is that the market probably won't just leave the unit prices alone if the payouts drop to the equivalent of a 7-10% yield on today's levels - the unit trading prices might be cut in half by the market such that the yield is still in the 20% zone.

IMO you would be very lucky to see only your monthly payouts drop while your capital (trading value) remains intact.

If you plan on holding through the entire trough, maybe you don't care about the unit trading value, but if it declines along with the distributions it's a given that your capital will be trapped for the duration. IMO you have to take that into consideration when allocating your capital into these things, since changing horses in the middle of the stream won't really be an option without taking a major bath.

One other thing - check out the new issue calendar at your favorite broker and you'll see that there are more and more of these things being floated every day. IMO it's never a good sign when the vendors are anxious to come to market, it usually means the party (i.e. the fat payouts that attract the buyers) will be ending soon, perhaps for an extended period of time as hedges run out and lower prices finally work their way into the cash flows.

On the other hand, if prices do crater, that might result in some genuine bargoons this winter if you have the patience to wait for the right opportunity.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News