DJ, <<could it be just another Ponzi scheme?>>
Not in the strict sense, at least not by my valuation model, because no new units are sold, given that no new reserves are bought.
And if PWI does buy new reserve, and do so by raising new money, while paying out the old investors with income attributable to existing reserve, and return of capital (depletion/amortization) from existing capital, no Ponzi is formed.
In reality, as in 3D space, the existing capital and new capital are mixed together, the existing reserve and new reserve are blended together, and all the accounting numbers are amalgamated in one annual report. In such 3D world, the cross-over point of fair new unit valuation vs equitable old investor dilution is a key calculation, and should be manageable as well observed by the market place.
The characteristics of the energy trusts are actually, IMO, preferable to the peculiarities of QCOM, INTC, MSFT, PFE, GM, F, JPM, C, AIG, ...
Chugs, Jay |
