| A subject I would like to bring up on a weekend is that of cuts in the distributions. This is always given as a dire warning by journalists writing, usually for the first time, about trusts. It is regarded by knowledgeable posters with abject terror, the kiss of death, a reason for "getting out", at any price, immediately. I take a more sanguine view. Businesses of any sort have their ups and downs, affected by commodity prices, currency fluctuations, strikes, weather, economic cycles, you name it. Now I will concede that suspending distributions completely, as is the case with HAL, is a real downer, but holding HAL as dead money is probably no worse than holding NT, and a lot better than holding AC. But if the yield is reduced from 18% to 15% for your trust, why the panic? If the yield were cut in half, to 9%, that would be better than the best REITS. Cut it in half again, and it's better than a bond fund. Halve it again and it beats money market funds. What I am trying to say is that we are a little spoiled by stupendous yields, and should take pullbacks in stride. |
