Why did we sell royalty trusts ?
Look at 2001-2002 for ERF, PVX, PTF, CA:AVN.UN and SJT - the first 4 Canadian, last is US.
Go to Big Charts, look for a decade time range and a monthly time tick.
I'm seeing drops of 50% or MORE.
Many of these stocks STOPPED PAYING DISTRIBUTIONS, OR BORROWED MONEY TO PAY DIVIDENDS.
I know we say we can hold through a down period...but hwen you are down 50% - is there another 20, 40, 50 % down ? How long to get back ?
Especailly when we know that pervious high prices have permanently KILLED industrial demand - the plastic plant has gone to Trinidad or Argentina or Qatar, as has the fertilizer plant.
We sold because on these macro moves that happen on a 3-5 year cycle, we don't know HOW FAR DOWN IS.
And ther is usually time to buy back in.
A nibble might be a good idea. The oil side looks okay.
Unless we get a hot summer (< 30% chance now), AND industrial demand keeps up (trust Ben Bernacke), August and September will be a BLOODBATH for Natural gas - under $ 5.00 spot, maybe under $ 4.00 spot - that will be under current costs for some of these trusts - remember drilling costs are Way Up.
So soon we should buy the more oily trusts, and the one with activity outside North America, like Vermillion.
But Hold back some for August / September, for the Natual Gas trusts on sale. |
