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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (26806)	1/4/2003 3:30:02 AM
From: energyplay	Read Replies (1) \| Respond to of 74559

Hi Jay - I have about 40% or more allocated to the high yielders, and about another 20% on Natural gas E&Ps. If there is a sharp market break, llike 1987, 1998 LTCM, or 9/11, they will drop and then come back over the next few months, usually a little faster than the general market. They are all finite life, but the Canadian ones (ERF, NCE, PWI) buy more assets, either from retained earnings or by issuing new stock (which causes some dilution). If they buy good assets which will return more money than they paid for them, this overrides the dilution. If they buy the wrong thing, they will hurt future distributions. The U.S. ones (SJT,HGT) are allowed to buy more property, so the risk of buying something bad is gone, but htey do have a finite life. SJT has been around a long time, will look that up and post. Assets on SJT and HGT have long lives. With the price of natural gas going up, the value and future distributions will be going up. There is a delay of about four months from selling the gas to the new distribution, so higher prices will start to show up in March 2003 and later distributions. Why are they yielding so much ? Many people expected and El Nino year, and very warm like last year. Last winter was 2+ standard deviation warm, warmest in about 20 years. Most peole don't know that, or understand reversion to mean. The warm winter and high storage hid the decline in Natural gas production - when you have a full ware house, it's hard to notice that production has dropped. >>>These trusts were priced on the assumption that the distributions would decline with the declining natural gas prices, like they did after the very warm winter.<<< People expected the 12% distribution to go back to 7%... If the market really crashs, gold may go way up, or you may have one of the bear funds, like RYURX, BEARX, and some bond funds. I have NEM, some bear funds, and govt bonds, and a little cash... One possiblity is the market crashes BECAUSE oil (and gas) go sky high (see 1973, 1979). In that case, you may need to buy another watch or two ;-) P.S. I have invested in energy since 1999, and did very well on the last up cycle in natural gas. My first royalty trust was in 1999, but that was a lousy one (LRT). I've been in these trusts since about May, with more added in December. There are people who have owned these through a number of cycles, and are happy with them. I expect to start selling in early 2004 until May 2004 (I expect a multi-year up cycle). If gas goes to the moon, I might sell earlier. I also might keep some for another cycle, especially in taxable accounts, wher I could earn a good return on money I will eventually have to pay tax on.

To: TobagoJack who wrote (26806)	1/4/2003 12:39:54 PM
From: Jim Willie CB	Read Replies (3) \| Respond to of 74559

I think China will soon become such a financial thorn to USA, that we will make political sacrifices in return for Beijing to spend some political capital I believe the USA will rationalize that HongKong "worked out well in transition", so let's reduce tensions by stepping back (not forward) from Tiawan we in the USA will demand two things 1. continued purchase of USTBonds 2. revaluation of YUAN upward by 20-30% I believe China will agree to both in return we back off supporting Taiwan we are far too pre-occupied with Islamics and Oil Supplies I believe China will screw the USA on item#1, as they gradually secretly convert their USTBonds into Gold and EuroBonds but their main stealth maneuvers will be accumulating gold because a much larger gold treasury ensures future decades of prosperity through growing bank reserves, potential for very large-scale loan portfolios to build up their infrastructure (as you constantly remind us about) item#2 is critical for relieving the pricing pressures across the entire US Economy spectrum we will need some concession from the Chinese here they have set themselves up nicely with artificially silly low YUAN valuation now the biggest question on my mind with China is what will the USA be coerced into doing in return for fixing the Yuan peg ??? Taiwan is sliding down the list of US priorities, even as other threats are more clearly being identified North Korea will be a very revealing test will China step in to relieve bilateral tensions? if they do, will we owe them even more visavis Taiwan? big issues, ChugsMan I dont believe I have ever seen USA weaker strategically I am never fooled by our large military presence reminds me of big dumb muscleheads, whose emotions are weak, whose egos are pea-sized, and who can be led around by the nose, if only the woman can exert the right pressures / jim

To: TobagoJack who wrote (26806)	1/4/2003 2:40:18 PM
From: Seeker of Truth	Read Replies (1) \| Respond to of 74559

Jay, the energy royalty trusts in Canada are semi-Ponzi schemes. Why do I say semi? They do save a little of their earnings for some self financed replacement of the depleted reserves. However it's usually not enough to keep their earnings at the same level consequently they need to sell new shares. As far as I can see, all of them do this at least once a year. My favorite is AVN.un. AVN.un retains 25% of the earnings for development of replacement resources. Also they are heavily into natural gas which seems to have a brighter future than oil. In any case the royalty trusts are commodity shares; when the price of the commodity rises so do they etc. Not as peaceful as shopping plaza reits Since people like high yields, the trusts can place the new shares . As a result they live more or less forever, in their semi-Ponzi way. Chugs, Malcolm