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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (39663)	10/14/2010 9:34:09 AM
From: E_K_S	2 Recommendations Read Replies (2) \| Respond to of 78470

Hi Spekulatius MLPs vs Holding Cash vs owning "other" income producing assets (like real estate) The Fed plans to start their QE2 program in early November which could last 11 months at $100 Billion per month. My credit union pays 1% and most liquid cash holdings are generating less than that. So much money is flooding the world markets that some analysts are looking at a possible "Green" Swan event where the market spikes significantly higher. I have been building up my cash reserves perhaps looking at moving some of the proceeds into income producing real estate. After a brief trip (last weekend) to view properties I have had my eye on for several years, I saw the most "For Rent" signs ever. Prices are just getting down to where the cash flows begin to work (as long as tenants can pay their rent). I still believe I can hold off for another year and still see prices at the same or lower levels. It's a little scary to hold vacant units. MLPs are sort of the next best thing to owning the actual real property and operating it. The key fundamental is the cash flow the asset generates and the future increase in the income streams from their different operation(s). One continuing growth area I see are the NG gathers, pipeline transportation & storage operators. The good ones are definitely not cheap but IMO still have a favorable niche growth profile especially in a generally slow growth US economy. There is a lot more work in managing a real property asset (ie duplex) than completing the UBTI paperwork on an MLP (especially now that the reports can be downloaded). MLPs are more liquid than an income producing real estate investment and can provide more diversification too I think there are a lot more investors that are looking for alternative investments other than the stock market. They never want to experience another market crash. Perhaps that is why you are seeing money finding it's way to farmland and just sitting in a low yielding money funds. Eventually the QE2 is going to tip the scale (never fight the FED) and either (1) the market takes off to ridiculous valuation levels or (2) massive inflation hits certain market sectors (we have seen this in gold and other commodities and FINALLY (3) money fund & even Bond fund holders will give up on their low yields and jump back into the stock market. MLPs should be an attractive place for these investors to land because of their large distribution pay outs (even though some of that is return of capital) and their reoccurring revenue streams. EKS FWIW - Enterprise Products (EPD) Increases Quarterly Distribution 1.3% to $0.5825; Yields 5.6% ......... Oct 14, 2010 07:10AM Enterprise Products Partners L.P. (NYSE: EPD) today announced that the board of directors of its general partner declared an increase in the quarterly cash distribution rate paid to partners to $0.5825 per common unit, $2.33 annualized. The distribution is a 1.3% increase over the previous rate of $2.30 annualized. The quarterly distribution will be paid on November 8, 2010, to unitholders of record as of the close of business on October 29, 2010. The ex-distribution date is October 27, 2010. Yield on the dividend is 5.6%. (This will be the fourth increase this year!)