The MLPs and royalty trusts and call options complicated doing my own returns. But that's OK. I took careful notes, asked lots of questions and now I have that learning experience behind me.

I went on and bought some AT&T. I bought it strictly for the dividend, but it already has a modest gain in it which I wasn't expecting.

I'm thinking of buying some FTR to go with it. Should have done it at 4.50. It's now 5.50ish but still has a 7% dividend.

Noticed yesterday that when most things were down, those royalty trusts were doing well. I'm looking closely at adding a couple more. The only thing is, I'm having trouble gauging when the prices will start falling to reflect the inevitable declines in production. I have the dates that final exhaustion is expected, but that doesn't really answer the question of when to get out.

I think I'll go by when the entire investment is returned plus some "x" factor.

Years ago I owned San Juan Royalty Trust and Permian Basin Royalty Trust. They did quite well but I stayed too long, and let them get some of their money back. The declines in price matched the price of oil, more than the decline curve of the production. At that time any negative stories about the industry impacted everyone in anyway related to Oil & Gas.

Most of the time Logic doesn't have anything to do with the price moves. Like today. Last night BAC gives out nothing but good news, so the stock takes a dive today. Go figure!

I listened to a guy bad-mouth the Telecoms today; specifically AT&T and Verizon. I'm just going to pretend I didn't hear him. I'm long both and will add more if they show a little more life.

I'm watching BAC, BPL, and PFE for now. I'm just going to hold onto HAL, KMP, and SNDK. They've gotten too rich to add to my positions.

It wasn't Cramer was it? I start by muting the sound when I watch that show.

Some of the royalties I'm now studying are the pair from Sandridge. Another in particular is CHKR (connected to Chesapeake Energy) which is a 10%er with a 2006 IPO and a 2026 expiration date. I know of course they rise and fall on the price of oil, but I do wish I knew when the depletion would affect prices. I'm hoping it'd be good to about 2020. That'd be all I'd need from it. But, others say these weren't meant to stay in more than a year or two. Anyway, I don't know.

On the taxes you had to choose between the cost method or the percentage method. I found the cost method easy and the percentage way a real bear to mess with, although it seemed to give a greater allowance.

Not Cramer, a "Founder & CEO", in other words, just another talking head. He touches on Telecom at about one minute left on the video below. I started watching to see what he had to say about BAC and GE.

http://finance.yahoo.com/video...erica-090201568.html

After the market closed today I took another look at BPL and placed an order to buy more at the open Monday. I've been in BPL for nine years, but with them being pipelines instead of production, they're not consuming their product.

HAL was up another 2.36% today, hitting a new HIGH. I'm heavy into Halliburton, but like I said, I'm just going to go along for the ride from here, and won't continue to accumulate, other than through dividend reinvestments.

Met with the tax advisor / preparer yesterday. The results weren't as bad as I feared. I'll pick up more BPL at the open this morning.

F, CSCO, SNDK, and DOW had big moves yesterday. I'll be watching BAC, BPL, DD and SE today.

One other comment about taxes. The past few years I haven't paid quarterly estimated taxes during the year. I pay a 4% "penalty", more or less, because of that. Basically the IRS is charging me 4% interest on that money when I don't pay them.

My feel is that with the market we've been experiencing the past year or so, if I can't make 4% on my money, I'm not even trying. BPL would be a good example. BPL was up 25% last year, plus pays a 5.8% dividend. Rather than give money to the IRS, stick it in a high paying dividend stock, and pay your taxes (and penalty) later with the profits.

Well, I send them a little money quarterly and they have always left me alone.

Where you run into problems is with a large gain coming all at one time especially if you weren't expecting it, like a merger. Then you take your chances on whether to do it normally or use the extremely tiresome annualized underestimated tax method, which has saved me a LOT of money when I've elected to go that route.

I think though they know when you received something and maybe are now taking that into consideration.

Anyway, I'm staying away from the big money center banks for several reasons and instead got heavy into large regional banks when higher rates appeared in the offing. I'm also buying "duplicate" shares of them for trading and buy/write purposes. Also have some high div foreign banks.

It appears I've got a new LP. KKR (KFN) is converting to a partnership via merger by the parent company. I've done well with it so far. Was on the phone with them yesterday.

I do have an interesting choice to make on getting into another LP. I owned some Cross-Tex (you know them I think) and they merged with Devon. And now I've got ENLC and they have an LP too, ENLK. Not sure if to buy the LP. No info out yet on the yield or when they'll do K-1s (I won't buy anything that will require an extension).

You have any feeling about the new Cross-Tex/Devon companies?

I can't comment on Devon/Cross-Tex. CT is new to me and I'm more familiar with Devon from their production in the Campos Basin, offshore Brazil. We were trying to develop a relationship with them since their work was in 300' of water and jackup-capable.

Owning a stake in the LP might be interesting. I ran into something similar when El Paso and Kinder-Morgan came together. I ended-up with positions in both KMP and KMI. I'm not sure there is a reason to hold both, but I do. My justification was that KMP had run away from me, too pricey to buy more; and the EP to KMI swap gave me a larger stake in essentially the same company, so I've held both. KMP pays 7.4%, KMI 5.1%. KMI has been a dog lately, but it looked like that would just give me a chance to buy more at a lower price. I haven't pulled the trigger yet, but will if KMI drops another $2.50 a share.

Changing the subject, I ran into a humorous article that shows you something about Jim Cramer.
http://blogs.marketwatch.com/t...me-barely-breathing/

Cramer spends a lot of time on his knees. The financial news networks talking-heads all spend a lot of time on their knees, paying lip service to bullshit artists that deserve no respect, and have no knowledge and ability to make money in the market.

CNBC continues to tout Ron Insana, a longtime employee of theirs. He wandered-off on his own, created Insana Capital Partners, and went broke based on his vast knowledge of investing. He's now started creeping back onto the CNBC programs as an analyst/commentator. I used to like the guy, but when you screw-the-pooch, you need to move-on and find another line of work. I don't need Insana, Dykstra, or some 15-year-old Hollywood starlet, telling me what to do with my money.

BPL just hit another HIGH. I added another 50 @ $76.47. BPL pays 5.8% at this level. My average cost is $31.70. My cut-n-run point is $53.88, so I can stand some volatility if it comes. BPL has made a nice move the last 10 days. What I don't want to see in the future is some decline in their distribution. That would tend to be a red flag.

Well, it looks like we've hit another bump in the road with the decline last Friday. I guess it'll be like the last one. Word is, the decline amongst the momentum stocks set it off.

Personally, I think the whole thing's just getting too high. And the results of that are always predictable.

What I'm sensing is, people are re-positioning from low paying common stocks into high yield. Preferreds are going up nearly every day and high paying common stocks have been holding up.

Anyway, the ENLC I spoke of was formerly XTXI, Cross-Tex. I bought it for no particular reason at around 19. I think I just liked the name (great reason for buying, no?). I wasn't expecting the Devon merger and just got lucky (they say it's better to be lucky than good). I was surprised to see it shoot up to near 40.

It had a companion LP called XTEX. I don't know what happened to that. Anyway, now it's ENLC and ENLK - Midstream Partners, which is what they do. Not downstream or upstream.

Btw, my BPT has been coming back (it's pretty much the star of the royalty show). And my KMP has been doing better too. But its companion LP, El Paso Pipeline, I suspect you know how it's been doing.

There's a report out that rates EPB as "stable". That's at least good. I don't know how they got so far off track.

Nice work on the BPT. I've followed it off and on starting in 2008. I never bought any for some reason. The dividend was outrageous, but the price was a little steep I thought. It just keeps throwing-off the cash. Wish I was sitting on a ton of it.

I added more DD and SE to my existing holdings Friday. They don't pay great dividends, but they've been good to me for quite a while. I'm UP 81% in DuPont and 26% in Spectra Energy. The SE was a "gift"; a spinoff from Duke Energy.

It wouldn't hurt my feelings if the market stopped going higher, and just consolidated here for a while.

There is a chance I might buy some more BPL, just have to wait and see. You've got me thinking about BPT again.

Monday should be interesting.

Well, I way overpaid on the BPT. About 90. At the time I thought it a good price because it had been higher. But it then kept dropping all the way into the 70s. It's 80 something now, and it's hard to find any good research on it or even a customer relations person to talk too. I called them to get the expiration date.

No one seems to have a handle on what it's really worth. And while I've thought of buying some more at the right price, I think probably not. There are other royalties to spread it around with. But I do like the fact they are in AK only, which has no state income tax. The others will typically be in the TX, OK, AR, LA areas. And I even have one in CT of all places. And the APU touches several states I think. And technically I then fall under the state tax requirements for those (I'm told TX doesn't have that).

Concerning your SE spinoff, I got XEC as a spinoff many years ago. I don't even remember who spun them off. And it did nothing til last year, when I got lucky again, and it's shot up to over a 100. I actually used it for covered call writing because it was all I thought it was useful for. But, then I had to buy back a call when it popped big last year. Sure glad it didn't get assigned away.

Btw, I make almost exactly the same on my WIN (of all things) as I do on the BPT. Both are high but with completely different risk factors obviously. The WIN I'm living dangerously with I think and would never suggest it to anyone. But the WIN actually is ahead on the underlying whereas I'm still in the hole with the BPT and just hope I may eventually cover the cost.

Anyway, rule number one? Never, never overpay for one of these things...

I bought more BPT and SE since the last post, and sold some HAL.

I feel like I may be overpaying for everything lately, but I'll take the dividend and keep my ears perked-up for that Jaws music. Hopefully I can get out of the water in time if the sh*t really hits the fan.

SNDK took a Hell of a jump this week; up almost 10% one day. I'm just sitting tight on that one.

My plan on the BPT and other royalties is to keep them for just a time, keeping one eye on the clock as far as their expiration dates, then bail if I can get my money back intact.

But I really do like the fact BPT is Alaska only, so no state tax issues. I also like a royalty with Texas ops, since it also has no tax. Others you know, subject you to taxes from various places, like KS, CO, AR, LA and MS. I've researched the income tax filing rules, exemptions and rates in each. FL is ok since no income tax.

Anyway, I've bought a bunch of preferreds. Tonight's work project is to research the latest list from S&P with new additions and match them against a list of requirements. There are some decent rates, but I personally like to stay below those call prices. And that's hard with a high payer. And you're constantly replacing ones that have been called.

Another thing I'm spending hour after hour on is calculating annualized yields on buy/writes. You gain both on the premiums and on the price differentials. It's exacting business. However, the yields can be rewarding and there are plenty of opportunities. You're limited mainly by your own ingenuity.

The "expiration date" on the royalty trusts is very hard to predict. I owned San Juan Royalty Trust (SJT) for years. I started getting a sense that the trust was "weakening". It wasn't so much anything they said, as the fact that their distribution seemed to be getting ratty, and unpredictable. I finally bailed-out reluctantly. They still continue to operate years later, but their distribution is just a shadow of what it once was five or six years ago.

I held Permian Basin Royalty Trust (PBT) about the same time frame and bailed for the same reasons. PBT is still rocking along. I think new technologies allowed them to maintain production (distributions) longer than even they thought possible.

I bought a little more BPL this morning. The stock has been on a roll lately.

My strategy is to stay disciplined and continue to ride the wave as long as it lasts.

My daughter had an interesting comment about a month ago. She asked me how I would know when I was too old to play this game. Good question.

quote:

She asked me how I would know when I was too old to play this game. Good question.

You'll know when your grown children come to you and ask you to give up the keys to the car and come with them to see a fun new place to live. And they explain how there's this five year look back period for Medicaid, so we need to be thinking about...

Anyway, my BPT royalty showed up Saturday. Did yours? Three bucks per unit. Sweet, was it not.

Anyway, sure glad I went on and bought the AT&T. 32.5 to 36 in a couple weeks and their 5 1/2 div should show up right soon.

But I missed one. INTC. I KNEW 24.5 was an obvious buy. Decades of instinct said so. But I read some dumb article in Alpha that thought the 3 3/4 div wasn't good enough. Now it's at 27. Could have played my strong hunch and made a little quick something.

After buying the BPL on the morning of the 22nd, I took a look back later in the day, liked what I saw and sold a little HAL to buy more MRK.

HAL has just been surging. I've still got a strong position in the stock, but the dividend is unimpressive.

No BPT royalty for me, but I bet that is a stunner. Do you reinvest it, or take the cash?

I like AT&T. It took a beating today, for no reason, but it's a good hold. I've accumulated it at prices between $24 and $38; averaging $26. If it fell to $23 or rose to $39, I would probably buy more.

My INTC plan would look strange to you probably. I've bought it between $12.50 and $29.50 over the years; averaging $19.25. If it hit either $20 or $30, I would be interested in adding to my position.

I don't see anything happening today, but more BPL may be in my future.

I looked at the market this morning and it wasn't doing anything exciting. And yes, I noted the drop on T also. But am not concerned. I know you're not either.

Tomorrow I'm pulling the trigger (probably) on two more royalties. I can't let BPT have all the fun. And no, I don't reinvest. I don't know if they even offer that themselves. I don't do that on anything for reasons we've touched on before. I always take the cash and move on to something else with it.

I also am not into (if I'm understanding you) having target prices both below and ABOVE the current price. Like 23 would be below on T and 39 way over. You sure you don't mean SELL at 39? In other words they need to drop before I buy unless it's already at a bargain price. Same on INTC, at 30 I'd sell, then re-buy at whatever lower I could get (there was a time when my idea of a buy on it was 18).

I've got a lot of strategies, but generally speaking the only important one is any way that makes a buck regardless the stock or methodology. The money all looks the same once you get it into your account.

With T I have a buy price on both ends; $23 and $39, and a "soft" sell price of $34.

The way I started initiating a position in a stock years ago was to find a solid company that has been or would be around for years, solid fundamentals, some type of catalyst (usually bad news that resulted in it being oversold) and buy a little. If the stock moved either direction, and the company, and story behind it remained the same, I would buy more. I eventually wedged out a window. That's how T became $23 and $39. It has rocked-around in that range.

That's how I was able to buy GLW and F at $1.00 a share. They went down, but I still believed in them so I kept buying into the drop. When they turned around, it was all gravy from there.

I probably won't sell T at $34 because the spread is too narrow.

BPL is probably a better example. It is at $75.94. I will buy more if it hits $23.88 or $79.38. My sell price on BPL is $55.81. Because I believe in the company, if nothing fundamentally changes I'll let the stock fall $20, and sell if it does. If I do that I still exit with a $23 a share profit. I don't like to sell too quickly because I've had some big reversals in the past. I bought 1000 of Apple at $7.00, ran it to $200. It then fell to $100 and I bailed. Too much nosebleed volatility for me, I thought. Wrong move! If I had been shipwrecked on a deserted island and been unable to do anything, I would have 14,000 shares of Apple, plus dividend reinvestment, after the latest split.

I don't try to Time the market. Prior to following my current strategy, I would pick a stock, buy and sell on a whim (emotion). I try to let the numbers tell me what to do now.

I would like to see Putin and the Ukraine get out of the news. They could capsize the whole market.

As of yesterday evening Earnings Season is about over for me for this quarter. CSCO reported after the close, and looks to be UP about 8% in Futures trading this morning. About time.

I've still got SDRL to come in on the 30th, but it won't move the needle I don't think.

After working the numbers, looks like VZ, BP, ESV and T are most likely to appreciate in value the next quarter. BPL, DOW, and DD are most likely to attract my attention. They are closest to my trigger points.

SE, BPL, and MRK have run higher than they deserve I think and may pull back; but they seem to have an underlying, intangible strength for some reason. It's worth keeping my eye on.

As far as I can tell, it's just going for yields now rather than anything else. So I bought another royalty and several preferreds and mortgage bonds. But I'm holding off on more BDCs because of warnings due to higher rates in the foreseeable future. Common stock hi yielders, REITS, MLPs and LLCs I'm about already maxed out on. Which leaves only Buy/Writes as a solution. That's my current area of interest.

Others must agree. I can tell because my BPT is back up to what I paid for it. I'd do OK on it if I just got out and walked at this point.

Anyhow, T is holding up and even gaining traction. I presume because of the DTV deal.

Bought a little more DOW today.

BAC made a 3.4% jump on news that their numbers correction is back in to the Fed, and didn't change much from their previous submission. I hope they reinstate at least half of their previously announced dividend increase. Seems like every time BAC generates a little momentum, they get knocked on their butt.

Focused on SE, DD and DOW in the near term.

DOW hit 17,000 this morning. I've been adding to positions in BPL, DD, DOW, INTC, and SE the past month or so. Funding those purchases with sales of HAL.

I also started a position in RIG last month and added more later. I'm using my dividend in ESV and sales of HAL to buy RIG.

I'm not negative on HAL. It's had a great run, but the dividend isn't enough to keep me interested.

I'm getting a little overloaded in offshore drillers (ESV, RIG, and SDRL), but I like the sector and I believe RIG has more room to run that the other two. SDRL is the weaker of the three.

I like VZ, T, and GE going forward, but will probably add to current positions first in BP, MRK, RIG and SE. They seem to be the movers. BAC seems to be building a base as well.

It is hard to believe that the DOW can get to 18,000 before the end of the year, but I wouldn't bet against it the way things have been going.

Let me know when to bail, can't afford another round trip at my age. I'll even pay Obama his capital gain tax surcharge for the great government health care I get now.

Earning Season started for me today with INTC. The report was good and the stock jumped 4.1% in After Hours Trading. Tomorrow comes BAC, KMI, KMP, and SNDK.

I still like Verizon, AT&T, and General Electric long-term, but expect Spectra Energy (SE), Intel (INTC), and Transocean (RIG), to get my attention before them.

The bull market seems a little more tired at this point, but I suspect it has a little more room to run.

What a blood bath in the energy space. Damn feels like nightmares from 2008.

Mike

Even on a day like today, UP 200 points on the DOW and the drillers are still taking a bath. I've bought some RIG and DD recently, sold a little Halliburton, but for the most part, just been watching.

I guess the drillers; ESV, RIG, and SDRL could go another $10 a share down, but I'll just hold what I've got, buy more RIG when it looks like it's bottomed, and keep reinvesting the dividends. (Now if they really want to start ruining my day, they can start cutting their dividend.)

If I had to compare my buying of some energy equities recently it compares to a injured cow buffalo I killed that was being eaten alive by screw worms. The cow was in less pain.

Unless the good folk in Saudi Arabia cut production and raise the price of oil, our esteemed wildcatters are going to drill and drown themselves in an oversupply of oil. The worst capital allocators (as bad as Obama and his community organizing comrades) have to be independent oil and gas companies.

Mike

I've been wondering how they were going to screw-up the latest boom. Over production may be it.

quote:

Originally posted by Kensco:
I've been wondering how they were going to screw-up the latest boom. Over production may be it.

+1

But more than over production its the allocation of capital to produce.

These guys just don't look out for their owners/investors. They don't pay dividends, they only buy assets - they want to build empires.

Mike

quote:

Originally posted by Beretta682E:
What a blood bath in the energy space. Damn feels like nightmares from 2008.

Mike

Rough week in the salt mines...

quote:

Originally posted by TomP:

quote:

Originally posted by Beretta682E:
What a blood bath in the energy space. Damn feels like nightmares from 2008.

Mike

Rough week in the salt mines...

I said I will never see 2008 again in my lifetime and low and behold six years later the energy space has a rerun.

MIke

It looks like it's stabilized a little the last couple of days. The shorts have started covering their positions. Others will follow.

So no one panic.

Remember, when the urge to panic is at its absolute worst, is frequently the bottom. That's when to hold fast.

It's what I'm doing excepting some that needed to be sold anyway. MON is one of them. After two years of holding it my patience just finally wore thin. That'll free up capital for others where I'm seeing buying opportunities.

I did a buy/write on MRO Friday. It has a simulated annual yield of 11%. And DNR is looking interesting. My COP, XOM, TOT and a few others though I consider off limits. They ain't for sale.

With SDRL I'm just hanging on for the dividend. They are probably the best of that group. Made a little too on a call with it while it was dropping.

I'm holding my drillers (ESV, RIG, SDRL). I'll probably buy a little more RIG if it slides again. I'm still selling HAL to fund purchases, etc., even though they increased their dividend, and had a very good quarter. Nice to see VZ increase their dividend. Bought XEL and DUK a couple of weeks ago; just adding to existing positions. Went to Isla Mujeres last week, and glad to see things seemed to have stabilized somewhat while I was gone. Gave back all my gains for the year the past month, but made a nice comeback today.

Not looking for new investment ideas for my portfolio at the moment. Got to pay a mess of property taxes this time of year.

quote:

Originally posted by Shack:

With SDRL I'm just hanging on for the dividend. They are probably the best of that group. Made a little too on a call with it while it was dropping.

That is my long-term hedge. low price + high dividend stacks it up nicely. If it maintains here then the dividend should continue as-is through 2016, if it drops to 16 they'll likely lower it before then. Either way IMO it is very nice for those who count on time instead of timing.

Have you seen SDRL's current yield? Impressive, at these price levels.

I'm using the correction (or panic judging from the rapidity of the drop) as a buying opportunity for MRO, VLO, PSX and DNR ("DNR" is a very unfortunate choice in symbols if you ask me - but it could be worse - suppose a stock had the symbol "DOA").

I sold my OLN (Winchester) for a modest gain, but will promptly buy it back if it drops a bit. I'm thinking it's a candidate for short term swing trading. The dividend's OK, but not exciting.

Others I'm really watching are some of the "ocean going" off-shore outfits with good dividends. Some have nice yields on preferred issues.

Btw, since we got a bunch of oil patch guys here...anyone else taking the plunge on SHLX?

Bought a little more DUK and SDRL at the open this morning. Sold more HAL. Should have bought more RIG.

I doubt SDRL will maintain their dividend unless the share price recovers quickly, but even if it fell in half, it would still look good to me.

I think whether SDRL and any of them maintain their dividend depends not on the share price, but on the underlying earnings to support the dividend. In SDRL's case they've said they are OK thru a certain period of time, and then they'll see if day rates have stabilized. I guess everyone knows there are significant problems with lack of new contracts due to the majors reducing capital expenditures along with the shale oil glut. All of which is hurting the off-shore guys.

Anyway, I went ahead and signed up for the SHLX IPO. It'll of course be a while before any distributions. And it might be over-subscribed, so we'll just have to see if I wind up being offered any at the subscription price.

Another I'm sorely tempted on just now is NADL. The yld today was 16%. Hard to ignore that. However, it's 30% owned by the Russians, and that's the issue I'm having trouble swallowing. I just don't know how the sanctions are going to affect it, and more importantly, if they could impact any U.S. citizens' dividends from it. I presume not a problem, but just don't know with any certainty.

offshore oil, even deepwater, is cheaper than shale and sand.

The Rosneft issue is what I think is hurting Seadrill/NADL the most.

They could be in a position to buy more rigs if they thought demand would swing back, and looks like the Saudis are going to help that out.

The thing I'm wondering is what this ebola mess will mean on West African offshore development. That and whether we'll see a lot more activity in the North Sea to replace the decline, but I think that will be piecemeal.

quote:

offshore oil, even deepwater, is cheaper than shale and sand.

I dunno, why don't you ask BP how much a barrel of oil cost to find and lift in the Gulf of Mexico?

Sold my position in Sandisk Corp. today, and bought DUK, RIG and XEL. I'm not convinced the price of oil isn't headed for the low 70s, but I'll continue to follow a strategy that's ben working for about ten years.