Fracking will destroy our waters, rising interest rates crush student loan holders, BUT MY PORTFOLIO WINS!
I'm rather bullish on the market long term but I semi think things are a little 'springy' and hot for my liking right now so I just swapped a ton of equity stuff in my portfolio out for MLPs and BDCs and other equity products and funds with downside protection (income producing or just weird structured products and quant fund shit). Anyone else doing any portfolio maneuvering or 'SECTOR ROTATION' right now?
Fed cools off stimulus + rates eventually going up = BDCs get windfall
MLPs already ran pretty hard but I really dont have any fear of anti-fracking regulation stopping them -- the economic boom and "US #1 Energy producer' are way too sexy in my thoughts but obv the anti fracking laws are still adding some fear to the MLPs
I'm also 2x long the euro stoxx 50 for another 4.5 years
What is this fracking you speak of?
You have far more faith in BDCs than I do. They don't generally see the best deals and are Plan C for most deals they get shown. I think that speaks to the quality of companies they underwrite/invest in.
there is no need to worry about anti fracking... our entire country is "fracked" if we don't have it
Mind naming a few tickers and maybe a few sentences about why you like them? I agree with you that equities are a little too hot right now, so I sold off most of my equities around a week ago and am sitting on a sizable amount of cash. I'm just trying to figure out what's the best allocation of my $$ in the near future
....MLPs are such an obvious bubble. They are making anything & everything an MLP these days.
sure they soared like everything else last year but do you really want to short something that is really just getting heated esp in the energy space with fracking?
as im coming into my old age im going to start dabbling a lot more in income producing and yielding things
Do you mean they're making everything a REIT these days? If so, that would be true.
You're a data center operator? Sure, join the REIT party! (EQIX). You own lots of boxes full of slot machines and want to be a single-tenant REIT? Sure, why not (PENN).
More importantly, if you think rates are going to go up YOU SHOULD NOT BUY MLPs. They are fundamentally a yield product and rising rates means they have to pay more in cash flow to maintain risk competitive with other asset classes.
That being said. I think you are wrong on rates so it will probably all work out.
Also, E&P MLPs hold long-lived properties with stable cash flows so the risk to development is fairly low. They are subject to commodity price risk as are all commodity based equities but I don't think that puts them at a significant disadvantage.
@ Short - I think they are a great income / yield play and many of them have seen substantial value appreciation as you mentioned. Some of the pipelines are likely a bit more inflated but the E&Ps will probably be more stable.
You are right in a way but also wrong. I should have phrased it that they will have to pay more RELATIVE to price (my mistake and the way I phrased it was incorrect). Obviously they will not change their distribution, but the yields will rise (price falls and IPOs will have to pay more in quarterly distribution relative to the typical $20 pricing to go public), hence why they are a bad long if you are bullish on rates. If you are arguing that MLPs, which are a yield product, are not affected by rate movements, then I, and probably most every research analyst who covers them, would disagree.
Thanks for the E&P MLP 101, but your point on them is really off.... E&P MLPs are more stable than pipelines??... no not at all. Look at LRE if you need an example of what can happen. Pipeline MLPs are some of the most stable, hence why pipeline MLPs have lower coverage ratios than E&P MLPs.
i dont think rates are going up TOMORROW, i just dont think theyre going to be drastically low for years upon years upon years, next couple years we're going to see some moving around -- i think MLPs are a lot less sensitive than REITs are (maybe im wrong but whatever) to rates and yield as such
i rode the high yield surge pretty nicely over the past few years so was swapping them out
REITS hedge interest rate risk and are mainly exposed to extension risk. Yes rates have gotten "choppy" this last week by today's standard but short-term rates haven't budged at all and FED is locked at zero. You can count on rates most likely staying low till late 2015 or so. We are only about halfway through this cycle. You have much HW to do. Its not "whatever".
love to hear what you guys are investing in / swapping out right now instead of just 'BDCs suck so im short them and MLPs' too :P
i still have equity exposure and like long term emerging and frontier markets, like a europe bounce over the next five years (esp since i have 2x upside), bought SPY @ 84.02 for siiiiiiiiiiiize on the way down and ive flipped that around into different things over the years
Global X Nigeria ETF.
Seconded.
Wow you are good! Can I schedule informational interview?
Just a little piece of advice on MLPs for anyone who is unaware:
The MLP based ETNs don't have this underperformance issue, but you are taking the full credit risk of the issuer and you really aren't getting compensated for the additional risk. They're still better than the ETFs though.
If you hold MLPs directly, be prepared for K-1 statements. If you earn enough income, you may be required to file taxes in every state in which the MLP conducts business. As many MLPs are interstate pipelines, this can be a large number of states if you own more than a couple of MLPs. Most likely, this won't effect many of you, but just an FYI. Regardless of state filing requirements, they are more of an administrative burden than a traditional stock.
Do not buy MLPs in a retirement account as they can generate UBTI and you may have to pay taxes from activity in your IRA.
Just because I think MLPs are overvalued doesn't mean I'm going to short them. That said, I'm certainly not going to buy them...
Edit: Poor phraseology earlier on MLPs. Obviously there are still restrictions, but pretty much everything that qualifies is opting for the MLP structure since investors are so yield hungry. Seems like an obvious bubble, much like the high yield market. As I said above though, definitely not going to short since I don't have a clue when the correction will come.
If we are halfway through this cycle then we have a lot longer to go than 2015 and yes I'm cognizant of that supposed horizon.
I'm not looking at intraweek rates and trading yield against yield.
Still no one else has brought up what they're trading and swapping around In their portfolio. Europe ? Commodities? Apple even? Africa ? Water? Or just click the boxes for your 401k?
Do you guys have portfolios with certain macro convictions.... or just structure pitchbooks and give the same guidance as everyone else on the street ? Waiting to hear some other interesting thoughts and ideas.
Do you think we are going to reverse or correct ? Why or why not.
I haven't heard anyone else say xyz is a better idea because of this or I like this, I just see oh I wouldn't do this. So what would you do then
Global X Nigeria Index ETF looks good, low fees, although what do you guys think about market cap of only $2M??
I have way too much in cash right now, but recently picked up some CQP when it was still yielding 6%, good play on exporting LNG. Not too much else out there that looks good right now, IMO.
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