The problem with the market is that whatever disposable investment money people have is all being jammed into the stock market which is causing the 70% increase in 4 months.
Money is not flowing into the usual investments such as real estate, CD's, Savings Accounts. Real estate is a loser and interest rates on CD's are lucky to be 1%. This is causing an artificial bubble in the market and just as any and all bubbles have suffered the same fate it will burst.
If I have $50,000 now...I can buy 1000 shares of NS (assuming $50 price) and zero cash. Or I can wait until $40 and have the same amount of shares and 10K in my pocket.
I strongly believe that the market is going to burst and NS will fall to $40 or below with no sweat. When the fed is forced to raise interest rates this will happen rapidly. There probably is more upside at this point, but I don't really think that it is worth the risk and stress at this level.
I believe that the buy, hold and collect distributions at this level will not out weigh the wait and buy later strategy.
I agree with you that at these levels I would not buy and hold for the distributions.
I think you have missed the opportunity to own NS because it will not retrace to a level that suggests a 10.9% yield to cost.
Or let's put it another way. If NS went back to $40 we would be in such market conditions that you would not want to own. I believe such conditions would be the complete failure of the economy to recover.
The correlation of MLP distribution yields to the 10 year is there is NO correlation.
The main reason the world came to pieces in 2008 was forced selling day after day after day after day by overlevered hedge funds playing the carry trade game.
The game is being played but surveys are showing that hedge funds have been teathered by their banks this time and are keeping the amount of leverage the hedge funds can use way down from a year ago. We can always get a dramatic selloff but I suspect we would not get that kind of cascading that led to the generational low.
I respect that you are placing your bet but I suspect you will find a year from now that you will not get what you want and you will have to re-evaluate and look for another sector of the market.
These treasury auctions are the tell right now. The cost for protection is so high..... these investors pass on owning some of the best blue chip stocks with huge international exposure at a time when the world's middle class will expand by 1B people over the next 15 years. I am stunning just how scared individual investors are and what they have missed.
Kerf, have you considered that with 30% of homeowners underwater, the way the government will make them become "above water" is to inflate the currency to the point where nominally, they are no longer underwater.
In that case, you should inflation adjust upwards your buy target price of $39.99 *wink*