This is not quite yet to the level of pigs getting slaughtered, but it might turn into something like that.
Fools have been looking at charts of NFLX, AMZN , OPEN and saying it's going higher. Even EVEP caught the momo trade, sooner or later, the smart money takes profits and leaves you holding the bag. Like I said before, when you see treasuring bonds giving 5-6% yield, where do you think EVEP needs to be?
This week the market is catching up to the idea that China is about to collapse on itself. Without China growth, US corp profits will drop. And yes oil prices must come down probably to $70 range?
Congrats to those who wrote covered calls. Those who bought at the top congratulations also.
A couple of things to address. First, Treasuries are not yielding 5-6% at least when you look at the 10 year UST which is usually used to compare against other yield alternatives. Last I checked, the 10 yr is 3.14% and has been falling. Wells Fargo has done comprehensive research into MLPs and presents historical info that suggests that MLP trade somewhere about 350 bps over Treasuries. Second, with the ending of QE2, Treasuries should decline in yield as the economy weakens. The economy already shows signs of weakening (GDP estimate was less than 2%) as it did when QE1 ended last year (see a pattern developing with QE and the moves in the stock market). While oil will similarly decline with the end of QE2, the rise in the dollar and the end of the dollar carry risk trade, nat gas prices have not risen like oil prices.
So while I agree that we are due for a correction or selloff in stocks, including MLPs like EVEP, there will be support because the fundamentals for EVEP are strong.
Mark, you make great arguments. The future is hard to predict. But I have a gut feeling the hyperinflation scenario is closer at hand because of the past and present behavior of our policymakers (congress). They will not make necessary sacrifices yet they will bail out the bankers (read rich class). So we will continue to socialize losses and rack up public debt. Bond markets see this as inflationary and will demand higher yields. We currently trade at AAA 3-4% yields. I think we will jump very quickly to the AA 5-6% yields before this summer is over. How else can we hit bottom in housing? In the medium term, oil is a great investment. in the short term, other investments including liquid cash will trump EVEP's speculative premium above $40. I too was a holder of EVEP, stepped away and may come back before December if the price is right.
I am also getting ripped, but hanging in there. I think the big boys are manipulating the price of gas and oil as they always have. Had I sold the taxes would have killed me anyways so I'll just hang in and wait for the updraft.
This is truly a take no prisoners day. It just goes to show you that the "big boys" know more about how to work this market than those of us on this message board. I've owned this for over 2yrs so still ahead, but a $100,000 drop in 5 days still hurts and that hurt is really bad.