my id is a job related inside joke.
the point of my message .... my opinion.
my return in 5 months, true. and if I had not bailed on one stock when it hit my upper limit.... could have been 45%(theoretically). oh well
I will shut up now.
I disagree. SJT and other RT's are overpriced for my view of thier 1-2 year distributions. These are not your the same risk level investments as other stocks. (what am I saying, all stock prices are still way out of line!!!!)
as far as these types of investments go, I think you need to do much more due diligence than relying on the Fleet nimrods.
by the way. by doing due diligence, I have made 21%(anualized) return on my money in 5 months.
The Fleet Letter, a very conservative advisory service, recommended SJT when it was higher than its present price. When the price fell, a special bulletin was issued advising investors to hold onto their shares. The rationale is that SJT's recent decline is only temporary, and that the dividend is exemplary in this low interest environment. I tend to agree and believe that one should accumulate shares at this low share price. Remember that the Fleet Letter only recommends very conservative investments. Their picks have being doing nicely when most investors are losing money.
Good morning jerry
A lot of your points are well taken and have merit. The problem is you and others think there is some underlying value to the unit price other than the distributions that are coming down the pike. You also insinuate that the supply of oil and gas is basically unlimited in the fields making up the trust. What one buys when you buy into the trust is the revenue stream that will come from the depletion of the commodity in the ground. It is as simple as that, and at the end your units will fall worthless. What the amount of the distribution will be in 5 years is guesswork and nothing more. I can with some reliability predict what the distribution will be over the next six to twelve months, and that is the basis for establishing a "fair value" for the units.
I cound go on and include some of the math that is used in establishing the value of money, but that is covered in many books on econmonics and would waste my time.
It appears you only wish to be combative, and have fixed your mind on what is or is not fair value. That is satisfactory with me and I wish you well with your coarse of action. I on the other hand, will follow my dictates and buy when and only when I feel the value justifys the buy. If you feel getting back $20 over the next ten years justifys a $13 outlay now, so be it, (And $20 is optimistic)
with the potential of the oriiginal outlay falling to zero, then go for it.
Have a nice day.
The rational is based on an assortment of factors that DO include past prices vs. distributions.
Perhaps the first place to start is to read that part of the last annual report which discusses the reserves and the PV10 values for 2000 vs. 1999.
The reserve estimates and PV10 jumped way out of reason based on the inordinate high gas prices last December which are used for these estimates.
Then, the fact that up until today's AGA 3 bcf storage number, weekly storage has been running much higher than normal threatening higher gas prices for even this winter. We could have, and may still be looking at sub-$3 HH gas prices later this year.
Commodity futures markets are where "bets" are made as to future commodity prices. The risks are enormous there. However, here with RTs, we are also betting on future commodity prices albeit with a lower risk factor.
Sooo... If I'm going to place a bet on commodity prices with SJT, I want it to be at a price that I believe is as good or better than other RTs available to make such a bet.
I am not looking to buy at I what I perceive to be a fair market price based on my expectations for future commodity prices and distributions. I want it to be at a better price than other comparable RTs based on the markets view of future commodity prices. And that perception must be lower than mine.
I personally believe TRU is a much worse buy than SJT. Why wouldn't you buy some TRU also based on your views?
I'm sorry, I must have read something into "I'm trying to decide if it is even worth more than $11.00." that wasn't intended. How is it over-priced at $13.50? Based on what?
I've just seen several posters, you included, stating that SJT is over-priced and I can't seem to get a rationale response on what the logic is behind the statement.
jdbsd (aka jerrybrammer) I'm just no good at this alias thing! I have to stop checking my e-mail and the boards at the same time.
I had a feeling when I used the term stock that I would get a response, however, I decided not to go back and change it, thinking it wasn't relevant to the discussion.
So, let's value a chicken!
Your first major assumption, (and it is major) is that "if fair valued" last year. Where does that assumption get validated? Second assumption is that if the distribution remains the same, the value must be less this year. Another odd assumption. It's almost so outrageous, I'm beggining to wonder whether your bustin' my chops or really believe this stuff.
What if the units were under priced last year? What if other things change, say interest rates? Last year my money market was getting 5.5% - today it's 3.25%. I hear it's a good bet that short term rates will go down another .25% before the end of the month and probably another .25 to .50 before the end of the year. Do you think that might have an impact on the value of the units?
With regard to the life span of the trust, it's not a given that there is one less year in the lifespan. I know, simplistically, you are right. But one year they say the trust has 20 more years of reserves and the next year they could say it's now 25 years. Did we lose a year or gain 5 years?
So take my units of this chicken and tell me why it's overpriced.