The following is a quote from Peter Lynch's book, "Learning to Earn."
============================================================ If you are going to invest in a stock, you have to know the story. This is where investors get themselves into trouble. They buy a stock without knowing the story, and they track the stock price, because that�s the only detail they understand. When the price goes up, they think the company is in great shape, but when the price stalls or goes down, they get bored or they lose faith, so they sell their shares.
Confusing the price with the story is the biggest mistake an investor can make. It causes people to bail out of stocks during crashes and corrections, when the prices are at their lowest, which they think means that the companies they own must be in lousy shape. It causes them to miss the chance to buy shares when the price is low, but the company is in terrific shape.
Perhaps the story here is not clear enough. I have been interested in PZN for some time, and have watched as the price has sunk down (today, below 17 for a while). I am confused by the prospective dividend, apparently divided between for-sure and we-may-pull-it-back. Could someone explain this?
What will happen to PZN if interest rates go up (which I am sure they will over the next few years)? Does this impact debt already in place? What about availability of funds, should credit tighten? Can PZN stop building and live on its current income? Or does it have to keep building to survive?
The REIT structure is not popular right now, as I understand it, partially because rents are not as secure as they were. PZN's rents are assured. The prison population is at an all-time high, and will keep on growing. Crime is down in this country for the simple reason that prison terms are getting longer. Keep the bastards off the streets, and insurance rates go down, people are safer, and life is better. So if PZN's rents are secure, why the drop?