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Energy Transfer Partners, L.P. Message Board

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  • arbtrdr arbtrdr Feb 3, 2006 10:40 AM Flag

    MLP's List

    I will add my 2 cents worth since my opinion is a bit different.

    MLPs are probably in for a bit of a downspell in the next 4-6 months. My reasons are that wages are up and unemployment is continuing down. These factors will push the Fed to continue increasing the fed funds rate at least two more times to 5% or possibly 5.25%. The possibility of more increases will raise interest rates and give competition for alternative opportunities to invest.

    Historically MMP trades at a 219bps premium to the 10yr Fed rate. So its yield should be something upside of 7.3% if the Fed continues to raise.

    Now the real question! Buy or not and when. In a 2 year perspecitve I would wait a bit. Talk of future rate increases makes investors in this type of investment nervous. Vis a vie look at today down action. If, like chartny and me, you are going to hold virtually forever it probably doesn't make any difference.

    Happy investing. ARB

 
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