When you see MMP drop 9% it's screaming BUY, BUY, BUY! That's why the chart sometimes looks like shark's teeth. The drop to $66.36 last week was the best buy I've seen in this whole market correction. Have open orders in well below the market and use the big spreads to your advantage. Don't hold your breath waiting for the same thing to happen again anytime soon. Those who sold MMP in panic are already kicking themselves, and they'll be kicking a lot harder as they watch it get back on track to new, all-time highs above $87.50. Patience and a cool head will be well rewarded.
You're absolutely correct about irrational sellers. Put the emphasis on IRRATIONAL! Buffoons like Jim Cramer like to sow the seeds of panic in order to get attention. They thrive on creating their own news on CNBC in order to sustain their ratings. It costs them nothing to be wrong, but it does cost those who succumb to their fear-mongering. Cramer et. al. did, however, create a fabulous opportunity for level-headed investors to pick up some terrific bargains.
Here's my take. From the intraday high to the intraday low, the broad market dropped almost exactly 10%. By definition, that's a "correction." The market may re-test the recent lows, but I believe they will hold. Unless something untoward occurs, we will be in for a brief period of consolidation which will open the door to a full-blown resumption of the secular bull market we are presently in. MLPs trade very much in their own universe, as evidence by the trading last week. Some corrected by well over 10%, but the reversal was just as dramatic as the sell-off. Take a look at MMP, as a good example. From the recent intraday high of $87.50 to the intraday low on Tuesday of $66.36, it corrected by well over 10%. Within 3 days, MMP was back up to $81.48. Some MLPs have very thin markets that provide unusually wide spreads that can give patient traders some great opportunities to grab bargains. It takes some guts (and cash), but having open orders, laddered down, well under the market, can prove to be extremely profitable. When the price starts to collapse, don't panic and cancel your orders. Leave them alone. Don't let buffoons like Jim Cramer cause you to panic. Set up your own game plan, and stick with it. Stop watching CNBC. Turn off your computer. Take a laxative. Watch a movie. JMHO.
Until about two weeks ago, I was severely under-invested in stocks. Sentiment had gradually turned overwhelmingly positive, investors were complacent, and all memories of 2008 seemed to have been erased. During the past week, I did some very aggressive buying in names that I had been watching carefully. EPD and MMP had been on my radar, so I put in orders very substantially below the market. As the orders got executed, I put in new orders even lower. I didn't get everything I wanted, but that's part of the game.
When I was selling in 2007, I had a premonition that the country would have a catastrophic mortgage crisis that would cause a stock market crash of biblical proportions. Shortly after LEH went bankrupt, and Obama was elected, I was confident that we were at or near the bottom. We're not going to see another 2008/09 this time around, but this correction was long overdue. The pendulum always swings too far. The trick is to guess how much too far it might go. The talking heads are all using words like "reflex rally" to describe days like Friday (10/17). I take that as a good sign that the correction is nearing its end. The panic selling will eventually turn into panic buying by those who can't afford to miss the next big move up. Money managers don't get paid the big bucks to be sitting on cash when prices are soaring. A year from now, this correction will look like a little blip on the charts that will have been forgotten about by most people. In the meantime, some of the charts look like shark's teeth.
GE will probably increase the dividend again this year, especially given the good earnings. My guess is that it will go to $0.25/quarter ($1.00 annual). The BOD needs to do something to get this stock moving again, and that might help.
I've been in this game long enough (50+ years) to know that junk goes down and stays down. Quality goes down with the junk but bounces right back. I live for markets like what we've had in the past couple of weeks. That's when I do my buying. I was like a kid in a candy shop in late 2008 and early 2009. I had gotten out it late 2007... a little too early, but better too early than too late. When I told people to get back in, they were like deer in the headlights. They were paralyzed by fear that the whole country was going down the toilet, so they sat on the sidelines until most of the recovery had run its course. Knowing when to get out is great, but knowing when to get back in is even better. For most people, the best strategy is to not sell... just go along for the ride. That's why I tell most people to keep the major part of their money in something like VTI and forget about it.
At the present rate, the DRIP people will end up buying at a much higher price than if the distribution had been payable early this week.
It looks as if the smart money has discovered a new safe haven. MMP!!! We're seeing a buying panic as investors realize they missed a once-in-a-lifetime opportunity to pick up one of the great bargains that the panic sellers created. The sellers are probably already kicking themselves in the #$%$, and they're likely to be kicking a lot harder in a few months when this is all over and forgotten. Earnings come out in a few days.
Take a look at the chart comparison, do some thorough research, ask all the "professionals", and then do the most sensible thing; flip a coin. SPY is more like VOO, and I much prefer the VOO. That said, I prefer the VTI by a very small margin. Performance is essentially the same over the long term. There are no fees of any kind if you buy either (or both) through Vanguard. You pays your money and takes your choice.
I rest my case. Today's rebound should convince the skeptics that MMP has the strength to buck a terrible market. Panic will never be rewarded; patience will. When your gut instinct is to run for the hills, it's usually best to do the exact opposite. This market has given you the best opportunity to pick up a real bargain. It's not just buying the right stock that matters. What matters even more is buying it at the right price. Buy wholesale, sell retail. (My mother told me that.)
You're being way too pessimistic and showing signs of panic. Get control of yourself. When I see posts like yours, I know the bottom is near. Panic is the greatest enemy of your wealth. Buying opportunities like this don't come alone often enough to suit me, and I'm taking full advantage of this one while there's time. Put your open, limit buy orders in well under the market, and just stop watching it. I bought MMP that way at $67 yesterday, and look at it now.
The die-hard bulls on MCD are getting a severe dose of reality. MCD has 3 things going against it; their boring food, their lousy service, and the overall stock market. I seriously doubt that it will get anywhere near $60, but I can believe $84. That's realistic, and I'd call it a buy at that price. That is, unless they have a disastrous earnings/revenue report. I believe this correction will be over before year-end and will prove to have been a good buying opportunity. There are only a very few things that could derail that, such as a full-blown Ebola epidemic. If you take Ebola off the table, the bears will be in retreat sooner than most people think. I've been very bearish on MCD, but I'm now more neutral at $90.
I tend to agree. MMP had its own, personal wash-out when it got down to $66.36. My gut feeling is that we've seen the low. If it couldn't break down today with the overall market tells me that the worst is over. Up $5.37 in an otherwise terrible market has to be taken seriously. I say that anyone who wanted to get out has already done so. The panic selling could easily turn to panic buying, not to miss out completely on a move to new highs - possibly by year-end. If you look at the long term chart, MMP has had some dramatic moves, both up and down. We had an exaggerated "V" bottom yesterday and another test today (10/15). IMO, MMP is going up from here. All aboard... the train is leaving.
This is especially encouraging given the horrible market today. I don't expect a dramatic recovery to match the severity of the sell-off, but up a little is still better than down a lot. The skies will be blue again, someday.
Don't panic! Resist the urge to dump and run. Now is when you should be buying, not selling. This drop is not the end of the world (but it sure looks like it.) Put in open buy orders well below the market and pick up some great bargains. Exports are going to be important to a price recovery in oil to take the oversupply off the domestic market, and EPD looks to be way out ahead with the takeover of OILT. IMO, that will turn out to be a brilliant move.
You're on the right track. I was looking for a near-term bottom at about $66 based on nothing more than a pure guess. Having a limit order in way below the market will give you the best chance to pick up a real bargain. This company is not going out of business. They seem to be financially sound and growing despite what the unit price has done lately. IMO, buying below $70 makes good sense and is likely to be well rewarded. (Below $70 could also mean $60 or $50 or $40.) Resist the urge to panic and run for the hills. You'll be kicking yourself when the inevitable rebound comes.
Looks as if the argument is settled; cheaper oil is bad for MMP. In fact it's disastrous for MMP, at least as far as the unit price is concerned. I'm amazed at how suddenly the sentiment reversed itself. The momentum is clearly negative. It's more like a stampede for the exits with no buyers in sight. This kind of panic selling can reverse just as quickly as it started, but I don't see any sign that it's about to happen anytime soon. There was no question that it was overbought, but it may be getting oversold at the present price. One thing seems fairly certain; it will take a lot longer to go back up than it took to go down.
When Zacks is wrong, they're disastrously wrong. Now Cramer is down on MMP, also. With huge selling and a severe shortage of buyers, it looks bad for at least the near term. To make matters worse, the Russians are pulling most of their troops back from the Ukraine border in an apparent signal that the sanctions are taking a heavy toll. That could push oil even lower as Russia is heavily dependent on oil revenue to keep their economy afloat.
Unless and until it becomes legal for U.S. producers to export oil, the surging production will create a glut that will fill storage tanks to capacity. We simply don't have refining capacity to make use of all the crude that can be extracted with modern technology. That's very bad news for MMP. The low price of oil may be good news for end users (consumers), but it's bad news for producers and midstreams. If producers start to cut back on production, the strongest part of the economic recovery will be stopped dead in its tracks. If the government allows exports to take the excess supply out of the market, the price will quickly stabilize. If not, we're likely to see still lower prices but less demand because of limited storage and refining capacity. There's only so much we can use unless we bring back millions of 10-MPG cars from the 1950's and pull all the insulation out of millions of houses. Not going to happen!
It all depends on which comes first; the chicken or the egg. Does increased demand cause the price to fall, or does the drop in price cause the supply to increase? If usage increases as a result of lower prices, then the price will quickly rise. That's economics 101. The forces of supply and demand rule the day. The price depends largely on whether U.S. oil exports will be allowed to take some of the excess supply out of the system. If production is cut back as a result of lack of storage or refining capacity, then less oil will be pushed through the pipes. It won't have anywhere to go. A more immediate confirmation that I'm correct is the fact that MMP has gotten pummeled mercilessly as the price of oil has declined. If the drop in oil prices was likely to result in increased fees for the midstream operators, we'd have seen higher unit prices by now. I rest my case. (I own a ton of MMP and sincerely hope your theory is correct, but I don't think so. ☹)
Massive selling and no buyers is taking a heavy toll on MMP. Volume by 11:00 is nearly double the average daily volume. The V bottom this morning might have cleared out the panic sellers, but it's way too soon to tell for sure. Pretty ugly, though. Thanks Zacks!