How is This Market Treating You?

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While we don’t know how this market is treating you we do know that we are surviving just fine–and hope you are also.

The new 2015 Model Portfolio – Blended Income has lost about .6% in the last 2 days–not great, but dramatically better than the S&P 500 which is off 2.7%–this tracks well with prior sell-offs–common stocks lose about 4 times the amount of our typical income model.  The 2014 Model Portfolio – Blended Income is off just .36% this year.  Also this was expected–the 2014 Model has less exposure to common stocks than the new model.  All in all a respectable showing.

MLPs are still taking a beatdown and one must remain extremely cautious–although certainly we are approaching a bottom in crude prices. The biggest problem is that when a bottom is reached how long will prices stay low?  All we can do is watch the objective data and take a best guess. The key is to limit size of positions and average in over time.  We have taken a position in LinnCo (ticker:LINE) which is very modestly sized and it has hung in there this week after a more than 50% distribution cut.  Also we have taken a position in CVR Refining (ticker:CVRR) which has taken a bit of a haircut this week. In neither case did we ‘back up the truck’ so to speak.  We are rather conservative folks so while we would like a taste of a bounceback–we are not attempting to hit home runs as that raises the risk profile too high for us.

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Speaking of CVRR we are going to try to write something more extensive soon on ‘variable rate’ MLPs. Even though over time they can move up and down alot we believe that investors are finally figuring out that some quarters they are going to pay a huge distribution and other quarters they are going to pay zilch.  That is the nature of the refining MLPs.  We think CVRR is a great very long term holding.  We are a bit less positive on Northern Tier (ticker:NTI) only because they only have the 1 refinery which exposes one to more potential production disruptions.

REITs continue to hang in there very well–as they have done continually for the last 6 months. The day will come when they will be sold down-but it sure hasn’t been lately.  As a group one must believe they are getting extended on the upside, but we are not going to try to time the peak–another losers game–we aren’t that nimble.

In summary we are simply hanging in there with current holdings–a few days is way too little time to ponder further investing moves.

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