I like PWE a lot, but I think we are in a MAJOR BEAR market for energy.
I have started buying DUG, and ultra short oil fund, to hedge my reaming positions, which are a few oils and Royalty trusts. That and cash. I am late with this, and my portfolios are down 20+% from May.
By hedging, I think I can hold some royalty trusts, and collect the distributions, with the DUG making up some of the losses.
That is only a partial hedge, and not perfect, so I am going to more cash also.
I think almost every stock, including royalty trusts, goes down because of macro economic factors that don't have much to do with PWE, but have to do with the availability of money and how scarred people are.
I don't want to try to call a bottom. I will try to wait until we see energy stocks heading up again.
That could be 6 months or 3 years.
You make the key point - no stock is getting a reprieve - it does not matter what the distribution level is (PWE is at 14%), what assets they have, or how much oil they have found (like BZP).
I think we are in a big time bear market for energy, and everything else - gold, metals, consumer goods, etc. and I don't want to fight this tidal wave.
I will let the Royalty distributions go to cash, and buy later.
Look at your own situation, including taxes. If you have some PWE from a low basis selling could cause a big tax bill. You may be able to designate to your broker which shares get sold.
If you have a multi-year time horizon, like Tommaso or other people on the Canadian royalty trust thread, you might just wait this out with most of your shares. My time horizon is only about 1 year, so I felt I needed to hedge, and I bought some DUG.
This is just what I am doing, not advice, of course. |
