Re: All set to go shopping
Whenever I can, I like to find investments that won't be hurt by discontinuities. Back in the mid-80s there were gas producers with contracts with the pipelines at $6-$9 MCF. These were hugely over market, since the bottom had fallen out of the gas market since they were contracted. Investors were seeking these companies, since they were getting more for their gas. I reasoned just the opposite- the only thing that might happen here is bad, the contract gets broken. I didn't know if that would happen, but it seemed at least a fair bet. So I went looking for an entity with below market contracts, figuring this could only stay the same or get better. And the same forces that were set in motion trying to release pipelines and consumers from paying over market rates, might also allow this company to get at least a market rate.
I found an MLP with gas contracted at $0.35! So I bought it, along came FERC, and before too long my outfit was getting $1.80, just like everyone else. And of course they were now free to respond to market forces, which I viewed as mostly upside.
Today, twenty years later, the quarterly distribution on this outfit is close to half of what I paid originally. If I hadn't sold some over the years, to "diversify", I could almost have retired on that one small investment.