April 1, 2015
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(Update: Spiked up today and came back down. We bought at $50.31. We plan on holding ‘forever’.)
We are adding yet another risky position in the “headin to Vegas” portion of our Core Portfolio. Obviously we are not adding any oil positions like MLPL unless we feel that this segment will be increasing through the rest of this year and beyond.
As everyone knows the energy patch has taken a hit. But we like to buy stuff when it’s on sale, and energy positions are priced to buy. That NOT to say that it can’t go DOWN further. So you will want to determine if you can take the risk and invest now, or WAIT to see higher prices.
AS I WRITE THIS THE PRICE IS SPIKING UP. WAIT FOR POSSIBLE LOWER PRICES…WE WILL WAIT AND WATCH
Note that MLPL is involved in transportation and processing which is the same as other position we have been buying recently:
Petroleum Transportation makes up 38.6% of the index, Gathering and Processing 35.1%, and Natural Gas Transportation 26.3%
We ARE taking a Small position now for the Long Term. If prices decline from here we may buy more.
About the ETN
The ETRACS 2xMonthly Leveraged Long Alerian MLP
Infrastructure Index is designed to track a leveraged investment
in the Alerian MLP Infrastructure Index (the “Index”), and pay a
variable quarterly coupon linked to the leveraged cash
distributions associated with the underlying MLP constituents,
less financing costs and investor fees.
Exchange-traded Notes are senior, unsecured, unsubordinated
debt securities that provide investors with exposure to the total
returns of various market indices, including those linked to
stocks, bonds, commodities and/or currencies, less investor fees.
ETRACS are innovative investment products offering easy access
to markets and strategies that may not be readily available in
the existing marketplace.
Why Invest in MLPs?
MLPs are limited partnerships primarily engaged in the
exploration, marketing, mining, processing, production, refining,
storage, or transportation of any mineral or natural resource.
Because the MLP structure requires the distribution of at least
90% of an MLP’s income to investors (known as unit holders),
MLPs have typically produced attractive historical yields
compared to other income-oriented investments and have
exhibited relatively low historical correlation to the market prices
of a wide range of asset classes, including equities and
About the Underlying Index
The Index, comprised of 25 energy infrastructure MLPs, is a
liquid, midstream-focused subset of the Alerian MLP
Infrastructure Index (NYSE: AMZI). The Index, whose
constituents generally earn the majority of their cash flow from
the transportation and storage of energy commodities, provides
investors with a benchmark for the infrastructure component of
this emerging asset class. The Index is calculated using a capped,
float-adjusted, capitalization-weighted methodology that results
in greater diversification versus a pure market
capitalization-weighted index. The Index was created in
March 2008 and has no performance history prior to that
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