Quote:
Originally Posted by chr2002ca
Greg,
It always seems much harder to know when to sell than when to buy. Using your KMP for example...You own 22K shares of KMP, and the stock has been trending downwards for the past year when the market's been going straight up, and this latest news brings it back to early 2011 levels. You're still making 6.x% on the distributions which is great, but what exactly would you be looking for to convince you to sell and reallocate to something that might be a better performer moving forward? Is it a specific level, or specific news, or a downward trend of X number of years that under performs market or similar stocks' trends? Of course, if you bought KMP back in 2000, or even 2005, you're doing great on both growth and distributions, but I'm just curious about the triggering event to sell. In this case, it appears you're not bothered by the recent news and will hold, but what would bother you? 
Thanks for all your input.
-Chris |
Great question --- Not sure I have a perfectly direct answer. I sold my position in McDonalds because I don't eat there anymore - rarely - and when I did - I wasn't happy with the places or the food....
Kinder Morgan is about a 100 BILLION dollar "entity" if you factor in all their businesses. Energy prices are often volatile... and as we all know - you have risk from a pipeline break - or some environmental issue etc.
So here's why this is hard to answer. Because it all depends. Depends on why someone is holding the issue. I'm holding it because it pays me $30K PER QUARTER (29,500 actually)... which is very nice cash flow on one single holding. I have added to the position as it's slipped down. I'm currently underwater on the holding - but not by very much. Given the cash flow it represents to my portfolio... that's the trade off. If I sold it I'd have a LOSS -- and then would need to find a replacement for $120K per year. So for me - that would be a MAJOR factor. What else can I buy at todays prices - with that cash flow - that I would TRUST to not only make up for the loss - but also not go down (EVER? like that would happen). So until there is some FUNDAMENTAL reason -- I'm a holder. At the value of this position - I'm not going to ADD any more to my position. I have plenty of it.
In other words -- the CEO is a major holder - he's putting his money where his mouth is. Fundamentally the company and the way it operates hasn't changed. What changed is somebody wrote an unfavorable article. The company will still be there 6 months and 6 years from now - when the article is forgotten next week.
This is a long term holding for me - and todays or tomorrows price isn't a consideration for me and I don't see an issue with the company that currently affects my thinking. I've been wrong before - and might be this time but I'll stay the course in this one.