Investing 102

[96z28ss]

Wow I just looked at my KMI damn I never lost so much money before.
I wonder if we are all going to ride it down to a penny stock?

Here's hoping
it turns around in a year or two.

[GregWeld]

Originally Posted by PDXFactory

I ended up in KMI as a result of being a KMP share holder...and those of you who are Kinder Morgan holders know what has been going on over the past 8 months or so...a 50%+ drop in share price.

At this point I don't see a lot of reason to pull back at all, and I have been considering adding to my position since the stock is "on sale" these days and it would be nice to average down my price per share. I'm far from an expert though, and I'm curious if those of you with more experience see any reasons to be nervous (like the rest of the market seems to be with KMI!)?

Originally Posted by MPM IV

I'm not the guy with more experience, but I'm curious to hear other's thoughts as well.

Of the seven positions I own two are oil, one being KMI. I started buying before I understood about keeping each position to 5%. I'm pretty far out of balance now which makes me hesitant to add more, but it would be a significant reduction in price.

In full disclosure, I own 25,000 shares of KMI -- and currently have a sizable paper loss on this holding.... almost a half million dollar "loss" (you don't lose anything until you sell - I'm not selling).

There are "rules" that we've discussed in Investing 102 -- one of which comes to mind - and has been restated many many times i.e., "Don't try to catch a falling knife".

With oil in free fall - we don't know where these oil and oil related shares will go. Currently we're in a market where anything remotely related is "toxic". If you're a holder - this is known as "pain". These are painful holdings right now. This is why we limit holdings to 5%.... so they're only somewhat damaging even if they went to zero... This is why I preach, at the very least - collecting a dividend while you wait for the possibility that the share price recovers.

I intend to buy more KMI to average my cost basis down..... but I'll do that a little bit (chunks) at a time because I fully expect more pain before a gain. The baby is being thrown out with the bathwater right now. I own a company (APU) that distributes LPG.... and it's just getting hammered. Why? No particular reason except that it's oil related.

Think of this like what happened when the mortgage debacle hit the housing market. Good builder or bad - the builders got creamed - lumber suppliers got creamed - bricks got taken to the woodshed - roofing manufactures - plumbing suppliers.... you name it. The guys that made a ton of money on the recovery of the housing market were the guys that bought shares - bought houses - bought apartments - when nobody else wanted 'em.

[GregWeld]

We're in such interesting times in the world - as well as the equity (stock) markets. We have oil plunging worldwide. We have entire governments that have suddenly discovered their policies of dipping into the ever bottomless barrel to support their spending habits are problematical (to say the least)... We have China waking up to discover that they too - are mere mortals... And we have the FED attempting (perhaps) to raise rates.

NOW ADD ---- End of year (December) tax selling and re-positioning. Stocks that are down - tend go down more because people need to take some losses to cover some gains - might as well sell the biggest losers - causing what? More losses...

Some of these "losers" will rebound - as the cash that is taken in from the sales eventually gets redeployed - and the stocks that were sold become "bargains". Funny how that works isn't it?? In the since that - As the shares fall - at some point they become desirable because of price...

What's the point?? The point is to understand and try to make some sense out of it all.... and to prepare yourself to try to buy some of the bargains - if you're a long term investor. The key is to understand yourself and being able to handle the fact that some of what you buy might be still in for some pain and you're just "early" (catching a falling knife). This is why you don't buy a total position all at once. Now - that applies only if you can apply it. Obviously if you're buying 10 or 20 shares - at that level you just buy the whole position. But if you plan to buy 100 shares -- try just buying 50 -- and waiting. Buying the next 50 (or not) after you have a better overall view - and have tested your fortitude and thought process.

I'm personally sitting on a mountain of cash - double what I normally have at any given time - earning nothing - but waiting for the first quarter of 2016 before I even think about buying. There's just so many "events" that are colliding and at times - almost seem overwhelming. This doesn't mean I'm planning on doing nothing - it means I'm waiting for some more clarity and direction. I don't even care if I think the direction is more pain. If that's the case - I'll just buy fewer shares with each buy. I know that I'll never catch the bottom of anything - and I'll never catch the top of anything on the sell side. I'm okay with that. I'm not greedy - I just want to catch "some" of it. In the meantime I'll collect and spend the dividend which - to me - is far more important.

[CRCRFT78]

My KMI shares are down 46% and for whatever reason, I don't care. That doesn't mean I am not watching though.

[PDXFactory]

That is my basic take - just to keep an eye on it and see where it goes. I did end up buying another small block, and have cash in reserves for when it (hopefully) finally turns the corner! I'm a little surprised that it has continued to drop...but it is the selling season!

Thanks to Greg and all for the feedback!

[So Cal Camaro]

I just bought a few more shares of KMI, always try to add a few more shares when I like the company and it is below my original entry point. I'm in for the long haul and eventually they usually rise again. Only one I got killed on ever is Lehman Brothers, but made a killing on others in the big downturn.

[WSSix]

x2 Jose. I'm not overly concerned yet either but I'm not ignoring the situation.

This really is interesting to watch. Gas is below $2 here in Atlanta. Never thought I would see that again.

[SSLance]

My wife bought some KMI at $22.50... She's usually a good luck charm and I figured that would do the trick.

Strangely enough, I'm alright with my KMI and ETP being down 50% as well. I got caught in a similar situation in 2008-2009 with my high yield tax free muni bond funds. Their asset value got hammered because their insurers were tied to the mortgage defaults...when they really didn't have anything to do with the mortgage crisis at all.

Back then, I bailed from them at the bottom and went big into equities...and that paid off fantastically...but they were like 75% of my total portfolio. The two mentioned above are (or should say "were") just over 10% of my portfolio now.

I think (hope) this is just another case of Mr Market throwing out the baby with the bath water, mix in a little tax loss selling and bam...this is what you get.

[toy71camaro]

I'll be keeping an eye on this one. I've been considering KMI for a long time to get a stake in the Oil/NG systems. Now might be a good time to stake a small claim of it.

[SSLance]

There's the hammer...

Kinder Morgan whacks dividend by 75%
Dec 8 2015, 17:11 ET | About: Kinder Morgan, Inc. (KMI) | By: Carl Surran, SA

Kinder Morgan (NYSE:KMI) -7% AH after announcing a 75% cut in its 2016 quarterly dividend to $0.125/share ($0.50 annually) from the current $0.51, the company's first-ever dividend cut.

KMI says the move enables it to use a significant portion of its cash flow to fund the equity portion of its expansion capital requirements, eliminate any need to access the equity market for the foreseeable future, and maintain a solid investment grade credit rating."This is in the best long term interest of our shareholders,"

CEO Steven Kean tells WSJ. "It gives us the flexibility to fund our growth in other ways."The company will hold a guidance webcast tomorrow morning at 8:30 a.m.


It was already priced in, mostly anyway...I'm thinking the stock might just pick back up some steam now. Main complaint has been cash flow related, this stops that, right?