The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / Value Hounds

URL:  http://boards.fool.com/kitkat-you-wrote-spreads-look-low-right-now-30859727.aspx

Subject:  Re: first linn now KMP,KMR,KMI Date:  9/6/2013  5:23 PM
Author:  JustMee01 Number:  16026 of 20679

KitKat,

You wrote:

Spreads look low right now compared to 2008-2009.

Do you mean KMP yield spreads to Treasuries? Yes, they are below 2008-9 peaks, but they are still above normal levels. Its also wider than peers like EPD, PAA and MMP.

As far as 2008-9 collapsing MLPs, they certainly did feel significant pain. But what didn't? KMP fell 30% in the crash and 20% as the dot.com bubble burst. Neither are catastrophic from my perspective given their economic context.

In contrast, through 2 short year-long stretches of rising rates in the 2000s, losses were actually just as bad as during those corrections. Those were both 1%ish moves on the 10 year. The 10-yr right now is flirting with 3% and who knows how far it will push up after close to half of decade of manipulation. It's rising rates that worry me more than market corrections with KMP.

Peter
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us