Yet Another Good Question

I am not trading or implementing any new accounts today, so I have time to just read, write and watch.

This question came from a Mr. Richard Feder in Fort Lee, NJ.

There seems to be an income steam thread going this week and thus this question. Have you had any experience with energy trusts either Canadian or US based? I have sold naked puts for some time and one of the ways that I have found to help limit the kind of instant volatility that you use in your CREE example is to try to avoid earnings season entirely for this type of strategy and understand that what you don't know seems to goes up exponentially as your time horizon gets longer.

I have written a couple of time about Energy Trusts/MLPs before. The big difference between Canadian and American is that the assets in an American trust deplete, so part of what you are getting back is capital. The Canadian ones are/can be perpetual. At this point I only own one these for clients, I used to own more. The reason I have reduced exposure is that many of them had phenomenal runs. I used to have San Juan Basin (SJT). I bought it in early 2003 somewhere near $14. I sold most of it late last year at what I think was about $32. When I bought it I never expected that type of move, not even close. Many of them had similar moves to SJT. The one I kept has less volatility. I do not expect oil to break $40 anytime soon. If it does I think the trusts, as a group, will get crushed. There is way more risk in them now. I'd look to step back in if/when oil does get that low.