I suppose my 2016 outlook for MLPs and pipelines should begin with a mea culpa about something I wrote earlier in 2015. On September 24th, I wrote:
“I generally regard pipelines as being a historically defensive area of the stock market, comprised of relatively steady, fee-for-service businesses. (Pipeline companies’ stocks) may be receiving undue punishment in the midst of the oil crash of the past 15 months. (Their) prices are down about 16% since June 20, 2014, compared to nearly a 38% decline for the overall energy sector, and a 63% crash in oil prices.”
The First Trust North American Energy Infrastructure ETF (EMLP) closed at $22.17 that day; and while EMLP did rise to nearly $24 over the next couple weeks, it then plateaued in October and plunged below $20 again by December 4th. It closed Tuesday at $20.15.
I regret having used adjectives like “defensive” or “steady” to describe these stocks. The past 7 or 8 months have certainly demonstrated otherwise!
The jury is still out on whether these stocks are “receiving undue punishment,” though. Perhaps 2016 will provide the verdict on that. Continue reading "2016 Outlook For MLPs And Pipelines"