VNR suspends cash distributions

newlogo7.9.10For those of you tracking my reentry into VNR may be interested to know that VNR has suspended cash distributions for both common and preferred units. If you’re not used to deal in MLPs, it means they have suspended the dividend.

panicSo, time to panic? Time to worry? Nope. I knew this was a risk when I bought my position at $3.17/unit. At time of writing, price is at $2.44/unit. That is 23% drop in value with no cash coming.

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years. –Warren Buffett

panicInvesting in the stock market has to be long term. People that day trade have been proven over time to actually lose money. Instead, I am investing in the odds that natural gas and oil will eventually recover, VNR will resume paying distributions, and the price will rise again.

VNR has shown a strong history of making profitable decisions. Halting outgoing cash flow while waiting for commodities is a good decision.

dont-panicThe problem lies with emotional investors. People that either depended on VNR’s monthly cash flow (perhaps retirement income) or expected to make a quick buck, are more likely to panic and sell out now, locking in a solid loss.

I don’t need the money today. Instead, I prefer to wait for the recovery.

Good luck and don’t panic!


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