94 THE BiG DROP
Good luck getting that out of Treasury bills.
But what a broker will come along and say, is: “I’ve got
a fund right here; it’s a bond fund and it’s paying five or six
percent.” And the investor says: “Well, I’ll take some of that.”
But often, investors don’t look at what’s inside.
When times are good and everyone’s rocking and rolling,
the economy’s growing, new oil is being discovered and the
price of oil seems strong; those funds do pay five or six percent.
I’m not saying you can’t make that.
But when all of a sudden losses come rolling in you may
find that your five percent dividend doesn’t compensate you
for twenty percent portfolio losses when these things start
going belly up.
Look at the equity names in your portfolio, but also look
in the bond part of the portfolio to see if inside any of these
funds they’re holding notes issued by, or bonds issued by some
of these.
They’re not too hard to find. Simply screen for small,
mid-sized oil exploration and production companies, espe-
cially those in the fracking industry. Again, North Dakota,
Pennsylvania and Texas are among the main centers.■ The Oil Price: The Good, Bad and the Ugly
Everyday Americans have good reason to celebrate and fear the
recent collapse in oil prices. This is the fastest, steepest decline
in oil prices since the mid-1980s. Results are already showing
up at the gas pump. The price of regular gasoline has collapsed
from almost $4.00 a gallon to $1.99 a gallon in some places.
For a driver who uses 50 gallons per week, that’s an extra
$100 per week in your pocket: enough to buy a new dress or
take your family out to a nice dinner. If that new low price
sticks, the savings keep coming, and it adds up to a $5,000 per
year raise. Best of all, the government can’t tax that $5,000. If