The Seven Sins of High-Yield Investing

Sin #7: Buying Domestic Energy Trusts

Most high-yield income investors want an energy component within their portfolio as a long-term cornerstone against inflation.
That makes perfect sense, but only if that income vehicle can stand the test of time. It does this by replenishing reserves at
a rate higher than those energy assets to the market place at whatever the prevailing prices are.

This is the main drawback of owning domestic energy trusts. They have fixed reserves, meaning that once the life of the resources
in the trust is depleted, the trust shuts down and goes out of business.

You can only imagine what happens to the share price of such trusts in the long run. Sure, they get a pop when crude jumps to
$100 per barrel, but eventually they run out of oil and gas to sell to the market.

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