Crosstex Energy

I have placed this grid describing the stock price returns of Crosstex for a 10 year period of time.  It illustrates a couple of points.  The first is that numbers compound geometrically, not arithmetically. Here is a real life example of gains totaling about 440% and loss was about 90%.  Added together would create a value of 350% over ten years.  Instead, it was a nearly 130% gain.  The lesson?  There are several, but probably the most important is that volatility is only good when you understand what you are investing in.  If you did, 2008's downturn would have been a huge buying opportunity. If you did not, you might have sold at the wrong time.

I bring this grid up partially because I still don't understand the company. Crosstex was a midstream pipeline company that was merged with Devon Energy's pipeline assets to form Enlink in 2014. Pipeline companies have again gotten headline attention as their prices have dropped precipitously.  In 2008, I started analyzing the company when the stock price was at $33.  There were two reasons that I decided to study it.  First of all, a well-known investor named Glenn Greenberg had taken a large position in the stock.  Second, the company's headquarters were within a couple blocks of my home; I could walk to a meeting with management.