Laurence said:
Did everyone manage to sell before the bottom fell out? Oh, I understand that this is still a high price by historical standards, but aren't we about 35% off the high? Still hanging tough, already sold, buying more? My only investments in oil are through my S&P Index ( yay for Chevron, Exxon, etc.), so I missed out on the halcion days.
I remember the agonized postings of this past Summer. As the price of oil, and gasoline, has continued to drop even below my expectations I wondered if anybody was ever going to post about
that.
I still own XOM and BP. Oil has been an overweight in my portfolio for a few years, and I have been planning to lighten up a just a little this month or next. I do want to secure some of my profits, but I'm not a market timer and all I'm trying to do is adjust some sector allocations that are out of whack. They've backed off recent highs but I'm not concerned because I'm definitely not a short term investor - I've owned both of these issues since I started investing in the early 80's.
The recent "oil crisis" didn't just happen. A lot of cash was chasing profits and some people saw/created some holes in the market regulatory oversight that provided them with the means to drive the prices up. Katrina, Rita, Iraq and Iran were all just handy excuses to push it ever higher. I guess some hogs are being slaughtered now. I've stayed away from even pretending to know what the future is going to bring for oil prices, but I did think that prices were going to come down although I have not a clue how far or for how long. How far and how quickly prices have unwound has surprised me a little and if I had to make a guess I think we'll reach some kind of equilibrium before long. And since the genie is out of the bottle on this game, the next time we're perceived to be in a tight spot on supply there will be a lot of people piling in trying to make a buck.
But from the standpoint of my investments in XOM and BP (and maybe adding another company or two in that mix as I lighten up on those two) it does not matter. They'll keep on pumping oil, making money and paying me dividends. And unless oil starts suddenly filling up depleted wells, I think price appreciation will continue to be in the cards for a long time to come.
As an aside, I do have to ask whatever happened to Bush and Cheney manipulating the markets just to win the election. That didn't work out too well for them, but we're now two months past the elections and the prices haven't gone back up and in fact continue to drop. Is the secret Oval Office oil price contol lever broken?