I like Oil

[dallas27]

I keep looking at RSX among other things but have been [luckily it turns out] too gun shy to pull the trigger. Next week will likely see me dipping my toe into these waters...unless I chicken out again.

I think you are smart to hold back, I think their is still more bad to come. Opec is playing a dangerous game. If they don't get what they want, I could even see them falling apart. I forget the economist, but at the time Opec a leading economist and game theorist said it couldn't last. That he was wrong changed economic theory.

That their market share has become so much smaller they may not be able to maintain the cartel collaboration now that the collusion reward is eroding as others enter the market.

Certainly interesting times ahead. If they break, I pray for the poor souls living in the Mideast - terrible things will happen to them, just terrible.

 

[Fermion]

Certainly interesting times ahead. If they break, I pray for the poor souls living in the Mideast - terrible things will happen to them, just terrible.

Why is that? Certainly they have used the past 50 or so years of generous oil profits to develop other industries such that they are not relying on oil money for the economy?

 

[REWahoo]

I think you are smart to hold back, I think their is still more bad to come. Opec is playing a dangerous game. If they don't get what they want, I could even see them falling apart. I forget the economist, but at the time Opec a leading economist and game theorist said it couldn't last. That he was wrong changed economic theory.

That their market share has become so much smaller they may not be able to maintain the cartel collaboration now that the collusion reward is eroding as others enter the market.

Certainly interesting times ahead. If they break, I pray for the poor souls living in the Mideast - terrible things will happen to them, just terrible.

Here is an Opinion article regarding the future of OPEC : It's time for OPEC to surrender

OPEC — the cartel that used to bully superpowers, unnerve financial markets, and bilk drivers throughout the world — is clinically dead.

 

[dallas27]

Why is that? Certainly they have used the past 50 or so years of generous oil profits to develop other industries such that they are not relying on oil money for the economy?

Hoping that was sarcasm.


Sent from my iPhone using Early Retirement Forum

 

[Rosie]

My DH inherited a lot of XOM last year. We weren't comfortable having nearly one-fourth of our net worth in a single stock -- even Exxon! -- but by the time we could sell it, it had appreciated a great deal & we didn't want the large cap gains hit.

So we held on to it, figuring heck, worse that could happen is it would keep going up. But with today's price drop it was back down to the inheritance price, and we sold about half of it. Debating whether to sell more, or to hang on to it, we'll see what transpires.

At some point we'll probably put the proceeds in a total stock mtk etf (VTI), much more our speed.

 

[Htown Harry]

...I thought I would get razzed about LNCO!

OK, I'll bite.

It sure looks to me like LNCO is in fact Cutco, the (falling) knife company.

 

[aja8888]

OK, I'll bite.

It sure looks to me like LNCO is in fact Cutco, the (falling) knife company.

Many of the oil/gas 6 month charts look like this...

 

[Running_Man]

For those looking to play oil type companies the best value is not to play the oil ETF but the closed end fund Petroleum and Resources Corp. PEO it trades for a 13% discount to the stock value and pays out 6 % of average price minimum for the year. Most of that is paid out in December and is already ex dividend so payout of capital gains or more likely principal won't occur for a year. top ten holdings:


Exxon Mobil Corp. $127,760,342 14.2%
Chevron Corp. 88,678,624 9.8
Schlumberger Ltd. 56,946,400 6.3
Halliburton Co. 39,407,224 4.4
Occidental Petroleum Corp. 38,940,750 4.3
LyondellBasell Industries N.V. (Class A) 38,465,640 4.3
EOG Resources, Inc. 35,449,160 3.9
Phillips 66 35,066,970 3.9
Dow Chemical Co. 28,710,900 3.2
Anadarko Petroleum Corp. 27,896,000 3.1
Total $517,322,010 57.4%

Petroleum & Resources Corp. | Investments in Global Energy and Natural Resources

 

[Looking4Ward]

My bet is oil will be higher than it is today sometime in the future.

 

[eytonxav]

OK, I'll bite.

It sure looks to me like LNCO is in fact Cutco, the (falling) knife company.

Falling knife analogy may be valid, but throwing Cutco under the bus is not, as they are privately held.

 

[almost there]

I added VGENX at 63 / 56 / 54.
Have not owned ind stocks in years.
But am thinking I should buy XOM, CVX and COP today. Long term hold for Div.
Thoughts?

 

[Fermion]

I added VGENX at 63 / 56 / 54.
Have not owned ind stocks in years.
But am thinking I should buy XOM, CVX and COP today. Long term hold for Div.
Thoughts?

Nobody knows for sure, but XOM is very likely to be cheaper in a few weeks than it is today. It has not dropped as much as it should have. I am a buyer though in the mid 70s.

 

[almost there]

Thanks. Just added CVX at 103.75.
My plan is to hold it for years.
Your signal to short it. LOL LOL


Timber...............


If it drops 10%. that's my next buy.

 

[Running_Man]

Chevron and Mobil are both large and well financed corporations, Chevron has a significantly lower return on their capital and shareholder equity than XOM and from 2007 to 2014 has increased their debt from 6 billon to 24 billion while Exxon Mobil has increased debt from 7 billion to 12 billion while XOMt twice as many shares so there is far less debt with Exxon Mobil which provides XOM more flexibility in this price drop enviroment and would be my pick over Chevron which I have held in recent years but sold in June 2013 @ 120 (became a 4 in timeliness on Value Line and dividend yield at time was in a range low at 3.3%). Again PEO's portfolio is 24% these 2 stocks and sells for a 13% discount to market price so that is well worth a look.

If Exxon Mobil were to fall into the 70-75 range the dividend yield after next year's increase I expect should be 4% and that would be an a very good entry point. At 85 Chevron would be yielding 5 percent and would be my target look at the present time on a panic. Based on current market conditions and comments from OPEC I do not think oil price will be just reversing and going right back up, so I do not see an immediate need to purchase these stocks, I would wait for more of a panic to purchase the stocks at the values I know are very good for me long term, either company should be a good purchase long term even at these prices, but I like cheap prices best not fair pricing best.

 

[Running_Man]

Fermion, interested in your take. (I thought I would get razzed about LNCO!)

I stretched today and bought SU and LNCO. Not KMI yet.

Talk to me.

YIKES LNCO down 15% this morning yet I see no news, I see they have been dropped by the Alerian MLP ETF due to stock price and that selling could be sending down. I do not know but I would presume they would eliminate their dividend at this oil price to survive.

 

[almost there]

Feel free to short COP at my entry point of 62.48 this morning.

 

[38Chevy454]

I tend to agree with the sentiment that oil will be down for a while, too much supply and not enough demand. Plus the Saudi's and similar need to keep the income taps flowing. Wait and let the panic sellers bail out and lick their wounds. Then it is time to jump in. I am watching this and trying to figure out how to invest some, when I feel the time is right. Probably stay with a ETF or mutual fund that is is energy sector, rather than individual stocks.

 

[Running_Man]

Feel free to short COP at my entry point of 62.48 this morning.

Conoco Philips is interesting as this would be a play that OPEC will not be able to insert their will on the Shale and tar sands projects in the US, this is the key driver for COP's assertions that they will be increasing production by 5-7 percent per year for the next 5-7 years. with 4,800 well sites in the US and Canada and highly leveraged, and this is just my thinking I would sell those shares today and take a short term loss, this company is really the poster child for what OPEC is trying to stop. I now understand why in the last months why Boone Pickens was on CNBC saying oil would not drop below 70 dollars, and if you believe him COP is the stock to buy ConocoPhillips (COP) Stock Could Soar if Pickens' Prediction Is Accurate | InvestorPlace
I think recent market action has shown Boone to be as wrong as he possibly could be, yet he could still claim victory on CNB if oil stops at $40 in the first quarter next year and then slowly recovers to the 60-70 range. What that would mean for COP stock is hard to imagine, I think this stock has been the "safe" play for betting on an oil turnaround.

 

[almost there]

I have been on the side lines for a long while & might be blinded by a 4% div.

 

[aja8888]

Like RM said, have a look at PEO and wait for a good entry point. It doesn't make sense to jump into the Majors at this time. Especially those in shale plays. Drill rig count in West Texas is quickly dropping. Lease holders have 18 months to drill after the lease is obtained and there will be a new round of lease sales once the bottom is felt and more drilling to make up for wells going in decline.

Regardless of what the price of oil futures go to, we still need more than the 9 mm BBL per day of crude in the U.S. we are producing so the pipelines will still be moving lots of oil (and refined product). Remember, we still import 1/3 of our crude and Canada and Mexico are the big sellers to us.

While I keep hearing demand is down (worldwide, probably), we suck up a large amount of refined product in the U.S. and that won't stop unless we go into a deep recession. Gasoline prices @$2 and change will continue to fill SUV's and big trucks here. Remember that America has a "love affair" with the automobile.

 

[Running_Man]

Last post on this today, Well I see where BMO and Goldman Sachs just upgraded XOM, COP, CVX as the say the oil crisis will not hurt XOM as much even though it is overpriced relative to other names? Every analyst on CNBC discussion on whether now is the time to buy oil thinks the oil sector is a great buy, every single analyst. The key arguement seems to be low prices fix low demand and therefore you must get higher prices, the level of depth of thought appears to be exactly that, as the first quarter starts coming to an end next year, unless there has been a significant increase in price stocks like COP that have hedges if they do hav them to sell their production will be forced to give guidance on a loss of $50 per barrel revenue versus their prior hedges, here is an interesting story in the Wall Street Journal back in 2013 on COP's strategy basically they don't hedge as of Jan 2013 and were betting on porlonged high oil prices it seems to me that COP is the 2014 version of Citicorp in fall of 2007.ConocoPhillips's Tricky Two-Horse Strategy - WSJ

 

[MichaelB]

While I keep hearing demand is down (worldwide, probably), we suck up a large amount of refined product in the U.S. and that won't stop unless we go into a deep recession. Gasoline prices @$2 and change will continue to fill SUV's and big trucks here. Remember that America has a "love affair" with the automobile.

I don't think there is a decline in demand, just a slowing in the rate of increase. Much of the growth has been in emerging economies, they are less sensitive to price reductions because of the heavy subsidies in transportation related energy.

Every analyst on CNBC discussion on whether now is the time to buy oil thinks the oil sector is a great buy, every single analyst. http://www.wsj.com/articles/SB10001424127887323689604578221932198687810

Could this be a contrarian sign?

 

[almost there]

No idea, I blocked the business channels yrs ago.
Much happier now.


In my mind, the S&P broke 2000 today.
That's the real news..........


Up date. I bailed with a microscopic loss today.
Guess ind. stocks are a thing of the past for me.
Thought I had it in me, but I was wrong.
Will just add more to VGENX as time goes on.
Nice stopping by though! Have fun!

 

[almost there]

And thanks for the tip on PEO. Its got quite the history.

 

[Fermion]

Still a lot of meat on the bone for XOM and COP to short. XOM to $75 and COP probably around $50 before this is done.