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Oil Stock or Energy ETF?
Old 03-12-2015, 11:39 AM   #1
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Oil Stock or Energy ETF?

I am thinking of buying an oil stock (possibly Chevron with a health ~4% dividend yield) since it is so low.

I typically don't buy individual stocks but might give it a try. It would be less than 1% of my NW. Probably immaterial in the long run, anyway.

I also was considering spreading the risk by doing an energy ETF such as VDE.

What are your thoughts? Anyone else getting into oil?

VDE doesn't offer as nice of a dividend yield, and the risk is only spread amongst fellow oil/energy companies, so maybe I should just jump into Chevron?
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Old 03-12-2015, 11:45 AM   #2
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I would buy a midstream mlp or closed end fund

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Old 03-12-2015, 12:05 PM   #3
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Be sure to look at the estimates of growth for next few years for CVX, XOM, etc.

This article has an analysis of the Energy sector. If you don't have a Seeking Alpha account it's free to get one.

The Energy Sector - Risk Or Opportunity? The S&P 500 2015: Part 2 | Seeking Alpha
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Old 03-12-2015, 12:43 PM   #4
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Quote:
Originally Posted by target2019 View Post
Be sure to look at the estimates of growth for next few years for CVX, XOM, etc.

This article has an analysis of the Energy sector. If you don't have a Seeking Alpha account it's free to get one.

The Energy Sector - Risk Or Opportunity? The S&P 500 2015: Part 2 | Seeking Alpha
There are many errors in that article and the charts. Of course, things are changing fast. There are also errors that come from not paying close attention to the securities he comments on. For example, he says offshore contractor DO has not raised its dividend since 2009. True as to the regular dividend, but it began paying a large special dividend annually, until it was skipped this year. This is a deliberate strategy for addressing the extreme cycles in the offshore drilling space.

Ha
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Old 03-12-2015, 01:20 PM   #5
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Personally, I've been trading big oil (like XOM, TOT and CVX) for well over 25 years now but I currently have less invested in energy than ever before. I am considering buying back in very soon. XOM is at their 52 week low ths week and TOT and CVX are very near theirs. Of course that doesn't mean they won't drop more. I can't tell you how many times I've bought when they were depressed and sold when they on the rise and made a good return. Also, I can't say that I ever caught the absolute tops or bottoms but overall, big oil has been very good for me over the years. YMMV
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Old 03-12-2015, 01:35 PM   #6
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Yesterday, I stumbled across a "resources" ETF, but it appears to be mostly an Oil & Gas ETF, IGE

IGE ETF Guide | Stock Quote, Holdings, Fact Sheet and More

Haven't looked into it much other than it's pretty concentrated and a 0.48% expense ratio. Still over $2B in assets despite the price drops (not much bid-ask spread).

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Old 03-12-2015, 01:36 PM   #7
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Hmmm, never bought an individual stock, don't really understand the industry, only looking at 1% of your portfolio... why do you want to do this?
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Old 03-12-2015, 01:51 PM   #8
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Recent article on oil on this thread. Understanding Oil Prices
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Old 03-12-2015, 04:24 PM   #9
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There are many errors in that article and the charts. Of course, things are changing fast. There are also errors that come from not paying close attention to the securities he comments on. For example, he says offshore contractor DO has not raised its dividend since 2009. True as to the regular dividend, but it began paying a large special dividend annually, until it was skipped this year. This is a deliberate strategy for addressing the extreme cycles in the offshore drilling space.

Ha
Ha,
I do see that. I submitted a question asking about that.

If there are other errors in the article, please feel free to point them out. I am very interested in learning more.
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Old 03-13-2015, 04:13 PM   #10
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Personally I like XOM, HP and NOV. I feel like they are well run companies that are critical in the oil economy and financially able to survive the depressed oil price which could last longer or shorter than anyone can predict

I also believe those three in particular are dragged lower than they should be by the higher leveraged, less competitive companies. I encourage you to read a few years of 10ks listen to conference calls (especially Q&A) and really understand the current oil and gas industry (there's really good industry publications).

Generally I agree that "energy stocks" are low right now... That is cheaper than they should be... But I also think a lot of them may go bankrupt or be acquired very cheaply because of large capital costs laid out during much higher oil and natural gas prices and with much higher price requirements. Dangerous game to play .

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Old 03-13-2015, 05:17 PM   #11
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Ha,
I do see that. I submitted a question asking about that.

If there are other errors in the article, please feel free to point them out. I am very interested in learning more.
Programmer is working on a fix for the incorrect total dividend for DO.
Any other errors in the article?
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Old 03-14-2015, 03:57 PM   #12
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What are your thoughts? Anyone else getting into oil?
Had FP/TOT for a few years, did quite well for me. I'll sell them at some point and never buy back into oil.

Long term prospects are not there imo. But when a bargain arises, it's hard to resist.
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Old 03-14-2015, 04:15 PM   #13
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I made $50k in February shorting oil using USO deep-in-the-money puts and am now long oil using UWTI short term (2 weeks or less). If it looks like it'll keep dropping this Wednesday, I'll get out of that and look to buy USO deep-in-the-money calls. Not sure if that really fits what you're looking for or not -- if you're just looking for long term ideas on energy companies, would you not just consider XLE (either LEAP calls or shares)? Many good lucks to all of us.
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