Running_Man
Thinks s/he gets paid by the post
- Joined
- Sep 25, 2006
- Messages
- 2,844
I think this is the first time since 1996. Very interesting ........
Yea but Chevron has yielded 4% multiple times. in 1998 I convinced a co-worker that 100% of a portfolio in Mobil was no was to retire and he sold and reallocated 50% of the portfolio. 10 years later after he got his Exxon Mobil back to his sold price he let me know how much I'd cost him. His investment in the S&P500 didn't quite work out the same.
I think this is the first time since 1996. Very interesting ........
Exxon Mobil is obviously a very solid company and certainly is beginning to get into a range where the long term values are worth considering
Are you recommending the stock? I would suggest taking a look at the options. A week and a half ago, I sold the July 60-65 strangle at about 4.00. If I get assigned on the put, I sure don't mind buying the stock at 56 (3.14% yield). My upside break-even is 69. This is a trade I feel pretty good about. Worst case, I buy XOM at 56. Since I am already long XOM, I am protected on the upside. If this strangle expires worthless, I will probably rinse and repeat if the option premiums remain high. If the stock is between 60 and 65 at expiration I will have taken in more than 2 years of dividends in less than 2 months. Helps the portfolio cash flow when the yield on a money market fund is 0.05%.
It's a straddle with the strikes split. I am short the 60 put and also short the 65 call.What the heck is a strangle Is this another name for a collar?
Maybe Yes, maybe no. Peak oil aside, All of the majors have not been able to replace their now dwindling but still substantial oil reserves. The majors are being replaced by sovereign oil companies.
The majors are not growth companies. They are being managed for value.
Buying one of the majors is a bet on oil prices. They certainly aren't growth companies. Long term their business model will only consist of refining/distribution/retail. The upstream business of exploration/production will dwindle.
XOM does have the ability to buy new reserves whenever it wishes, as was recently proven by the XTO acquisition
Maybe Yes, maybe no. Peak oil aside, All of the majors have not been able to replace their now dwindling but still substantial oil reserves. The majors are being replaced by sovereign oil companies.
The majors are not growth companies. They are being managed for value.
Buying one of the majors is a bet on oil prices. They certainly aren't growth companies. Long term their business model will only consist of refining/distribution/retail. The upstream business of exploration/production will dwindle.
I agree with everything but the downstream/upstream prediction.
Downstream is dwindling, major's are cutting back in this area. While NOC's are increasing, they lack the technical expertise to develop anything, and they cut the major's a deal to bring in the expertise. They need the majors...
Maybe Yes, maybe no. Peak oil aside, All of the majors have not been able to replace their now dwindling but still substantial oil reserves. The majors are being replaced by sovereign oil companies.
Exxon has replaced more than 100 Percent of their production for the last 16 years including replacing 133 percent of their reserves in 2009. As long as you have 25 billion in profits in a world of no cash, if Exxon can avoid BPing themselves they should remain in business and grow at a steady but slow pace.
Essentially I only value stocks any way for the future value of the dividends. I see no reason to change the long term value of current plus 2 percent real growth which at present is giving me a fair value to pay of $44 per share. I use NPV of the next 30 years of dividends using expected growth of dividends over inflation discounted by 3 percent real return over the time period.
Essentially I only value stocks any way for the future value of the dividends. I see no reason to change the long term value of current plus 2 percent real growth which at present is giving me a fair value to pay of $44 per share. I use NPV of the next 30 years of dividends using expected growth of dividends over inflation discounted by 3 percent real return over the time period.
What about the dividend stream beyond 30 years? That could add quite a bit to the NPV. For example, if the dividend were to grow at 2% forever, and you continued to discount it at 3% real, the NPV would be given by the Graham-Shapiro model:
P = 1.76 / (0.03 - 0.02) = 176 per share
Unless you are assuming that XOM will go out of business after 30 years, it seems you may have ignored a large portion of the NPV
Is it even remotely possible to know anything about the energy or geopolitical situation of the world 30 years hence?
What about the dividend stream beyond 30 years? That could add quite a bit to the NPV. For example, if the dividend were to grow at 2% forever, and you continued to discount it at 3% real, the NPV would be given by the Graham-Shapiro model:
P = 1.76 / (0.03 - 0.02) = 176 per share
Unless you are assuming that XOM will go out of business after 30 years, it seems you may have ignored a large portion of the NPV
I differ with your post.
After the majors had their late-80's massive layoffs technical expertise was available independent of the majors everywhere. A very modest cash outlay will get whatever is needed. So the technical area is covered by the (now-many) small oil-related technical businesses. If finances are needed there are many who will finance such programs at much better terms than the majors. Deals such as that keep the sovereign resource in-country. They don't have to give away large percentages of their oil anymore.
Name some countries that have recently cut deals to the majors ?
Regarding downstream - aren't all the refineries in this country running flat out ? Where is that business dwindling ?