Who's buying Oil stocks?
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Who's buying Oil stocks?
Anyone with fun money taking this gamble yet? Curious to know if any Bogleheads are going for it?
Re: Who's buying Oil stocks?
Bought some VDE instead of VNQ with a portion of this years Roth contribution (both are only ~5% of portfolio). Got lucky with timing and my contributions for investing were available on 1/6. Picked up everything on sale!
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Re: Who's buying Oil stocks?
Is it on "sale"? What if it drops another 50% or more?surfstar wrote:Bought some VDE instead of VNQ with a portion of this years Roth contribution (both are only ~5% of portfolio). Got lucky with timing and my contributions for investing were available on 1/6. Picked up everything on sale!
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Who's buying Oil stocks?
Plenty of oil stocks in the total stock market index funds we continue to accumulate.
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Re: Who's buying Oil stocks?
I bought VGENX a few days ago. It's down something like 23% from a year ago and 34% from its high 6 months ago. If it keeps dropping I'll keep buying.
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Re: Who's buying Oil stocks?
David Swensen would consider this 1) security selection and 2) market timing.
John C. Bogle: “Simplicity is the master key to financial success."
Re: Who's buying Oil stocks?
I have an individual stock brokerage account for my Roth IRA. I already had NOV (oilfield supplier) and KMI (pipelines)...but only NOV is below my buy price. Still have long term confidence in both. I will hold and possibly buy more of both while prices are low, but I'm not convinced that oil is through going down. And there's no way I'll buy into major refiners, retailers or shippers at the moment. Had an opportunity to buy into Eagle-Ford Shale drilling options (private offering) about 6 months ago, but demurred...and I'm SO glad I did.
Dirk
Dirk
Re: Who's buying Oil stocks?
Yes, and it is a source of volatility for sure. At this point in my life I certainly don't want to overweight this in my portfolio.Pizzasteve510 wrote:Plenty of oil stocks in the total stock market index funds we continue to accumulate.
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Re: Who's buying Oil stocks?
XOM, picked up some more shares in my taxable account.
Re: Who's buying Oil stocks?
I don't know for sure, but thought I would pick up some VDE during my regular January Roth purchasing. Seemed I got lucky on VTI "timing" as well. A 50% drop means I'll likely have to wait longer for it to go higherabuss368 wrote:Is it on "sale"? What if it drops another 50% or more?surfstar wrote:Bought some VDE instead of VNQ with a portion of this years Roth contribution (both are only ~5% of portfolio). Got lucky with timing and my contributions for investing were available on 1/6. Picked up everything on sale!
Its a hedge - if oil stays low, I get discounted gas fill ups; if it goes up, my Roth gets the extra $
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Re: Who's buying Oil stocks?
Have you bought the banks yet? If you're going to gamble, it's best to purchase the house first.SailorJerry7030 wrote:Anyone with fun money taking this gamble yet? Curious to know if any Bogleheads are going for it?
Serious investors don't gamble, they make prudent decisions. Purchasing the whole enchilada ensures you participate in the entire market returns, therefore anyone who owns a Total Market Index and/or a Large Value Index is participating in this "gamble" as you call it.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Who's buying Oil stocks?
I've wanted to buy shares of BP. The price/book is currently less than 0.9 and it's got a nice dividend yield. But I can never pull the trigger on an order. I'm too risk averse. So I'll just stick to my AA.
- Tim
- Tim
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Re: Who's buying Oil stocks?
There are no cheap stocks or overpriced stocks. They are worth what the market dictates.
Now, should you buy oil stocks? Well, if you go to Vegas, buy lottery ticket or waste money on fancy lattes, the answer may be tilted to "yes". Never spend more than 5% of your assets for fun. You should have fun, why not? But truly understand that you are gambling.
Heck, if I wasn't so cheap, I would do it myself.
F
Now, should you buy oil stocks? Well, if you go to Vegas, buy lottery ticket or waste money on fancy lattes, the answer may be tilted to "yes". Never spend more than 5% of your assets for fun. You should have fun, why not? But truly understand that you are gambling.
Heck, if I wasn't so cheap, I would do it myself.
F
"Check ID" is my actual signature.
- Petrocelli
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Re: Who's buying Oil stocks?
I hold both Exxon and Chevron in my stock portfolio.
I bough some shares of Exxon at the end of last year for slightly more than $89 a share. It is now at $92.37.
I bough some shares of Exxon at the end of last year for slightly more than $89 a share. It is now at $92.37.
Petrocelli (not the real Rico, but just a fan)
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Re: Who's buying Oil stocks?
Same, and in that time it went as high as $104.something. I'm happy to buy these mega cap "safer" companies when I have some play money, espesially when they have a decent yield.Petrocelli wrote:I hold both Exxon and Chevron in my stock portfolio.
I bough some shares of Exxon at the end of last year for slightly more than $89 a share. It is now at $92.37.
AceJ
Re: Who's buying Oil stocks?
I am happily buying more oil stocks. Long big oil!
Re: Who's buying Oil stocks?
I haven't but I am considering buying one or two oil Jr stocks which will likely go much higher than oil majors. Of course, also more likely to go bankrupt if oil price stay low for a long time. It's gambling.
Re: Who's buying Oil stocks?
I looked at oil stocks but the current price doesn't seem emotionally low and is likely to be the "right" price.
I did drop a bit of fun money on RSX at 14.09 though, which is heavily correlated with oil. I have a completely unscientific feeling that the price being this low is at least partially emotional and there is a good chance that some of the things helping push it this low (sanctions, Ukraine, super low oil price) will probably get resolved in some manner over the next year or two.
Its my first real "fun money" shot though so we'll see how it goes.
I did drop a bit of fun money on RSX at 14.09 though, which is heavily correlated with oil. I have a completely unscientific feeling that the price being this low is at least partially emotional and there is a good chance that some of the things helping push it this low (sanctions, Ukraine, super low oil price) will probably get resolved in some manner over the next year or two.
Its my first real "fun money" shot though so we'll see how it goes.
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Re: Who's buying Oil stocks?
Anyone think oil will become irrelevant in the next 5-30 years as other energy sources and technologies come to replace it and make us need less of it?
Re: Who's buying Oil stocks?
Here's a really great article penned by Howard Marks of Oaktree on the lessons learned from the most recent slide in oil prices.Mountain Man wrote:Anyone think oil will become irrelevant in the next 5-30 years as other energy sources and technologies come to replace it and make us need less of it?
http://www.oaktreecapital.com/memo.aspx
Re: Who's buying Oil stocks?
The efficient market hypothesis says that the market incorporates into the price of a security all the information that is known about the security. It does not require that the information be correct. It isn't enough just to have correct information; if you're the only one who has it, the market will ignore it. To make money, you need to know something now that the market will find out later.
What is it that you know about the price of oil stocks that the market has gotten wrong? When/how will the market find this out?
If you think you might know something about the price of oil that the market doesn't know, then you might want to look at MLPs engaged in oil production. These have been beaten down far more than the stocks of major oil companies, but some of them are highly leveraged so that the companies might go broke before the price of oil goes back up.
What is it that you know about the price of oil stocks that the market has gotten wrong? When/how will the market find this out?
If you think you might know something about the price of oil that the market doesn't know, then you might want to look at MLPs engaged in oil production. These have been beaten down far more than the stocks of major oil companies, but some of them are highly leveraged so that the companies might go broke before the price of oil goes back up.
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Re: Who's buying Oil stocks?
Blues, what is your take from that memo you linked to?blues008 wrote:Here's a really great article penned by Howard Marks of Oaktree on the lessons learned from the most recent slide in oil prices.Mountain Man wrote:Anyone think oil will become irrelevant in the next 5-30 years as other energy sources and technologies come to replace it and make us need less of it?
http://www.oaktreecapital.com/memo.aspx
Re: Who's buying Oil stocks?
I bought some IYE last week in my fun money account. (Please keep in mind that this is the account that earned 1% last year)
Re: Who's buying Oil stocks?
Why is the ER for VDE 0.12 and VGELX 0.32?
Is active management really worth 0.2?
Is active management really worth 0.2?
Re: Who's buying Oil stocks?
Howard Marks of Oaktree has an excellent track record of allocating capital. The Company went public a few years ago and many of their funds have returned in excess of the benchmark net of fees. I pay close attention to his writings and find him to be an excellent value investor and writer.Mountain Man wrote:Blues, what is your take from that memo you linked to?blues008 wrote:Here's a really great article penned by Howard Marks of Oaktree on the lessons learned from the most recent slide in oil prices.Mountain Man wrote:Anyone think oil will become irrelevant in the next 5-30 years as other energy sources and technologies come to replace it and make us need less of it?
http://www.oaktreecapital.com/memo.aspx
http://www.sec.gov/Archives/edgar/data/ ... 52/ds1.htm
I do believe that the market is mostly efficient. However, there are instances where an investor can take advantage of mispriced securities (small caps, forced selling, merger arbitrage, spin-offs, etc). There's an excellent book called 'This Time is Different: Eight Centuries of Financial Folly' which details that there is a pattern of similarities among all financial manias (housing busts, currency crashes, public debts, etc). In our current environment most of the market's information is priced into securities, but I do believe that the current slide in oil prices presents opportunities. For example, those companies with rock solid balance sheets like EOG are getting treated like they're no better than over-leveraged E&P's. Is it out of the usual fear produced by manias or is this time any different than when you could buy WFC or AXP for less than seven times earnings during the financial crisis of 2008? If you are interested in going the anti-Bogle route of buying individual securities you need to be prepared to do homework, have an iron-clad stomach to buy when others are selling, and place large long-term bets where you have a margin of safety, i.e., for every dollar of downside you have at least two to three dollars of upside.
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Re: Who's buying Oil stocks?
I'm currently holding, "dirty oil transport shippers". China is buying the Mid-East's surplus oil with Dollar$, and needs a way to transport it.
I am wary of production, refining, and retailing of crude. Keystone XL will get built by politics which gets into the way of actual supply and demand. Future oil may actually be cheaper than current oil which is not a good place.
GL
I am wary of production, refining, and retailing of crude. Keystone XL will get built by politics which gets into the way of actual supply and demand. Future oil may actually be cheaper than current oil which is not a good place.
GL
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Re: Who's buying Oil stocks?
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Last edited by Confused on Fri Nov 06, 2015 12:46 am, edited 1 time in total.
- Petrocelli
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Re: Who's buying Oil stocks?
I know people have been selling them. I reinvest my dividends in one of the 5 stocks in my 20 stock portfolio with the lowest balance. That means I am always buying the worst performers.ourbrooks wrote:
What is it that you know about the price of oil stocks that the market has gotten wrong? When/how will the market find this out?
Petrocelli (not the real Rico, but just a fan)
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Re: Who's buying Oil stocks?
Mega Cap safe companies? Exxon? What about BP in 2010? Healthsouth, Worldcom, Enron, Global Crossing?acejacksingh wrote:Same, and in that time it went as high as $104.something. I'm happy to buy these mega cap "safer" companies when I have some play money, espesially when they have a decent yield.Petrocelli wrote:I hold both Exxon and Chevron in my stock portfolio.
I bough some shares of Exxon at the end of last year for slightly more than $89 a share. It is now at $92.37.
AceJ
John C. Bogle: “Simplicity is the master key to financial success."
Re: Who's buying Oil stocks?
Now I only invest in XOM via the dividends the stock provides me. I owned and still own XOM by way of Mobil Oil. I invested through work since age 25, at which time I became eligible for Mobil Oil's very generous stock plan. Mobil would give you 10% of your salary in Mobil Oil stock/yr. After steadily lowering their 10% over a number of years to finally 0, I continued to invest in Mobil in my 401k. Mobil Oil ultimately merged with Exxon, providing a very nice premium. By owning ExxonMobil for 30 years I accumulated 7 figures by age 55 and then started diversifying. I still own XOM in the low 6 figures and have no plan of selling anymore until and IF it ever reaches $104/share again within my lifetime. I've held it so long that the remaining lower 6 figures have a 0 cost basis while still providing a 3%+ dividend. It proved to be very lucrative and still is, even at it's lower price per share.
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Re: Who's buying Oil stocks?
Some of the oil majors are very well managed.
Exxon in particular is the industry benchmark for being able to make money at $40/bl (that I think is the company target).
However these businesses are very highly operationally geared. I think the oil price could go lower, and stay down longer, than the market currently predicts.
Beware catching a falling knife. Some of these companies will go broke. EDIT to be clear more on the Exploration & Production side companies, also perhaps some of the MLPs that are oriented to the energy price (don't know so much about those).
As the Oakmark post indicates, I am reminded of the telecomm bubble bust-- if the core thing these things produce falls by 50-60% in value in a year, they will not be able to cut their fixed costs as fast as that. They will slump into serious losses. At which point, some of them will be taken over.
And as we found with BP, *any* oil company is capable of a major financial or operational disaster, with a slashed or omitted dividend and huge destruction of shareholder value.
Exxon in particular is the industry benchmark for being able to make money at $40/bl (that I think is the company target).
However these businesses are very highly operationally geared. I think the oil price could go lower, and stay down longer, than the market currently predicts.
Beware catching a falling knife. Some of these companies will go broke. EDIT to be clear more on the Exploration & Production side companies, also perhaps some of the MLPs that are oriented to the energy price (don't know so much about those).
As the Oakmark post indicates, I am reminded of the telecomm bubble bust-- if the core thing these things produce falls by 50-60% in value in a year, they will not be able to cut their fixed costs as fast as that. They will slump into serious losses. At which point, some of them will be taken over.
And as we found with BP, *any* oil company is capable of a major financial or operational disaster, with a slashed or omitted dividend and huge destruction of shareholder value.
Last edited by Valuethinker on Sat Jan 10, 2015 7:24 am, edited 1 time in total.
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Re: Who's buying Oil stocks?
No. If you read people like Vaclav Smil (apparently Bill Gates' favourite author, although his books are repetitive) energy transitions take a long time.Mountain Man wrote:Anyone think oil will become irrelevant in the next 5-30 years as other energy sources and technologies come to replace it and make us need less of it?
Certainly petroleum is safe for the next 20 years. It's the densest portable, storable energy source we have and therefore almost irreplaceable in transportation which is c. 75% of use. We already pay an enormous premium for its energy content compared to natural gas or coal (roughly 2x and 4-6x from memory). And its environmental effects are (relatively) low compared to coal in particular (or deforestation!).
Alternatives will come slowly if at all: electric vehicles, biofuels etc. They either don't have the energy densities (especially for aviation purposes) or the cost-benefit is very unclear-- most first generation biofuels probably do more harm to the environment in their creation than they do help in their use.
Natural gas demand will continue because it is a clean and relatively cheap source of home heating fuel, electricity etc. particularly compared to its main rival-- coal. Just as the US, Japan, UK, Germany cleaned up their air in the 1950s, 60s and 70s in part by moving to gas home heating and for industrial purposes, so will China and India where they have major urban air pollution problems.
Beyond 30 years the situation is much more uncertain. The markets won't disappear but they may start to shrink due to environmental concerns and the very low costs of alternatives. The natural gas network, for example, could be modified to transport hydrogen -- if we can find a cheap way of producing hydrogen that does not make use of fossil fuels (right now, the usual way is using natural gas).
Last edited by Valuethinker on Sat Jan 10, 2015 7:22 am, edited 1 time in total.
- just frank
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Re: Who's buying Oil stocks?
I agree with ValueThinker re oil use in coming decades being highly predictable, but would add that company profits and valuation during that period could be in for some big changes....
Holding the highest cost of extraction oil in the market is not going to guarantee you a lot of profit in the future.
If your company valuation (and stock price) are tied to fossil assets in the ground, and scientists are telling us that those assets must be left in the ground, then at some point you will need to re-assess your valuation.
That said, the above concerns do not apply to many oil cos, the trick is figuring out which.
Holding the highest cost of extraction oil in the market is not going to guarantee you a lot of profit in the future.
If your company valuation (and stock price) are tied to fossil assets in the ground, and scientists are telling us that those assets must be left in the ground, then at some point you will need to re-assess your valuation.
That said, the above concerns do not apply to many oil cos, the trick is figuring out which.
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Re: Who's buying Oil stocks?
just frank
I have strayed too far into the environmental-- editing post. The risk thing highlighted by Greenpeace etc. in recent reports is not a subject for this forum.
Let's simply say this: if the price of oil is lower in the future due to fracking etc, it will hit the profitability of those on the high end of the cost curve disproportionately (eg Canadian tar sands producers).
If I was tempted to invest in the oil sector I'd like to see more of an acknowledgement by the market that these low oil prices are not just a short term blip. I don't think they are*, and I don't think the full impact on oil company earnings is yet in market forecasts.
* just to hedge my bets I am saying they are a 'medium term blip' ie 1-3 years out. Americans buying bigger vehicles again, growth in the economy, driving, consumption in importing countries, plus natural depletion of existing fields. And fracking and offshore drilling etc. will be sharply cut back -- thus constraining future supply Ie this is not a 10 or 20 year thing, but more than a repeat of the early 2009 drop to $40.
I have strayed too far into the environmental-- editing post. The risk thing highlighted by Greenpeace etc. in recent reports is not a subject for this forum.
Let's simply say this: if the price of oil is lower in the future due to fracking etc, it will hit the profitability of those on the high end of the cost curve disproportionately (eg Canadian tar sands producers).
If I was tempted to invest in the oil sector I'd like to see more of an acknowledgement by the market that these low oil prices are not just a short term blip. I don't think they are*, and I don't think the full impact on oil company earnings is yet in market forecasts.
* just to hedge my bets I am saying they are a 'medium term blip' ie 1-3 years out. Americans buying bigger vehicles again, growth in the economy, driving, consumption in importing countries, plus natural depletion of existing fields. And fracking and offshore drilling etc. will be sharply cut back -- thus constraining future supply Ie this is not a 10 or 20 year thing, but more than a repeat of the early 2009 drop to $40.
- just frank
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Re: Who's buying Oil stocks?
I always enjoy speculating (not with money) from an armchair....
In a macro sense, we could suppose that the price of oil follows the marginal, highest cost to produce barrel. In 2005-2008 we switched from conventional marginal barrels (at $30) to oil-sands marginal barrels (at $100), with an oscillation. After tight (fracked) oil ramped up, the market is now pricing to a tight oil marginal barrel (at TBD cost, maybe $50-80), presumably there will also be an oscillation/undershoot.
This analogy (now with 2008) is imperfect. To my knowledge, the oilsands are essentially a very deep resource, and 'flat' in terms of their cost to produce (assuming current surface mining tech). If tight oil had not been produced, oil sands could have ramped up production and sustained those marginal barrels for a long time, technically. IOW, the $100 regime could have lasted a long time, and I never would have worried about sustained prices much higher than that.
In contrast, the tight oil resource is VERY heterogeneous, with some relatively cheap/easy to extract and others that are much harder (tighter) and more costly. Moreover, the tight oil formations (at least in the US) are nowhere near as large as the oil sands. In this picture, unlike a 'plateau' price for production a la the oil sands, we might see a gradual creep upwards (over years) as the cheapest tight oil formations get progressively exhausted, until we get back to a oil-sand marginal barrel near $100 (current $).
This simplistic picture has MANY problems....notably, it would suppose that oil sands work will be effectively mothballed during the tight-oil price regime, perhaps for many years. This will require US tight oil to provide an even larger amount of marginal oil to make up for the difference (to be the price maker). Current projections suggest that at high production rates US tight oil (esp that which is much cheaper than oil sand oil) will be spent in 5 years or so. If other tight oil formations (or deepwater?) were not developed to a similar production level in the next 5 years, we would be back to oil-sands and a $100 (current) price in <5 years.
Of course, however, there is nothing magical about North America. So I figure the other continents have ~5 years to develop their tight oil, if they do in earnest, then (technically) we can stay below $100 for a decade or more.
In a macro sense, we could suppose that the price of oil follows the marginal, highest cost to produce barrel. In 2005-2008 we switched from conventional marginal barrels (at $30) to oil-sands marginal barrels (at $100), with an oscillation. After tight (fracked) oil ramped up, the market is now pricing to a tight oil marginal barrel (at TBD cost, maybe $50-80), presumably there will also be an oscillation/undershoot.
This analogy (now with 2008) is imperfect. To my knowledge, the oilsands are essentially a very deep resource, and 'flat' in terms of their cost to produce (assuming current surface mining tech). If tight oil had not been produced, oil sands could have ramped up production and sustained those marginal barrels for a long time, technically. IOW, the $100 regime could have lasted a long time, and I never would have worried about sustained prices much higher than that.
In contrast, the tight oil resource is VERY heterogeneous, with some relatively cheap/easy to extract and others that are much harder (tighter) and more costly. Moreover, the tight oil formations (at least in the US) are nowhere near as large as the oil sands. In this picture, unlike a 'plateau' price for production a la the oil sands, we might see a gradual creep upwards (over years) as the cheapest tight oil formations get progressively exhausted, until we get back to a oil-sand marginal barrel near $100 (current $).
This simplistic picture has MANY problems....notably, it would suppose that oil sands work will be effectively mothballed during the tight-oil price regime, perhaps for many years. This will require US tight oil to provide an even larger amount of marginal oil to make up for the difference (to be the price maker). Current projections suggest that at high production rates US tight oil (esp that which is much cheaper than oil sand oil) will be spent in 5 years or so. If other tight oil formations (or deepwater?) were not developed to a similar production level in the next 5 years, we would be back to oil-sands and a $100 (current) price in <5 years.
Of course, however, there is nothing magical about North America. So I figure the other continents have ~5 years to develop their tight oil, if they do in earnest, then (technically) we can stay below $100 for a decade or more.
- just frank
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Re: Who's buying Oil stocks?
Re the environmental issues...I get that this is strongly disallowed.
I have a deep respect for the vibrant, respectful and mixed community here, which is certainly a reflection of successful forum policy rules and firm moderation.
I also believe that good investing should be apolitical. If either side invests their politics (bearish when their party is not POTUS, for example) then that is a recipe for disaster.
That said, I think environmental policies and constraints will define many major sector opportunities and risks in the next couple decades. It is sad to me that all that is OT, but I suppose that is simply because the environment is currently politicized.
As a newb, I will put my head back down. If any non-newbs/mods can explain out how to discuss "green business opportunities and old business risks" within existing forum rules, I'm game.
I have a deep respect for the vibrant, respectful and mixed community here, which is certainly a reflection of successful forum policy rules and firm moderation.
I also believe that good investing should be apolitical. If either side invests their politics (bearish when their party is not POTUS, for example) then that is a recipe for disaster.
That said, I think environmental policies and constraints will define many major sector opportunities and risks in the next couple decades. It is sad to me that all that is OT, but I suppose that is simply because the environment is currently politicized.
As a newb, I will put my head back down. If any non-newbs/mods can explain out how to discuss "green business opportunities and old business risks" within existing forum rules, I'm game.
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Re: Who's buying Oil stocks?
It's just an area that attracts World War 3 debates.just frank wrote:Re the environmental issues...I get that this is strongly disallowed.
I have a deep respect for the vibrant, respectful and mixed community here, which is certainly a reflection of successful forum policy rules and firm moderation.
I also believe that good investing should be apolitical. If either side invests their politics (bearish when their party is not POTUS, for example) then that is a recipe for disaster.
That said, I think environmental policies and constraints will define many major sector opportunities and risks in the next couple decades. It is sad to me that all that is OT, but I suppose that is simply because the environment is currently politicized.
As a newb, I will put my head back down. If any non-newbs/mods can explain out how to discuss "green business opportunities and old business risks" within existing forum rules, I'm game.
Alex Frakt showed us one time what kind of external poster we get if we mention that hypothesis in this field that has P O as the initials. Anti-semitic, paranoid conspiracy stuff. Pretty scary.
I agree, increasingly, it's going to become an investment consideration-- all aspects of environmental risk. It's hard to know how these things will play out, but I see far more corporations taking it as a serious business risk than, say, 10 years ago. It's really been quite an amazing evolution, although sporadic. A flooding expert also told me she meets US Navy admirals and rear admirals at the conferences-- the military by its nature takes a long term and strategic view of risk.
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Re: Who's buying Oil stocks?
js frank
Just one thing on the oil sands. Yes an 'infinite' supply at say $100/bl BUT:
- those costs will rise as the easily accessible bits get mined out
- there's some strong physical and environmental limits on Canadian production. Say 10m b/d -- maybe 12-13 I doubt 15. Ok that's huge, more than Saudi Arabia now. But it would only be 10-15% of world demand in 2030, say. The time lags are huge, the physical and economic capacity of the host area and of Alberta is finite: water, environmental issues, skilled manpower, transportation etc. What is possible in Venezuela I do not know. Just getting to 5 m b/d is titanic.
Not sure what Canadian Natural (CNQ) has spent on Horizon but to get to say 350k barrels a day maybe $5bn? And that's the *easy* extractible reserves.
So infinite reserves, yes, or practically so. But not an infinite extraction rate.
- as has been discussed here, at a guess, when fracking/ tight oil technology reaches the rest of the world, there will be similar production recover 'miracles'. How sustainable I just don't know and I am not sure anyone does
Just one thing on the oil sands. Yes an 'infinite' supply at say $100/bl BUT:
- those costs will rise as the easily accessible bits get mined out
- there's some strong physical and environmental limits on Canadian production. Say 10m b/d -- maybe 12-13 I doubt 15. Ok that's huge, more than Saudi Arabia now. But it would only be 10-15% of world demand in 2030, say. The time lags are huge, the physical and economic capacity of the host area and of Alberta is finite: water, environmental issues, skilled manpower, transportation etc. What is possible in Venezuela I do not know. Just getting to 5 m b/d is titanic.
Not sure what Canadian Natural (CNQ) has spent on Horizon but to get to say 350k barrels a day maybe $5bn? And that's the *easy* extractible reserves.
So infinite reserves, yes, or practically so. But not an infinite extraction rate.
- as has been discussed here, at a guess, when fracking/ tight oil technology reaches the rest of the world, there will be similar production recover 'miracles'. How sustainable I just don't know and I am not sure anyone does
- just frank
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Re: Who's buying Oil stocks?
+1 (Forum needs a like button)
Adding to the 'unknowns' is how much unconventional production we will need to meet demand in the future. A combination of demand growth, eff improvements and conventional oil depletion. Beyond 5-10 years from now the uncertainty becomes comparable to the production volume of these unconventional technologies.
Adding to the 'unknowns' is how much unconventional production we will need to meet demand in the future. A combination of demand growth, eff improvements and conventional oil depletion. Beyond 5-10 years from now the uncertainty becomes comparable to the production volume of these unconventional technologies.
Last edited by just frank on Sat Jan 10, 2015 12:12 pm, edited 2 times in total.
- William Million
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Re: Who's buying Oil stocks?
While I'm rarely interested in individual stocks, BP would seems to be a reasonable gamble right now at 36. Dividend pays nearly 7%. Obviously, not the way to go for risk-adverse investors.
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Re: Who's buying Oil stocks?
I don't read anywhere in Bogle's books, Boglehead books or on the Wiki where it says single-stock speculation is smart. Maybe 5% at most if you have the itch, but this investor will not be scratching that itch.
Re: Who's buying Oil stocks?
I bought some USO in December. It's down a lot so I may load up some more. It's in my gambling account though that I used to buy individual stocks.
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Re: Who's buying Oil stocks?
If it drops 50% after you buy it, you'll be waiting for it to go up 100% to just break even. Glad I don't have to worry about market timing. Best of luck!surfstar wrote:I don't know for sure, but thought I would pick up some VDE during my regular January Roth purchasing. Seemed I got lucky on VTI "timing" as well. A 50% drop means I'll likely have to wait longer for it to go higherabuss368 wrote:Is it on "sale"? What if it drops another 50% or more?surfstar wrote:Bought some VDE instead of VNQ with a portion of this years Roth contribution (both are only ~5% of portfolio). Got lucky with timing and my contributions for investing were available on 1/6. Picked up everything on sale!
Its a hedge - if oil stays low, I get discounted gas fill ups; if it goes up, my Roth gets the extra $
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Re: Who's buying Oil stocks?
They have a couple of big structural problems. One is Russia and their interest in Rosneft (?)William Million wrote:While I'm rarely interested in individual stocks, BP would seems to be a reasonable gamble right now at 36. Dividend pays nearly 7%. Obviously, not the way to go for risk-adverse investors.
The other is the skyrocketing US legal settlements.
They need to sell assets to pay bills and in this environment that will be hard or impossible-- they won't get good prices.-
I don't imagine that dividend is safe, but I haven't looked at it in any detail.
My thought is if you want to play this, it's to buy the strong players like Exxon, Conoco? On the basic theory that they will come out as survivors.
You are seeing the weaker players throw in the towel. Talisman is going to Repsol for example, at a price in excess of pre announcement but way down from 18 months ago.
Re: Who's buying Oil stocks?
Buying more oil stocks now would be a great idea if we knew for sure that the future, at least in terms of oil, looks like the past. The thing is, we don't know. My best guess is that oil stocks purchased at these prices will continue to be very good long term investments. When I say oil stocks, I mean the big majors or a sector fund or ETF covering the sector. Some of the smaller players will be purchased or go out of business altogether.
So my advice would be to start buying in if you are interested in this play. But build your position over time and see what happens. Approach this with caution because oil prices could drop further. I actually am optimistic about this sector, even if we cease using oil for fuel it has so many other uses vital to our way of life. I like this area of the market, and I like the major oil companies. But those who have read my posts know that I am not infallible and I could be wrong. But even with all my disclaimers, I think this is a good long term opportunity.
So my advice would be to start buying in if you are interested in this play. But build your position over time and see what happens. Approach this with caution because oil prices could drop further. I actually am optimistic about this sector, even if we cease using oil for fuel it has so many other uses vital to our way of life. I like this area of the market, and I like the major oil companies. But those who have read my posts know that I am not infallible and I could be wrong. But even with all my disclaimers, I think this is a good long term opportunity.
A fool and his money are good for business.
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Re: Who's buying Oil stocks?
my ultimate dream goal is own some shares of XOM and other div stocks. One more good trading year.Billyboy wrote:Now I only invest in XOM via the dividends the stock provides me... I've held it so long that the remaining lower 6 figures have a 0 cost basis while still providing a 3%+ dividend. It proved to be very lucrative and still is, even at it's lower price per share.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
Re: Who's buying Oil stocks?
This thread reminds me of the wise saying: "Just because you can take a risk doesn't mean you should."
"Learn from the past, live in the present, plan for the future"
Re: Who's buying Oil stocks?
There is nothing wrong with buying into a sector that is on a downswing as long as you understand the risks. The adage buy low, sell high still rings true. Sure this is a form of market timing, but again as long as you are prepared to accept the risk, I see no problem. It is usually wise to use "fun" money for this purpose though, so if you lose it all, it won't affect your quality of life.
When deciding when to take the plunge, strategies range from ultra-complex to ultra-simplistic. Analyzing mountains of data may or may not pay off when it comes to timing. If I were to take the plunge, I would probably keep it relatively simple and pick a price where I feel comfortable buying. For example, if you were looking to buy VDE, you can see that $150 is the historic peak and $50 is the historic low. Right now it's around $108. So is $100 your number? $75? $50? If it truly is fun money you are using, you can be patient and see if it drops to $50, and then buy. If it never gets that low, keep your money and look for another opportunity.
When deciding when to take the plunge, strategies range from ultra-complex to ultra-simplistic. Analyzing mountains of data may or may not pay off when it comes to timing. If I were to take the plunge, I would probably keep it relatively simple and pick a price where I feel comfortable buying. For example, if you were looking to buy VDE, you can see that $150 is the historic peak and $50 is the historic low. Right now it's around $108. So is $100 your number? $75? $50? If it truly is fun money you are using, you can be patient and see if it drops to $50, and then buy. If it never gets that low, keep your money and look for another opportunity.
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Re: Who's buying Oil stocks?
+1mesaverde wrote:This thread reminds me of the wise saying: "Just because you can take a risk doesn't mean you should."
- William Million
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Re: Who's buying Oil stocks?
Yes, you're probably right. Hard to believe the dividend will hold. Main reason to buy would be the theory that it's oversold due to the settlement headlines.
Valuethinker wrote:They have a couple of big structural problems. One is Russia and their interest in Rosneft (?)William Million wrote:While I'm rarely interested in individual stocks, BP would seems to be a reasonable gamble right now at 36. Dividend pays nearly 7%. Obviously, not the way to go for risk-adverse investors.
The other is the skyrocketing US legal settlements.
They need to sell assets to pay bills and in this environment that will be hard or impossible-- they won't get good prices.-
I don't imagine that dividend is safe, but I haven't looked at it in any detail.
My thought is if you want to play this, it's to buy the strong players like Exxon, Conoco? On the basic theory that they will come out as survivors.
You are seeing the weaker players throw in the towel. Talisman is going to Repsol for example, at a price in excess of pre announcement but way down from 18 months ago.