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May 31, 2024
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There have been 1-2 other topics started on here recently about this. Oil is likely to stay low for a while. If you have a long-term time horizon, it's probably not a bad idea to start accumulating a little bit and build into a position over time.
Thank you and I will search first before posting on something I should have figured was already discussed.
just because something went down doesn't mean it's without reason. do your research before you buy solely because of a dip. you should want to have owned the stock before the dip, but then want to buy more after the dip. now, if it's gone down over 60% like RIG or 70% like SDRL, that is a potential value creating moment if the stock swings back up. BUT big oil (CVX, XOM, RDS, COP, OXY) are all down only around 10% on a 1y number, that's not a value creating price movement imo, the stock would've already been a good buy.
Question: if you want to go long oil, why would you buy USO over UCO? UCO is leveraged, so you get $200 return. If you think oil is a good long play, why would you ever take USO over UCO. Go!
you're probably joking but leveraged etfs decay.
If you're day trading I agree that could be a good idea but I don't think that is what he had in mind.
There is still more downside for energy stocks. Don't try to catch a falling knife as they say. Wait a little bit longer before you buy.
Everyone knows timing the market is a pointless exercise. "If I got in at the bottom and sold at the top would have locked in 56.7% gains." Sadly, these thoughts are not indicative of realistic expectations. Just saying
So what alternative are you suggesting?
I am long a few e&p energy co's... I would be honestly surprised to see oil at levels far below where they are now. Already rumours of taxing at the consumer level. Even the middle eastern guys(OPEC) will eventually get their shit together and cut supply to bring prices up. Although they have low costs these prices are no good as alot of their countries need fairly high oil prices to balance budget.
No, oil cannot stay at those levels sustainably. However many IOCs and traders are predicting existing market conditions to remain for at least 2 years. Question is how long you want to hold a stock. If you're the average 6-monther then I don't recommend it. And look into why some companies' stock collapsed while others didn't. In good times oil players often get bloated on spending and the major culprits are the most exposed when the crude price falls. In my view it's capital prudence that differentiates the very best from the pack.
I preface this by saying O&G is not a sector I've looked at in terms of equity investments. It's not just how long you are willing to hold a stock, it's whether or not the company you are buying has the balance sheet to survive for X time at current or lower prices, and can it do so without reorganizing and wiping out the equity or diluting the heck out of the existing equity. Look at big bank stocks during the financial crisis. There has obviously been a huge turnaround in the financial sector from 08 to the present, and the worst fears that you could have been dreaming of in September 2008 didn't come true. But if you bought BAC in September '08, you are still down over 50%, because of the huge dilution of the shareholders in order to raise capital. So the question of whether or not equity investors earn a good return investing in a distressed sector is far more complicated than betting on the rebound of the sector.
Temporibus quod ut numquam exercitationem incidunt maiores fugit. Ipsa quam et est ullam.
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