I've said for months now that oil will go below $50. I think it will ultimately settle between $20-$30. Which companies will benefit most from this? I think that is where we can make a lot of money.
Airline stocks are cheap.
Automakers are cheap.
Refiners are cheap.
It all depends upon your personal outlook. If you think Armageddon is at our doorstep, even these cheap prices are too high. OTOH, if you think America and capitalism will still be around this time next year, maybe there are some really good opportunities out there.
It's your decision. I am no financial expert, so don't blame me if we go into Great Depression: The Sequel and you lose all of your money. There's my disclaimer.
So what are you looking at?
Subscribe to:
Post Comments (Atom)
16 comments:
I don't own any Valero, but I am giving serious consideration to buying some shares this week. This is a good company that meets my "manufactures something we all need" requirements.
Just picked up on GM and Ford. Too cheap not to. If they totally tank, which I don't think they will, I am only out $5 and $2 per share respectively. And I used my "fun" money, sort of like money you use when you go to Vegas.
The likely outcome is that one or both will merge with someone, be acquired, or bought by a hedge fund or private equity group.
I have also started to scale into other positions that I already owned, and bring my cost basis down on my long term holdings such as Pfizer, C, HON, AA, SYY, WMB.
Fortunately I have 20 years before I need any of this money.
I'm not buying anything with large amounts of debt, like airlines or automakers, if the credit crises continues then those companies might bankrupt just from lack of day to day cash.
I'm looking to buy companies that don't have debt, and that will continue to operate even if most of the industrial world is in recession.
Thanks for pointing out valero, that looks good to me, we're still gonna need gas no matter what happens and the market cap of $10B versus a book value of $14B makes it a fairly safe bet.
It is almost universally believed by the pundits that the selling of the past few weeks was too much, good stocks are now way undervalued, etc. I happen to agree with this but I don't necessarily think it's a good time to get back into the market. We may be setting ourselves up for a classic dead cat bounce. I've read a few books on historical financial panics and they all seem to say that THIS is the time when you really need to keep your wits about you. When everyone says that the damage is done you should stay in the bunker because the bombs are still falling. Prices will ineveitably correct to the long-term P:E ratio, but the market is not currently valuing assets rationally (just as it wasn't valuing housing rationally until quite recently).
I bolster my contention only with the fact that we are still in a panic and the psychology has not yet shifted. Normal valuation metrics don't matter so much in times like this.
Lou,
$20-30 is way too low. My analyst friend who deals with US Govt., academics/consultants, and oil biz people thinks the $50 is most likely.
JCR
Paul writes,
The dollar has been, or will be, inflated such that $50 is really $20.
I say $60. That's enough for new tech oil investments and the industry to eat.
However, a lot of new production has been brought on line, and more is coming. Also Russia, Iran, Mexico, will pump as much as they can at $1 a barrel. They need the money, more than we need the oil.( Yeah, others are f'ed too )
The economy is down, and cost of living, and taxes are going up, one way or another.( Weren't those good times great, and aren't you happy paying today, for yesterday? Oh, and the Financials, and Friends of Barney Frank/Chris Dodd? They can not attend, and by the way, got any spare cash? )
Wild cards? China and India stop subsidising oil. ( Oil drops ).
War in Persian/Arab (Actually, U.S. Navy) gulf. Oil up.
Lastly, even at $120, or so, I saw Americans just take it in stride. Bit O' bitchen, but we got by.
We're a great people.
Stocks? MickyD's, Southwest,
I think you are way too optimistic in your projection, Lou. I'd say $50-$60 oil is going to be here shortly, but I have a hard time seeing it drift below that.
Lou did you see this one? I know you keep tabs on Dubai:
Dubai May Need Help From Abu Dhabi to Fund Borrowing
"Government-controlled companies owe at least $47 billion, more than Dubai's gross domestic product, and they will continue to accumulate debt at a faster pace than the economy grows, the New York-based rating firm said. "
Wow, Tesla, I came back to post that exact same article and you beat me to it.
With the desert setting and all the vacant property Dubai is going to look like Mad Max.
It was the Mother of All Bear Market Rallies. Too bad it all happened in one trading day. I don't think the downside is all over.
The market will I assume revisit the lows and give you a chance to play tso or vlo.
If I had bought Ford and GM first thing I would have sold by close. Don't mistake volatility for recovery. The Dow bounced off a ledge at 8800 and is now flopping around in an unbelievable ±400 points. There's another stairstep to go.
There's another stairstep to go.
Yep. The underlying problem has not been resolved. I am trying to convince the parental units to be cautious. Their portfolio went up 20% today! Most of it due to a drilling fluid company the male parental unit works for. I begged, pleaded... DIVERSIFY. Take advantage of the market action today. They are down 35% for the year, not counting today.
Pfft... Sheldon saw it 3 days before you guys:
http://www.sheldoncomics.com/archive/081010.html
Post a Comment