Well actually it can be matched by other strategies- I have made far more than my 9.9% APR investing in solar companies, or UPS, or literally (almost) all of my active picks.
Still, I hate credit card debt and seek to be free of it. And paying this off is a sure thing. I paid mine off online tonight. I had credit card debt for 2 of the last 12 months. I found it handy when I needed it, then was rid of it. Now I am ready to build a cash position in anticipation of the oil bottom.
One of the oil companies I’m interested in has:
Sounds like they’re circling the drain and I thank jeebus I didn’t jump on them when they were trading around the $1 mark.
Unfortunately my best friend was asking me back in September what stocks I was watching, and he chose this one to invest a massive amount of money in (at 1.60 a share). I blanched when he told me what he'd done, and I responded by saying that the timing wasn't right, and that the analysts are saying this is going to be a rough winter for North American oil producers. His response was "meh, I'll just ride it out and make a ton of bank when the price starts to rebound in summer 2016." Now I'm begging him to sell with the current price around .73.
His total loss is in the $10,000 range and I’m wracked with guilt. I really should have insisted that he sell but I was satisfied by his prediction. :smack:
What were you supposed to do? Physically restrain him every time he logged into his brokerage account? He made his own decisions. You shouldn’t feel guilty at all.
(Although my meager nest-egg is invested very conservatively, there is a logical reason why I should bet on an oil price increase: We buy a lot of fuel so owning oil would be a good hedge against future hikes in our fuel costs!)
Prompted partly by this thread, I’ve been clicking in Google Finance. A stock that caught my eye is Wells Fargo (WFC). Over the past six months it’s performed worse than Chevron; one report (which I didn’t understand) attributes its price fall to the falling petroleum price. I wonder if it would be a less risky (though less rewarding) way to make this play. The bank is very profitable. I like that it’s one of Warren Buffett’s biggest holdings.
What do Dopers think of WFC as a very conservative oil play? (And why is its price supposedly tied to oil? 
)
Disclaimer: I am very conservative and even buying a banking stock would be unusual for me. My biggest holdings are the non-cyclicals JNJ and MO. I literally pay no attention at all to the market for years, with stocks like JNJ and MO, stock market plunges are almost irrelevant to me. JNJ roughly tracks the SP500 long-term (missing both the crashes and the booms) while MO has outperformed the SP500 for decades.
[off-topic] I’d like to see a graph of MO performance, dividends reinvested, over the past half-century or so. I tried to find or construct such a graph via Internet but gave up. (I found one site that might have info, but it was pay-per-view.) In another thread, about finding old stock prices, I saw
@ Omar or anyone: Can you point me to the data I’d need for my long-term MO graph?
Thanks! It shows $100 in MO March 15, 1981 (earliest allowed?) growing to almost $6.2 million today, for an annual return over 37%. :eek: Wowww! Is this really right?
Too bad I’ve been so conservative, out of tobacco for long periods. (* - and always afraid Congress would do to tobacco what they did to asbestos.)
Hmmm… that seems fishy. My guess is some stock split isn’t being incorporated correctly.
septimus: If it is stocks irrationally tied to oil you are after, take a look at the solar sector. Most of those stocks have followed the trajectory of the price of oil, apparently because the market views them as “energy”. But solar and oil don’t compete directly all that much- eventually they will de-couple IMHO, and the solar sector’s growth will be reflected in the stocks again.
But that may not be conservative enough for your taste. How about the S&P 500? The whole market seems to be tracking oil right now. When oil bounces back, likely everything will bounce back. Hard to make a more conservative bet than the S&P 500.
Over the long term solar and oil compete directly. And the short term price of stocks reflects the market assessment of their long term prospects.
I disagree. The S&P 500 is very conservative in the sense that you won’t lose all your money. But it could hit a pretty big downturn. And in fact many Smart People believe that it’s currently overvalued and are predicting that it will.
There is no such thing as a truly conservative investment with significant upside. The market prices risk against reward.
An S&P index fund is a conservative strategy for investors in the stocks which make up the NYSE, but it isn’t a conservative investment strategy.
How do you define ‘conservative investment strategy’? For me, that means stability and low risk. The S&P 500 is subject to volatility, but in the long run (like in a 401k), it is a pretty safe bet that you will grow your investment. A more conservative approach would be to stash your money in Treasury bonds- effectively no risk with a steady, modest return. I also consider smart diversification to be ‘conservative’. Do you folks agree with that definition?
Anyway, I think one of my picks is starting to ripen-ConocoPhillips cut its dividend by about 2/3 today. The stock price fell by more than 8% in response, to $35.32 ($35.04 after hours). This is the kind of thing that turns oil stocks into bargains.
Still, I don’t think this puts COP in ‘blood in the streets’ territory, not quite yet. Their presentation was based on $42 oil, more than 30% higher than it is now. I’m guessing it won’t be time to open a position for months just because the glut seems to have plenty of legs and this company looks to lose big money for at least another quarter (if I had a ton of cash and a longer time horizon for holding the stock, I might pick up some shares now after the big drop and just wait for happier times). Still, good show, and I’ll be watching to see if Chevron is forced to cut their dividend, too.
Yes, bonds are obviously more conservative than stocks, and cash can be even more conservative still. And, in addition to some Smart People, at least one Stupid Person (me!) worries that we’re headed for recession and stock market plunge. And because my wife, who is not a taxable U.S. person, has Thai baht investments, it might make sense conservatively to short that currency!
Partly prompted by this discussion, I did buy a few shares of WFC yesterday and already have almost a 3% profit. 
(Yes, yes, I know the one-day move is irrelevant to a long-term investor like me, but as someone who rarely pays attention to the market, it did seem a lucky coincidence that I happened to do a click-click just when WFC was at its bottom(*).)
(* - Knock on wood. Maybe y’all be laughing at me next year when I wish I could sell WFC for the $47 I paid. :eek: )
Good luck, Septimus. I hope you make bank.
There’s some good news coming from ConocoPhillips: they’ve taken measures to stem their losses; they recently announced that North Alaska yields will exceed expectations. Yields on its bonds, which recently soared from 4% to 7%, have dropped to 6.2%.
And their CFO is gone. They should have reduced their dividend earlier, but instead said that keeping their high dividend was a priority … and then a few weeks later slashed it 66% :smack: Cutting the dividend should have been good news – why starve the indebted company of cash? – but became bad news due to CFO’s incompetence.
Could the stock (COP) have passed its bottom already? I’m probably too conservative to actually act, but this thread got me clicking.
What about buying a call option on COP? If we only have a vague feeling that COP might be upward-bound but we don’t known when or how much, is there some particular call to buy?
For example, buying a Jan’18 45-strike call for $3.50, I’ll triple my money if the stock gets to $59 within 23 months.
Or, for about $3 I can get a Jan’17 40-strike call, tripling the bet if COP gets to $52 within 11 months.
I realize these are all sucker bets for ignorant amateurs like myself, but if I did want to play, what would be a good choice?
Keep in mind that natural gas prices are down considerably as well and that is direct competition for solar.
Nobody is really shutting in existing producing wells (to any material degree). When people are talking about shale producers being able to recover quickly, they mean by adding new wells, not bringing shut in stuff back on line.
Most of the shale producers are levered up, meaning they have to keep production flowing, just to make debt service payments.
Right, but for most of these guys revenue exceeds operating costs, so it still also economically makes sense to continue producing if you disregard sunk costs. For the higher cost production, which would most be older low rate wells, you might produce it at a loss for other reasons, like to maintain leases.
It doesn’t make economic sense to drill new wells, but you may still be doing that for other reasons. You may contractually have the rig and have to pay for it anyways, so you may as well drill. You may be required to drill in order to maintain the lease.
I wish I could help you with strike calls, but again, I invest long and that’s it. It does appear that COP is at a resistance level- dividend slashed and yet it is not dropping any further. Looking at the 1-year chart, it looks like the stock could be stabilizing near a bottom. What gives me pause is that oil may not be finished dropping- see Longhorn Dave’s last post, producers have incentives to drill at a loss and it can take awhile for those factors to work themselves out before the low oil price takes its full effect on supply.
Still, considering the way the stock is acting, I bet long-term it rises above these levels as oil eventually recovers. Short term? Man, I am not convinced oil has bottomed, leaning toward “has not bottomed”.
Welcome to the thread, Dave! Nice to have an oil expert on board.
Low gas prices do not seem to be slowing the growth of the solar industry; see For the first time ever, solar beat out natural-gas capacity additions. I like to invest in growth! Even in this low-cost environment, solar continues to grow and set new records (note that the market share of utility-scale solar has grown dramatically over the past 5 years). When oil/gas prices rebound and the competition from natural gas recedes, shouldn’t we expect solar growth to accelerate further from this ‘low’?
I think so. I think solar has plenty of room to run regardless. I am moving money out of UPS to park in solar simply because of the dramatic difference in upside I see between the two. Still waiting on my oil picks, though the behavior of CVX makes me wonder if I missed that one…