Yeah this isnt panic overall especially in tech...this is energy panic with big names getting hit hard and mid names looking like death. If someone wants to take some risk on some mid name oils its about time to nibble.
I bot a little bit of RIG today, nothing big bit a little...also looking at some others as risk plays with big upside...also trying for some XOM, order in but a bit lower.
The market pendulum is now swinging to the opposite side of the spectrum.. Well said, Gamble.. We've all heard of irrational exuberance to the upside. Well, how about irrational pessimism to the down side ? I frankly can't understand how a 30% drop in oil (which is insane on its own) spreads so quickly to the rest of the market. I mentioned earlier Energy makes up only 4% of the market. How much does their debt represent ? Should we really be concerned about a credit crisis and contagion spilling over in to the overall market ? Really ? Banks are at risk here ? This isn't the financial crisis 2.0 IMHO, but it sure is being priced as such.
Wall, I looked at the XLE, and you're right. I expected more E & P in the top 10 holdings... The only stinker I saw in the top 10 holdings is OXY. Debt ridden due to the Pathetic decision making by the board and CEO in their ill-advised purchase of Anadarko. What a disgrace these people are serving their own interests instead of the shareholders. Carl Icahn is right in trying to overthrow the CEO and board. Warren Buffet, you're no help. You contributed to this catastrophe w/ your loan to OXY, enabling them to purchase Anardarko w/o shareholder approval.. Well done, Warren. Gosh, I wish I could have your problems. lol.
Well, OXY just cut their dividend big time... Who's next.
That was just so dumb of their management team to buy APC last year. Came in over the top to buy out APC over CVX. They didn't have the wherewithal to do it on their own, and so they asked Uncle Buffet for a loan. Buffet actually entered a stock position w/ OXY a couple of months ago, too. Nice timing.. 
Market likes it because OXY did this last time too and when the waters got calm they started raising the dividend again. I got about 1/3 to 1/2 of what I wanted yesterday done but even seeing the dip into the red so quickly on the sector today I think the bottom is not in.
The liquidity is poor, that is the only way I can describe these intra-day moves...from up 800 to down 100 to up 400 and we are barely at mid session. I have not seen anything to show me there is a reason for a bottom yet...Trump is doing his usual blaming and finger pointing instead of head down and get the job done...he is useless. It is like his only focus is to blame someone for what they are not doing instead of finding a way to do what is needed QUIETLY and with respect. It sucks having a classless slob like him as the leader of the country.
So I got some XLE, some XOM, some RDS, some RIG for risky fun. I did not go with CVX or BP but if they keep coming down I might want to add one of those. I am not a fan of airlines and havent looked closely but with oil so low there will be winners like LUV who likely are going to lock in forward fuel and do well. I just hate how they are all seemingly against the passenger and are making the flying experience worse and worse as time goes on. Makes it tough for me to want to own one. But I would lean to Delta or LUV if I were considering.
Wall. First let me say that I appreciate all of your stock market and economic opinions.....you share lots of knowledge and wisdom here. Second. I did not vote for Trump just like you didn't, but your constant ripping of him is getting old. For whatever Trump is or isn't, this is a bad look for you personally. It's enough already!
Wall, RIG and TDW are definitely risky fun. Good luck on those; I just don't have the guts to pull the trigger on these . lol..
Airlines are an interesting sector. You raise some good points on the flight experience . They are always an unloved sector by the general public... ironically, just like the oil companies, but for very different reasons. Yeah, the input cost of jet fuel is a big reason, and also the coronavirus virus cutting flight traffic are some compelling reasons to give them an eye... but I just hate Airlines. There is no "moat" to these businesses IMHO. Anyone can start an airline business (and many have). I think I came across a stat years ago that said the airline sector has had more bankruptcies than any other sector. Even the well known names have had their time in the BK bin.. . To me, they are just buses in the sky, and not very compelling businesses to invest in..
Yeah, I hope we can find a cure to this virus, soon. That is the only solution. Any targeted measures to help industries flies in the face of containment measures. How can you promote business activity when the CDC is advising against such measures, and the congregating of large pools of people..
Yes as usual Trump's mind only works towards businesses and the elite. A payroll tax cut wont help this problem, if he REALLY wants to help then focus on funding and being in front of containment..and stop badgering the FED about interest rates. That is the last thing we should be worried about is the daily FED bashing tweet from King Moron.
So, for the record , I put in my 2nd installment of cash in my mutual fund positions yesterday. It was close enough to my -20% trigger point for additional cash. My final one is at -30% if we ever get there. Like you guys have been pointing out, I expect further pain and really don't believe this -20% drawdown is the worst of it. It's just a non-emotional trigger point.
In our lifetimes, this has to be the most unpredictable we have ever seen the markets. That said, buying markets after a 20% off discount is highly likely to show significant gains by 2030 or 2040. Rush, I like your 20/30% strategy with a long term view as quibbling over another 10% drawdown will not matter when the markets double in 10-20 years.
In regard to King Moron (Wall), I'm sure he's not flying by the seat of his pants as much as you would like to believe.
In regard to the oil plunge, Russia and the Saudis are not in a price war. IMO they are in cahoots and teaming up. I wouldn't put it past either of them to intentionally narrow the field.
He is either out to lunch or just an elitist snob, either one is not a good thing. Tell me how he is handling this by attacking the FED, belittling Pelosi and thinking a payroll tax reduction is the answer to the problem?
What out of all he has done is the signs of a solid well grounded leader? Appointing Pence to be the minister in chief????
Trump is a clown..out of his league, he needs to go back to brow beating bush league real estate investors and reality show contestants.
Wall, you probably have a better historical perspective on OXY than I do.. For starters, I don't know how long their current CEO has been on the job (Vicki H.) , but she is a real piece of work and did the deal for selfish reasons. This used to be one of the better well run oil companies, but not with this nit wit.
[Quote: Originally Posted by gambleholic63]In our lifetimes, this has to be the most unpredictable we have ever seen the markets. That said, buying markets after a 20% off discount is highly likely to show significant gains by 2030 or 2040. Rush, I like your 20/30% strategy with a long term view as quibbling over another 10% drawdown will not matter when the markets double in 10-20 years. In regard to King Moron (Wall), I'm sure he's not flying by the seat of his pants as much as you would like to believe. In regard to the oil plunge, Russia and the Saudis are not in a price war. IMO they are in cahoots and teaming up. I wouldn't put it past either of them to intentionally narrow the field.[/Quote]
Wouldn't that be interesting... You know Gamble, I was thinking the same thing earlier in the day yesterday when I was at the gym.. What if the intention, by the Russians in particular, is to sink the American Shale producers.. And in the process, inflict a huge amount of pain on a major cohort of Trump fans. The Permian Basin, Bakken Shale, etc. all in the Midwest are home to big numbers of Trump fans. I think the White House recognizes this, and is why we heard rumors of financial assistance to the oil industry..
Well this drop is zero...people are just so used to non stop bull market that a drop is shocking. We went up like 4X from the 2009 lows and people are spooked from a 20% drop?
400 plus percent and even more on the NAZ and people are crying (not you) about a horrible bear market? Wow...
OXY pulled the divi years ago and waited the swoon out, that took longer...I think this will be a quick shake out but then they bumped it back up again.
Shale needs to be shook out, they as a group are too leveraged and Trump let them do whatever the crap they want to the environment and I dont feel bad if the whole thing gets torn apart. The banks are going to be the ones hurting here, they own the debt and are on the hook for these loans that will go poof. Poor banks, leveraging FED funds rates, gouging consumers on CC rates, excess profits galore, I hope the big names get smashed.
It's no secret to Russia or the Saudi's that oil at these levels will put fringe USA players out of business. Currently, every barrel of oil that gets sourced here is at a net loss. That would be like you going to work at your job and at the end of the day pulling money out of your wallet and paying your employer for your right to work. In my mind there is no doubt that Russia and the Saudi's let this happen as they know it will only benefit them in the long run. I saw a segment on CNBC the other day highlighting the extreme wealth of Saudi Arabia and how they could suppress oil prices for years if not a decade without dire economic consequences. It's no coincidence that Russia decided to defy OPEC this week. Why would they have acted differently when they have the ability to disrupt and dismantle the USA shale industry? This was no coincidence.
Wall, you're right.. In the grand scheme of things , bear markets are a normal part of investing, and occur every 7 years or so if memory serves correct. I don't have the data, but I wonder how long it takes the average bear market to occur. This one took about 3 weeks to enter bear territory. The one in Dec.2018 (which never technically entered bear market ~-19.5%) took 3 months. I don't think the -20% drawdown is astonishing ; I just think the speed at which the bear market occurred is pretty remarkable. It's up there probably in the top 3-5.. Nothing tops Black Monday in '87 though, with a -24% drawdown in 1 day.
Gamble, you're on top of it.. I think the breakeven price for most shale producers I've heard is around $50/barrel. They're in deep doo doo, no matter how you cut it. Every barrel they pump is losing money as you elude to.. This is why I kept harping on the credit quality and had an eye on debt levels of these oil producers. XOM and CVX are the most robust, but heck, even their dividends might be at risk. It's all going to boil down to "how long" these CEOs think a 20-handle or 30-handle on oil lasts. If they project lower for longer, no one in the oil sector may be safe with their current dividend . Of course, they have other levers to pull such as cutting back on cap-ex spending, etc., and eliminating stock buybacks.. Cutting the dividend is sacrosanct, particularly to XOM and CVX.
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