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Dilemma? - Vincenzo - 11-28-2014
Hi All,
Long time lurker, new poster here. I enjoy and appreciate all of the insight I gain from all of you.
My issue: as I built up my portfolio of individual dividend paying/growing stocks, I got carried away in buying oil/energy related stocks. Most of the stocks are solid companies with long track records (e.g., Chevron (CVX), Royal Dutch Shell (RDS.B), Helmerich & Payne (HP), British Petroleum (BP)), and one in which I did absolutely no due-diligence (Seadrill (SDRL))
. I learned my lesson with Seadrill - I bought in based only on optimistic talk about it. I knew at the time I invested that it was purely speculative and I didn't commit a whole lot of money to it.Fortunately, I'm well-diversified
so the ding that I took in all of the oil/energy related stocks wasn't as bad overall as it may have otherwise been. At any rate - my question: Now that stocks like CVX, RDS.B, BP, HP have gotten knocked down quite a bit, I'm tempted to buy more of these shares (but not Seadrill - I'll probably use that as a write-off), even though I'm overweight in oil/energy. I'm still in the accumulation phase and don't see the possibility of retirement for another eight years or so. Do I buy more of these shares now that people are running for the exit, or do I forgo the opportunity to buy shares cheap and concentrate on other things? I'd appreciate and value your input. Thanks.
RE: Dilemma? - Jimbo - 11-28-2014
Well, Had I have not just purchased more of BP, and having just purchased HP,CVX and XOM and think even though it took a nice hit today I would buy more of all for a LONG haul.
Unfortunately will have to wait some time for more of that hard to come by green stuff called cash.
Oil prices can't stay low forever and the above 4 have some nice yields and background to them.
I guess one of the saving graces to todays fall is when the DRIPS for these hit soon more shares will be purchased.
Just my 2 cents.
RE: Dilemma? - Roadmap2Retire - 11-28-2014
Hi Vincenzo,
Welcome to the forum. I face a similar dilemma as you do. I have 17% of my portfolio in energy sector and today, I was tempted to add more as some of the major names took a hit and fell by about 5%. I just added to my position in CVX last month and today would've been a good day to add more. But I decided that 17% is already way more than what I want in my energy sector, so I decided to skip it and bought a railroad instead (CNI).
What Im trying to say is: it depends on your overall risk tolerance, diversification and outlook. Good time to pick up energy names, no doubt. Commodities/Basic Materials are also an attractive sector right now.
RE: Dilemma? - Main Street Stock Investor - 11-29-2014
IMO a 10% move down in a core holding is a reason to consider adding a partial position if you believe in the stock. In the case of Dividend Achievers and Dividend Aristocrats, I am a believer. I added partial positions in XOM, COP, CVX, OXY in early October, and will add additional partial positions of these stocks to my core holdings on additional weakness. I monitor technicals such as MACD and stochastics to help analyze a buy point. Always monitoring diversification of my portfolios with regard to sector allocation.
M$$I
RE: Dilemma? - ronn38 - 11-29-2014
It terms of high quality companies with strong histories and reasonable expectations to maintain that "history" going forward (I think CVX would be an excellent example here): buy the dips, re-balance later.
Ronn
RE: Dilemma? - Be Here Now - 11-29-2014
We are definitely going to see some bargains in the oil patch, but I caution against buying just yet. Yesterday the midstream MLPs got clobbered. Look at a chart of MLPI, which is an easy way to follow the Alerian MLP Infrastructure Index (AMZI). This is a group that is mostly or entirely immune to changes in WTI pricing. Does the selloff make sense? I think we are seeing the start of panic selling. The selling could challenge the panic that happened in October. It could easily go down another 10%.
If the midstream MLPs are being hit by panic selling, the E&P companies are going to get it even worse. Look at a long term chart of CVX. Yesterday's big selloff is just the start, IMO. It could easily go down to 90, another 20%.
I want to start a position in CVX but it is way too soon for me. I am also waiting for the AMZI to get cheaper so I can buy some midstreamers. Way too seen there as well.
This article has a detailed look at what has happened and cautions against jumping in just yet: http://seekingalpha.com/article/2716985-panic-in-crude-oil-prices#comment-44027425
RE: Dilemma? - CritMass - 11-29-2014
Welcome Vincenzo and ditto Ronn38. This a great time to buy discounted high quality oil/gas equities. Sure, they could go lower, but most likely they will go back up at some point. I caught the "falling knife" when I topped off some COP about four weeks ago....it went some lower but this is where patience comes in handy. Best of luck to you, Vincenzo....may your yields be high and dividends growing. Long CVX, COP and XOM.
RE: Dilemma? - Vincenzo - 12-01-2014
OK - this is a complete edit of a post telling you all that I was just going to sit on my hands and do nothing. Then I re-read some of the replies - there are some good arguments for buying this dip and rebalancing later, not to mention that sitting on this cash, although not a huge amount, is hurting. So, still torn
I'll figure it out eventually.Anyway - thanks for all the feedback.
Edit: OK - I decided. I figured I have 15% of my portfolio in oil/gas. That's enough. No more - at least not for now. Thanks everybody.
RE: Dilemma? - CritMass - 12-01-2014
V, sometimes the best decision is to simply do nothing.
RE: Dilemma? - Be Here Now - 12-01-2014
"Don't just do something, stand there." - Jack Bogle
RE: Dilemma? - Vincenzo - 12-08-2014
Gosh darn it! I'm feeling weak. I wanna buy more! Helmerich & Payne is down 4% on a quarter of its average volume as I write this. The fact that it's down that much with relatively little volume - does this signal that it's being manipulated? The big boys trying to shake out the weak hands?
I saw a headline on Yahoo Finance that hedge funds are betting the rout in oil is coming to an end. I don't place much stock in what I read on Yahoo Finance, but I was wondering what your thoughts were.
RE: Dilemma? - Be Here Now - 12-08-2014
(12-08-2014, 10:48 AM)Vincenzo Wrote: I saw a headline on Yahoo Finance that hedge funds are betting the rout in oil is coming to an end. I don't place much stock in what I read on Yahoo Finance, but I was wondering what your thoughts were.
Hedge funds are getting it wrong more often than right. Plus, they are not investors in the sense of Graham and Buffett, they are speculators. Ignore them, do your own due diligence, follow your plan, don't over-pay.