No one at my office talks about stocks. A new guy was hired about 2 weeks ago and he is the only other person in the office to even mention stocks. His comment yesterday at lunch while the market was in a free fall was that he sold all his oil stocks when it was at $50/barrel and wished he had sold even sooner. I said that now is not the time to be selling it's the time to be buying. When you can get XOM at greater than 4% and CVX at nearly 5.5% . He sais how long can you expect them to keep making their payments. He then mentioned he's 80% cash and the two stocks he owns are T and a shipping company (ocean) that I've never heard of that is paying 13%. I told him I avoid companies that have a yield that high. He mentions that they've made their payments the past 3 years.
So he's concerned about XOM and CVX making their dividend payments, but has no concern about a no name shipping company yielding 13% making theirs. I just had to walk away. Thought I might have a fellow co worker to discuss stocks with and this is his investing method.
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If I had to guess his shipping company is TAL, which actually leases shipping containers. I looked at them a long time ago but they're going to be bankrupt soon ( admittedly haven't looked at them since I came to my initial conclusion )
You can still talk to this guy at the office about stocks, no one has to be right or wrong. Besides, 80% cash seems like a better place to be than naked shorting bio penny stocks. So at least he doesn't appear to be batshit crazy
Ask him when and how he plans to allocate the cash. Take the conversation from there.
crimsonghost747
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Just because his views are different from yours it doesn't make them wrong. I too would be concerned if I owned oil stocks as to how they can keep their distributions going on without taking on too much debt if the oil price remains like this. I haven't taken a deeper look into those oil companies but a quickie at CVX brings up this: In q1-q3 2015 the FCF has been negative. The dividends have been larger than the EPS. Now if that was the trend at oil around $40, what will the trend be in the coming months? Debt looks ok so there is no immediate worries though.
Regarding the shipping company, you should know better than to judge a stock on a single number. If you know nothing about the company except the dividend yield then you aren't exactly in a position to say that it must be a bad investment. Sure it's a sign that there is something to be cautious about... and it's obviously going to be a risky investment with a yield like that. But risky doesn't mean that it has to backfire.
Long story short: you shouldn't stop talking to him just because his view of the markets is different from yours.
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I feel your pain about having nobody to talk to (in person) about this stuff. All of my co-workers seem to be straight indexers / asset allocators. Which can be a little intimidating, since I work with a lot of really smart people, including lots of economists and engineers. But my dividend checks keep rolling in, which keeps me on the path...
I'm not saying that he's wrong or that I will quit talking stocks to him, just thought it really weird that he doesn't trust XOM or CVX to keep paying their dividends, but does think his 13% yielder will.
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Sometimes its even worse talking to a relative. I have a brother who gets out of the stock market every weekend ("You never know what the government is going to do."). In addition, he buys stock in companies that have declared bankruptcy. He also tries to get my mother to sell her PG (good thing she knows better).
