I've entered mid-cycle a few times and managed to give back gains and a lot more. Fast forward to MAR 22 and suppose XOM is at 75. They are chugging along and paying off debt and covering the dividend. These days they aren't leveraged up where it might double again fast. But what about that sexy little leveraged up oil driller over there growing REVs at 75% the past few quarters. Moon shot baby! We are gonna be rich in a year and all the cool kids are buying it. No different than tech when it hits a lull in the big caps. AAPL and AMZN are flat lately so lets do something stupid for a quick double instead. Way back I got killed on offshore drillers. Good companies like Diamond Offshore and Transocean. The story changed and I didn't recognize the trend. I also failed to respect the enormous debt that was quite normal for the sector. It all came tumbling down. This way back in the late 90s.
I'm embarrassed to admit I got sucked into Seadrill. Motley Fool was hyping them and they have an OK rep. They didn't give up soon enough and neither did I. I averaged down more than once and basically lost it all.
I got "kindered" by KMI. Cramer was hyping the hell out of it and Rich Kinder was n the show with a compelling story. I don't feel too bad for that one. The market crashed and I had time to cut my losses. But I stubbornly held and it was a huge mistake even halfway through this price cycle.
Averaging down has got me in every one of the above situations. It just made things worse without exception. You know what would have fixed it? Admit the cycle may be in for a long downturn and I owned debt laden junk. I didn't have to bail on the sector, but hunkering down in XOM-CVX and the other majors would have been far less devastating. Returns wouldn't have been amazing but I could have closed my eyes and collected the Div. A 2% total return for a decade is a helluva lot better than a handful of 90%+ tax write off losses. It's hard to make up for that later.
The averaging down thing is something I have control of going forward due to my experiences. Just sell or hold what I own and give it time, because it might be years. No, it will almost certainly be years for most commodities. The urgency to buy more so I can at last get back to even was always in my head and not reality.
I hope somebody might benefit from my oil spleen vent.
It's not easy and it never will be.
I'm embarrassed to admit I got sucked into Seadrill. Motley Fool was hyping them and they have an OK rep. They didn't give up soon enough and neither did I. I averaged down more than once and basically lost it all.
I got "kindered" by KMI. Cramer was hyping the hell out of it and Rich Kinder was n the show with a compelling story. I don't feel too bad for that one. The market crashed and I had time to cut my losses. But I stubbornly held and it was a huge mistake even halfway through this price cycle.
Averaging down has got me in every one of the above situations. It just made things worse without exception. You know what would have fixed it? Admit the cycle may be in for a long downturn and I owned debt laden junk. I didn't have to bail on the sector, but hunkering down in XOM-CVX and the other majors would have been far less devastating. Returns wouldn't have been amazing but I could have closed my eyes and collected the Div. A 2% total return for a decade is a helluva lot better than a handful of 90%+ tax write off losses. It's hard to make up for that later.
The averaging down thing is something I have control of going forward due to my experiences. Just sell or hold what I own and give it time, because it might be years. No, it will almost certainly be years for most commodities. The urgency to buy more so I can at last get back to even was always in my head and not reality.
I hope somebody might benefit from my oil spleen vent.
It's not easy and it never will be.