The Speculative Stocks....

[fenders53]

(03-31-2020, 03:44 PM)vbin Wrote:

(03-31-2020, 03:41 PM)fenders53 Wrote:

(03-31-2020, 03:20 PM)vbin Wrote: I am chest deep in oil.and ready to go neck deep. We will see super cycle in oil once demand comes back and high debt companies have filled ch 11( don't get me wrong, I am not happy people leaving jobs but that's what will happen unfortunately. )

Not that you have ever listened to me before on oil but...........  Wait for a little more blood in the streets.  We are getting close.  Nobody is out of business yet, hardly anyone has cut a dividend yet.  Capitulation has not happened yet.  

What is your thesis that oil demand recovers anytime soon?  That has to happen in a big way.  You believe the virus is doing VERY real damage right? (your short positions say you believe that and you put your money where your mouth is).  That thesis absolutely flies in the face of oil being anything but treacherous for many months.  We know demand is dead for a good while.  I can only think of one way the supply chain is disrupted and nobody is in the mood to start a regional war right now IMO.

I will never invest another nickel in oil until companies are panicking.  It has to be starting but I haven't seen it yet.

I have listened to you before, lol. Otherwise I would be neck deep in oil already. Thank you for reminding me to wait. Agreed, doesn't look like oil is recovering tomoorw. My speculation is that Trump will focus more on oil closer to election time, not at this moment.

I know I am full of market philosophy sometimes (often).  I hope I don't come off arrogant.  I want everyone on this forum to succeed.  I've probably lost more money in oil than you have over my investing career.  It is the only sector that has absolutely schooled me on how much I don't know about commodities.  The only way you make money in this sector is to buy when companies are going out of business, when nobody wants to buy oil, then trim profits on the way back up when everyone says oil is headed to the moon. You'll lose a few bucks scaling out but nobody can time this.  I don't care that the oil bulls type volumes about on S.A.   This is a very slow growth industry.  Renewables are not going to end oil, but they can sure as hell kill oil growth.  It's delusional to think otherwise IMO.  Make all your moves slowly when all hell is breaking loose.  That is almost always a better strategy than jumping deep into the fire because you believe this has to be the bottom.       

Anyway, tiny moves are almost always prudent when catching a falling knife.  You have to keep asking yourself what could possibly cause oil to launch higher tomorrow if I move too cautiously today.

[Otter]

(03-31-2020, 03:41 PM)fenders53 Wrote:

(03-31-2020, 03:20 PM)vbin Wrote: I am chest deep in oil.and ready to go neck deep. We will see super cycle in oil once demand comes back and high debt companies have filled ch 11( don't get me wrong, I am not happy people leaving jobs but that's what will happen unfortunately. )

Not that you have ever listened to me before on oil but...........  Wait for a little more blood in the streets.  We are getting close.  Nobody is out of business yet, hardly anyone has cut a dividend yet.  Capitulation has not happened yet.  

What is your thesis that oil demand recovers anytime soon?  That has to happen in a big way.  You believe the virus is doing VERY real damage right? (your short positions say you believe that and you put your money where your mouth is).  That thesis absolutely flies in the face of oil being anything but treacherous for many months.  We know demand is dead for a good while.  I can only think of one way the supply chain is disrupted and nobody is in the mood to start a regional war right now IMO.  The US GOV will do absolutely nothing to raise gas prices in an election/recession year.  That would be political suicide.  They might fill up the strategic reserve.  There is enough oil floating off shore in storage to cover that in a month or less.

I will never invest another nickel in oil until companies are panicking.  It has to be starting but I haven't seen it yet.

WTI is down 66% since January. I don't think we have lost 66% of the economy before my LEAPs expire in 2022. That is my thesis. That is overly simplistic, but that is the thesis in a nutshell. 

Energy traders are smart folks. I know quite a few. The folks who trade futures contracts for WTI are well aware of the economic consequences of COVID-19, the supply chain disruptions and demand shocks, Russian/Saudi attempts to bankrupt American shale producers, and the sudden filling of tankers with oil that can't profitably be sold. Crude is fungible, prices itself in real dollars according to global demand, and is the primary input of most of the world's industry. It is, for the most part, an instantaneous readout on what the economy is doing right now, like RPMs on an engine. 

If any investing space appears to be accurately reflecting the current screeching halt in industry and commerce, my estimation is that crude oil and industrial metals is that space. Unlike the S&P 500, WTI has gone straight down by 2/3 since January, reflecting the huge dropoff in demand and increase in supply. Sure, it might drop down to $15 or so on a panic day. Likewise, it could easily pop to the high $20s on the tiniest bit of good news. 

I think $5 USO LEAPs will do alright in this environment. Contango is always a risk in such situations, but I think there are going to be some huge up days for crude at the first inklings of good news. 

Unlike the RPM gauge of crude pricing, I don't think broader equities markets have yet digested and priced risk. There's a lot more push and pull there, with different guesses as to what the forward-looking outcome may be. Those market makers don't ultimately need to sell a commodity right now (in a way which affects futures pricing for that commodity).

[fenders53]

The key words is LEAPS. Long-term plays should work out. Oil can't get too much cheaper. Oil stocks can. Some Canadian oil is sub $10. That's unfathomable. None of the brilliant oil authors called this. Not even close. Majors have been investing CAPEX just months ago. If anyone should know it would surely be XOM,CVX,BP etc. Watching them scramble to cancel now.

[Otter]

(03-31-2020, 04:58 PM)fenders53 Wrote: The key words is LEAPS.  Long-term plays should work out.  Oil can't get too much cheaper.  Oil stocks can.  Some Canadian oil is sub $10.  That's unfathomable.  None of the brilliant oil authors called this.  Not even close.  Majors have been investing CAPEX just months ago.  If anyone should know it would surely be XOM,CVX,BP etc.  Watching them scramble to cancel now.

Yes. This was a black swan event, and so not predicted by analysts or those doing CAPEX planning before the virus broke out, and understandably so. 

I think the crude market is doing a pretty good job at the moment of pricing in the near-standstill in industry and commerce - better than the equities market. Their commodity is pricing according to reality. Next 30 days or so is the worst of this for America, Europe is 2 weeks ahead of us generally (and should start slowly putting itself back together sooner), and China is desperately trying to bring itself back online without experiencing a second wave of infections. Even a rumor could send crude up 10% at this point. Actual good news could see WTI head up 40% or more.

[vbin]

Appriciate your insights. I have too many negatives on oil for sure at this moment.

[fenders53]

(03-31-2020, 05:18 PM)Otter Wrote:

(03-31-2020, 04:58 PM)fenders53 Wrote: The key words is LEAPS.  Long-term plays should work out.  Oil can't get too much cheaper.  Oil stocks can.  Some Canadian oil is sub $10.  That's unfathomable.  None of the brilliant oil authors called this.  Not even close.  Majors have been investing CAPEX just months ago.  If anyone should know it would surely be XOM,CVX,BP etc.  Watching them scramble to cancel now.

Yes. This was a black swan event, and so not predicted by analysts or those doing CAPEX planning before the virus broke out, and understandably so. 

I think the crude market is doing a pretty good job at the moment of pricing in the near-standstill in industry and commerce - better than the equities market. Their commodity is pricing according to reality. Next 30 days or so is the worst of this for America, Europe is 2 weeks ahead of us generally (and should start slowly putting itself back together sooner), and China is desperately trying to bring itself back online without experiencing a second wave of infections. Even a rumor could send crude up 10% at this point. Actual good news could see WTI head up 40% or more.

It's the perfect oil storm.  I fail to see what oil +10% does for any US oil producer. If you are just trading the commodity then yes up 10% is good.  Up 30% will still bury US producers. Majors are cutting Divs if up only 30% lasts. Up 100% from here and all is well, and better shale is back to surviving.

[Otter]

(03-31-2020, 05:36 PM)fenders53 Wrote:

(03-31-2020, 05:18 PM)Otter Wrote:

(03-31-2020, 04:58 PM)fenders53 Wrote: The key words is LEAPS.  Long-term plays should work out.  Oil can't get too much cheaper.  Oil stocks can.  Some Canadian oil is sub $10.  That's unfathomable.  None of the brilliant oil authors called this.  Not even close.  Majors have been investing CAPEX just months ago.  If anyone should know it would surely be XOM,CVX,BP etc.  Watching them scramble to cancel now.

Yes. This was a black swan event, and so not predicted by analysts or those doing CAPEX planning before the virus broke out, and understandably so. 

I think the crude market is doing a pretty good job at the moment of pricing in the near-standstill in industry and commerce - better than the equities market. Their commodity is pricing according to reality. Next 30 days or so is the worst of this for America, Europe is 2 weeks ahead of us generally (and should start slowly putting itself back together sooner), and China is desperately trying to bring itself back online without experiencing a second wave of infections. Even a rumor could send crude up 10% at this point. Actual good news could see WTI head up 40% or more.

It's the perfect oil storm.  I fail to see what oil +10% does for any US oil producer. If you are just trading the commodity then yes up 10% is good.  Up 30% will still bury US producers. Majors are cutting Divs if up only 30% lasts.  Up 100% from here and all is well.

Agreed. Even among the majors, their free cash flow wasn't sufficient to satisfy dividend obligations before all of this happened, when crude was $50+. They need a 150% gain in the underlying commodity price just to get back to playing unsustainable financial engineering with debt and buybacks. That's why I'm not investing in the companies, just betting that WTI rebounds from $20.

[fenders53]

(03-31-2020, 05:42 PM)Otter Wrote:

(03-31-2020, 05:36 PM)fenders53 Wrote:

(03-31-2020, 05:18 PM)Otter Wrote:

(03-31-2020, 04:58 PM)fenders53 Wrote: The key words is LEAPS.  Long-term plays should work out.  Oil can't get too much cheaper.  Oil stocks can.  Some Canadian oil is sub $10.  That's unfathomable.  None of the brilliant oil authors called this.  Not even close.  Majors have been investing CAPEX just months ago.  If anyone should know it would surely be XOM,CVX,BP etc.  Watching them scramble to cancel now.

Yes. This was a black swan event, and so not predicted by analysts or those doing CAPEX planning before the virus broke out, and understandably so. 

I think the crude market is doing a pretty good job at the moment of pricing in the near-standstill in industry and commerce - better than the equities market. Their commodity is pricing according to reality. Next 30 days or so is the worst of this for America, Europe is 2 weeks ahead of us generally (and should start slowly putting itself back together sooner), and China is desperately trying to bring itself back online without experiencing a second wave of infections. Even a rumor could send crude up 10% at this point. Actual good news could see WTI head up 40% or more.

It's the perfect oil storm.  I fail to see what oil +10% does for any US oil producer. If you are just trading the commodity then yes up 10% is good.  Up 30% will still bury US producers. Majors are cutting Divs if up only 30% lasts.  Up 100% from here and all is well.

Agreed. Even among the majors, their free cash flow wasn't sufficient to satisfy dividend obligations before all of this happened, when crude was $50+. They need a 150% gain in the underlying commodity price just to get back to playing unsustainable financial engineering with debt and buybacks. That's why I'm not investing in the companies, just betting that WTI rebounds from $20.

WTI almost has to bounce, whether is does any US company any good or not.  I think we are at max manufacturing unproductivity about now.  You can't get much worse than shutdown economy in half the states.

[fenders53]

Anyone else following the OXY drama? This is perhaps the biggest self inflicted dumpster fire I have seen for a major corporation. They imploded the company in about 12 months. Can't help but wonder if Icahn and or Buffet is going to own the Permian before long. Just read that OXY can pay Buffet's interest with newly issued common shares and it seems they will have to. That will be some significant dilution. I'll be curious to learn if he is buying shares now, or dumping them.

[Otter]

Added more 1/21/22 USO 5 LEAPs this morning. USO up 0.25% while the market is down nearly 3%

[fenders53]

(04-01-2020, 09:22 AM)Otter Wrote: Added more 1/21/22 USO 5 LEAPs this morning. USO up 0.25% while the market is down nearly 3%

Can you share a paragraph about USO please. I don't know what that is but trust your instincts.  I have some cash.

[Otter]

(04-01-2020, 09:40 AM)fenders53 Wrote:

(04-01-2020, 09:22 AM)Otter Wrote: Added more 1/21/22 USO 5 LEAPs this morning. USO up 0.25% while the market is down nearly 3%

Can you share a paragraph about USO please. I don't know what that is but trust your instincts.  I have some cash.

https://www.etf.com/USO

It is designed to track the price of West Texas Intermediate crude. 

Contango is a risk, but with the price of crude where it is, I am willing to take that risk. LEAPs are cheap at the moment, so why the heck not give myself a little extra runway.