(11-23-2018, 01:48 PM)vbin Wrote: @fenders do you consider SLB or BHGE small? I haven’t looked deep into them yet, Just know that GE is looking to dump BHGE stake which could add up to steep decline and could give great opportunity to own this even at lower prices.
SLB is one of the larger oil services companies. about 5 times the size of Baker Hughes. BHGE is a GE company. That might make me uncomfortable because it;s no secret GE is screwed if their debt rating is downgraded to junk. They have publicly stated they'll sell a lot of assets if they need to keep the banks happy. (as they should). BHGE sure looks like a candidate because they are a liability when oil is low. That sale could be very good or bad for you depending on projected oil prices at that time.
The small exploration companies are what I am most gun shy of. They take a chance and leverage up when times are good, then they just about go bankrupt when oil falls. Some of them do go bankrupt, cut dividends etc. If you don't know the industry they can be lotto tickets. To me they are swing trading stocks and not long-term investments.
Whatever you decide, pull up a 20 year stock chart and see what you are getting yourself into. Make sure the dividend didn't disappear at times. That's how $5 oil stocks are born. About the same as my chip stock preachins lol. Three year charts will mask the risk. It's the reason I just dabble in the oil majors now. Energy is very political, but then again it seems hard to avoid that in many sectors. In oil, a public statement from the US Prez or Saudi can swing the oil market 10% in a hurry, and worry the market it's a trend. To invest intelligently you have to understand the current logistics and politics of fracking, challenges of moving oil from the Permian Basis, Bakken fields, offshore drilling, pipelines, etc. The CEOs screw it up about half the time so I accepted my reality the the Aristocrats are far safer. I believe we'll see the oil majors like XOM, CVX and BP diversify over the next ten years. They just have to. It could be bumpy but they have the resources to adapt. They could bully their way into solar, wind or ice cream if they choose.
EDIT: Swear I didn't see this article before I posted all that.
CNBC's talking heads are discussing what's really the minimum you need to make yourself aware of before you dive into anything other than an oil major. It supports a lot of what I stated. The market thinks it's true so it is for now. Will we burn down our new US oil industry jobs, and then take corrective actions to fix it later when election season starts up? It's certainly a possibility. Just look at the AG industry. Devasting tariffs to farmers and Deere etc, then subsidize them 60 days later when the sky was truly falling. This gives me a headache lol. https://www.cnbc.com/2018/11/23/trumps-q...llers.html