When should I buy oil stocks

[rutgersguy1]

I have both VZ and T. I have recently been buying Diebold 4.6% div, ETN 4.6 %, CSCO 3.7%, EPR 6.7%, IP 5%, PFE 3.9%, UTX 3% most of them at 52 week low and down 25-40%. Might still go down more and then will buy the BIOTECHS and high flyers.

52 weeks lows are something to look at but don't forget in down markets or in a poorly performing stock, 52 week lows beget new 52 week lows. Just over the holiday was talking to a family member about CMI. Good solid company and down also like 40% or something last year. Dividend around 4%+ and was trading I think around 86, 52 week low was 84.99 at that time. I said I don't know an industrial company like that where economies around the world are weakening you might want to wait a bit. Took a look at chart and told him maybe around high 70s-80 might be a better spot to start a position. He ended up buying some at 87. Later he told me it was a mistake and said should have waited but put another order at 80. Well in this last turn down CMI went just under 80 and has bounced back to that 87 area now. I myself didn't trade it at all though.

Point is I don't get too caught up in the 52 week lows even if it is something I look at. My personal opinion is if you like this stuff pick up a book on charting, technicals, candlestick patterns. I think it's one of the best decisions I made a while ago when I began trading for myself. It gives you a bit of a roadmap and you're not just flying blind. It doesn't mean I don't pay attention to fundamentals but I do it in combination with charting etc.. and it's been working for me including through the crisis. Mind you as I've said I do this in the safety of names I trust and I think are strong fundamentally but it's nice to have a guide which I think charting etc. helps give you.

 

[Extra Point]

Now! For the long term. Take my opinion with a grain of salt though.

 

[DanceAppreciationTA]

today looks like a short squeeze on oil - which in turn has the overall market positive. May tell a positive trend if the market closes up going into a weekend - to me that would signal a bottom to this correction.

Feels different than a correction to me, my gut call is that we don't get over 195 (spy) and fall back over (that head and shoulders is still popping up and the way gap ups have been selling off to fill has shown me weakness)...but like the above poster says, take it with a grain of salt

 

[rutgersdave]

52 weeks lows are something to look at but don't forget in down markets or in a poorly performing stock, 52 week lows beget new 52 week lows. Just over the holiday was talking to a family member about CMI. Good solid company and down also like 40% or something last year. Dividend around 4%+ and was trading I think around 86, 52 week low was 84.99 at that time. I said I don't know an industrial company like that where economies around the world are weakening you might want to wait a bit. Took a look at chart and told him maybe around high 70s-80 might be a better spot to start a position. He ended up buying some at 87. Later he told me it was a mistake and said should have waited but put another order at 80. Well in this last turn down CMI went just under 80 and has bounced back to that 87 area now. I myself didn't trade it at all though.

Point is I don't get too caught up in the 52 week lows even if it is something I look at. My personal opinion is if you like this stuff pick up a book on charting, technicals, candlestick patterns. I think it's one of the best decisions I made a while ago when I began trading for myself. It gives you a bit of a roadmap and you're not just flying blind. It doesn't mean I don't pay attention to fundamentals but I do it in combination with charting etc.. and it's been working for me including through the crisis. Mind you as I've said I do this in the safety of names I trust and I think are strong fundamentally but it's nice to have a guide which I think charting etc. helps give you.

Well, these are very strong companies that I'm willing to wait 10 years getting the high dividends and they will go back up at least 20% capital gains in 2-3 years. I also have CMI and will be buying MMM. This supposedly is a correction and not a recession or depression. I pretty much move out before this downturn same as 2008 and the recent downturn last year. I let Cramer and the other analysts do the technical charts for me. I don't like to read books about trading but doing it for 40 years gives you a sense about the market.

 

[rutgersguy1]

Well, these are very strong companies that I'm willing to wait 10 years getting the high dividends and they will go back up at least 20% capital gains in 2-3 years. I also have CMI and will be buying MMM. This supposedly is a correction and not a recession or depression. I pretty much move out before this downturn same as 2008 and the recent downturn last year.

I'm actually in the camp with the poster above who thinks this is more than a correction but who knows for sure. Some of the central banks around the world trying to talk up support but we'll see how long this bounce lasts. Endless QE for all, haha.

My trades usually last 1-3mos, occasionally longer and occasionally shorter. Rarely do I trade on a short term basis like I have been recently but that's partly because of the volatility lately. But it's always in companies I'm willing to hold long term like you if necessary and usually pay dividends. There are still a few things I picked up in the crisis that I still have and have a very low cost basis but a lot of it I sold off over time. Things that are buy and hold forever I keep in mutual fund accounts mostly not my personal trading account. Even in those I may pare back a little at times when it's gone up a lot and put extra money into when it goes down a lot like this. There is a solid core position though that is essentially forever though. Really I don't believe in buy and hold forever anymore. Just look at some of these companies you just named you'd be hit hard if you were holding forever.

If something has gone up a huge amount I'm not holding it forever. I'll pare it back a little at the very least. If those things come down again a lot I'll put some back into that core position. I just don't believe in holding forever irrespective of magnitude of price movement over time. That's my personal opinion and most professionals would advise against it and it's probably the smarter thing to do because most people don't have any inclination to follow the market. Again though I think it's about knowing your psychology and what you can handle.

 

[rutgersdave]

I'm actually in the camp with the poster above who thinks this is more than a correction but who knows for sure. Some of the central banks around the world trying to talk up support but we'll see how long this bounce lasts. Endless QE for all, haha.

My trades usually last 1-3mos, occasionally longer and occasionally shorter. Rarely do I trade on a short term basis like I have been recently but that's partly because of the volatility lately. But it's always in companies I'm willing to hold long term like you if necessary and usually pay dividends. There are still a few things I picked up in the crisis that I still have and have a very low cost basis but a lot of it I sold off over time. Things that are buy and hold forever I keep in mutual fund accounts mostly not my personal trading account. Even in those I may pare back a little at times when it's gone up a lot and put extra money into when it goes down a lot like this. There is a solid core position though that is essentially forever though. Really I don't believe in buy and hold forever anymore. Just look at some of these companies you just named you'd be hit hard if you were holding forever.

If something has gone up a huge amount I'm not holding it forever. I'll pare it back a little at the very least. If those things come down again a lot I'll put some back into that core position. I just don't believe in holding forever irrespective of magnitude of price movement over time. That's my personal opinion and most professionals would advise against it and it's probably the smarter thing to do because most people don't have any inclination to follow the market. Again though I think it's about knowing your psychology and what you can handle.

I agree with you and I do trade a lot. I want to reduce my trading and just accept some of the dividends paying stocks.

 

[jmc11201]

OP called the oil bottom?

 

[linzalonic]

I have both VZ and T. I have recently been buying Diebold 4.6% div, ETN 4.6 %, CSCO 3.7%, EPR 6.7%, IP 5%, PFE 3.9%, UTX 3% most of them at 52 week low and down 25-40%. Might still go down more and then will buy the BIOTECHS and high flyers.

Some good names. For dividend stocks I like QSII long-term. I've had it for a couple years & expect it to find the mid/high 20's in a few years. Also I love VER, which has suffered due to management issues among other things.

CMI does look good here.

The past couple days have been encouraging but I wouldn't be surprised if there's another downward leg to this correction. But in the past week or two I've bought or averaged down on several names I like long-term like PANW, WFC, M, LGF, CSRA, AA, EXXI (speculative), APA, NLNK, QURE & VDTH.

 

[jmc11201]

Now?

Looks like @ImBadRU called the bottom...at least over the short term. XLE troughed around $50 at mid-day on Jan 20th and is now up to $57.40...up almost 15% in a bit over a week. Oil prices up around 22% from the 20th. Nicely done!

What do you like next?

 

[Ole Cabbagehead]

Looks like @ImBadRU called the bottom...at least over the short term. XLE troughed around $50 at mid-day on Jan 20th and is now up to $57.40...up almost 15% in a bit over a week. Oil prices up around 22% from the 20th. Nicely done!

What do you like next?

I just noticed that as well. If @ImBadRU had bought UWTI when he posted this, he would be up over 60% right now.

 

[linzalonic]

Nice to see oil rebound & I hope it doesn't revert downward. Still could. Lots of supply out there. I bought some EXXI at $0.35 around the time this thread originated & it's now around $0.89. Too bad my initial tranche purchased a year ago cost $2.00!

 

[mildone]

I just noticed that as well. If @ImBadRU had bought UWTI when he posted this, he would be up over 60% right now.

There's an object lesson to be learned here. And I'm not entirely certain the lesson isn't that the best investment is in hookers and blow. Or the surest investment, at least.

 

[rutgersguy1]

Well I said in one of these threads that the fact that these oil threads and stock market crashing threads were popping up here could be signalling a short term bottom and to some a degree it looks like it was. It doesn't mean both couldn't go lower later but at the very least there was a tradeable bounce to play if you were inclined.

I myself didn't get involved with any oil stocks but have traded BA, ABTin the last couple days on what I thought were big over reactions to their earnings. Sold both of them this morning. I got into FB into earnings as well and that paid off nicely but out of that as well. Had the same feeling for UA and BMY but didn't have the guts to go into those at the same time but that would have been really good. Can't win them all. I tend to think the market is in a trading range right now low 1800s to low 1900s and where it goes from there who knows, although I tend to think lower myself but we'll see.

 

[phlop87]

If you are going to invest in oil be prepared for a very bumpy ride. Oil prices hit 12-year lows last week, though it has rallied recently. However, supply far exceeds demand, and this can get worse when Iranian oil hits the market. On top of the excess supply, demand appears to be weakening. Just review Chinas econmic sluggishness for 2016 and beyond (China is a major consumer of Oil).

 

[patk89]

Rutgersguy1, you must be very rich. Seems like all you talk about is your winners. I guess that is the nature of threads like this with rank amateurs. I remember Cramer having Lenny Dykstra on periodically talking about how well he was doing trading options. Until he lost all of his money because he is an utter and complete idiot who had no business education.

 

[OntheBanks]

I can remember when we were talking about 'Peak Oil' on this board. Times have changed.
The only individual 'oil' stock that I own is Cheniere (LNG) who will begin shipments overseas soon.
If Carl Icahn wants in, so do I.
http://www.cnbc.com/2015/12/07/carl-icahn-raises-cheniere-stake-to-138-from-127-dj.html

 

[DanceAppreciationTA]

Dead cat bounce, IMO... crude got rejected from the earlier descending channel...either it consolidates around this price or creates a new descending channel...time will tell

My crude chart: https://www.tradingview.com/x/V4EZVBqs/

 

[rutgersguy1]

Rutgersguy1, you must be very rich. Seems like all you talk about is your winners. I guess that is the nature of threads like this with rank amateurs. I remember Cramer having Lenny Dykstra on periodically talking about how well he was doing trading options. Until he lost all of his money because he is an utter and complete idiot who had no business education.

Actually I posted about how much I had to average down on a trade involving CVX/XOM when they dropped big but still came out fine in the end and why it worked for me. I also posted about how the only time I lost what I consider a good amount of money was with the financials during the crisis but yes I do make money on most of my trades (sometimes big, sometimes small) and I do fine. I've given examples of the type of companies I invest and trade in from conservative names like SO, PG, T, VZ, JNJ, UL, etc.. to names more out on the risk curve for my psychology like NKE, UA, FB, GOOG, V, MA, SBUX, etc..

Like I said I use some technicals, fundamentals, go for things I consider oversold at times (although it doesn't mean they couldn't go lower) and keep enough money on the sidelines to average down positions at certain points to make my trades come around. It's usually in companies that pay dividends or companies that I feel have strong fundamentals even if they might be going through a bad patch and most of the time they come around. The financials in the crisis was the only time I was burned. So I stay away from those now outside of a V/MA and something like that. I don't trust that they ever have a good handle on their real exposures in a crisis especially in times of fear/greed so I won't deploy any money in them again.

You can call me a rank amateur moron idiot or whatever you like, it makes no difference to me. I know what I'm doing works for me and while not doing it for a "long" time I've been doing it for a 12-15 years, honed my trading style to my own personal psychological tolerance and survived downturns and came out on the other side. If was losing tons of money doing it I would have stopped long ago like most "rank amateurs" do after they've been burnt badly. I don't care about Cramer who I consider a blowhard or Dykstra or anyone else for that matter. I post about my thoughts here, right wrong or otherwise including trades I thought about but didn't jump in. I always say do your own due diligence. You can either add something about your thoughts, ideas or just stay out of the thread rather than taking a shot at me.

 

[LevaosLectures]

Gas $1.49 in Wayne today. Jesus.

 

[rutgersdave]

Rutgersguy1, you must be very rich. Seems like all you talk about is your winners. I guess that is the nature of threads like this with rank amateurs. I remember Cramer having Lenny Dykstra on periodically talking about how well he was doing trading options. Until he lost all of his money because he is an utter and complete idiot who had no business education.

Pat, I Think you are being a little harsh calling anyone a ranked amateur. I don't think there is anyone that 's an expert. Just like Rutgersguy, I am positive over my lifetime trading over 40 years or wouldn't be trading at all. It's an art that one learns with experience. It did help me retire in my mid fities. No one an expert because the market is always changing with new situations. I listen to everyone opinions but I make my own decision on stocks.

 

[rutgersguy1]

Pat, I Think you are being a little harsh calling anyone a ranked amateur. I don't think there is anyone that 's an expert. Just like Rutgersguy, I am positive over my lifetime trading over 40 years or wouldn't be trading at all. It's an art that one learns with experience. It did help me retire in my mid fities. No one an expert because the market is always changing with new situations. I listen to everyone opinions but I make my own decision on stocks.

He and anyone else can call me what they like, it doesn't matter to me. I've always said this is a message board and I don't take it seriously. I don't need any plaudits from anyone. I know what I'm doing works for me otherwise I wouldn't be doing it. I gave examples of my thinking, psychology etc.. in these threads so it's not just blind I bought this or that without any rhyme or reason. Why did I mention BA and ABT? To take some credit for it? Who cares, as if anyone thinking anything about me here positive or negative matters in reality to me or them. It has no impact on my actual life.

I did it to say see here a couple examples of companies that reported some "iffy" earnings but I still think are solid companies and maybe I should take a look to see if the sell off is overdone and a bounce is possible. An example of a possible opportunity when things get overdone. ABT was a company that reduced guidance and had some currency issues but is a 11-12% hit justified? I thought it had some support in the mid low 35 area so I started legging in in the low 36s feeling that it was a solid company, with an okay divy 2.8% and was a company I'd be willing to average down in if it went down further. I got rid of it today in the mid 37s but I could see it go another buck or so, think there's some resistance in the mid 38s to 39 area. If it does so be it. Like I said earlier these days I've been cutting my trades short. Same for VZ/T which went up more since I sold them. Same MCD awhile back which has really gone up since I sold and I said that too. I don't act like some god I got in at the bottom and got out at the top. I've given examples of trades I had trouble in, trades I lost in, stocks I won't touch or stocks that are out or my psychological tolerance, trades that would have been positive but I didn't get involved in cause I was chicken, etc.. What more do you want, unless your someone who wants to act all high and mighty over "schmoes" like me. So be it. Like I said it's a message board I can't take it seriously.

 

[miketd1]

Keep in mind, those who actively trade and lost money overall are less likely to post in this thread.

And experts who do this stuff for a living get it wrong all the time.

For most of us with longer time horizons and lower risk tolerances, I would imagine a bogglehead approach to investing would work just fine.

Of course the most important thing is to simply start.

 

[rutgersdave]

The market will drop in a couple of days or a week or two when the earnings announcements end. Maybe lower than the 1800 and we get the 20% correction everyone is talking about. I start going in at 14-15% down because you never know and you might just miss the updraft.

 

[Goo]

These snaps back up are normal in oil. The question is will they hold this time or can we expect new lows.

After getting hammered all Summer from the 70-80 range to low 40's we had a 27% snap back up in August. I'm sure a lot people thought the low's were in.

In October we had a few weeks where oil fell 20% only to bounce back 12% in late Oct. early Nov. The lows are definitely in right? Wrong again.

We then go from the mid 40's into the mid-high 20's. You do the percentages, these are huge moves to the downside. We now have 22 % bounce since the lows last week. That's a 6-7 point move. Now remember where we came from.

I have no idea where oil is going, nor do I follow it closely enough, but just wanted to throw some numbers out there for you guys to digest.

 

[mildone]

Seems to be if people want to back a sure bet in oil, they should invest in personal lubrication products. Always going to be a high demand for that.

 

[nick614]

Generally you don't want to buy a single stock as an investment unless you really believe in the company you are buying.

 

[RURahh]

Fyi..buying cvx and xom as oil stocks makes no sense. Both names have little to no correlation to oil since they have big refiners that benefit from lower oil. Find a low debt energy player like Diamond Back it will give you far greater exposure. For the record, I agree with Jelly that unless we trade up to 40 or 50 in the next few months on oil, many small guys will go under and company's like Diamond Back as well as private equity guys like Blackstone will pick them up with no debt and just wait for the turn

 

[RU Husky]

When Korab Idrizi starts a game for BC

 

[ATIOH]

Pat, I Think you are being a little harsh calling anyone a ranked amateur. I don't think there is anyone that 's an expert. Just like Rutgersguy, I am positive over my lifetime trading over 40 years or wouldn't be trading at all. It's an art that one learns with experience. It did help me retire in my mid fities. No one an expert because the market is always changing with new situations. I listen to everyone opinions but I make my own decision on stocks.

Playing devil's advocate, I think it would be nearly impossible to lose money over that long a time horizon. Depending on how you measure it, the market is worth over 100x more than it was back then.

And separately, most people forget to factor inflation, taxes, and commissions into their performance measurements.

 

[rutgersdave]

Playing devil's advocate, I think it would be nearly impossible to lose money over that long a time horizon. Depending on how you measure it, the market is worth over 100x more than it was back then.

And separately, most people forget to factor inflation, taxes, and commissions into their performance measurements.

100x is a little extreme. I do know people that invest in the market with high flyers during the tech bubble that got destroyed and never got back into the market. If you think investing in the market is easy, You must have over 80% in the market. It's easy to say the market in the long run always goes up which it has in the past. However, it's difficult for many to invest a significant amount of your savings in the stock market.

With that logic, everyone over 50 should be a millionaire because it's as simply as saving your money.

 

[ATIOH]

100x is a little extreme. I do know people that invest in the market with high flyers during the tech bubble that got destroyed and never got back into the market. If you think investing in the market is easy, You must have over 80% in the market. It's easy to say the market in the long run always goes up which it has in the past. However, it's difficult for many to invest a significant amount of your savings in the stock market.

With that logic, everyone over 50 should be a millionaire because it's as simply as saving your money.

You said you're positive over 40 years of investing. So let's use Jan 1975 to Dec 2015.

If you invested a $1 in the S&P 500, it would be worth $102.87. There's nothing extreme about it; that's just the data.

And yes by that logic, anyone who invested $10k at the time and did nothing else should be a millionaire.

However like i said before, that ignores inflation, taxes and commissions.

 

[rutgersdave]

You said you're positive over 40 years of investing. So let's use Jan 1975 to Dec 2015.

If you invested a $1 in the S&P 500, it would be worth $102.87. There's nothing extreme about it; that's just the data.

And yes by that logic, anyone who invested $10k at the time and did nothing else should be a millionaire.

However like i said before, that ignores inflation, taxes and commissions.

No one here mentioned investing in the S&P 500. If you invested in Enron, Westinghouse, or Lehman Brothers, you would have lost your money. Again, easy to say and predict the past but it's much harder to actually invest your money and do it. I lost money not by investing in stocks but by not being invested in stocks.

 

[rutgersguy1]

Fyi..buying cvx and xom as oil stocks makes no sense. Both names have little to no correlation to oil since they have big refiners that benefit from lower oil. Find a low debt energy player like Diamond Back it will give you far greater exposure. For the record, I agree with Jelly that unless we trade up to 40 or 50 in the next few months on oil, many small guys will go under and company's like Diamond Back as well as private equity guys like Blackstone will pick them up with no debt and just wait for the turn

If they have little no correlation to oil why have they both dropped a lot when oil has dropped a lot. Just bad luck? It's obviously not some 1:1 correlation but I'm not sure why you would think their performance is not correlated to oil at all.

It's exactly because they're integrated and have both upstream/downstream operations that they're the names I'd go to if I have interest in investing in energy in this type of environment. It's a little bit of a cushion and a hedge. Mind you refining margins have shrunk recently if you look at the earnings in CVX and Phillips66 so I don't know how much of a cushion it's provided lately. But if I'm going to energy in this environment those are the names I'll go to because they're integrated, they have a dividend (which I think is fairly safe, specifically XOM) and their size/diversity. I know the market was very strong on Friday but CVX didn't act too badly considering their lousy earnings and the fact that one analyst at Oppenheimer said they'd have to cut the divy.

Besides, I'm never one to invest for the most part in smaller players in any industry (not just energy) anyways. Even if the environment was a little better, if I were to venture away from CVX/XOM it would be in a COP/HES/BP/SLB and stocks like that. That's just my nature and my psychology.

 

[rutgersguy1]

No one here mentioned investing in the S&P 500. If you invested in Enron, Westinghouse, or Lehman Brothers, you would have lost your money. Again, easy to say and predict the past but it's much harder to actually invest your money and do it. I lost money not by investing in stocks but by not being invested in stocks.

Well I think the S&P is something to measure against as a benchmark. Putting it in there and letting it ride on autopilot versus doing whatever any of us do on our own. Is there any appreciable difference? I think comparing the 2 is something to look at.

But say you invested 1 dollar from Jan 2000 to Dec 2015, not an insignificant amount of time, your dollar could be anywhere from 1.50-2.00 depending on reinvested dividends or not and not including taxes, fees, inflation. In the last 40 years the S&P went from ~80-90 to ~2000. Are we going to see that kind of growth over the next 40 years or say you invested in 2000 like my example above then say the next 25 years? With other growth engines in the world like China and India and the US being much more mature where is it going to come from at that pace to push the markets higher in the same fashion. I don't know. It's part of the reason I don't believe completely in buy and hold forever even though a part of my money is essentially that. If you're not inclined to care enough though I think it is the right move to leave it in on autopilot. But It doesn't mean I like leaving everything like that. I feel more comfortable being involved and I've done okay which is why I keep doing it like I said above.

 

[RutgersSam]

Ok so now the anecdotal consensus is that the market and oil are just displaying short term bounces and are gonna to go lower still. To me, that means that this is likely NOT going to happen. I think both either go up significantly in the short term in order to convince people the correction is completed, right before cascading down when most people are back in the market, or we enter a low volatility grind within a very narrow range for at least a few weeks. That would frustrate both short and long speculators. I've learned the market nearly always follows the "max pain" route, especially when it comes to short term trading.

 

[RUChow]

I'd be looking at energy companies that have been thrown out with the bathwater and now pay better dividends as a result - SPH (Suburban Propane, 13%) & CVA (Covanta Energy 7%). Both still plan to raise their dividend in 2016 and both have made recent acquisitions.

 

[ATIOH]

No one here mentioned investing in the S&P 500. If you invested in Enron, Westinghouse, or Lehman Brothers, you would have lost your money. Again, easy to say and predict the past but it's much harder to actually invest your money and do it. I lost money not by investing in stocks but by not being invested in stocks.

I think we're talking around each other, so let me try putting it a different way. You said you were positive over forty years of trading and I said it would be nearly impossible to lose money over that long a time horizon.

Without getting bogged down in the minutiae, the S&P 500 represents the 500 largest US traded stocks. Let's forget about investing in the total index and imagine ranking the annual returns of all 500 individual stocks.

Imagine you invested in the company with the 474th best return at the beginning of that year and sold it in December. In January, you then bought the stock with 474th best return for the next year, and did the process for forty years. You would still be up.

In other words, if you managed to pick one of the worst 5% of stocks EVERY year for forty years, you would still be up. And the odds of winning the powerball are infinitely higher than being that terrible a stock picker.

This includes all my previous disclaimers in the thread.

 

[LadyRU09]

My best friend told me the other day that he lost thousands of dollars in his oil stocks when the oil prices dropped. I don't know if it's a great idea now.

 

[mildone]

My best friend told me the other day that he lost thousands of dollars in his oil stocks when the oil prices dropped. I don't know if it's a great idea now.

May not be the right time. But if the stocks in question are going to rise again, buying at their lowest point still makes sense. Even if one has lost money previously.

 

[DanceAppreciationTA]

SPY broke the bear flag that was set up the past two weeks and the relation between the indices & Oil finally seems to be separated...new 2016 lows to be made? who knows, just be cautious if long or short!