Glad to see it came back. I believe the major problem was the sheer rapidity of the drop that frightened people this time. You didn't know how far it'd drop. But, there was nothing "structurally" wrong to justify it, so of course it'd come back.

As far as the oil patch is concerned, I'm real interested in DNR at these levels. I just don't know about waiting it out to get back to a good selling price. I bought however some MRO and PSX. May buy some more COP just to sell another call. And my royalty outfits go ex-distribution this month.

Anyway, I wasn't able to get in on SHLX's IPO. I put in an indication of interest. But none was allocated. However, it's OK. I've since found out it only paid 2.8%. Hardly worth the trouble.

Otherwise I'm just adding cash flow type situations. Bought some NMM recently for that, amongst others.

Drillers getting absolutely hammered today. The rout isn't over yet I'm afraid.

Oils are coming back. Glad I bought the MRO and VLO. Even SDRL is showing signs of life. I'll buy some more MRO tomorrow as a companion to what I've already got, to have a second section for selling a call. I guess I'll have to go on and pull the trigger on DNR too. I'll buy two parcels of it too. Same reasons. And they expect big things in the future from its dividend.

Anyway, I'm thinking it's time we talk interest rates. This is going to be as I see it REAL important for stocks next year, when the Fed raises the rates.

It bears on stocks in MANY ways, but the immediate concern will be the competition with bank CDs.

You can get a 1% CD even now, and according to internet research we can by this time next year expect up to 3% on bank CDs (it was 5% in '08 just before Bernanke stupidly whacked out bank interest - a huge mistake in my opinion that directly caused the loss of discretionary income across the board, which in turn accelerated the whole mess).

Anyhow, now you've got all these income investors with stock in good companies, but that only pay 1%, 2% or maybe 3%. Unless they are steady risers in the underlying (and advancing interest rate costs will ding that for sure), then the only reason for having them is the DIVIDEND. If they don't have to cut it.

And it's a no brainer on picking between a risk free 3% CD vs. a 3% or less stock of the type that does nothing or moves like a glacier and takes forever to do it and is seeing its profits under pressure due to higher interest costs.

I'm thinking from here on out, unless it's got serious short term appreciation in the underlying, then I don't want anything new that pays less than 4% (KRFT is one such I don't already own, where I'm waiting for the right opportunity). It's another reason I bought several of the utilities (my AEP, CPK and PPL are doing well).

In other words, stock picking is fixing to go back to being a whole lot riskier.

What say you guys?

quote:

Originally posted by Shack:


You can get a 1% CD even now, and according to internet research we can by this time next year expect up to 3% on bank CDs (it was 5% in '08 just before Bernanke stupidly whacked out bank interest - a huge mistake in my opinion that directly caused the loss of discretionary income across the board, which in turn accelerated the whole mess).

10 year is at 2.3%. I don't think we see a 3% CD for a long time.

I think history will remember Bernanke fondly. Not so sure of either Bush or Obama on the economy.

I also don't think many American understand how close we came to in 2008 of the wheels failing of the global economy. Would have made 1930s seem like fun if Bernanke had not provided global liquidity.

Mike

quote:

I think history will remember Bernanke fondly. Not so sure of either Bush or Obama on the economy.

I'm aware many consider Bernanke positively (although I wish his predecessor had stuck around longer). But, I'm only referring to his actions on interest rates at the time.

As I recall, the interest rates were first raised, then lowered to almost nothing. Both of those I think were mistakes. The former hurt the housing market which was the main positive thing going for some time prior to the recession. The latter robbed the economy of a critical component, discretionary income. I understand the reasons for doing it, but I think it hurt more leaving them that low long term and prolonged the recession needlessly.

But that cuts both ways. I see the ultra low interest rates as the number one policy that propelled the stock market. You had to put your money somewhere and stocks were the only real option (some of us have put it in land and other things). So, we get great returns, the kind that "floats all the boats".

BUT, you add back into the mix higher interest rates, and a lot of that money will be moved out of stocks and back to where it was before, in bank CDs.

What it is, is we can't have it both ways. Higher bank CD rates and high stock market readings. Money's going to flow to yield without risk.

Here's one of the links that says expect 3% on 2015 1-yr CDs (skip on down to find it) - http://www.monitorbankrates.co...st-for-2014-and-2015

Sold a little of my HAL and bought more DUK today.

I would like to buy more SDRL, but not until I'm sure Seadrill isn't a falling knife, and that uptick in the drillers seemed like a dead-cat-bounce to me. I'm just watching both RIG and SDRL for now and hoping oil stays above $75 a barrel.

I'm OK with Bernanke. I wish he was still the jockey although I don't think the change to Yellen changes much. I thought Greenspan was good, but in retrospect I'm not so sure he didn't set us up for some of the problems that crawled out of the woodwork a couple of years after he left.

It would take a 4 to 5% CD to make me flip out of equities, and I don't think that will happen any time soon.

If anyone is thinking about investing in oil & gas.

http://www.msn.com/en-us/money...the-house/ar-AA7AC0s

The more deals like this that come out, the closer we are to the end of another boom.

quote:

Originally posted by Kensco:
If anyone is thinking about investing in oil & gas.

http://www.msn.com/en-us/money...the-house/ar-AA7AC0s

The more deals like this that come out, the closer we are to the end of another boom.

Everyone likes to bitch about welfare queens ect.

The criminality in corporate compensation and insider deals is far worse than any welfare scam.

I have no issues with management getting paid top dollar for top performance - its gettin paid top dollar while shareholders get raped is the issue.

I would expect nothing less from the Cohens on Atlas. They paid themselves $20 mil. each ($40 mil. total) last year to run ARP.

Finding management with skin in the game is the key. With Atlas its the investors that gets skinned alive.

Mike

Most oil deals are the same. Management has no skin in the game after the deal is sold. Investors historically pay 1/3 for 1/4. What that means is that the promoter has sold investors 100% of the deal, in terms of cost, for 75% of the production. He, the promoter, gets 25% of the production at zero cost. Add to that all the back-door / side-door deals described in the article and you have an almost guaranteed loser (for the investors) over time, when you factor in the dry holes, marginal wells, etc.

One of the boiler-room operations I saw back in the 80s used to fly their big investors to the drilling location and house them in a bank of trailer houses when the bit was getting close to some of the pay zones. They were drilling underbalanced so any amount of gas encountered would go across the blooie line and ignite. A very impressive sight, particularly at night. It would rattle the trailer house windows and the investors/suckers would come running out. The "investors" would dig deeper into their wallets to buy-in to additional wells at the thought of becoming filthy rich oilmen. The company eventually went bankrupt. I doubt any of their investors made a dollar. Most, I suspect, lost their entire stake.

The latest article I read says oil could go to $30 a barrel. That would mean a Bust like in the 80s that would take 20+ years to recover from. http://www.cnbc.com/id/102175351

hehe like the "oklahoma gusher" when they frac 5+ zones at once and blow the head clean out. Anyone who thinks all that is wasted production never considered how much capital that raises right there on the spot.

King HAL deciding to expand on its empire by buying BHI. Market sure hates the deal.

Mike

Pre-open this morning crude oil, DOW and NASDAQ all UP big on news from China. I picked-up a little more INTC on the Open and continue to watch ESV, RIG and SDRL. All are UP, but not to the point of getting me to react. The only stocks of interest going negative today are the Telecoms; T and VZ.

DOW made a nice 4% move early.

I like BPL, INTC, and XEL in the near-term; probably buy more before the end of the year.

Remember, for evey point the DOW gains, there is a concurrent and equivalent loss of habitat and biodiversity (including wildlife).

A lot of speculation on Seadrill (SDRL) earnings report on Wednesday and a possible dividend cut. The OPEC meeting Thursday will probably lead to nothing. Two experts today said:

1. WTI to see $60 before it sees $80.
2. WTI not to drop below $72.

Unfortunately I'm leaning towards #1 being the most likely scenario.

Dumped my position yesterday in Seadrill (SDRL) ahead of the earnings today. A good move considering SDRL dropped 19% this morning when they cancelled their dividend.

http://blogs.barrons.com/stock...ahoobarrons&ru=yahoo

Still holding ESV and RIG. Both of them are down 4+% on the Seadrill move.

May be the beginning of the end for the latest oil boom. OPEC will act brave tomorrow by announcing a production cut, but then continue to pump when they think no one is watching.

Dumped the RIG also a few minutes ago.

Jeremey Grantham view on oil

http://www.gmo.com/websitecont...Letter_3Q14_full.pdf

Beretta, I attempted to read your link, but got a throbbing headache and fell asleep numerous times. Good remedy for insomnia at 4:00am.

Seems like each of the writers enjoys the sound of his own voice. Too cerebral for me. The written version of background noise as far as I'm concerned. I need to get the Cliff Notes.

The overuse of the word "fracking" always turns me off also. It's given credit for every advancement that's occurred in the last fifteen years in the oil industry; while the media has turned it into a monster that pollutes all ground water, causes earthquakes, makes Miley Cyrus twerk, etc.

Media oil "experts" make it sound like a recent modern day miracle. Wells were being fracked when I started in the industry in 1970. The difference now is that there was no horizontal drilling back then. THAT is a modern day miracle. Secondly, you don't have to locate a sand to produce economical amounts of oil & gas anymore. You find a loaded shale, and you're in business. Who'd a thunk it? Not an oilman from the 70s. Shale was what you didn't want to find.

The oil industry will find a way. A lot of very smart people there. Talking head "Experts" in 1970 said we would run out of oil by 2000-2020. That didn't happen. Won't happen in my lifetime, nor my grandchildren's lifetime.... and yet we've got that big ball of fire in the sky each day from now 'til the end of time, and can't figure out how to harness it to provide our energy needs, so we dot the landscape with ugly-ass wind turbines. Something doesn't smell right there.

Back to the real world.

I'll be buying KMI, T, and possibly BP Friday morning. Watching CSCO and INTC also, to see if they move higher.

Energy keeps getting uglier.

This is what Donald Rumsfeld meant when he said "shock and awe" !!!!!

I am really starting to miss 2008 - at least here was a bounce in 2009.

Mike

This is very reminiscent of 1982, as we went over the cliff. It gutted the onshore domestic drilling industry.

I did hear analysts placing April call orders on SDRL today which surprised me. Price of oil appears to still be in free-fall, and the ripple affect into other industries is worrisome. I'm not stepping in front of this runaway train.

I want a bounce in oil before other companies start eliminating their dividends, like SDRL.

Making some moves this morning. Added to my positions in BP, ESV, and XEL. Watching CSCO, DD, and DUK.

HAL looks interesting but I'm not sold on the idea that oil has bottomed.

The Telecoms look interesting; T and VZ.

Energy equities and oil on fire. Energy equities trading where they were when oil was 20% higher.

I shorted some energy equities today - so its a safe bet they are only going higher.

Mike

Thanks for your help Beretta. I need you to short Bank of America too.

quote:

Originally posted by Kensco:
Thanks for your help Beretta. I need you to short Bank of America too.

I never short anything Buffett is long.

Mike

Added to my positions in CSCO, DD and DUK today. Watching BAC, DUK, ESV, GLW and KMI. May yet do something with BP and VZ.

I saw gas at $1.89 this weekend in the North Dallas area. As I headed south towards Buda / Giddings the price kept rising. I saw one place selling it at $2.39. I was amazed there was that big a spread in a few hundred miles.

Another ugly day for energy.

2008 was so much more fun than this.

Mike

Added to positions in BAC, DUK (twice), KMI and XEL since Christmas. I would like to make moves in oil, but as WTI falls below $50, I'm not in any hurry.

It will be interesting to see whether the market recovers any today.

My only holding that was UP yesterday was MRK.

As ratty as the market has been lately, there are not many options for getting your money to work for you.

That is the understatement of the day!

And well, not so much this week. Guees I'll let it ride for now.

Bought a little more Merck (MRK) today. Looks like the market is now flat for 2015. Watching Corning, Merck and Pfizer.

A little preoccupied this morning. Got a new grand-daughter yesterday afternoon. 4 lbs., 4 ounces; seven weeks early.

Watching PFE and DUK in the morning. BP, HAL and ESV are interesting but I'm not interested in stepping in front of the bus yet.

Picked-up more DUK. BP and ESV on a tear this morning.

Anyone long/own us government bonds when the 30 years yields 2.3 percent ?

Mike

quote:

Originally posted by Beretta682E:
Anyone long/own us government bonds when the 30 years yields 2.3 percent ?

Mike

No, not as long as DuPont keeps paying over 3% dividends. Sometime there is going to be trouble over paying interest on government debt, maybe when people realize that MyRA funds are just savings bonds with a new label and the return on investment comes from their own tax money.

quote:

Originally posted by TomP:

quote:

Originally posted by Beretta682E:
Anyone long/own us government bonds when the 30 years yields 2.3 percent ?

Mike

No, not as long as DuPont keeps paying over 3% dividends. Sometime there is going to be trouble over paying interest on government debt, maybe when people realize that MyRA funds are just savings bonds with a new label and the return on investment comes from their own tax money.

Something is very wrong in the government bond market when US government 30 year is at 2.3%. For all the bitching and whinning on the the political forum I am pretty sure US economy is going to grow in real terms at more than 2.3% a year over the next 30 years and we wont have deflation.

Looking at German and Japanese (a broken financial system) yields is even scarier.

Strange times we live in - if one had social security and 800K and had the money in a check account. The retired persons income would be below the poverty line.

Scary.

Mike

PS - Buffalo hunting prices in Zim keep going up at 10% a year.

Energy is likely to take another hit this coming week as Anadarko, Exxon, BG, BP, National Oilwell, Marathon, Weatherford, etc. all report quarterly earnings.

Bought more XEL and DUK the past few weeks. Seems like the Utilities were the only things moving.

Still looking at BP, ESV, and HAL, but not ready to make a move.
Corning (GLW) is a BUY, but it doesn't pay a big enough dividend to interest me.

The S&P 500 index is at new all-time high. NASDAQ at 15 year high. An opinion on CNBC was made yesterday that we're in the 6th year of a 20 year bull market. My guess is that we're in the 6th inning of a 9 inning game. Time to be careful and put money where there is a decent dividend return in case stock price appreciation stops.

I've bought CSCO and PFE in the past few weeks. DD, PFE and CSCO still look good to me as possible plays.

If oil was to hold its ground HAL, ESV and BP would be good bets, but I'm not convinced that will happen yet.

Still have a few positions yet to report quarterly earnings; DUK, ESV, and SDRL.

Oil continuing to soften, so I'm staying out of that arena.

I found more opportunities this month with Cisco (CSCO), and particularly DuPont (DD) on multiple occasions, including this morning. DuPont is UP 22% in the last six months. It will probably run higher as Trian Partners tries to get their claws deeper into them.

If TP gives up, the price of DD will probably give back some of their gains, but I won't be surprised to see DD raise their dividend soon to keep shareholders happy.

I think Corning (GLW) has about run its course. I will probably take some winnings there and reallocate those funds.

Going forward, BP, DD and PFE may be worth watching. (BP is very tempting right here with their 5.9% dividend.)

Funny, no one ever mentions their LOSERS.
I'll admit mine, most of which were contrary picks, a strategy which has never worked well for me: silver, Latin America, emerging markets, recent energy purchases.
Biggest winners are health-related, consumer non-durables, technology, small cap.
I don't buy individual stocks, only sector ETFs, and I generally don't trade or rely too much on economic or industry fundamentals. Other words, I watch longer-term momentum indicators. Many ways to skin a cat.

The Treasury yields are kept at that level to keep the banks going in an uncertain economy. They borrow from the Fed at .25% and buy treasuries at 2.5%. $3.8 trillion worth of dormant reserves as of a month ago. A nice little sop to the poor financial sector.