Everyone knows oil is a one way trade, it can only go up which is exactly why I shaved off a little Statoil (STO) this morning.I have no idea what direction the next $15 will be for crude oil but the price has practically gone vertical as has the price for STO.
Chances are if you own any oil stock that is not a refiner or own some sort of oil sector fund it too is up a lot but at the hair over $43 I got as an average price this morning STO is up 38% YTD. As the oil ETF I use is also up a ton, not as much as STO, I am a little heavier than I want to be.
The trade specifically was to sell 25% of STO (subject to any unique client situations). I sold it in the pre-market at an average price of $43.09.
I have done this sort of trade before with Statoil and other stocks including Vale (RIO). There is nothing wrong with taking a little off the table and the stock still going up.
It is sort of a no lose proposition. If oil keeps going up then I would expect STO to keep following along and if oil goes down I would of course expect STO to drop.
If oil goes to $200 then just about everything energy will go up and I would shave down STO again (don't key on $200 because I might shave down at some other level, the key thing is when something gets very big and out of balance I tend to shave it down).
One amusing nugget about this trade that ties into the post I had a few weeks ago about renting a stock for the dividend. STO went ex-div yesterday for $1.65. The price got reduced down to $40.81 and made back the reduction almost immediately.
8 comments:
Does anyone know if gas prices in other countries have gone up as rapidly as they have in the U.S.? Europe, in particular, has endured much higher prices than the U.S. in the past. I can't imagine even driving there now, let alone the broader economic effects of higher fuel prices.
50 years ago President Kennedy stressed education and hard work to tackle the goal of sending a person to the moon. The lack of current leadership on this issue is quite appalling. The best time to plant a tree farm was forty years ago. The second best time to plant one is today. President Bush should address the nation, roll back the speed limit to 55, impose a tax on any auto that does not get 50 MPG within 2 years, etc. etc. and set a national policy goal of energy independence within 20 years. I can't believe more people don't take this issue seriously. The disruption in lives when it really hits - not price wise, which will be bad enough, but actual no availabilty will be hard to imagine. Unlike President Kennedy, the current Congress's solution to the energy crisis we face is to sue OPEC. That pretty much did it for me. I'm now looking for 40 acres and a mule if anyone has a good deal.
anon 12:28, here in the UK we're paying around £1.20 a litre, I think that works out at $9.50 a gallon. Around 75% is tax and the amount of tax goes up as the price of oil goes up, but we've been used to paying around £1 a litre for a while so it only hurts a little. Europe is in a similar position although the Euro has been stronger and they tax differently, for example France will lower taxes as oil rises and vice versa. Apparently the UK government is considering that too, although then I don't know how it would fund all the nannies and CCTV cameras.
LOL! Thanks anon 1:53. I guess our weak $ really is a big part of the problem here.
Roger,
You're profit-taking approach makes sense. I can't believe the supply/demand imbalance is growing anywhere near the rate to justify the recent spike in oil prices.
jimidean - I'm not sure more regulations from government are going to do the trick. The auto makers are going to scramble like hell to offer the fuel efficient vehicles without a 5 year plan from our Politburo.
The government could legitimately do several things to put us on the road to energy independence...but they won't:
1) open up oil exploration in the U.S.
2) knock down barriers preventing nuclear power, new refiners, etc.
3) provide prize/incentives for R&D and development of new technologies - with big bonuses from bring them online first.
4) Simple stuff: How much fuel could be saved if local/state governments acually optimized the timing of their stop lights?
Re returns: John Hussman rightly notes that it is the returns throughout a complete cycle that matter. Accordingly, though you may lag in the short term due to prudent management of risk, over the full cycle you are likely ahead.
Roger,
I have a pretty aggressive approach and can afford to take a educated gamble. Where would you put some money in now if you had a little to put somewhere {small investment $10K - few % of porfolio}?? What ETF or area would you be investing in now with a little extra cash?? Appreciate concise response.
giving any sort of opinion on that would be a compliance no-no
Post a Comment