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Oil: A Slippery Slope Ahead?
Also, very interesting about the renting of tankers to store unbought oil. I did not know that at all, and shows how weak demand really is!
Where I strongly disagree and where I find you lack adequate research is for your Oil Sands argument. Let's set something clear... Cash costs for Oil Sands ARE NOT 80$ per barrel. You mention Canadian Oil Sands Trust. Had you read their quarterly report (biz.yahoo.com/cnw/0810...) you would see their cash costs per barrel are at 35$ and funding for their investment projects are 10$ per barrel, meaning they are profitable and self-sufficient at 45$ a barrel (more or less). Suncor and other oil sands companies also have cash costs in the low 30s. Low natural gas prices and weaker demand for oil workers will actually make that cost go down.
Oil sands in Canada are often misunderstood. Some 'unconventional projects' indeed might have marginal costs of 80$ a barrel, but these have already been shelved. Most active fields actually have quite low cash costs, so the barrel would still need to come down a lot in order to cause important losses.
Whether the barrel will go as low as 30-35$ is another question to ask, and of course I do not have the answer... But I guess if speculating sent the barrel to 147, speculating can equally send it to 30. Just by listening to the trader sentiment (on Fast Money) on oil, it is insanely bearish.
Anyways the market is setting itself up for a supply squeeze in 5 years that will send oil prices back up again.
Conclusion: Neutral/Bearish short term and Bullish long term
Disclaimer: I own Suncor shares
Oil Sector Flush with Cash, Expect M&A - Canaccord Analyst
By the way, the integrated companies know the long term equilibrium price should be more towards 100-120$ in real dollars, just as the International Energy Agency mentioned in their study. BrotherMaynard, if you know more than the IEA, please tell us how you got this good and why you are not CEO or on the board of any of the big energy companies!
As Warren Buffett says, better to buy a great company at a good price than an average company at a great price. The great names in Oil Sands (Suncor, Canadian Natural Resources and Encana) would fit in the former category, so the big guys in Energy are likely shopping around as we speak in order to boost their growth prospects.
As for your ''Time to move on'' statement, most of us are actually WORKING in this sector, so this is our job, we are not ''moving on'' to the next ''hot sector'' as I'm sure you already have done. We actually study the fundamentals, not what Roubini or Cramer are saying.
Disclaimer: I own Suncor shares
On Nov 21 12:37 PM BrotherMaynard wrote:
> omg, this site is relentless about hoping for commodity names. integrateds
> have been around for almost centuries now...and that for good reason.
> They don't make crazy assumptions, esp. given the crazy nature of
> crude. $49 of oil is historically extremely expensive. Integrateds
> know this. So why would they pay for an incompetent company that
> can't manage when oil falls below $60 now, rather than wait until
> oil hits $30 and it goes out of business...just buy it from the Ch
> 11 judges.
>
> It was a bubble folks...time to move on.
Chinese Market Annihilated - Cramer's Lightning Round (9/24/08)
I like Frontline though. Their dividends are unstable, but I'll live with that for a 23% yield...
New Game, New Rules
No matter what the government did, it would have faced strong criticism. The problems is in the savage capitalism system advocated by Milton Friedman. Each firm has so much pressure to exceed profit estimates that OF COURSE they will take on more risk (CEOs also get bigger bonuses when the profits are record-breaking). Had Friedman gotten his way, there would probably be no government to bail out the Wall Street fat cats, and we'd be plunged in a fear-induced negative spiral that could lead to something as bad as the 1930s.
The assumptions behind the pure market theory (RATIONAL economic agents and PERFECT information, for example) are flawed, and let's hope the government realizes that and goes for a better capitalist system like the one they have in Scandinavia.
Now the government is forced to socialize all the losses to the common taxpayer.
The Oil Bubble Will Meet the Same Fate as Tech, Housing
I don't agree with the 40$ oil statement about industry insiders (Boone Pickens, an insider, sees it at 100$), but still the article is very insightful.
Speculators have an essential role in the oil market, but the so-called index investors (mostly large passive pension funds who look for the diversification benefits of investing in commodities) do not. Index investors do not serve a specific purpose on the market; they only put upward pressure on the price of the barrel that is unfortunately not always corrected by speculators. This has the effect of transfering wealth from net oil importing countries to net exporting countries.
Explanation:
The portfolio of the pension fund that invests in oil will get greater benefits from diversification, but it comes at the expense of its clients (us, individuals) paying significantly more at the pump. Therefore it's actually a very unprofitable and short-sighted strategy by pension funds to invest in oil futures, since their clients lose a lot more than they gain from it!
It would be nice, but unlikely, to see the US government regulate the index investors, and letting speculators do their job.
Key Earnings Reports This Week
I bet 250,000$ that Sirius will be NOWHERE near 10$ if and when the merger is announced. Matter of fact, it will be nowhere near 5$. Almost everyone knows the merger will go through, so a big part of that is priced into the stock.
Be careful, Ronjsq looks like a crook. If he does really advise clients on stocks, he is in severe breach of many if not all ethical and professional standards by posting one-sided ''recommendations'' like that.
Exxon Mobil: World’s Safest Investment
Exxon is definitely a safer investment vehicle than PBR, but personally, I would own both, this way you get the best of both worlds: A strong value company in Exxon and a solid ''growth'' stock in Petrobras. They should actually be a nice complement in a diversified portfolio.
eBay's Looming Identity Crisis
This translated into fewer bargains to be found, which reduced the ''active return'' for buyers who specialize in finding cheap products on Ebay. The costs (i.e. time and effort) of actively watching the auction now exceeds the benefits, since the spread between the price we would normally pay (on Amazon, for example) and the price we can find it for on EBay is lower. That is why many buyers just gave up on auctions and either stayed loyal to EBay (and used the buy it now option) or switched entirely to Amazon.com (like I did).
I'm not all too sure what EBay can do about it, since it will always suffer from the winner's curse; increased popularity (and therefore higher profits) leads to decreased appeal (and therefore lower profits). It can't rely indefinitely on its non-core businesses for generating growth and returns for its shareholders. Perhaps over the long term it might consider a merger with Amazon (now wouldn't that be something special?!), if of course it can pass anitrust rulings. The same questioning as the Sirius-XM merger would apply to this one I'm sure...
Interesting story to follow.