Short sellers hitting energy at near-crisis levels
Saudi Arabia’s oil minister threw down the gauntlet at the industry confab by ruling out production cuts and challenging many of those very same leaders in Houston to “lower costs, borrow money or liquidate.” And with a wave of bankruptcies already ravaging the U.S. shale industry, Hess Chief Executive Officer John Hess warned “contagion” in the high-yield debt market is spreading to investment-grade producers as financing dries up.
Although the European oil and gas sector has experienced more than its fair share of cuts during the last few months, there is sentiment across the entire energy industry that oil prices will begin to stabilize towards the end of 2016. Should such a scenario occur, it would undoubtedly provide a much needed boost to Europe’s hydrocarbon business and could halt the steady stream of investment reductions the sector has had to endure.DYI Comments:
Buy When There's Blood In The Streets
Baron Rothschild, an 18th-century British nobleman and member of the Rothschild banking family, is credited with saying that “the time to buy is when there’s blood in the streets.”
He should know. Rothschild made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon. But that’s not the whole story. The original quote is believed to be “Buy when there’s blood in the streets, even if the blood is your own.“
This is contrarian investing at its heart–the strongly held belief that the worse things seem in the market, the better the opportunities are for profit.DYI Continues: Two areas of the market oil/gas/service companies and precious metals mining companies are ripe for purchasing.
Vanguard Energy Fund
Vanguard Precious Metals and Mining Fund
Sir John Templeton ran the Templeton Growth Fund from 1954 to 1992, then sold it. Each $10,000 invested in the fund’s Class A shares in 1954 would have grown to $2 million by 1992, with dividends reinvested, or an annualized return of about 14.5%. Templeton pioneered international investing. He was also a serious contrarian investor, buying into countries and companies when, according to his principle, they hit the “point of maximum pessimism.”DYI: Oil/gas/service companies may not have reached the "point of maximum pessimism." This is why I've been recommending dollar cost averaging as oil and gas prices could go lower especially with the distinct possibility of a world wide recession. However, prices are well off their highs having all the signs of a great long term contrarian play.
Precious metals mining companies share prices have been decimated. Lump summing or dollar cost averaging is recommended. Please note both these industries will take a few years to work themselves out and thereby pushing stock prices back up. Percentage of portfolio? Currently 17%....
Updated Monthly
AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 2/1/16
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
DYI
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