What the hell happened to oil stocks today??? Chevron-Texaco and Exxon-Mobil were down almost 7 percent!!! How many billions of market value did that vaporize? It's been going on for a couple of weeks. Look at BP. It was trading at about $53 and it closed today at $39 and change.
That chart doesn't reflect today's plunge which would take it completely off the chart.
These are enormous oil companies, and so we're talking tens of billions of dollars of market cap disappearing, daily!
There's no good reason for it in terms of the industry. Oil prices are pretty solid, and with the weakening dollar, they'll probably rise. I think they're simply being caught in the mutual fund redemptions that are going on. Investors are selling their mutual funds and the managers have to unload stocks to pay them.
It's not terribly sustainable, though. Most of the big oil stocks pay a dividend, and at these stock prices, the dividend is paying more than some CDs. When investors notice that, they'll prefer to buy these stocks instead of CDs. They pay more, plus they can appreciate while a CD can't.
That's where the bargains are in the stock market today. Look for a stock that's paying a dividend higher than what you would get if you cash out, as long as that dividend isn't likely to be cut.
If anyone would be as dumb as attempting to pick the bottom of this market you must accept the losses that you will incur. This is so far from being over that it is downright frightening.
The Pro's only buy when there is someone to take the other side of the trade when they sell. Who is waiting to do that? Ask yourself this 100x's and you will get the picture. There is no 2nd or 3rd tier buyers....All the reasons are gone.
Who will buy the short term rallies? Yahoo's that’s who, and they will get there heads handed to them. The Market will spike up and get smashed back down so fast your socks will fly off your feet.
Be patient. Wait a couple of years. Only a fool would buy a Train wreck. Stick a fork in it.
Who bought the top? Anyone here? Honest now....
By my calcs, CVX is paying 4%, XOM is paying 3%, and BP is paying 3.6%. Still not all that great.
But the P/E ratio CVX is 30+, XOM's is 18, and BP's is 60! Not good. Historically speaking, the price should fall to 1/3 of today's values to make the P/E's assume "normal" values.
BTW, my Mother is still holding her Arco shares that she bought in 1951! Of course they morphed into Amoco, then BP, but she never sold them. [I advised her to sell two years ago, but she didn't] She would always say, "What do I care if the market is up or down, as long as they keep paying dividends." (Of course that philosophy didn't work so well for the AT&T she bought around the same time.)