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Business, Economics, and Taxes: Capitalism. Yay? >=(

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Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

FadeToBlack&Gold said:
The paradox is that if he'd managed this properly, the demand for oil wouldn't have crashed as hard as it has.
Click to expand...

And the entire country wouldn't be shut down, so he wouldn't need to be out there encouraging insurrection to open it back up again.

And, he would cruise to re-election.

What happens when you can't think long term.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

St. Clown said:
For the investors out there, now is the time to look into oil drilling company stocks. It’s Buffet time.
Click to expand...

It took me a few moments to see what you did there. Interesting play. I was talking over stocks with Mrs. 316 yesterday wondering if there's other plays out there. Take tire companies. 2020 might be fine for them, but consider the fact that automobile transportation is down what? probably somewhere between 20-75% depending on how you look at it. I can't imagine they're going to have a good 2021.

Jim Cramer, yeah I know, once made an interesting comment about how to look for opportunities. I can't remember exactly when it was (03-06, or near peak in 08) he said that you shouldn't be looking at the oil companies for stocks. You should be looking at companies that manufacture railcars and the railroad companies themselves. Look for secondary and tertiary plays. You'll get beat by the good traders, but you'll be out in front of the average person looking to make a buck.

And to bring it full circle, I know Buffet bought huge stakes in the rail companies a while back. I remember reading something that indicated he was making a play on mineral rights since the railroads own most of the mineral rights in the nation. I'm not sure if mineral rights include oil, but that could be an interesting combo for Berkshire.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

walrus said:
west texas crude. How do you trade negative numbers crude?
Click to expand...

Idiot's (my) understanding:

Oil company creates a contract to buy 1,000 barrels of crude at a location on a date. Someone buys that contract from the oil company. This contract is bought and sold by any number of traders. Eventually, that contract comes due. The person who holds that contract is contractually obligated to pick that oil up at a transfer station when the contract term is up. I think May's contracts closed today so if you held it, you had to pick it up on May 20th. Now, say you're an average moron who bought one of those contracts on speculation. You don't have means to receive, transport, or store that oil. So April 20th comes around, you are going to sell that at whatever price you can so you aren't obligated to pick up that oil.

This drop doesn't represent the value of oil, today it represented the cost to store the oil.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

dxmnkd316 said:
This drop doesn't represent the value of oil, today it represented the cost to store the oil.
Click to expand...

Right. And what is affecting that price is the glut -- oil keeps pouring onto the market because Putin wants to kill the shale industry. Meanwhile, the virus means nobody is consuming so storage space becomes more and more scarce. That Financial Times article forecast that global oil storage capacity will be exceeded soon. That literally no matter what the supplier will offer to pay, nobody can take receipt because there is nowhere to put it. Nowhere on Earth. Think about that.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

Kepler said:
Right. And what is affecting that price is the glut -- oil keeps pouring onto the market because Putin wants to kill the shale industry. Meanwhile, the virus means nobody is consuming so storage space becomes more and more scarce. That Financial Times article forecast that global oil storage capacity will be exceeded soon. That literally no matter what the supplier will offer to pay, nobody can take receipt because there is nowhere to put it. Nowhere on Earth. Think about that.
Click to expand...

I saw rumors of professional traders leasing crude oil tanker ocean ships to store oil because US oil storage capacity is effectively full.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

dxmnkd316 said:
It took me a few moments to see what you did there. Interesting play. I was talking over stocks with Mrs. 316 yesterday wondering if there's other plays out there. Take tire companies. 2020 might be fine for them, but consider the fact that automobile transportation is down what? probably somewhere between 20-75% depending on how you look at it. I can't imagine they're going to have a good 2021.

Jim Cramer, yeah I know, once made an interesting comment about how to look for opportunities. I can't remember exactly when it was (03-06, or near peak in 08) he said that you shouldn't be looking at the oil companies for stocks. You should be looking at companies that manufacture railcars and the railroad companies themselves. Look for secondary and tertiary plays. You'll get beat by the good traders, but you'll be out in front of the average person looking to make a buck.

And to bring it full circle, I know Buffet bought huge stakes in the rail companies a while back. I remember reading something that indicated he was making a play on mineral rights since the railroads own most of the mineral rights in the nation. I'm not sure if mineral rights include oil, but that could be an interesting combo for Berkshire.
Click to expand...

The drilling companies are going to be in a down cycle for a while. I wouldn’t expect a quick, big ROI, but they will rebound. Long-term should give good returns. Back in 99, I remember my roommate making this same play when crude was down. The market was ripe for a bigger rebound than today’s preferences of moving away from petroleum, but a rebound will be had.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

dxmnkd316 said:
Idiot's (my) understanding:

Oil company creates a contract to buy 1,000 barrels of crude at a location on a date. Someone buys that contract from the oil company. This contract is bought and sold by any number of traders. Eventually, that contract comes due. The person who holds that contract is contractually obligated to pick that oil up at a transfer station when the contract term is up. I think May's contracts closed today so if you held it, you had to pick it up on May 20th. Now, say you're an average moron who bought one of those contracts on speculation. You don't have means to receive, transport, or store that oil. So April 20th comes around, you are going to sell that at whatever price you can so you aren't obligated to pick up that oil.

This drop doesn't represent the value of oil, today it represented the cost to store the oil.
Click to expand...
Thats insane and I'm not smart or dumb enough to play the futures market :) I'm sure others will and make lots of money
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

Playing the Futures was how Southwest made their mark. If I remember the story they bought when oil was undervalued and bought in such quantity that they could fly for years on cheaper prices. They hedged and bought contracts in the $50 range and as prices spiked and everyone else was paying nearer to market value they were cleaning up. That was how they were able to keep prices down.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

Handyman said:
Playing the Futures was how Southwest made their mark.
Click to expand...

That was the corporate strategy. The marketing strategy was a little different...

<img src="https://media.bizj.us/view/img/9980082/southwest-airlines-1971-uniformsjpg*1200xx2855-1606-0-315.jpg" height=300 width=550></img>
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

That sound you hear is Alaska’s economy going fully into the tank...
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

dxmnkd316 said:
It took me a few moments to see what you did there. Interesting play. I was talking over stocks with Mrs. 316 yesterday wondering if there's other plays out there. Take tire companies. 2020 might be fine for them, but consider the fact that automobile transportation is down what? probably somewhere between 20-75% depending on how you look at it. I can't imagine they're going to have a good 2021.

Jim Cramer, yeah I know, once made an interesting comment about how to look for opportunities. I can't remember exactly when it was (03-06, or near peak in 08) he said that you shouldn't be looking at the oil companies for stocks. You should be looking at companies that manufacture railcars and the railroad companies themselves. Look for secondary and tertiary plays. You'll get beat by the good traders, but you'll be out in front of the average person looking to make a buck.

And to bring it full circle, I know Buffet bought huge stakes in the rail companies a while back. I remember reading something that indicated he was making a play on mineral rights since the railroads own most of the mineral rights in the nation. I'm not sure if mineral rights include oil, but that could be an interesting combo for Berkshire.
Click to expand...

I know dx knows who I work for, we had a minor dip (less than 10% in the past couple months) and now we're back to the early March level.

I'd look at the slow growth companies that are selling all the stuff that the front-liners/businesses need to operate. There is no quick buck to be made there, but it's a solid investment long-term.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

Jimjamesak said:
That sound you hear is Alaska’s economy going fully into the tank...
Click to expand...

June oil was still in the 20s. I know that’s not ideal, but it’s not a disaster, yet. There’s some worry about he value of the oil, but no ones sure how May will play out.
 
Re: Business, Economics, and Taxes: Capitalism. Yay? >=(

dxmnkd316 said:
June oil was still in the 20s. I know that’s not ideal, but it’s not a disaster, yet. There’s some worry about he value of the oil, but no ones sure how May will play out.
Click to expand...

Interesting that while the May contracts sh-t the bed the June contracts didn't slip a bit.

It isn't as if this is going to be over by June.
 
dxmnkd316 said:
June oil was still in the 20s. I know that’s not ideal, but it’s not a disaster, yet. There’s some worry about he value of the oil, but no ones sure how May will play out.
Click to expand...
Well, the other problem of this is that some North Slope oilfields are shutting down because of the virus so production is already down.
 
The Rube said:
I know dx knows who I work for, we had a minor dip (less than 10% in the past couple months) and now we're back to the early March level.

I'd look at the slow growth companies that are selling all the stuff that the front-liners/businesses need to operate. There is no quick buck to be made there, but it's a solid investment long-term.
Click to expand...

This is what CNBC said, and it seems pretty obvious. To ride this roller coaster out, they recommend long term investing in the experienced companies that sell what people need AND have solid ledger books that will get them through this. Johnson and Johnson. Proctor and Gamble. Those types. The "old money" companies.
 
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