Bob,
Funny you should ask. Like a moth attracted to a flame, I find myself going back again and again to the source of the pain.....each time burning myself a little more. :-))
I have not abandoned the Energy sector entirely; still own EPD, KMI, bought a long time ago at higher prices. Yep, they've taken huge blows along with everything else. I write Covered Calls on them now and then.
But I remain optimistic that Oil will not stay around these low-$40 level for very much longer.
Saudi Arabia, Venezuela, Russia, etc all need the price to go higher - the level of desperation is rising, and will eventually force these countries to capitulate and agree to production quotas. ( At least, I hope so ! ).
Lots of rumblings about "emergency" meetings between OPEC and non-OPEC countries. Lots of rumor about Saudi having to issue bonds to sustain their budget. All pointing to growing uneasiness and need to do something.
The moment the first consensus of production cuts is announced, oil prices will shoot up. I'm expecting it to stabilize around the $60 range depending on how deep the cuts might be.
The US will likely increase production slightly, but not a huge amount, as it takes a lot of money to re-start wells that have been shut-in. That will still remain a wild card in the pricing horizon.
I may pick up some XOM if it drifts to the low-mid $60's. At that level, yield is very attractive, and downside risk becomes acceptable though not eliminated.
IB |
