This weekend is one the world auto industry celebrates. Today is the Monaco Formula One race. Later in the day is the Indianapolis 500 race. Drivers start your engines!!!
This weekend also kicks off the summer driving season in the northern hemisphere, which happens to be by far the majority of auto drivers in the world. Investors start your engines!!!
You probably would have been investing in the Oilers this week except that Wall Street has been depressing your sentiment, instead telling you to continue buying the inflated share prices of Apple, Microsoft, Google, Amazon, and Facebook.
But it’s time for an attitude adjustment for I have been saying, ‘It’s Now All About Oil’.
Here is a list of the major integrated oil and gas companies that trade in US markets. Take a note of the top 14 (counting the A and B shares of Royal Dutch Shell as one).
http://finviz.com/screener.ashx?v=111&f=ind_majorintegratedoilgas&o=-marketcap
Here are the US and Canadian companies in the list.
http://finviz.com/screener.ashx?v=111&t=XOM,CVX,IMO,ECA&o=-marketcap
Here are the other companies in the list, the largest ones in the industry in those countries.
http://finviz.com/screener.ashx?v=111&t=RDS-A,TOT,BP,SNP,STO,E,SSL,EC,YPF,PZE&o=-marketcap
Now, look at the charts.
Here are the charts of the US and Canadian companies in the list.
http://finviz.com/screener.ashx?v=211&t=XOM,CVX,IMO,ECA&o=-marketcap
Here are the charts of the other companies in the list.
http://finviz.com/screener.ashx?v=211&t=RDS-A,TOT,BP,SNP,STO,E,SSL,EC,YPF,PZE&o=-marketcap
Note a difference? Of course; it’s the trend. The trend of the four in North America are all DOWN and the trend of the ten outside North America are all UP.
Examine all the important price drivers that might possibly explain the differences between the trends of the share prices of North American major integrated oil and gas companies and the rest of the world. You will find this phenomenon is not an oil price issue. It’s not a currency issue. It’s not an earnings issue. It’s not a yield issue. It’s not a debt issue.
This is a Wall Street issue.
Wall Street has been playing you to avoid investing in oil and gas stocks. I believe they are buying while you are selling, and they have been doing this since mid-December. Any week now, however, they will start telling you to buy. Then the prices will rise until they sell.
Because Wall Street will still be telling you to buy when they are selling, the prices will form a cycle top. Later, after the public starts selling, the prices will drop at which point Wall Street will be recommending the selling in order to drive prices, at some point, to a low enough level where, like today, they will be buying again, while not recommending you buy.
This cycle never changes. The scoundrels always get richer and the public poorer.
I know that because I used to be one of them. Many of you know that I once founded the eastern Canada operations of Canada’s largest non-bank owned full service broker-dealer, building out the top floor of the Toronto Stock Exchange Tower from raw concrete and later building from concept Canada’s number one rated discount brokerage.
I know the industry. I know the culture. It’s one of take, not give, and it’s one of deceit. They want your money and your state of mind, and they usually end up succeeding because you trust them.
My message is that you need to stop listening to Wall Street, especially these days when it comes to Oil industry companies. Listen to the industry. Don’t let the tail wag the dog.
The global oil industry is led by the Ministers of Energy for Saudi Arabia and Russia, and they are telling you the price of Crude Oil is going higher; hence company revenues and earnings will go up, hence share prices will go up.
Those who buy now and are patient will enjoy improved portfolio performance.
Of course, Wall Street will not be happy because you will then have reduced their share of the pie. They don’t like it when you play fair; they want you to continue being stupid.
I don’t like stupid.
Enjoy your Memorial Day holiday weekend. I will be watching the races from aboard my 1220 horsepower turbo-diesel engined boat. 🙂
/Bill
