Showing posts with label crude oil. Show all posts
Showing posts with label crude oil. Show all posts

Feb 11, 2016

How To Tell If A Company With Falling Share Price Will Not Close Down Eventually (Part 1)

Happy Year of the Monkey! 


In my last post, I talked about participating in this crude oil opportunity through buying crude oil-related shares. With all the crude oil-related shares taking a hard beating, the next question is: How to pick stocks that will eventually go out of business? I think the key to profit from the panic is to buy stocks that will not go bust and hold them tight tight till the stock price rebounds, right?

Buying ETFs suits this strategy really well. ETFs won't go bust. And for instance, STI ETFs sort of follows the STI. So I can participate in the eventual stock market rally without spending too much time analysing company stocks.

Now that I don't have a choice, timely that I revisit stock picking criteria too.

Let's discuss stock picking criteria using the 4 stocks I mentioned in my last post: Sembcorp Ind, Keppel Corp, Ezion and Nam Cheong.

Criteria #1 Company has solid backing

Essentially, whether the company has sound management. A company with good management can do magic and turn the tides during bad times. But too bad my level not so high, I don't know most of the people running these companies. On paper and especially in pictures, they all looked like super smart people with damn good credentials. 

Then I look 1 level up. Government-linked Temasek Holdings owns 49.5% stake in Sembcorp Ind (Dec 2014) and 20.43% stake in Keppel Corp (Nov 2015). Trust me, some of Singapore's brightest minds are in Temasek Holdings. They must have done their due diligence before buying these companies. And I don't think they are thinking of selling them (yet). In fact, big mama has been thinking of ways to increase cash flow for them.

(to be continued...)

photo credit: Heerema Hermod via photopin (license)

Feb 7, 2016

No Easy Way to Invest in Crude Oil in Singapore

Adam Khoo generously shared the various ways to profit from panic in crude oil. He mentioned oil ETFs (e.g., USL), energy sector ETFs (e.g., XLE) and oil companies stocks. Wifey and I do not like to transfer our money to US online trading brokerages. We have learnt our lesson. We ever put our money in USD and lost a few thousand dollars just because of exchange rate. Not worth it at all.

I looked around and discovered that there is no similar crude oil-related ETFs offered in SGX. The closest is an energy ETF from Lyxor but the volume is too thin for my liking. We can of course buy crude oil using CFDs. However, We are going to be in this for the long haul, well, at least for 5 years. The daily holding cost may kill us. How about unit trusts? Fundsupermart has this Blackrock World Energy Fund A2 SGD. Unit trusts have sale charge and annual management charge and are not ideal.

Seems like the best option is to buy SG stocks that are related to crude oil, like Sembcorp,  Keppel Corp, Ezion and Nam Cheong. Buying company shares gives dividends - another plus. Given current climate, Ezion and Nam Cheong are almost becoming penny stocks. Sembcorp and Keppel Corp are being snooked by Brazil. Haha. Seems like no risk no extraordinary profit...So is it back to textbooks to analyse balance sheets and income statements for the companies?

photo credit: Pumpjack via photopin (license)

Feb 1, 2016

Video Notes: Profit From the Panic Re-Loaded by Adam Khoo

Recent videos from Adam Khoo:





Wifey and I have just been looking at when to buy STI ETF. The above videos reignited our interest in crude oil. The videos made sense. Oil couldn't possibly remain as such depressed levels such that only Saudi Arabia can make money. And imagine if only one person can make money and he is able to control how much money he can make. Why would he not want to make more money?

This is the list of top oil producing countries. The top 5 are: 
  1. United States
  2. Saudi Arabia
  3. Russia
  4. China
  5. Canada
I validated the cost of oil production:

Country Adam Khoo's Video
(Jan 2016)
CNN Money
(Rystad Energy, Nov 2015)
United States $36 / $70+ (shale) $36.20
Saudi Arabia $10 $9.90
Canada $41 $41
Brazil $49 $48.80

Can oil price stay at such levels?

I came across the following articles:

Seems like it can't. But will it go back to $100 soon?
Source: MacroTrends

If we measure the peaks and troughs, we have:


For STI, we have:


It appears that crude oil may give a better bank for the buck. Ok, now, how to take part in this crude oil opportunity?