Something had to be done.
It is December, so I cleared my head and made some tough choices. I sold completely out of AEC, ETP, and BTU. AEC and ETP are the only two positions I have that have held up (made money, really). I don’t want to part with them, but it’s the best move.
There will be immediate cries about selling winners and doubling down on losers. This is nonsense. I’m not doubling down on anything.
The sheer magnitude of this calamity has left me with an enormous, outstanding loss for the year. It’s December – no way in hell I can absorb that loss in less than 30 days.
The only way I can view this is as a window of opportunity to cash out my winners tax free.
Cash now stands at 25%.
I’m sitting on the cash. My preference, obviously, would be to deploy into a sector not at all tied to oil and gas. But if my worst fears come to fruition, that may not be a real thing.
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Caine I have read your commentary for years and always enjoy your well thought out theses and writing style. Like everyone, sometimes your ideas work out and sometimes not but they are always well explained.
I really don’t understand how things could change so fast in an industry as oil. The financial crises, sure, that seemed to be out and out fraud and leverage but this oil carnage has thrown me for a loop! As a Canadian it is hard to avoid owning oil as it is a huge part of the country’s revenues and huge part of our stock index along with the big banks. everyone owns oil whether they know it or not.
I watched for 5 years after the crash of 2008-9 when everything was sold and oil went to $37. Everything was taken to the woodshed and appropriately thrashed, Since 2009 oil went from $37 back to $110 but stocks did not follow to the same proportion. I owned a lot of the “blue chip” company’s and the only time there was any significant upside was for a few months this very same year. But not near the to the same correlation to the upside in oil as there is now to the downside. It is apparent that the market never really believed that high priced oil was here to stay until seemingly this year. I watched expert after expert from April to Sept continue to pick oil stocks as a buy.
So what really has changed? The Saudis not cutting back and oversupply? How long have the Saudis been opening the spigots at full production and how is this so different this time from any other year? How could this current excess capacity be such a surprise to everyone? I never really heard about it until this past few weeks and it was pretty much too late.
What fundamentally has changed or is this simply paper oil moving around and fear? Besides the Saudis who is profiting from this and riding this all the way down. Who is making the money and leading the carnage because someone is. The Goldman Sachs?
Too stubborn to sell here and thankfully not on margin. Is there any hope or is oil the new coal?
“Everyone owns oil whether they know it or not.”
Brilliant.
I don’t think the market is responding to the Saudi’s at all. That marketing gimmick always struck me as stupid. But I do think the market is responding to something, and that would be the impact of global recession.
We’re pricing in tomorrow’s oversupply, today.
only thing working for me banks and
insurance
God that is ironic.
I sold SHLX and RICE, but I’m having a very hard time selling my HCLP, EMES and ETP. The former two are just so cheap down here.
Thoughts on your hi-crush position? Will you average down further?
I’m not throwing any money at the oil trade right now. I’m holding what I have.
I don’t sell into waterfalls unless I have to. And thank God, I do not have to.
I wrote this note to myself last night..
Stop mistrusting things that are going up that you have dismissed, and START mistrusting things that you OWN that are going down.
NOW!
What if it turned out qe was actually helping stave off a global depression for the past 5 years…