(03-10-2020, 04:42 PM)The Real Marty Wrote:

(03-10-2020, 03:35 PM)HandsomeRob86 Wrote: The reduction in demand is a short term phenomena IMO. And while I love cheap gas, it won't stay that way into the summer. Either way, cheap oil will decrease costs for flight, shipping, transport and travel. Plus the tons of petroleum based plastics out there. It boosts the economy all on its own, thereby increasing its own demand.

I think people have minimal idea how built on oil our whole society is. Consumer vehicles are like 5% of the demand. 

Anyhow, I agree that long term, oil is great buy right now. I mean people would have killed in the past to get 9% dividend yield from Exxon, its a blue chip.

Exxon has a very strong balance sheet, and it will survive any oil recession and probably absorb some of its competitors, but the one thing to watch out for is, Exxon is currently borrowing to pay that dividend.  They are going against the grain and unlike other big oil companies are spending huge amounts on exploration, and that's why they are borrowing to pay the dividend.  But why are they spending so much on exploration when oil prices are so low?  That's the big question- do they have the right strategy. 

The thing that comes to mind for me is, with oil prices so low, and banks under so much pressure as a result of large loans to oil companies, will Exxon be able to continue to borrow and pay that dividend?   Investors including banks might decide to pull back on all this lending to oil companies or demand higher interest rates for loans.  

Exxon at this price is probably a good buy if you are willing to hold it for at least 5 years.  That's my opinion.  I am often wrong.

The one to watch out for is Occidental.  That company is in danger.

Buying individual stocks is not for lazy people like me.  There's way too much work involved, and I don't think I will ever know as much about any company as the big boys on Wall Street who will always be ahead of me and know things before I know them.  I'd rather just buy an index fund and go play golf or something.

I agree.  The same thing could be said about (insert oil company here).  The success/failure of oil companies is closely tied to the banks.

 A while back I brought up the 10 year treasury number and it was dismissed as "not important" but it is.  At the time I think it fell to around 1.6% (just a few months ago).  Today that number is less than 1% (.75 last time I looked) and fell to less than .3%.  This number is important.  The more that it falls the "cheaper" mortgage rates are and the "cheaper" it is to borrow money.  Businesses rely on borrowing money all the time.  I'm not talking about big corporations though they do it as well, I'm talking small businesses and farmers.  The problem is that loaning that money at such low rates hurts the bottom line of banks.  If//when there are defaults on the loans the banks go under.  It's a "domino effect". 

Some people on here are so quick to want to buy into the cruise lines (specifically Carnival) since it lost so much.  I don't see the stock price recovering anytime soon between this "virus" mess as well as what is happening with oil and the banks.  One must take the blinders off and look at the big picture.

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