Why I will not touch any oil stock for now

I will not touch oil-related stocks for now and for a long time perhaps. Earlier on this year, I have sold all my Keppel shares at $6.73.


Oil-related stocks are not only those that supply oil / gas but also include those that produces oil-rigs, do offshore oil drilling. It seemed like yesterday that the oil crisis has sent my portfolio plunging more than 30%, and I am so not going to repeat the same mistake this cycle (see also previous post's video on economic cycle). 


From the macroeconomic point of view, oil demand will gradually reduce due to two main reasons - 1) manufacturing sector slow down  2) conversion to electric vehicles and "green fuel". Will an oil price war driving oil price lower stimulates demand? I think unlikely so in the face of current covid-19 virus situation. Quoting from Reuters:

“This could be even worse than 2nd half 2014 and prices could test $30 or even $20 given the simultaneous demand shock with the coronavirus impact on economic activity,” said Doshi who has previously worked for Saudi Aramco.

A trader with a North Asian refiner said the “crazy” price cuts could lead Brent to test $40 a barrel soon.

The slump in crude costs will likely support Asian refiners’ margins which have been battered by a demand slump from the coronavirus outbreak, traders and analysts in Asia said.

“It’s good news for refiners and consumers,” one of the sources said.


Unless you are a contango trader, otherwise don't end up catching a falling knife like in 2014 and of course don't end up as a dividend yield pig! *oink*

There may eventually come a point of price stabilization and covid blow-over, but till then I shall just sit on my palms.



Image result for stock market chart down graphic



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If you are scratching your head over DBS Multiplier account's recent rule change, fret not. With the stock market sell-down, it's time to do some dollar-cost averaging and at the same time earn interest from DBS by fulfilling the Investment category.

What companies I will be eyeing?
The stalwarts and those that will bounce back the fastest once the virus blows over.

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Just some quick thoughts on Robo-advisor...

Is it worth using Robo-advisor in a highly volatile market? (Is investing good to be so clear-cut such that there's no leeway around the ratio?)
Will it keep doing re-balancing and end up with snowballing commissions / losses?


My thoughts stemmed from this post:
https://www.turtleinvestor.net/how-did-autowealth-react-when-the-market-tanked-an-autowealth-review/


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Comments

  1. Smart girl!

    That's the essence of investing - never let a mistake/lesson go to waste ;)

    Cyclicals should never be bought-and-hold forever and ever...

    Dividends are just icing on the cake; never treat them as medicine ;)

    ReplyDelete
  2. Hi SMOL,

    Essence only get distilled from years of observing the market and surviving the cycles without chopping fingers.

    "Dividends are just icing on the cake; never treat them as medicine" - totally agree.

    ReplyDelete

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