How to profit from Y2K oil problems?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
So if you assume there's going to be an oil shortage next year, who would you invest in? Prices would increase, which would benefit any supplier still in business. On the other hand, a general stock market crash would hurt all stocks, including the oil stocks. Some of them seem to have the same ridiculously high P/E's as the rest of the market.
So which company would you guess is most Y2K compliant? Can you form an opinion based on SEC filings/Y2K press releases? Go with the one that has spent the most on remediation? Any idea who has the newest equipment? (or perhaps the oldest equipment?)
-- You Know... (email@example.com), November 28, 1999
Exxon. Incredibly aggressive, lean, competitive corporation. Started working on Y2K early.
-- nothing (firstname.lastname@example.org), November 28, 1999.
Good luck. If you can see the future that clearly you should put as much money as you can into it.
This is not a simple equation by any means. It can not be reliably determined by anyone on this forum.
-- Gordon (email@example.com), November 28, 1999.
My problem is that I have a fair amount of cash, but no hard assets to speak of. If the economy is deflationary next year, I'm OK. If the economy continues to boom along, I'll be very surprised, but also OK.
But if we have inflation, I'm more worried. Either we could see a real price rise due to shortages, an increase in money supply due to the Fed trying to "help" the Y2K mess, or we could see the dollar drop due to worldwide economic turmoil.
Shortages will eventually cure themselves, and it takes the Fed months to react. But a drop in the dollar could happen in days. I would like a simple strategy for hedging against this problem. I could buy gold, but it seems like such a bizarre thing to hold. With oil, at least you'd have something that people actually need.
-- You Know... (firstname.lastname@example.org), November 28, 1999.
Oil and mining stocks are cyclicals and PE's don't work well for cyclicals. Both the earnings and the price are usually severely depressed at the bottom, resulting in high and/or confusing PE's.
-- John (jh@NotReal.ca), November 28, 1999.
Putting this in some perspective--your main concern is how to make some bux off of other people's misey? Is that about it?
-- (email@example.com), November 28, 1999.
To You Know...
I'd not recommend shares of stock in an oil company because you just don't know if they'll make any money in a Y2K oil crisis. Marathon Oil & Ashland Oil are two "majors" thought to have the least exposure to embeddeds within their own systems. However, will they get crude oil at all? Will they get enough crude? In any stock play for a company in this scenario, the problems become, will the pipelines work? The Tankers? The docking facilities? and of course the oil wells.
Chances are that what you are most disposed for is actually a pure oil play contract ... West Texas Crude? This is a VERY risky trade also. So too (even worse IMHO) are options unless you're a pro who has all the instant tools to the floor.
Gold, or silver would probably be a little safer, but no guarantees either. Anyway you move is a risk. But frankly, the greatest risk is to hold shares of stock in a company, even an oil company.
If you don't have hard assets but lots of cash, I'd suggest you consider doing balancing your portfolio by putting 5% of it into Precious metals bullion...either silver or gold. Both are also used in manufacturing, so their not just a form of money. The metals may end up being used as money if things were to really shoot craps.
Also, for other diversification into "hard assets" buy some rural land somewhere if you don't already have it.
Have fun figuring it all out.
-- Dick Moody (firstname.lastname@example.org), November 28, 1999.
I agree with Gordo. The oil and gas business is incredibly tied together. You must drill, ship, refine and distribute and after all that is there are major problems you have the GOVERNMENT nationalize the business as essential to national security (Oops just lost all those profits).
Instead of guessing, cash is king.
-- squid (Itsdark@down.here), November 28, 1999.
NYMEX crude oil is going to open +50 cents lower on Monday morning. If you know what you're doing, buy into it. Its a high risk, purer Y2k play than anything else thats out there on any exchange.
-- Downstreamer (email@example.com), November 28, 1999.