[AltaRed]

FWIW, I believe Larry81 placed a pretty savvy, but ballsy, bet back in April 2020 but I am pretty sure he did it on the premise his buy probably could not get worse, at least for very long and he has staying power. The oil industry wasn't going to disappear even if half the participants in XEG could have gone bankrupt. CNRL and Suncor were not going to be in that waste. Some things are purely speculative as in rolling the dice and others have much better odds than that.

 

[zinfit]

Why? You should never compare yourself to others.

There will always be some gambler out there with ridiculous wins. Just like there are gamblers out there with ridiculous losses.

There are people who are buying some other asset today which will make millions off it. This is the nature of speculation and gambling. Larry's story is a neat one, but pretty inconsequential and there are no lessons to learn from it.

There are also wealthy people who threw millions of $ at speculations, only to get wiped out in the process. Remember that people posting at places like CMF have some survivorship bias. You hear from Larry because his aggressive speculation went well. There are many others out there who had aggressive speculations go badly -- they don't post here.

I agree . My decision to reposition a large chunk of my investments into energy stocks was based on the numbers and the fundamentals. The gamblers are people who pile into cryptocurrency or meme stocks without any rational strategy . When the facts and market conditions change I will be out of these stocks. I am a sector rotator . I am currently putting money into EV material stocks and cybersecurity stocks. That decision is based on a fairly obvious observation of trends in both of these sectors. I put in an order for an EV and I am sure we see many millions of consumers will be doing the same . Especially with the trend in gas prices.

 

[KaeJS]

Either way, my utmost respect to Mr. Larry.

I'm just jealous. =)

 

[zinfit]

Either way, my utmost respect to Mr. Larry.

I'm just jealous. =)

me too. It took a brave soul to pile into energy stocks in April of 2000.

 

[Money172375]

No comments about the $25,000 management fees?

 

[OneSeat]

My decision to reposition a large chunk of my investments into energy stocks
was based on the numbers and the fundamentals..............................
When the facts and market conditions change I will be out of these stocks.

Glad I am not the only one who believes in facts rather than prejudice.

 

[AltaRed]

No comments about the $25,000 management fees?

It is not clear to me if this is the MER of the ETF or advisory fees, nor if that is cumulative from April 2020 or not. It is in line with low cost passive investing.

 

[KaeJS]

No comments about the $25,000 management fees?

Who cares?

The guy made 3 mill.

Who's gonna squawk about 25k when they make 3.25 mill?

 

[hboy54]

What James called "aggressive speculation" in oil stocks I call most obvious investment in my 4 decades as an investor.

I would suggest that a lesson here might be that sometimes the market gets stunningly irrational and next time, instead of watching it go by, be brave and participate.

Another lesson might be to not fear a "falling knife" if it is clear value. You have no control over the irrationality of other investors, but you can just keep buying more shares. I bought energy shares maybe 2 or 3 dozen times between mid 2019 and late 2020 and was deep under water for about 2 years. The truth eventually emerges and am now up substantially.

 

[MrBlackhill]

most obvious investment in my 4 decades as an investor.

I don't know the context of 2009, but just so I could debate about that 2020 investment being "obvious":

Maybe in hindsight it seems obvious to buy oil in 2020. I did and made a lot of money. I sold too early though. Why? Because I'm a beginner. But even if I were an expert... Buying is the easy part, knowing when to sell is the hard part.

When XEG crashed in 2009, maybe it was obvious to buy it at the cheap price of $12. Maybe one investor was gloating around in 2011 when XEG reached $22, doubling his investment. But did that investor sell at that moment? Did he kept holding in 2012-2013? And in 2015+?

The only one thing I know: stocks go down faster than they go up.

Also, sure, there are many indicators telling us that the oil sector "should" continue to go up. But wait, is that because we're the only "geniuses" out there seeing clear? I'm pretty sure there's much more "geniuses" experts in Wall Street who are also buying... So the current price should reflect the current information that all experts have and current risk of that investment. And there's also the unknown behavioral / momentum factor in play.

So we can't truly know when will this rise stop and how fast it'll go back down, if ever.

 

[james4beach]

FWIW, I believe Larry81 placed a pretty savvy, but ballsy, bet back in April 2020 but I am pretty sure he did it on the premise his buy probably could not get worse

Sure it's savvy, but it's still speculation, and could have gone another way. Over the decades there have been many assets and sectors which people tried to "buy low" and then lost their shirts.

Nobody ever knows where the bottom in a market is. There is an element of luck in anything like this. That's just the nature of the game.

 

[KaeJS]

Sure it's savvy, but it's still speculation, and could have gone another way. Over the decades there have been many assets and sectors which people tried to "buy low" and then lost their shirts.

Nobody ever knows where the bottom in a market is. There is an element of luck in anything like this. That's just the nature of the game.

It wasn't speculation lol.

This post shows you haven't learned as much as you think and you are too risk averse, especially given your age.

Retail REITs were also a bargain in 2020 due to COVID. Are you saying that was speculative? Because it wasn't.

 

[nobleea]

There were many people here that were adamant that the price of oil would return to healthy amounts and quickly, primarily due to their knowledge of working in the industry for so long. It was almost predictable. James, you said at the time that there's no way you could know and it could go either way. At a macro level, the oil industry (and pricing) is pretty predictable.

There is no way this bet could have gone 'the other way'. Literally impossible unless COVID killed 20% or more of the worlds population. I'm not talking SU specifically, just general energy.

 

[zinfit]

It wasn't speculation lol.

This post shows you haven't learned as much as you think and you are too risk averse, especially given your age.

Retail REITs were also a bargain in 2020 due to COVID. Are you saying that was speculative? Because it wasn't.

what is the speculation? The stocks I have are in the 5 or 6 PE ratio range. Most have very little debt and some will soon have no debt. They are trading at 2.5 or 3 cash flow. In the past peak stock prices were at 8 x cash flow. Cash flow is around 25 or 30 %. What will they do with this cash? two things share buyback and pay cash to the shareholders. I have a US energy stock that is into buybacks and dividends payments. They went from 3% to 9% plus. I am expecting another bump up on the dividends on the next quarterly report and subsequent reports. They are justing starting on that process. These companies were very profitable at 70 or 80 dollars. WTI is at 121 dollars today. NG is close to $9 and a year back it was selling at $9. When winter comes we can see prices much higher for NG. We are in a clear demand/supply imbalance and I see no turnaround in that situation for the next year. I guess demand destruction might bring oil down to 80 or 90 dollars but that will still leave these companies with a pile of cash. ESG are keeping some investors out of the market but that will be good news for the people not restricted by these guidelines. I can see Larry's investment growing at a significant level over the next 6 -9 months. Buffet has been putting a lot of his cash into energy stocks. Do you consider him a speculator or an investor?

 

[james4beach]

It was almost predictable. James, you said at the time that there's no way you could know and it could go either way. At a macro level, the oil industry (and pricing) is pretty predictable.

lol, oh my mistake then, I didn't realize the oil industry is pretty predictable!

Then why aren't active fund managers in Canada able to beat the index? If this kind of thing really was so obvious and predictable, active managers (including hedge funds and mutual fund managers) would reliably beat the index.

And they don't. This proves that someone making active bets (like thinking energy is entering a period of strength) cannot reliably and steadily make successful calls of this nature over the long term.

Markets have more uncertainty than you think @nobleea and @KaeJS . You are using hindsight knowledge to say something was [nearly] obvious -- but it wasn't. There is always uncertainty about how something plays out. When you guess at sectors over the years (like energy strength) you will win some and lose some. Over time, it's unlikely you will come out ahead doing this kind of thing.

I think it's kind of fun to bet on sectors but I only do it with a small amount of money because it's very unlikely to "win" at this game long term.

 

[londoncalling]

It's almost a given that oil was oversold and that at some point a catalyst would come along. what was unknown was when it would happen, what the catalyst would be, how high and how fast it would rise on the upswing. Commodities are cyclical. Anybody who has seen a couple cycles can recognize a general pattern. One cannot time the top and bottom exactly but can still manage to make some profits as it ebbs and flows.

 

[larry81]

Came across the following article this morning:

Is It Too Late To Buy Oil Stocks?

Is It Too Late To Buy Oil Stocks? Submitted by Kailash Concepts We get asked this question. A lot. Investors, scorched by multiple expansion...

www.nxtmine.com

Might be confirmation bias but IMHO well worth the read

 

[nobleea]

lol, oh my mistake then, I didn't realize the oil industry is pretty predictable!

Then why aren't active fund managers in Canada able to beat the index? If this kind of thing really was so obvious and predictable, active managers (including hedge funds and mutual fund managers) would reliably beat the index.

No they wouldn't. It's cyclical. One can tell when the conditions are right for the price to go up. When to get on and off are at their discretion. Half of your posts seem to be written for your own consumption to confirm your rigid AA plan is the right one, even when certain sectors shoot up. Long term it certainly is the right one. But that's not to say that there aren't opporunities to supercharge as one goes along.

The oil sector is definitely 'pretty predictable' for those of us who have worked in the industry for more than 10 or 15 years.

 

[zinfit]

Came across the following article this morning:

Is It Too Late To Buy Oil Stocks?

Is It Too Late To Buy Oil Stocks? Submitted by Kailash Concepts We get asked this question. A lot. Investors, scorched by multiple expansion...

www.nxtmine.com

Might be confirmation bias but IMHO well worth the read

Thanks for the article. People figure NG and Oil are at record price levels and that is not true .NG was as high as $ 14 and Oil was at $150 back around 2006. I figure the demand /supply situation is much tighter now and back then the companies were using their profits to expand production. Anyways these stocks are still very profitable at 70 or 80 dollar oil. Back in 2006 the Canadian dollar was close to par with the US dollar. Today they are producing oil with a .80 cent dollar and selling it for $100 US. What could bugger things up? Trudeau comes out with a windfall profit tax. Let him try that. If he does the east can say good bye to Alberta and SK.

 

[larry81]

It is not clear to me if this is the MER of the ETF or advisory fees, nor if that is cumulative from April 2020 or not. It is in line with low cost passive investing.

This is simply the 0.61% MER calculated on the total value of the investment. This is by far my most expensive position !!!