(I have heard on the grapevine that Google may be about to offer a “GPTChat+more” service for companies some time in the coming weeks. Not that many companies have the machines, datasets and staff to be able to do it.)
If you can’t beat em, join em. Would be a smart move for both.
If you truly believe the bear market will continue selling short or selling options must be the right approach. At least for the pros.
I jumped in a bit earlier than you at an average of $92.5/share for Google and $264 for BRK.B. I am a vanilla investor that doesn’t do anything fancier than buying or selling, and have a very long term view of these investments. My expectation was not that they might not be cheaper at some point, but that they were likely to be more expensive when I go to sell them, and I didn’t want to miss the opportunity by trying to predict the bottom. Still very cash heavy and looking for bargains.
IP
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If you truly believe the bear market will continue selling short or selling options must be the right approach. At least for the pros.
I do truly believe, but
a) the interesting thing about the market is that it doesn’t give a damn about my beliefs
b) rarely, hard as it seems to believe, I have been known to be wrong
c) events can happen, unforeseeable by everyone today, which might make my beliefs irrelevant - covid being a recent example - china’s sudden pivot being another - ukraine being a third - a warm european winter being a fourth
d) cash is a perfectly valid position to hold, it isn’t necessary to short something or take options positions just because you think something will go down.
For example, I think bitcoin will go down. Am I short? Nope. Do I have options over bitcoin? Nope. Staying the heck away is always a valid plan to deal with an overvalued or crazy market or one you simply don’t want to be a part of.
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Options that expire can be a source of income while you hold the stock and wait for recovery. So long as prices continue to fall.
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I keep saying this over and over and over again. The people you are selling those options to are rational and are buying something of value from you. They aren’t giving you free money. It is essentially a transfer of risk in return for the option premium.
Mark [trading options since 1986. Burned hard in '87 crash while being long NYA options.]
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Options that expire can be a source of income while you hold the stock and wait for recovery. So long as prices continue to fall.
There are many countries in the world where regular or short-term use of options can significantly alter your tax situation, and people often don’t find out about this till after the fact as the determination is made on an ad hoc basis by tax authorities.
It’s extremely common in Europe and for example, also in New Zealand. The consequences can be brutal; all of your investing gains may be taxed as income, with tax rates of up to 50%.
In countries like NZ and others where there is no capital gains tax, that is a horrifying outcome to risk.
I appreciate you are attempting to help, and I’m grateful for that.
I assure you though, I’m quite comfortable with my strategy at present, and extremely familiar with how options may be used 
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In countries like NZ and others where there is no capital gains tax
You wish! As you mention NZ several times I suppose you know about NZ’s FIF regime which is NZ’s substitute for that.
P/E too high? How about a P/E of 8.63? ExxonMobil
Energy stocks are the place to stay invested
Worried that crude oil prices are destined to tank?
Coal? Prices up 200%
Consol Energy P/E 6.59 NYSE CEIX
Beat Earnings Est. two Qs in a row by 40%
Consol Energy is ramping up exports to Germany
Follow the Money
You wish! As you mention NZ several times I suppose you know about NZ’s FIF regime which is NZ’s substitute for that.
Thank you, I’m familiar, but I believe it’s not an subsitute, it’s a minimum, and actual ‘random capital gains tax’ on top is a real risk there.
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said2, my original reply was too brusque, sorry. I’ve edited it to be more polite.
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Valuing cylicals on 1-year PER at moments of cyclical strength is seldom a good idea.
Are you kidding? It was not brusque at all!
I am all for being polite on the Inet as it’s soooo easy to be aggressive/attacking/insulting without knowing the other and without having to look into his eyes (similar to road rage, distanced by the metal/armour around one).
I know that just too well as I was often guilty of that on the old board, did regret it, and repeated it not much later when felt provoced.
But believe me: You were not even brusque!!!
P.S.: And overdoing politeness can lead to robbing the other one of the chance to see what you really want to tell him.
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I’m not.
XOM P/E average P/E 8
(leaving out the pandemic oversupply)
Go look EPS for the past ten years. The Current EPS is four times currently and the P/E is still at 8. There’s still upside to this stock. Russian Oil isn’t coming back anytime soon in the next year or two, Saudi Oil production is at peak, and that can not last for long.
If you don’t trust Oil, look at Coal
Coal skyrocketed to a high of about $400 a ton following the invasion. Germany’s demand for coal will continue, there’s no way that Germany will go back to dependance on Russian Oil and Gas. It will take a half a decade for Germany to get off LNG and Oil dependency and coal will be their only bridge to get there.
Consol Energy CEIX has gone from an historic EPS of .75 to 4.50. with a P/E 6.7
Consol is positioned to get exposure to export coal. Roughly half of the company’s coal production is going to export customers, and they can’t even ramp up production fast enough to meet demand in Germany.
Natural Gas demand in Europe
Cheniere Energy is well positioned as a leading supplier to Europe for LNG despite reporting an unexpected loss in EPS (reporting a net loss of $9.54 per share while sales soared 175% to $8.8 billion in the third quarter due to settlements of $2bil and $6bil)
Russia has cut LNG supplies to Europe by 2/3s which makes Cheniere Energy imports a crucial component of the EU’s emergency energy plans.
US Liquefied Natural Gas Exports Price is at a current level of 16.72 , up from 15.45 last month and up from 8.34 one year ago.
Follow the money
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I’m not exactly sure why someone would think ‘price in the past’ would be meaningful as a metric of present value, or why you think it refutes my comment about peak earnings.
I mean, imagine a stock, that earns $1/year, pays it all out as a dividend. It’s on a PER of 8 for a decade. The price is $8 constantly through the decade.
Suddenly, it has a great year. It makes $100/year. The price jumps to $800. The PER is still 8.
Over this period it has a P/E of 8 constantly.
But is it worth paying $800 for, or are you paying for ‘peak of cycle earnings’ if you pay that? What will happen if the earnings revert back to trend ($1)?
IIRC the largest part of the profits of oil companies of the last 8 years were made in the last 18 months or so, hence the analogy.
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True, Exxon may be priced out to get in so late. Downside, earnings will probably stay near Q4 for most of 23. As I said, Saudi Oil Production will not continue at peak production and Russian Oil reduced exports will continue, Oil will average $90bbl throughout 23. Who knows?
The point is, Exxon is ramping up oil export and production.
I should point out that I’ve been consistently warned on this board since last year that Exxon is a risky investment.
You’re investing in a company (Intel) that’s just announced an assortment of cost-reduction efforts aimed at $3 billion in cost savings in 2023, growing to $8 billion-$10 billion annualized by the end of 2025; which mean massive layoffs. Exxon can’t hire enough people.
Looking ahead, Intel is cheap and maybe where you want to be in four or five years. That’s a long time to wait for a return. I still would argue that in ’23 Energy markets are going to see a big increase in revenue.
Furthermore, companies like LNG and CEIX are positioned to increase earnings with the disruptions of the Energy Markets. It certainly has been the place to be since the Russian invasion. While, Exxon and CEIX have increased EPS in the last year and beat expectations significantly, GOOGL has missed its earnings est consistency in the past year.
Going forward, it’s a question where you can stay invested in the market in the next year, which will not be a good year for stocks. So the question comes back to “peak earnings.” I don’t think that ’22 will see the end of peak earnings in the Energy Market. Intel is already telling you that earnings will be waning going into and through ’23. Your analogy portents that Oil will go back to $50bbl on average for ’23. I’m betting it will be $90bbl.
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I bought oil in 2020 when it looked like what Intel does right now.
It went alright.
I still would argue that in ’23 Energy markets are going to see a big increase in revenue.
Depends. Putin could have a heart attack tomorrow. A new Russian premier could cancel the war, announce reparations on condition the west renews purchasing oil/gas from Russia. That’s not impossible. It’s very hard to know what the world will look like in a year. I didn’t guess it would look like this, back in 2021.
If ‘pivoting on one man’ like that seems a bit much to imagine, all it might have taken for a much darker 2022 is if Zelensky had run instead of declaring he needed ‘ammo, not a ride’. Or if the teams of Russians looking for him at the start of the war, had found him. Perhaps Russia would be at the Polish border then, and torture camps would be all over Ukraine extinguishing hope.
Intel’s the same, it’s in the process of pivoting on two men; Biden’s support for a renewal of American factories and Gelsinger’s renewal of Intel’s structure, a move to foundries.
Hard to predict these things.
don’t think that ’22 will see the end of peak earnings in the Energy Market.
Might be, might not be. But busts tend to follow booms.
Your analogy portents that Oil will go back to $50bbl on average for ’23.
What the heck? $50 isnt’ the inflation adjusted typical earnings of an oil company the last ten years. Don’t put ridiculous strawman words in my mouth, please.
Don’t know if I’m wayyyy too early on Intel or not. Hard to know. It’s certainly quite a bit down from where it was in… the year 2000.
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Don’t know if there are numerous qualified people around to hire. Industry was hit hard in the '90’s, causing many early in their career to move to another industry, and again during Covid. We’ve been retired for 4 years now, so not sure if difficulty in hiring people who know what they are doing is still an issue. Heck, it’s hard enough for any company to hire on decent people right now. Someone we know recently got hired on to a petroleum based chemicals company, getting a 401 K with a 10% match. That doesn’t happen if it’s easy to attract employees.
Maybe it’s Exxon doing so well they need more employees, maybe it’s more about simply not being able to get employees, like just about everyone else.
IP
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Who in their 20s would commit to e.g. oil tech degree with the way the environment and future job situation are likely to look.
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