Author Archives: buckley

What is the difference between $65 Oil and $45 Oil?

For Exxon Mobil [NYSE: XOM] , the difference between $65 Oil in March 2018 and $45 Oil in January 2015 is a little less than $15 per share decrease in stock price.

XOM closed at $87.42 on January 31, 2015, and closed at $72.83 on March 28, 2018.

What gives with Exxon Mobil?

As reported elsewhere, other oil & gas companies’ share prices have gone up, gone down, or stayed flat:

Concho Resources – UP
Pioneer Natural Resources – UP
Marathon Oil – DOWN
EOG Resources – UP
Diamondback Energy – UP, Way UP! It is a FANG stock you know…
BP – FLAT

Yet, in the summer of 2014, Exxon Mobil had followed increasing oil prices to $106 Oil by printing a little over $103 per share price.

Today, perhaps, the disconnect in oil pricing and XOM share price since the summer of 2014 speaks to the market’s disinterest in Exxon Mobil as a vibrant oil company and the market’s disinterest in oil as a vibrant source of energy.

One day, perhaps, the market will become disinterested in solar panels mounted on the rooftops of electric cars.

Anticipating Average Opinion

“We have reached the third degree where we devote our intelligence to anticipating what average opinion expects the average opinion to be.” – John Maynard Keynes, General Theory of Employment, Interest, and Money, 1936

The business entrepreneur who thinks that their business opinion is fresh, new, and desirable is one amongst many entrepreneurs who hold the same optimistic opinion.

As one amongst many, the entrepreneur is likely average in several measurements as compared to their peers.

Thus, their business opinion is likely average and the implementation of their business opinion will likely have average outcomes.

In order for the business entrepreneur to have an above average probability to have better than average outcomes, then the business entrepreneur should embrace and learn to overcome multiple trials and errors (small errors as Taleb recommends).

These multiple trials and errors filter out the clear business signals from the noise of average opinion.

Instead of anticipating average opinion, the business entrepreneur should pursue the certainty and the clarity that comes from trial and error as long as this same trial and error does not harm the business entrepreneur and other stakeholders yet causes them to grow and flourish.

“Stay on Target!” Real estate and US nonfarm employment

If you remember the movie Star Wars from 1977, then you may remember that the line “Stay on Target!” is directive, encouraging, and, perhaps, cautionary.

Directive to real estate

US real estate which is a “target” for investment is dependent on jobs growth trajectory which leads to household creation.

Total US nonfarm employment peaked at 138,365,000 persons in January 2008.

Total US nonfarm employment then declined to 129,700,000 persons in January 2010.

Total US nonfarm employment then climbed back to 138,497,000 in May 2014.

As of December 2014, total US nonfarm employment is below “on target” at 140,347,000 persons.

Encouraging to real estate

The US may be back “on target” (i.e. total nonfarm employment approximately 143,000,000 employed persons) by January 2016 albeit deflected by six years journey from where the US would have been in January 2010 had it not collided with the Death Star recession,

Cautionary to real estate

If the Federal Reserve raises interest rates in 2015 to “crush the rebellion with one swift stroke,” then the US may again be re-deflected from being “on target.”

May the Force be with you.

$40s Oil DeJa Vu All Over Again?

In the most apropos words from Yoggi Berra,  “DeJa Vu All Over Again,” we observe oil trading in the $40s per barrel in January 2015 as if it were January 2009.

Which may lead us to say that oil will bottom soon and start to climb back towards $80 just as it did by October 2009.

Yes, and Yoggi Berra also quipped, “Its tough to make predictions, especially about the future.”