Let's Talk Stocks

larry · Post by **larry** » Thu Dec 08, 2011 10:43 pm

Looking to establish a larger energy position in my freedom fund.
Currently, I hold 100 shares of ACI (Arch Coal).
I'd like to set some limit orders for the energy sector.
I'm trying to buy stocks with 3 to 4 % divy.
Thoughts / Ideas for adding oil / natural gas?
My Ideas:
STO

BP

CarNut · Post by **CarNut** » Thu Dec 08, 2011 10:59 pm

Is this because you think you are under exposed to energy stocks, that they are poised for the most gains, or something else?

larry · Post by **larry** » Thu Dec 08, 2011 11:05 pm

Car Nut,
I'm underweight energy in general. I think long term, there will be gains, of course there will also be lots of volatility. I'm building a "freedom fund" that will generate income for my ERE. That's one reason I look for the decent divy of 3 to 4 percent, plus a history of dividend growth is good also.

George the original one · Thu Dec 08, 2011 11:12 pm

If you want oil money, then check into the resource trusts (BPT, MVO, CRT, etc.). Hold them in your IRA or Roth to cut down on paperwork and sell if you think there's an imminent supply glut. Don't hold for more than 4-5 years unless you're paying close attention to their depletion.
I'm inclined to stay away from the corporate dinosaurs in the realm of oil production. Every time I've researched them, I see that it's a risky business. Much prefer the MLPs in this sector as you get a better, more secure income stream (though I think most are overpriced right now).

DividendGuy · Post by **DividendGuy** » Fri Dec 09, 2011 2:13 am

You can see my entire Freedom Fund here:
http://www.dividendmantra.com/p/portfolio.html
I made some changes to it today and bought a couple things, and will update soon.
BTW, I've been officially calling it my Freedom Fund for about a year

.
Best wishes!

chilly · Post by **chilly** » Sat Dec 10, 2011 1:12 am

@DividendGuy... let's hope the EU get's their act together so the market will stop abusing poor TEF! Down to 5:1 P/E and almost 12% dividend. Sounds like they should be able to keep paying out, but it would be nice to see some stock price growth, as I've taken a little beating on it lately.
I also have some BP. I think they are relatively undervalued and paying around 4%. Oil's a little high and maybe risky with the current economy... but I plan to hold it long term with the hopes they'll come back out of the 2010 hole and continue to pay out. Sooner or later oil will certainly come back if there's any short term issues.

DividendGuy · Post by **DividendGuy** » Sat Dec 10, 2011 2:17 am

@chilly,
I sold my TEF very recently. And, it wasn't because of the share price destruction, as I lost money on that. It was simply because I don't agree with some of the company's fundamentals, namely: debt. They have a TON of debt, and it's really just very unattractive as an investment standpoint. I think the dividend is quickly going to become unsustainable, although even if it's cut in half or so it's still a huge payout. I think the dividend policy is just too aggressive with the debt load currently.
It worked out ok, as I didn't lose a lot of money when you factor in the dividends I received. Also, I had over $3k in short-term capital gains this year, so my ~$600 loss on TEF saves me a little on taxes. All in all, I learned a little lesson on chasing yield.
I chased yield with TEF and disregarded the debt. I really love some of their Latin American and Brazilian operations, but in the end I think the asset sales are going to hurt long-term growth as anything underperforming is unattractive in this environment.
I prefer VOD and T in the telecom space currently.
I used the funds from TEF as well as some fresh capital and put about $5k to work into three different names. I'll be updating shortly.
Best of luck on TEF. I think if you're looking for yield on Euro telecoms, FTE might be the better play. Change the three letters around a bit and you get a totally different company.
I'm bullish on energy long-term and it makes up over 20% of my portfolio, spread between XOM, CVX, COP, and TOT.

mikenotspam · Post by **mikenotspam** » Sat Dec 10, 2011 4:30 am

DividendGuy and Larry,
In place of Freedom Fund, I refer to it as the Banana Stand.

chilly · Post by **chilly** » Sat Dec 10, 2011 4:58 am

I hear there's money in the banana stand.

larry · Post by **larry** » Sat Dec 10, 2011 12:28 pm

I always liked what Jacob said in his interview on survival podcast:
"F*** You Money"
Yeah, oil has had a nice run up, but I sold some of my more profitable long term holdings and now I've got the cash to set some limit orders and let the stocks come to me. It may take 2 weeks or 2 years. Who knows. I do know that we as a nation and as a world will not stop using oil anytime soon. I just have to buy at the right price for the long term. I know that overpaying will kill my returns for the next decade.
I've looked at BP, but still not sure what kind of future liabilities they may face from the gulf spill.
COP is fixing to split, which may be good or bad.
TOT has a nice yield, but theres foreign withholding tax, plus France is right smack in the middle of this Euro zone mess, and I think there may be more pain to come.
MLP's sound good, especially the yield, but they carry a lot of debt and that may sting when interest rates eventually rise.
I guess CVX is okay if you get in at the right price.
Thoughts?

mikenotspam · Post by **mikenotspam** » Sat Dec 10, 2011 8:22 pm

Larry, if you're planning on buying anyway at a given price, have you considered selling the puts at that strike? Perhaps each month? Of course, it would have to be a real move of the stock on option expiration, you wouldn't get filled if it's just a "flash crash" or a couple days down there.

larry · Post by **larry** » Sat Dec 10, 2011 11:54 pm

I've read alot about options, but never traded them. Plus, Most everything I have is in self directed brokerage account inside my 401k / 457b with no options trading privileges.
I could trade them within my roth / taxable brokerage once qualified.
I'll look into it, thanks for the info.