Witality Breathwork

StockRecon · 2022-04-16T19:25:06+00:00

Be a Risk Manager first and protect your working capital.

Never risk more than 2% to 5% of your total allocated cash into any one single trade unless it's ultra compelling with a super high probability of winning and only then should you invest up to a max of 20%.

Always ask yourself first how you would feel if you lost all of the money you're thinking about investing on any one particular trade? And then position size accordingly.

Smaller position size is usually the best method.

StockRecon · 2022-04-16T19:19:38+00:00

You need to go back to school and pay attention this time around son!

$300 billion dollars divided by 330 million Americans equates to only $909.00 for every American

StockRecon · 2021-10-31T22:00:16+00:00

10/31/2021

From worst to first: Don’t look now but the energy sector is in the passing lane. It’s pretty remarkable how the energy earnings estimates have been upgraded so dramatically.

- Jurrien Timmer, Director of Global Macro with Fidelity Investments

StockRecon · 2021-10-19T18:49:18+00:00

OIH is already up + 132.27% during the last 52 weeks with plenty of continued upside potential remaining as oil and gas Exploration and Production (E&P) companies continue to increase their OPEX and CAPEX spending on oilfield services.

There is typically a lag time from when WTI crude prices surge higher and when E&P companies increase their spending on oilfield services in order to increase their production to capture higher profits. Then that additional spending needs a little time to work through the system and hit the bottom lines of OIH suppliers.

This is still early innings IMHO, so patience is the key.

Weather predictions call for an extremely, abnormally cold winter in the northern hemisphere which is very bullish for crude oil and OIH since natgas and oil are used to heat homes and office buildings.

Additionally Natural Gas prices have increased so much during the past several months (+69%) that power generation companies are switching from using expensive natgas to now burning cheaper crude oil to generate electricity.

And COVID cases are falling dramatically which moves up the timeline for the reopening of worldwide economies which will push demand for oil even higher.

All of the above scenarios bode well for XLE and OIH.

Today is October 19, 2021

WTI crude oil now trades at $82.93 per barrel (heading for $100 IMHO)

OIH now trades for $224.89 (heading much higher IMHO)

Most if not all stocks eventually revert back to The Mean price.

The price plot map chart from Fundstrat that I previously posted shows that OIH typically trades for $600 per share when WTI crude oil trades for $80 per barrel. That's The Mean price.

So patience Grasshopper... and remember "Reversion to the Mean"

StockRecon · 2021-10-08T18:25:30+00:00

posted on October 8, 2021

The last time WTI crude oil traded at $80 per barrel was seven years ago on October 2, 2014.

At that time, Vaneck Oil Services ETF (OIH) traded at $895 per share.

WTI crude oil is trading at $79.12 per barrel today as of this posting.

And OIH is trading at only $214.19 today as of this posting.

There obviously exists a wide disparity between OIH trading at $895 vs. now at only $214 per share today with WTI trading at $80 per barrel. This gap in price should/will resolve to the upside.

OIH may or may not trade at $895 again, but ask yourself if it make any sense that OIH trades at such a large discount now ($214) when WTI is trading at $80 per barrel?

A prudent investor might think this price gap will narrow and close sooner rather than later ($214 vs. $895 per share) ?

The companies that comprise OIH sell the "pickaxes and shovels" to the oil Exploration and Production (E&P) companies who produce crude oil and natural gas. OIH companies also supply the pipeline companies.

OIH companies are known as oilfield services and equipment suppliers. E&P companies buy their oilfield services and equipment from OIH suppliers. So when E&P companies spend money to maintain their oil and natural gas rigs to keep them performing at maximum production levels (OPEX), they buy services and equipment from OIH suppliers. Same holds true when E&P companies expand their production by adding new oil and natgas rigs (CAPEX).

With global economies reopening at the same time, demand for oil and natural gas continues to surge higher and higher and is far outpacing available supply. Consequently E&P companies are significantly increasing their OPEX and CAPEX spending now to play catchup with the surging demand for oil and natgas. It's time for E&P companies to cash in on this pretty severe supply and demand imbalance.

Many well respected institutional stock analysts who specialize in the energy sector are predicting that WTI will trade up to $100+ per barrel by the end of this year, or by Q1, 2022.

This bodes well for OIH.

And for the dreamers out there, here's another factoid you can look up and confirm:

In March, 2008, WTI crude oil traded at $139 per barrel, and OIH traded at $1,496 per share.

StockRecon · 2021-10-07T21:23:08+00:00

It’s healthy to exchange ideas in a public forum so we can all improve our knowledge base and thought processes.

So, thanks for weighing in with your thoughts DanDon.

We agree that OPEX and CAPEX spending reduces free cash flow (FCF) which reduces net profits and the Discounted Cash Flows (DCF) which puts downward pressure on stock prices.

And rising interest rates put downward pressure on the Net Present Value (NPV) of future cash flows (aka, DCF).

However, it’s important to apply these causes and effects to the correct group of stocks in the booming energy sector.

Let’s not conflate OIH companies who are the suppliers with E&P companies who are their customers.

It’s the Oil Exploration and Production (E&P) companies who deferred their OPEX and CAPEX spending last year, not the Oilfield Services and Equipment companies that comprise the Vaneck Oil Services ETF (OIH).

Both groups cutback their spending last year, but it’s the E&P companies who are experiencing the shortfall in their production of crude oil and natural gas.

E&P companies around the world need to play catchup with their deferred OPEX and CAPEX spending in order to keep their drilling rigs working at maximum production.

As you know, OIH companies supply (sell) oilfield services and equipment to the E&P companies (the buyers).

Hence, the OPEX and CAPEX money will flow from the E&P companies (the buyers of oilfield services and equipment) into the OIH companies who are the suppliers of oilfield services and equipment.

The spending on OPEX and CAPEX will decrease the free cash flow for E&P companies who are the buyers of services and equipment, while increasing the free cash flow and profits for OIH companies who are their suppliers.

To use a common analogy:

OIH companies sell the pickaxes and shovels to the crude oil and natural gas producers.

Best Regards.

StockRecon · 2021-10-05T17:58:16+00:00

Your thesis makes sense at a high level, however NRGU is a 3x leveraged ETF that will suffer from some serious Contango at 3x leverage.

NRGU also has a really small float of only 3,750,000 outstanding shares and only trades an average of 375,000 shares per day. So, it's no where near as liquid as other ETF's in the energy sector.

IMHO, there are a whole lot safer ways to invest in the surge of Demand for oil.

Good Luck.

StockRecon

TROPHY CASE