Okay bros - Oil Prices & Energy Stocks - time to buy?

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Oil prices are at 2005 levels excluding the 2009 dip, and energy stocks are similarly depressed. See, e.g. VGELX.

So I'm thinking its time to buy, since energy/oil prices can't go too much lower without pretty serious international repercussions, as much as I do like $1.89 gas.

Anybody else think this has serious upside potential in 2015?
 
Blazin

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I was thinking same thing this morning. I like the look of some of the energy stocks but taking individual name risk seems dangerous so I'm going to go with VGELX. My debate now is to ease into it over a couple weeks in case we aren't done yet or go ahead and dive in. WTI under pressure again today. I think it's necessary to go into it realizing pay off may not be in 2015, too many unknowns with Europe and China economies for 2015 we may see a year that is relatively flat with the real pay off coming a little further out. Some energy companies are going to go belly up, the small shale/bakken plays that are over leveraged. Despite the run it's had bio may still have more upside in 2015
 
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The Ancient_sl

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Yeah, it's certainly not a bad time to buy if you are a disciplined investor. Which stocks are you looking at? I wouldn't recommend something like DIG.
 
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The Ancient_sl said:
Yeah, it's certainly not a bad time to buy if you are a disciplined investor. Which stocks are you looking at? I wouldn't recommend something like DIG.
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I was definitely looking at VGELX as opposed to buying individual stocks.

Right now I'm primarily in VTSAX and VGHAX; this would be new investment not moving those around. Pretty happy with how those did the last few years, not ready to sell them yet. Although I'm not sure how much more VTSAX has this year with the markets already at record highs.
 
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Rais

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I think it's going to get worse during 2015. OPEC wants to kill the shale oil production in America and the only way they can do that is flood the market with oil, with the process making it cheaper than shale production. There is too much oil in America and those taking advantage of it won't die out quickly. Some companies will, but I would say they hang on and ride it out. Maybe at the end of '15 a huge upswing if someone hesitates during this game of chicken.
 
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Healthcare fund has been a monster last few years just be careful the vanguard fund is no longer as strong of a position in GILD and CELG and they are the real income generators right now. Just watch in 2015 that the fund doesn't start under performing the IBB by any significant margin or maybe take some profits. The other down trodden fund is the precious metals and mining. I would normally just say go after the whole market but sitting at highs and historical fair P/E that isn't too exciting, but both Energy and mining seem to be set up for some gain next few years. Their Euro index is another consideration for overweight.
 
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The Ancient_sl

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Rais_sl said:
I think it's going to get worse during 2015. OPEC wants to kill the shale oil production in America and the only way they can do that is flood the market with oil, with the process making it cheaper than shale production. There is too much oil in America and those taking advantage of it won't die out quickly. Some companies will, but I would say they hang on and ride it out. Maybe at the end of '15 a huge upswing if someone hesitates during this game of chicken.
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Yeah, well as a rule I wouldn't invest in any equity you can't afford to hold for 2 years.
 
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Rais_sl said:
I think it's going to get worse during 2015. OPEC wants to kill the shale oil production in America and the only way they can do that is flood the market with oil, with the process making it cheaper than shale production. There is too much oil in America and those taking advantage of it won't die out quickly. Some companies will, but I would say they hang on and ride it out. Maybe at the end of '15 a huge upswing if someone hesitates during this game of chicken.
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Definitely could get ugly, when you read how leveraged some of these companies are there is definitely going to be blood in the street. Many were protected for $80 oil not $55. The way financing often works for the producers is that the banks extend them lines of credit based on the value of proven reserves. Periodically these values are recalculated and companies will be faced with what is in essence a massive margin call as the value of their proven reserves has gone to shit, and they lack the cash to meet that call and will have no choice but to dump assets and reduce cap ex. The market will throw out the good with the bad though and I don't think the big boys are under any LT threat (XOM, CVX).
 
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The Ancient_sl said:
I like a stock like VLO which wins on Shale or crude right now.
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MPC is another good one. I have been swing trading (Which is not investing) Marathon in 2014 but I do think it is a good solid play for the long term. VLO and MPC sold off together at the end of the summer but MPC has been much strong since and I think is in a better strategic position. VLO at 50 is a better value play than MPC at 90+ though, but if MPC drops her panties and shows you the high 70s I think it's a very safe bet to load up on.
 
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The other one I'm looking at is VITAX. I might split my investment right now between VITAX and VGELX; maybe pull some of my VTSAX out and get it in VITAX. I'm definitely a long-term investor. The mining and precious metals fund scares me because that shit has just been tailing off since like 2010, thats not some political-calamity-driven drop like I see oil being right now. Thats just a long term devaluing. Don't really know what to make of that.

Basically my picks for 2015 are:
VGHAX (35%)
VITAX (20%)
VGELX (maybe?) (25%)
And VTSAX (20%) to stay broad.

Anybody think thats a stupid mix?
 
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The Ancient_sl

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Well I'm not quite sure why you are picking out specific industry funds so much, you'd probably be better served just DCA'ing a broad index fund if you are going to do it like that. I guess if you wanna weigh heavier in Healthcare, Energy and Tech, there are certainly dumber things you could do. I'm not going to bother looking into the breadth of each of those indexes and seeing where on the spectrum you lie so out of hand I'll just say, sure, mix looks good.
 
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The Ancient_sl said:
Well I'm not quite sure why you are picking out specific industry funds so much, you'd probably be better served just DCA'ing a broad index fund if you are going to do it like that. I guess if you wanna weigh heavier in Healthcare, Energy and Tech, there are certainly dumber things you could do. I'm not going to bother looking into the breadth of each of those indexes and seeing where on the spectrum you lie so out of hand I'll just say, sure, mix looks good.
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Well, my thought was that the broad index is going to include a lot of industries that aren't particularly successful right now; getting the sector specific funds that I think have room to grow means that they can beat the market-wide index. Since I don't know enough about particular companies to pick particular issues, I'd rather do it more broadly by picking sector ETF's with like .1 - .2% expense ratios.

I could probably plow all my account into VTSAX, leave it for 5 years, and be happy, but just trying to be a little more active without being too active for my knowledge level.
 
Khane

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Not to nitpick but aren't those mutual funds, not ETFs? Not that there is a huge difference, but there are differences.
 
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Gadrel_sl

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Exploration companies have only scratched the surface of supply in the U.S. The Tuscaloosa Marine shale formation, for example, has barely been explored and looks promising. Costs are also dropping faster than oil prices at an annualized rate. I personally think that there is more downside pressure over the next 2-3 years than upside. I base this on the fact that no OPEC country can cut supply because they're already running budget deficits, and US explorers have already hedged and locked in the next 3 years of production.

I fully expect $30-40 barrels to be the norm in 2 years.
 
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Khane_sl said:
Not to nitpick but aren't those mutual funds, not ETFs? Not that there is a huge difference, but there are differences.
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Yea. I don't really know the difference so I've kinda used the terms interchangeably.
 
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Gadrel_sl said:
Exploration companies have only scratched the surface of supply in the U.S. The Tuscaloosa Marine shale formation, for example, has barely been explored and looks promising. Costs are also dropping faster than oil prices at an annualized rate. I base this on the fact that no OPEC country can cut supply because they're already running budget deficits, and US explorers have already hedged and locked in the next 3 years of production.
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Do you have any sources for this
 
Khane

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I was more asking where you got your specific information. Telling me to Google it will hit me with a ton of differing opinion. I want to know what you've specifically read that's lead you to believe that. Guess you can't backup your opinion?
 
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