Oil Was The Right Investment
Two years ago I wrote an article for Poletical called, "It's a Good Time to Invest In Oil". I made some bold predictions and expressed skepticism for “green energy”. So how did my predictions pan out?
I recommended five stocks.
Conoco-Phillips: Conoco-Phillips was $41.09 a share in August of 2016. Today it is worth $70.35 a share. This is an increase of about 70% in two years along with another 4% in dividends.
Shell: Shell was $55.04 a share in August of 2016. Today it is worth $68.90 a share. This is an increase of about 24% over two years along with another 11% in dividends.
Chevron: Chevron was $105.39 a share in August of 2016. Today it is worth $121.53 a share. This is an increase of about 13% over two years along with another 7% in dividends.
British Petroleum: British Petroleum was $35.80 a share in August of 2016. Today it is worth $44.25 a share. This is an increase of about 26% over two years along with another 10% in dividends.
Exxon-Mobil: Exxon-Mobil was $93.85 a share in August of 2016. Today it is worth $82.22 a share. This is a decrease of about 11% over two years, along with a 3.20% annual yield it’s more like an 8% decline.
If you had bought each of these stocks in equal quantities then you would have made roughly 31% in two years. I’m no financial advisor, but 31% returns over two years isn’t a bad return, right?
There is much gossip and rumour afoot in the oil and gas industry. Chasing the news of the day is a pointless task and what I believe in doing is looking at things for the long term. With 75 million more people being added to the world every year and economies around the world developing at a rapid pace, oil and gas are going to be in high demand for the rest of our lives. Current oil consumption amounts to roughly 100 million barrels a day. Production can barely keep pace with demand. Even optimistic estimates by green-wing prognosticators think oil demand will max out by 2040. That’s a lot of years to profit from energy needs.
Championing the oil and gas industry is the exclusive territory of conservative ideologues like myself. I don’t have any apologies for loving the civilization-building chemistry of our petrochemical infrastructure. Investing in oil and gas (smartly) is a good way to both champion and exploit conservative common-sense. Here are some other conservative common-sense stocks to take advantage of…
Costco: Costco stock is currently $219 a share. A year and a half ago I bought into this stock when it was $160 a share. That’s an increase of 37% (plus a 1% dividend). Why do I like Costco?
Costco exploits the big-box store bargain-capitalism that middle-class people love. The advantage with Costco is the counter-intuitive membership fee. I could never understand why a store would want to limit sales with a barrier to shopping. Why not just drop the membership fee? For the longest time there was some lip service about how it was supposed to stop large scale businesses from taking advantage of the warehouse-style bulk prices...why that would be a problem I have no idea...
I was talking to a relative of mine about the membership fee and he said the reason they have a membership program is that it “keeps the ‘undesirables’ out”. I then realized that this is how Costco has branded itself. The membership requirement allows middle-class people a more exclusive identity as “smart shoppers taking advantage of value buying in a clean and decent store” as opposed to, “cheap shoppers, stretching their dollars buying absurd quantities of made-in-China junk in a warehouse”. Costco is Walmart for the Bed, Bath and Beyond class.
Costco is under attack from Amazon now mostly, but I don’t think Amazon and Costco are going to kill each other. They do their own thing quite nicely and would be well served to stay focused on doing what they do. In the meantime I believe Costco is worth buying. (I wouldn’t touch Amazon with a ten foot pole right now, but that’s just me)
McDonalds: McDonalds stock is currently $158.00 a share (with a 2.5% dividend). I bought a bunch of this stock when it was about $100 a few years ago and I plan to keep it for the long haul.
Because people are fat and getting fatter all the time. The advantage with McDonalds in the fast-food arena is that the brand is clean and wholesome and timeless. They are a dynamic company that is always working to make there service and products better. They ruthlessly innovate and compete harder than any company out there in the same quick-service market. Whether they’re stealing coffee customers away from Shit Horton’s or replacing workers with giant screens...McDonald’s is the epitome of hardcore capitalism, but it’s done with a warm and friendly branding that can’t be undone. And also...the obesity epidemic ensures endless customers.
CN or CP Rail: All that product heading to Costco and McDonalds needs to come from somewhere. Much of it will be shipped by train. Canada is so enormous and vacant that getting products moved on a mass scale makes trains the most effective way to do so.
On top of this we live in a country that is hostile towards oil pipelines, so we have to load oil onto trains instead. When combined with a commodity-exporting economy in other areas, such as agriculture, trains are destined to be a big business in Canada for the foreseeable future.
Investing in trains is basically a bet on Canada’s political incompetence and legislative/regulatory gridlock. What could be a safer investment than that?
Any of the big five Canadian banks: RBC, TD, CIBC, Scotiabank, and BMO are all good purchases.
Canada’s banks are heavily protected and regulated. They are too big to fail and they have no competition other than each other. Canadian banks are government protected colluders that work in tandem to control the market. Our banking sector is essentially a monopoly and as a result the stock performance of these banks is stellar.
I realize that this ideology is the exact opposite of what conservative-minded, free-market capitalism stands for. I’m simply suggesting you exploit the situation for your own benefit by recognizing reality and making it work for yourself. This is Canada and things aren’t going to change so you may as well make some money in the meantime.
Disney: The massive entertainment empire just keeps getting bigger.
Everything in Disney World is efficient, clean and designed to provide enjoyment. I was in Disney World a few years ago and I was standing on the monorail leaving the park. The train was packed with people from around the world and I remember thinking... I’ve got to get in on this.
I’ve always been a fan of the Walt Disney story. The guy was a visionary and embodied the romantic ideal of the American entrepreneur. He turned a drawing of a mouse into a billion dollar media empire. The Disney brand is the embodiment of the romantic capitalist dream. With the recent purchase of 20th Century Fox, the Disney story is going to become bigger than ever. Pixar, Marvel, Star Wars, Muppets, Theme Parks, ESPN... Disney is a global media entertainment monster and it’s not going away anytime soon.
10 years ago Disney stock was about $20 a share. Today it’s $112 a share. There’s even a 1.5% dividend on top of that. In ten years you could have doubled your money twice over...and then some! I don’t think it’s too late to get in.
“If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes.” ~ Warren Buffett
Using conservative ideology in order to invest is a good and practical habit to have. We know that conservative principles function in the real world and that’s why we embrace them. Leftists want the world to operate the way they wish it would... we accept the world operating the way we know it will anyway. It’s practical and realistic.
In terms of investing, don’t get sucked into fads and leftist fortune telling. Green energy is a long way away from arriving in a realistic fashion. We’ll be using copious amounts of oil and gas for the rest of our lives. Wind farms are garbage and solar panels aren’t much better. Other leftist things to avoid are marijuana stocks and cryptocurrencies like bitcoin. Beware becoming a doomsday gold bug as well. I did that for awhile and it got me nowhere.
I’m just a regular 40-year-old guy who’s learned about investing the hard way over the past twenty years. I think a conservative approach to stock investing is the way to go. Warren Buffett values are what work best. Buy and hold. Invest in good companies. Don’t overthink it. Make your own decisions.
Good luck and happy investing!