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General Investing and Economics Discussion - No Politics
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<blockquote data-quote="Techster" data-source="post: 711524" data-attributes="member: 360"><p>Personally, I think there's money to be had in the oil industry if you know what you're doing. I don't invest in anything I'm not familiar with, so it's not in play for me.</p><p></p><p>Here are my thoughts on Oil:</p><p></p><p>1. It's a "sacred cow" industry. Along with industries like banking/finance, guns, agriculture, tobacco...and probably a few others. That is, there are certain industries that are very friendly to the government in terms of lobbying. This is NOT a political statement, so I hope no one takes it there, but Oil and the Republican party have always been "good friends". The government will not let the "big players" in this industry fail. Trump has already tweeted financial support for the Oil Industry so you know aid is coming.</p><p></p><p>2. This goes along with point 1, this industry is too big to fail, therefore the government will backstop it. You essentially have a built in government stop loss. You just have to figure out the sweet spot to pull the trigger. Go back to the financial crises in 2008, the government essentially back stopped large banks. If you invest, keep in mind the American based companies (Chevron, Exxon-Mobil), which companies are most likely to get the aid?</p><p></p><p>3. Despite low demand for Oil, at some point the world will need to get back to normal. When that happens, more people will be on the roads. Outside of that, our supply chain (trucking, shipping) depend on oil and gas for transport. Despite the rise in electric vehicles, EVs still only represent less than 2% (being generous) of the total US cars on the road. There is no way Oil will collapse to zero forever because it would cripple our economy. In some shape or form, every sector of our economy depends on Oil.</p><p></p><p>Obviously the trick, just like any investment, is at what point does it hit bottom?</p></blockquote><p></p>
[QUOTE="Techster, post: 711524, member: 360"] Personally, I think there's money to be had in the oil industry if you know what you're doing. I don't invest in anything I'm not familiar with, so it's not in play for me. Here are my thoughts on Oil: 1. It's a "sacred cow" industry. Along with industries like banking/finance, guns, agriculture, tobacco...and probably a few others. That is, there are certain industries that are very friendly to the government in terms of lobbying. This is NOT a political statement, so I hope no one takes it there, but Oil and the Republican party have always been "good friends". The government will not let the "big players" in this industry fail. Trump has already tweeted financial support for the Oil Industry so you know aid is coming. 2. This goes along with point 1, this industry is too big to fail, therefore the government will backstop it. You essentially have a built in government stop loss. You just have to figure out the sweet spot to pull the trigger. Go back to the financial crises in 2008, the government essentially back stopped large banks. If you invest, keep in mind the American based companies (Chevron, Exxon-Mobil), which companies are most likely to get the aid? 3. Despite low demand for Oil, at some point the world will need to get back to normal. When that happens, more people will be on the roads. Outside of that, our supply chain (trucking, shipping) depend on oil and gas for transport. Despite the rise in electric vehicles, EVs still only represent less than 2% (being generous) of the total US cars on the road. There is no way Oil will collapse to zero forever because it would cripple our economy. In some shape or form, every sector of our economy depends on Oil. Obviously the trick, just like any investment, is at what point does it hit bottom? [/QUOTE]
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