Oil Stocks? I’ve Got No Energy For This & OTC Toyota-Thon
Friday Feedback: The “Sympathy For The Oil” Edition
Please allow me to introduce myself. I’m a commodity of wealth and taste. I’ve been around for a long, long years, stole many a man’s retirement.
I was around when Jimmy Carter had his moment of doubt and pain. Made damn sure that Iran closed its ports and sealed its fate…
Pleased to meet you, hope you guess my name.
Nice lyrics Mr. Great Stuff … but what’s puzzling me is the nature of your game.
Today, Great Ones, the nature of the game is Friday Feedback … as if you couldn’t tell from that header up there.
And I pretty much gave away today’s main topic as well … I’ve really gotta stop doing that.
Anywho, y’all know the drill by now. If you want your question featured in the weekly Great Stuff Reader Feedback issue, you need to write in: GreatStuffToday@BanyanHill.com. We take all kinds here.
While we won’t get to every one of your questions in Reader Feedback (do you realize how long these things would be if I did?), I can assure you that no question goes unread.
As you might’ve guessed, today we’re talking about oil. Black gold. Texas Tea. Can it still make you a millionaire like Ol’ Jed and his concrete ponds? Let’s find out:
Dear Mr. Greatness,
Yesterday you reported that Boeing sees the commercial jet fleet growing to nearly 50,000 planes by 2040. What is going to power these planes? Batteries?
I see the world oil demand increasing along the same lines as Boeing’s assessment of the commercial jet inventory. I may be sniffing gas fumes, but with the beating the fossil fuel stocks have taken due to climate change activism, perhaps it is time to jump in and get some “greed” energy . . . or should I keep “rolling along in my flatbed Ford hoping the Tesla slows down to take a look at me.” — Dale
Howdy, Dale. Thanks for writing in!
Man, you went right for the jugular on green energy, didn’t you? Airline travel. There isn’t a good answer for that one right now … well, an answer that people are willing to accept, that is.
Pssst … it’s still hydrogen … and that’s my one big beef with Boeing. But you talk about “hydrogen” and “flying” in the same sentence, and the people who say I shouldn’t remember old soap operas from the ‘80s chime in to tell me they remember the Hindenburg disaster of 1937.
Do I really have that many 80-year-old readers? Y’all doing okay? How are your hips?
But you didn’t come here for another tirade on hydrogen power, Dale. Your dig at battery-powered aircraft made that clear. And it’s a really good point (in favor of hydrogen), especially when you consider the following fun fact from Forbes:
I don’t know about you, but that’s funny. It’s jet plane batteries all the way down!
No, Dale, you came here to take it easy and talk about oil. And my advice would be to do just that: Take it easy. Don’t let the sound of oil bulls make you crazy.
You mentioned that you see “world oil demand increasing” just as Boeing increases its forecasted demand for jet inventory. That’s not a bad indicator for oil demand. However, practically every government on the planet that isn’t the U.S. is working against that demand.
Most of Europe has deadlines to kill off either combustion engines or gasoline. China has stated that it’s moving away from oil and fossil fuels on the same aggressive schedule.
But most of these resolutions focus on automobiles — not airplanes. And, as you noted Dale, nobody has a good solution for green airplanes yet. (Except Airbus…)
Here’s the crux of the problem: You’re going to see oil demand steadily fall in every market. Consumer products that use oil will be first as we move away from oil-based packaging and plastics. Cars will come second as they go electric.
This domino effect will continue until we hit military and airline operations. And the U.S. military has already defined climate change as a massive threat to national security. That change is already coming, and it will probably take place faster than the shift in the airline industry.
I’m rambling, but the point is that some industries will take longer to transition away from oil due to costs and technology. But it will happen.
Right now, you’re going to see oil demand jump due to the pandemic reopening. We’re still an oil-based global economy, after all. Once things start chugging along once more, we’ll probably see oil prices hit $100 per barrel again … but only briefly.
If you’re a speculative investor, betting on oil over the short term makes sense. It’s a good way to make some money over the next year or two. But if you really feel the need … the need for energy “greed,” I’d recommend looking at companies like BP (NYSE: BP) and Royal Dutch Shell (NYSE: RDS-A).
Both of these oil companies are … well … oil companies. In that regard, they give you exposure to the oil rally you’re calling for, Dale.
However, they’re also leading the industry’s transition toward greener energy solutions using biofuels and hydrogen power. This way, you get kind of a two-for-one investment. You bet on the oil rally while still getting exposure to the growing global alternative energy market.
Good luck, Dale. Thanks again for writing in!
For all you other energy fiends with your oil-transitioning dreams … check this out.
This surge in EV demand is also creating a surge in the materials critical to having these EVs come off the assembly line.
There’s only one company in the entire Western Hemisphere that supplies this critical material on such a large scale. And as EVs take over roadways all across America … they will rely on this material for future success.
And now, the rest of your razzling, dazzling emails … or whatever else the cat dragged into the inbox this week.
This Is Ourselves … Under Pressure!
You piqued my interest in two subjects today.First, thank you for moving to Friday Feedback. I get so much information from Banyan Hill that it takes me 1 – 2 hours of reading and listening to it all each day. I enjoy yours the most but sometimes skip through content about stocks I don’t own if I’m short of time. Now I can wait till Saturday or Sunday to leisurely enjoy the feedback.
Secondly, I have no problem paying to keep up with the Great Stuff portfolio. Sign me up! As for the stocks you pick, they are rare and very thoughtfully chosen. The great majority are winners. My fear is you will be under pressure to come up with more picks in a paid subscription service, and the returns could suffer.
Just sayin… — Mike P.
Hey there, Mike. Thanks for writing in!
First, happy to oblige on Friday Feedback. We get just as many emails throughout the week as you do and know first-hand how difficult it is to keep up on everything.
In fact, the team has been putting its collective Great Minds together trying to solve this very dilemma. If you’ve ever seen the film Minority Report with Tom Cruise, our team huddles look a little like those precogs floating in a futuristic bathtub … except a whole lot less creepy. (I’m kidding, of course. Mostly.)
Anywho, we’ve come up with a groovy way to keep all you Great Ones updated on our watercooler conversations with the rest of the Banyan Hill tribe.
Not to give anything away too soon and risk spoiling your appetite … you can’t have any pudding unless you eat your meat … but let’s just say it’s going to be Great. More on that in the weeks to come!
Second, do you really think Mr. Great Stuff would succumb to that “gotta issue a new stock recommendation because it’s the third Thursday of the month and Saturn is in retrograde” kind of peer pressure? Moi?!
Seriously though, if we end up giving the Great Stuff Picks portfolio a permanent home, I’ll continue to issue new stock recommendations only when they make sense — no more, and no less.
Great Stuff shall be the change the financial world has waited for … or accidentally bumped into while waiting for the subway … depending on how you got here.
Keep on keeping on, Mike. And thanks again for chiming in.
Who’s Responsible For All This Great Stuff?
Howdy, Lisa. I hope you’re enjoying your Friday!
First off, thank you so much! I have such a wonderful team of degenerates working for me. And they greatly appreciate the thanks!
However, much like you, I’ve been trying my darndest to pull the nameless and faceless Great Stuff team out of the shadows and into the light.
While I can confidently say that I work with some of the best and most warped writers in the business … they’re a nocturnal bunch that you need to approach very slowly, and without any sudden movements, else they’ll scamper off.
Luckily, after some gentle poking and prodding, the team has agreed to take more of the limelight and will now start writing to you Great Ones on Thursdays. So you’ve got plenty more quirky tips and witticism headed your way.
And maybe … just maybe … if we’re lucky enough, and lay down a long enough trail of dry Honey Nut Cheerios, we can coax them out into the open. Y’all a scary bunch sometimes. Just saying…
I’m A Freight Not
Airline question. It’s better to fly freight… No frozen sandwiches, NO masks, NO overburdened exhausted stews, and… ta-da! It’s cheaper (just be sure to book a pressurized area…)I have a plant in the New World Order in Zurich…
He says the plan is, once we all drive EVs, that they will be outlawed second to environmental damage. Then he says that we will all have to buy horse drawn carriages instead! We will be taxed only on horse apples… For a cleaner new world… 3 Aperol Spritzes to the wind. — Bill in Nürnberg
Sup, Bill! It’s always great to hear from you OG Great Ones out there. I’ve taken the liberty of compiling your emails this week into a clean-cut collage of Greatness … or something faintly resembling it.
You’re quite the considerate traveler, Bill. Usually, when I fly cargo, I just skip the booking and head to my spot right by the parrot cages and cursed mummies in transit. Landing gear stowaways? That’s a rookie move…
However, much like putting Baby in the corner … I don’t think anyone should put a veteran in cargo. You should be flying first class for your first-class service, my man. But I get you on the no-frills cheaper flights … over here, we just fly Spirit, it’s basically the same thing.
Cargo ships, on the other hand, I’ve seen … let’s say “varying” reviews from people booking passages on container ships and whatnot. I’ve heard the rime of the wannabe-mariner. Super expensive, but if you’re just dying for a 42-night round trip from L.A. to Fuqing, China, I won’t be the albatross around your neck.
Anyway … what was your question again? Did you have one? (Did I?) Thanks for writing in!
What’D’Ya Mean “Not An Active Reader?”
I’m not an active reader, but I LOVE to read the Great Stuff. You make reading fun!!! I cannot wait to read your daily email. I bought over-the-counter Toyota instead of the regular Toyota stock. Should I sell and buy the correct one? Thank you for your time! — Christie
Are you down with the OTC? Yeah, you know me. So, OTC … how can I explain it?
Over-the-counter (OTC) stocks don’t trade on exchanges. For instance, while Toyota has a U.S. listing (NYSE: TM), you could also buy Toyota shares straight from brokers and dealers (OTC: TOYOF). Same company, yes, but different tickers and different price points. And potentially, a different trading experience.
Upon these virtual counters, you can find everything from foreign equities to domestic stocks that simply don’t meet the minimum requirements to list on the Nasdaq and NYSE. But what’s this all mean for you?
OTC stocks are thinly traded — Toyota’s especially. TOYOF only has an average volume of 6,720 shares exchanged. TM is no TSLA, but it still has an average volume upward of 228,000.
With such an illiquid trade like TOYOF, if you’re buying in … you’re probably gonna get a bad price. If you’re selling out … you’re also gonna get a bad price.
Without getting too into the nitty-gritty of how OTC stocks are priced — unless y’all are really into that sort of thing, I don’t judge — illiquid stocks like TOYOF make it hard to sell or buy shares quickly without the share price changing.
The trade just isn’t that crowded. And in the OTC realms, the broker-dealers have full reign. (See, Ken B.? I use the right “rein” sometimes.)
So that’s the first proviso … what’s quid pro quo parte deux?
Before you sell, consider the tax implications of selling now. I know, it’s the most boring decision you’ll make today (if you’re lucky), but take a second and check: How long have you held the shares? Would you have to pay long-term capital gains or short-term?
Maybe you only had a few shares so the tax event of selling is negligible for you … but what if you had a few hundred or thousand shares? In that case, you’d have to consider if selling now just to buy American-listed shares would really be worth it.
And if you’re really plopping down that much dough on a stock … double-check the ticker you’re buying before you whisk off that order, Capisce?
Thanks for the springboard to sound off once again, Christie. If we make reading fun, you make ranting fun (it’s all I want to do). And that’s all we wrote, Great Ones!
Once again, if you suddenly stopped getting your weekly Greatness in your inbox, write to GreatStuffToday@BanyanHill.com and let me know … once you’re done panicking.
Everyone else, it’s time for you to chime in for next week’s Friday Feedback. Don’t be shy — this is the internet.
In the meantime, here’s where you can find our other junk — erm, I mean where you can check out some more Greatness:
- Get Stuff: Subscribe to Great Stuff right here!
- Our Socials: Facebook, Twitter and Instagram.
- Where We Live: GreatStuffToday.com.
- Our Inbox: GreatStuffToday@BanyanHill.com.
Until next time, stay Great!
Editor, Great Stuff