The energy market has been a meat grinder for investors during these last nine months. Just look at the nosedive oil prices have taken:
Chart courtesy of StockCharts.com
Oil might have led the way, but it took down energy as a whole as well. A quick look at the Energy Select Sector SPDR ETF (XLE) reveals a couple of interesting notes investors should be paying attention to. Continue reading "Oil Might Be Down, But It's Not Out – Here's The Long Term Play"
The Dow Jones Industrial Average (^DJI) has been hated on by investors for years. Most believe it is inferior to the S&P 500 Index (^GSPC) due to its price weighting formulation as opposed to market capitalization weighting, the fact that it only consists of 30 as opposed to 500 stocks, and until just recently it didn’t even hold the largest company in the world, Apple (AAPL) in it, just to name a few.
But for all its flaws it was shocking to me to see a comparison of the Dow's performance to that of the S&P 500 over different time frames. Continue reading "Did You Know the Dow Jones Has Crushed the S&P 500 Over The Past 30 Years"
Yemen, a country south of Saudi Arabia, and with an economic output roughly the equivalent to that of say, San Antonio, Texas, is sinking deeper into chaos. Though in the grand scheme of things in the Middle East, that chaos stems from a relatively small country, it is likely to have widespread ripples that could affect market sentiment, in general, and specifically, in the FX market. One might ask how on earth Yemen, a small country that is primarily desert and which is categorized as among the world’s poorest, could affect trends in the Dollar, the Euro and other currencies?
The answer, as you might have guessed, and the only way that trouble in a small Middle Eastern country could have repercussions on global markets, is through Oil. Despite the fact that Yemen produces less Oil than Denmark and its direct effect on Oil supply is marginal, its location is critical. Yemen is situated on the banks of the Gulf of Aden, the 4th largest passage for Oil in the world and a key passage for seaborne Oil and gas from the Middle East. Analysts point out that with the country deteriorating into chaos, the risk of Oil tankers being hijacked by pirates grows much higher and thus heightens Oil supply risks. Now, while this might be a plausible risk scenario, it is not the real Continue reading "Chaos in Yemen Could Undermine Dollar"
In part one, I explained how the S&P 500 index (^GSPC) and most index tracking ETF's are weighted. The weighting is based on a company's market capitalization, which means that since Apple Inc. (AAPL) is easily the largest company in the world, it carries the largest amount of weight within these investment vehicles. Furthermore in the past I explained how this amount of exposure to Apple may not be a good thing.
But, with Apple recently being added to the Dow Jones Industrial Average (^DJI) investors now have an index to park money and not feel over exposed to Apple due to its size. While the S&P 500 weights companies by its market cap, the Dow weights companies by its share price. Over the years, a number of analysts and market experts have said this is one of the Dow's major flaws and to an extent I would have to agree. But, because Apple is so much larger than all of the other companies within the market, I am very much in favor of this share price weighting format. Continue reading "Apple + Dow Jones = Better Apple Exposure (Part 2)"
One stock that has caught my attention the last couple months has been Pioneer Natural Resources (PXD).
Simply put, every analyst or article I've read agrees PXD has a solid balance sheet, exceptional management, favorable hedging positions through 2016, low production costs, and some of the most productive oil field acreage in the business. Plus, the stock seems to be trending higher within a trading channel that bears the appearance of a good strong bottoming formation – even while trading more than 30% below its 52-week high.
Shale is still a dangerous place to play, no doubt about it. Oil and gas prices continue to flirt with a continuation of their precipitous declines since last June 20th. Further oil-price deterioration would surely affect shale companies like PXD.
On the other hand, if you're game for a little bottom-fishing and want to stay with high quality, take a look at Pioneer. Continue reading "An Interesting Shale Play"
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