Wednesday, December 17, 2014

Most Wanted Commodity is not oil anymore this last quarter of 2014

Dated 12/17/2014

                 Crude oil the most loved commodity in the world, many wars have been waged and cities built for this great viscous liquid. This last quarter of 2014 things have turned to south as the OPEC stood on its feet to make sure the production goes on irrespective of the prices. 

                 Saudi Arabia is the largest producer standing at spot 1 , trailing behind is United States of America in 2nd and Russia in 3rd positions as of Year 2014. 

Today's crude prices.

               Whole jest of this discussion is to identify the companies in US that are in a region of mid to small level oil producers and having impact on their production and pricing stratergies. Many of these companies are setting foot on the ground scenarios where they work with lenders and part of the well or equipment is shared on profit basis. As the prices go up or down there is a direct impact on their production and operations. 

             The stocks of these firms have been brutally shorted and abused to the core that some have taken some serious dough out of this panic scenario. As a consumer driving around feeling good that gas prices are around $2.67 range in the city of woonsocket, RI. Feels happy at the gas station. At the same time as a investor in these mid cap firms hoping the crdue to shoot up. 

           There are always derivative firms that are impacted for no reason of the slump in oil.       Derivative firms are those who might have been directly or indirectly related to the production of oil. Oil drilling firms (MPO) , shipping firms (NM, EGLE, DRYS), oil distributors, Transporters. When the prices have fallen down there is a heavy buy potential for these stocks, but at the same time there is a thin line between buying a company at the lowest versus company about to go belly up. As a investor, what do you really do at this scenario ?

          As always said, anyone can buy stock and make money, it is not when you buy it is when you sell, but in this scenario it is when to buy. Tough to make decision, back of your mind you are saying, Hey!! it is not the firm's fault it is the overall oil as commodity, but you are also capturing the thought that these companies are running from the loans given by the lenders and lender can pull plug anytime when they feel that the catastrophy is coming soon. The prices and the scenario recollects the fall of financial industry back in 2008. 

           The brave have always risen, if you feel you are not ready to put in one put in two or three. Give benefit of doubt and take a buy interest in your favorite oil company, you never know you will be counted as the oil tycoon soon.

Best wishes!! Make Money !! The slumps in overall commodity is a rare pheonomena happens every few years. You will be in a win win situation . 

Jay Raghupathruni