My last article had me questioning my sanity for investing in energy companies. The last decade has been brutal, and the political environment is brutal. Before delving into the questions, I would like to comment on a common narrative — that the invasion of Ukraine caused a European energy crisis. The narrative is highlighted by […] Read more
Why invest in energy?
Will “reversion to the mean” occur this time?
Are energy companies displaying “grotesque greed”?
Vilification of profits continues unabated
Shortly after submitting my previous article on the vilification of the word “profit,” and even more so when related to oil, the headline “UN Head Calls for Taxing ‘Grotesquely Greedy’ Oil” appeared in a newsletter I read, with the following quote: “UN Secretary General Antonio Guterres called on governments globally to tax these excessive profits […] Read more
Profit is not a four-letter word
Investing directly in stocks helps participants learn about the economy and business, allowing everyone who chooses to benefit from corporate profitability
There are few words as vilified as the word “profit.” The word “oil” is probably on equal vilification footing, making “profitable oil company,” vilified squared (V² for mathematicians). Given the societal hatred for profits, why are those societies with the strongest profit incentives also those with the highest standards of living? The role of “profit” […] Read more
The economy, GDP, inflation, interest rates, recessions and bear markets
These items are interrelated but perhaps not as directly correlated as perceived
The current U.S. bear market is brought to you by an unwinding of speculative excess, increasing inflation driving interest rates, Putin’s war in Ukraine and fears of a recession. A recession is defined as two quarters of negative growth. First quarter U.S. growth was negative and if the second quarter comes in negative it will […] Read more
Outside of speculative fervor, numbers count
How tech giants Amazon and Shopify stack up against Linamar
This is the third installment of my series on comparative company analysis. For this column, I’m looking at two “hot” tech companies, Amazon (AMZN) and Shopify (SHOP) and contrasting them with an old school Canadian industrial company Linamar (LNR), which has an agricultural connection through the ownership of MacDon. My analysis was done in late […] Read more
How to make sound purchase decisions: company analysis, Part 2
Another example of stock purchasing decision metrics (that sounds boring!)
The current series of articles were prompted by a couple of emails to further outline the process I use to buy individual companies. So don’t blame me for putting you through this! Hopefully, by the end, you will be able to relate to the small amount of number crunching required to make sound purchase decisions, […] Read more
Company analysis, real live examples
A focus on price/cash flow, cash flow/assets and cash flow growth
Following up on recent articles, it might be beneficial to work through real stock selection examples. My first example compares two of the largest worldwide integrated oil companies, Chevron (CVX) and Exxon (XOM), along with the largest Canadian company, Suncor (SU). I will attempt to cut through much financial gobbledygook (it’s a real word in […] Read more
Four market success factors, Part 2
Portfolio construction and how you manage yourself
While individual stock selection gets most of the airtime, organizing those stocks into a high performance, resilient portfolio is equally important. This aspect is referred to as diversification, but it is bigger than that. Some may think owning a number of companies in a couple different sectors qualifies as diversification. However, the market tends to […] Read more
Four market success factors
And how they affect our personal investment success
There are four key factors affecting our personal investment success — understanding market behaviour, security selection, portfolio construction and managing yourself. I will discuss two in this column and two in the next. Most discussion is around security selection, but the other factors are equally important. Understanding market behaviour The market often exhibits perplexing and […] Read more
The looming energy predicament
I use the word predicament because “crisis” and “catastrophe” are grossly overused
A short 14 years ago, as oil approached $150 per barrel, chants of “Drill, Baby, Drill” were often heard at republican campaign rallies. While the republicans lost the election, the U.S. oil industry heard the message loud and clear, unleashing a torrent of investment in shale oil, boosting American production from about five million to […] Read more
Cyber-Savvy Farmer
