Uncertainty appears to be influencing oil prices near-term, and the long-term outlook doesn’t look to be showing much strength. For the time being, oil prices are stuck in a trader’s market.
Current and Near-Term Action in Oil Prices
Oil prices are currently at a crossroads with the longs and shorts battling it out. On one hand, there appears to be some decent support at the $40.00 level for the West Texas Intermediate (WTI), as prices for the May futures contract has been bid up to the $52.00 level.
Conversely, I expect to see some resistance selling, as oil prices edge higher due to the record oil storage and the fact that the global demand side continues to be a major overhang. China is importing less oil than the previous year, as the country battles economic stalling.
The wildcard situation with ISIS and the oil-producing country of Iraq appears to have stabilized for the time being. Moreover, a highly tentative nuclear technology framework with major oil producer Iran may not pan out if the religious fanatics in the country can stop it. However, if a deal is eventually struck, we could see a gush of oil flowing out from the country and pressuring oil prices.
While I cannot say with conviction where oil prices will be a year from now, the commodity will likely continue to be a quick trade (not a buy-and-hold situation).
Where’s the Price of Oil Headed Next?
WTI futures point to oil prices rising to the $60.00 level by June 2016 and $64.00 by December 2017. The direction is clearly higher. We are also seeing a spike … Read More
When Lehman Brothers Holdings Inc. crashed after the impact of the sub-prime financial crisis in 2008, the financial sector was turned upside down. Regulators made a bold and smart decision to clean up the banking sector and its somewhat secretive high-risk activities.
Fast-forward nearly seven years, and the banking sector is clearly stronger and more trustworthy than it has ever been. Investors can thank the annual Federal Reserve bank stress test for this.
Fed’s Stress Test Making Banks the Safest Investment for Long-Term Investors?
The Fed’s financial crisis stress test aims to analyze the stability of the country’s largest banks with assets of more than $50.0 billion. It includes both a round one quantitative test and a round two qualitative portion.
After the rigorous testing based on the assumptions of a severe financial crisis, all but three banks passed. While all of them made it through the first round, only the U.S. units of Santander and Deutsche failed on a qualitative basis. The Bank of America Corporation (NYSE/BAC) was approved based on the acceptance of a new capital strategy by the end of September.
The financial crisis stress test is critical, as it gives investors and consumers confidence in the country’s banking system and pushes the banks to put measures in place to help avoid the mess we witnessed in 2008. The promise of the financial crisis testing is to put the various banks under the worst economic situations and see how they would fare. The assumptions under a financial crisis include severe recessions, high unemployment above 11%, plummeting home prices, and a crash in the stock market by 50%…. Read More
By Sasha Cekerevac for Daily Gains Letter | Feb 5, 2014
One of the most hotly debated topics these days is the role of activist investors. Some people have the impression that an activist investor is not a positive factor when it comes to long-term investing. I disagree, as many times, the investment strategy recommended by these activist investors ends up benefiting all shareholders.
Probably the most well-known, and certainly the wealthiest, activist investor is Carl Icahn. One of the things I like most about Icahn’s investment strategy is that he is willing to buy when others are selling and be vocal about his intentions.
A perfect example of his long-term investing ideology was when he stepped in to buy shares of Netflix, Inc. (NASDAQ/NFLX). If you remember a few years ago, Netflix shares were trading around $60.00 and many analysts were recommending an investment strategy to stay away from Netflix. Icahn saw an opportunity to accumulate a solid company for long-term investing purposes and has held on, making a return well in excess of 500%.
I would never recommend someone simply follow a successful activist investor like Icahn; rather, I would investigate any investment strategy he advocates to see if it matches my own risk profile. For long-term investing purposes, if I was a shareholder and he became active, I would certainly be happy.
Chart courtesy of www.StockCharts.com
His recent investment strategy in Apple Inc. (NASDAQ/AAPL) makes perfect sense. The recent sell-off, I believe, is an excellent opportunity for investors to take a look at Apple as a possible long-term investing option, since the current valuation is only 10.9X its forward price-to-earnings (P/E). That is an extremely attractive valuation for … Read More