Oil

Next Stock

You are investing in stocks not the GNP.  If you have been following my blog and advice you now have 4 stocks.  Consolidated Edison Inc. (ED) or another utility, Kraft Foods Inc. (KFT) or another food stock, Eaton Corp (ETN) or another industrial stock, and U.S. Bancorp (USB) or some other financial (Bank) stock of choice.

You now have somewhere from 20 to 40 thousand dollars saved, you are following a plan.  You are getting rich slowly.  Keep it up; it is now time to buy your fifth stock.  Again do it in another sector.  I call the oil and gas stocks a sector, unlike many other investors.  Maybe not correct but I have my reasons as I will explain below.  All oil and gas stocks move with the underlying commodities. 

I think the best oil & gas stock to invest in is Chevron Corp (CVX).  Just because I like CVX there are many oil and gas companies you can invest in pick one.  Pick one and invest in it.  Again 100 shares and again sell upside calls.  You get a 3.4% dividend of 90 dollars a quarter, and with a upside call out 3 months you can get an additional either 200 or 60 dollars depending if you sell the call 3 dollars higher than you purchased CVX at or 7 dollars higher.  I would take the 7 dollars higher call at 60 dollars.  So now you get 150 dollars return for the quarter and a total return with the call at about 5%.  At the current price of the stock (7/3/12) and if the stock is called away from you, you will make an about an additional 6% on your investment.  (Sorry I am not going to do the math to get the exact percentages.)



In 1956 a geoscientist who worked at the Shell research lab in Houston, Texas prodicted the U.S. would become a oil importer after oil production peaks in the 60’s and 70’s See the Graph.  He received harsh criticism at first, this prediction proved correct in 1970.  Hydraulic fracturing changed the bell curve some see the chart in this post, but there is only so much oil underground and this investment will pay you a dividend return for the rest of your and your childrens lives.  That is why I put oil and gas in their own sector.  Let this trend of downward oil inventory pay you dividends for the rest of your life and your childrens lives, and build your wealth.  I am not sure exactly where or when oil will drop off and you see in the graph that new technologies can shift the bell curve upward, but there is a finite supply on earth.  There is an infinite demand for engery on this planet. 

Just look at the war in Iraq for a good example of the importance of oil.  The United States did not intervene in Sudan, Uganda or Tanzina over human rights violations or to bring democary to their people, those countries killed more of their own citizens than Iraq did.  These African countries remind me more of Nazi Germany and Hitler than Iraq did.  Engery is in our strategic national interest.  This war was about oil and gas, you don’t think we would have stayed for 10 years in Tanzina if the terriorists were from Africa do you?  There is always at least one carrier battle group over in the Strait of Hormuz.  We don’t guard the Gulf of Aden and the trade route through the Seuiz Canel and fight the pirates in Somalia like we protect the Strait of Hormuz do we?  It’s oil not human rights George Jr. be honest.  Besides if human rights violations mattered to us at all, George Sr. would have taken out Iraq during the First Gulf War when the Iraqian troops started killing the civilians who had supported the United States and democary.  Just as long as the oil flows and the proper people control it the two George’s were happy.  I always felt bad that we allowed all those people die under George Sr.  And, I will feel bad until the day I die about U.S. troops torturing and tormenting the enemy under orders from the president.  Christians don’t torture George.

The United States will fight for oil now and in the future, like it or not.  At least until we have an alternate engery source.  Do you really think a oil billionare from Texas wouldn’t use any excuse?  There were better ways to take out the terriorists if they alone, were what we were after.  There are other countries that would accept democary better and who have nasty dictatorhips in them, other than those two middle eastern countires we are in garrisoning now.  One for a pipeline project and one for oil. 

 

Do you really think the oil companies need special tax treatment?  Since we are going to put oil companies on government welfare.  Since we will go to war for and use our troops to garrison oil countires.  Since we have now tortured for oil.  Looks like we will do just about anything for oil.  You need to put your money where your government and special intersts put their money!  Ride the coattails of a trend that is here to stay, and build your wealth.  Ride this major wave of a needed commidity and build your own net worth.