Berkshire now owns a 27% stake in Occidental Petroleum worth $13.6 billion.
— December 14, 2023
That is Warren Buffet’s BRK company. June crude oil hit $86.97 a week ago. It has corrected as predicted bottoming in the low 80s.
Thursday it closed up 76 cents at $83.78. May gasoline has had a similar correction closing at $2.76. This is the futures price without federal taxes. As previously mentioned, a close over $3, which is expected, will make a much harder slog for Team Biden to win.
My picks include Apache (APA), DIG, Halliburton (HAL), Transocean (RIG), and SLV, an ETF holding silver bullion. DIG has is recovering faster than the others. RIG lags the rest. It is trading at 45% of book value. A continued rally in oil should employ RIG’s one of a kind collection of offshore rigs in a drilling frenzy, increasing the dirt cheap $5.74 price.
Let’s keep an eye on Patterson (PTEN). It is profitable with 88 cents earnings per share. It trades at a most reasonable 12.8 price earnings ratio. It offers land-based drilling and completion services. It pays a 278% dividend.
One can become an oil man buying Permian Basin Royalty Trust (PBT) which pays a 55% dividend. The price is half what it was a year ago. It owns royalty interests throughout the Permian Basin.
Now to a most important announcement. The Magnificent Seven which have driven the NDX and NASD are still Seven but hardly Magnificent. All are selling off. Meta/Facebook dropped 10.5% Thursday. Nvidia is down from $975 to $800.
It is no surprise that the NASD 100 has lost 1,000 points, down to 17,432. Various indices topped in late March and now the tech stocks have joined the sell-off. Your broker/financial planner/brokerage firm will never tell you to sell your stocks. They might lose some underwriting business. But there are times to exit. The SPX has already fallen form 5,250 to 5,050. I believe this is a market top equal to the significance of March 2000 or Summer 2007. In the first instance, the NASD lost 75% in two years and in the second the SPX lost 50% in 18 months.
My last recommendation is Hedge (HDGE), a fund that increases in value as the market falls. Since late March it is up from $19.75 to $21.26. The SPX could easily fall 25% by late August. The sky high NASD, well look out below.
Follow www.themarketperspective.com for frequent updates.
The time ahead will duplicate the 1970s. This was a period of increasing inflation and interest rates with declining stock prices.
