Oil Follow-Up

In the The Case For Oil posted on January 20, I wrote:

Energy is not a fickle industry. It’s one of the best developed and best managed on the planet. It’s not going away. Your money invested in energy is safe. Do not sell because of currently low oil prices. They will eventually rise again.

If anything, watch the oil sector with an eye on buying.

That was a good call so far.

Oil closed this week at $59.89, near the highest it’s been all year and 15.2% higher than its $51.99 close on Jan. 19, the Friday before I posted the oil report. That’s quite a rebound in just three weeks.

Exxon Mobile reported 2006 profits last week, and they were the highest that any company in U.S. history has ever reported. That’s a pretty good indication of the kind of business that oil provides.

Oil stocks have done well. I suggested in the report that both Baker Hughes (BHI), BJ Services (BJS), and Grant Prideco (GRP) looked like good buys. In the past three weeks, here’s how the three have done:

BHI: +6%
BJS: +3%
GRP: +13%

Three weeks does not a successful investment make around here, but it’s a good start to what I think will be successful long-term holdings.

To those of you who were worried about your oil portfolio three weeks ago, I urge you to remember this mini-experience. Investments bought for sound reasons at reasonable prices need not be sold under duress at market lows. If anything, down markets are a swell time to buy more. This is why I am so meticulous in researching and patient to buy. Doing so gives peace of mind when the market moves against you. Trading junk requires extremely good timing, which few people have, because junk doesn’t afford the luxury of relaxing when prices move lower.

Oil companies like the ones I mentioned in the report are not junk. They’re excellent businesses.

Congratulations if you held or bought more. You must feel better these days than you did just a few weeks ago.

This entry was posted in Uncategorized and tagged . Bookmark the permalink. Both comments and trackbacks are currently closed.
  • Here are your three options:

    Option 1: Annual Subscription (no refunds)

    For just $200 per year, you’ll receive everything listed above to completely upgrade the way you manage your investments. This is 17% cheaper than the monthly option. This is what I recommend:

    Option 2:Monthly Subscription (no refunds)

    If you'd like to try The Kelly Letter  without paying the full year, you can pay $20 per month.

    Option 3:Free Email List

    If you'd like to hear more from me but aren't ready to part with any money yet, you're welcome to join my free email list:

    Join the free list

    Thank you for the work you do. You're a household name here and my wife and I often discuss your letters on Sundays. My ten- and seven-year-old children recognize your name and will eventually be taught to invest using 3Sig and 6Sig. You've had an enormously positive impact on our investing and inspired me to look at the world in more rational and clear terms than I did years ago. I'm sure that thousands of others would say the same. Kelly Letter subscriber Matt Barnes
    Matt Barnes
    Product Line Director

    Join Matt and thousands of other rational investors to invest without stress.

    Subscribe to The Kelly Letter  now!

Bestselling Financial Author