Back to the past
You may also recall reading a newsletter with information on who the world’s biggest oil companies were (refer to “Invest News” August 2005) and how they spent their money diversifying into other industries. The “common sense” belief that higher oil prices would make oil companies go broke, may be commonly held… this doesn’t mean that it is true….
Oil goes up, buy more oil…
Huh? Since the article was written, the price of oil (and petrol) has continued to rise at a massive rate. The profits of oil companies have increased dramatically, as has geekowear their share price. Did you buy into any oil companies? Prices on fuels and lubricants have risen by 21%, so did we all buy 20% less oil? Nope, we bought 18% MORE.
The oil companies don’t just have us over a barrel; they have us over millions of barrels a day… Did you buy into oil companies yet?
See the Past, now look at the Now
OK, so you’ve got the message about the oil companies. Like the dinosaurs that they dig up, these huge juggernauts* will rule the world for a long time. Don’t fight it, get used to it, and learn to profit from it. If you don’t take my word for it, look at what the major investment managers are doing with their money.
Which fund managers are buying into oil companies, and how much are they buying? Are they hoping to make more money in the future than they did this year? The fund manager’s job is to make money in the future, so what are they doing now?
Fund Manager —–
What is in their Top Ten? (as at June 30th 2005)
Credit Suisse—- Mortgages, phone companies and finance companies.
Barclays: —–Total Fina Elf is number two, Exxon Mobil at seven.
Merril Lynch —–Total Fina Elf is number two stock on their list also Platinum Royal Dutch Shell is number ten stock
UBS Global —-Total Fina Elf is number 3, BP at number 10
Westpac Intl —-Exxon Mobil number 1 stock held
BT USA —-Exxon Mobil number 2
BT Global —-Exxon Mobil number 1
BT European —-Royal Dutch Shell number 1, Total Fina Elf number 3
Oil = Money
If the oil companies are NOT going to make massive billions of dollars worth of profits in future years, then why are the biggest and smartest fund managers investing into the oil companies? Perhaps with all their money and all their research, the major oil companies know that major oil companies will continue to turn gargantuan profits. Perhaps with the largest fund managers’ money and research, the fund managers have also come to the same conclusion: oil equals money.
Save the trees: shoot a beaver…
Sure, you can buck the trend against the juggernauts*. You can invest all of your money into stocks other than mining and oil. You can invest into “new” areas such internet stocks and bio-technology. You can invest into mortgages and finance companies like Credit Suisse. You can invest into eco-responsible, genetically unmodified, environmentally-sustainable alfalfa-eating, alpaca-friendly, tree-hugging hippy stocks**.
It may make you feel good. It may even make you a dollar or two. A good idea is to diversify your money: — have some smiley, care-bear investments** and also have a little bit of investment into some of the “smash, pillage and wreck the environment” stocks.
Exxon/Mobil hurt some penguins with a leaking oil-tanker. Fine, sell their shares, punch the CEO, or volunteer at Greenpeace.
Union Carbide upset some people with dodgy battery acid. Throw out your torches, toys and computers or choose to make a positive difference.
When I discovered that a subsidiary of BHP was mining uranium, I felt so bad about it that I donated some of my BHP dividends to my favourite charity***. Now, BHP were not making uranium nuclear weapons, it was for nuclear energy; and it was not BHP, just one of their connections.
I am not crazy enough to sell all of my BHP shares just because some of their friends are a little environmentally unfriendly: — that would be silly. Besides, I can do a lot more for the environment by gifting thousands of dollars to good causes, than I can by chaining myself to a bulldozer… Bulldozer. Hmm, that gives me another excuse to use the term “juggernaut”… ☺
Speaking of big powerful, heavy things without restraint or social conscience, let’s have a look at the world’s biggest super power and largest economy. Do you know who it is? Do you think that the answer may change in future?
Live in the Now, Look to the future
Hey, I don’t wish to be an alarmist; you have the newspapers and horror movies to make you frightened. I just wish to point out a few things and make you “alert but not alarmed”.