Oil $47.18US in early trade, page-67

nothing wrong with the thinking, except

a) we likely havent seen the low in oil price yet in my view

b) sto specifically appears overvalued unless you think this is a v shaped recovery - at a $60/bbl oil price sto equity is worth about 5.70.  though agree they may sell infrastructure interests that could improve their stock value

its a good trade.  but you;re advocating long term buy and hold.

the reason i caution ont he oil price is pretty simple - the saudis and russians basically are maximising output to crush the yanks.  a short sharp down leg like we;ve had to date - however steep - wouldnt do that.

i doubt a single shale oil company would go out of business from all this if oil jumped back to 70 inside next 3 months.

i dont imagine either group started this without doing their math and being ready to stay the course.

basically what should happen is wti price lifts as the highest cost US output is pulled, then brent price - driven by supply from saudi/russia, goes below wti - brent starts getting bought by us buyers - and US oil producers then have to  lower prices again in order to reclaim market share.

this appears to be a market share war.

if thats correct - then we wont know the oil price bottom until weve had several months of sustained overproduction.

id also overlay against this the extreme danger of overall equities at the moment.  The US is currently the most expensive its ever been in its history.

doesnt mean it all has to topple over tomorrow.

but in volatile equity times, weak commodity related stocks are bad bets generally