9/30 newsletter
*** Market
The quarter ends with slight gain on SP500, ~3%. My portfolio gained about 7%.
September is also a positive month, but unfortunately with two huricanes on a row
and high oil price, the market did not fair too well.
Summer is over. October will be a sell-off season. You should stand on the buy side when the selling is over in November.
*** Murphy Oil
I promise you to talk about Murphy Oil. I am stuck in an IM session with my bosses and can not shut down my PC. So I decide to type this up.
Murphy Oil is just another oil company. But... It has a very unique business model. The company has two sides of business. Oil exploration and pump stations. What is special about it? Well, oil exploration profit tends to rise and fall with oil price and that is very cyclic. Cyclic is bad to conservative investors. However, pump station's profit tends to counter that. When oil price drops, the demand will increase. If the demand can increase more to compensate the earning shortage, the business can sail safely through multiple business cycle.
How can you make demand increase? Murphy aligns with WalMart to set up pump stations in front of WalMart with a discount price. Those who shop at WalMart will be loyal customers. This way when oil price drops and economy booms, people will pump more gas -- at the parking lot of WalMart.
Is this smart? However, if you study carefully of Murphy's stock price, you will find it fluctuates a lot. I did a short-term calculation on return pattern. It is very hard to make money with 6 months of investment window. What it says is "Do not speculate on my stock. Go away!" I learned it in a hard way, bought at peaks twice. I am only make 10% off of it so far. It's long term tend however is very strong, rising more than 30% a year. I will tell you if I indeed make that kind of money in the years to come...
--Steve
The quarter ends with slight gain on SP500, ~3%. My portfolio gained about 7%.
September is also a positive month, but unfortunately with two huricanes on a row
and high oil price, the market did not fair too well.
Summer is over. October will be a sell-off season. You should stand on the buy side when the selling is over in November.
*** Murphy Oil
I promise you to talk about Murphy Oil. I am stuck in an IM session with my bosses and can not shut down my PC. So I decide to type this up.
Murphy Oil is just another oil company. But... It has a very unique business model. The company has two sides of business. Oil exploration and pump stations. What is special about it? Well, oil exploration profit tends to rise and fall with oil price and that is very cyclic. Cyclic is bad to conservative investors. However, pump station's profit tends to counter that. When oil price drops, the demand will increase. If the demand can increase more to compensate the earning shortage, the business can sail safely through multiple business cycle.
How can you make demand increase? Murphy aligns with WalMart to set up pump stations in front of WalMart with a discount price. Those who shop at WalMart will be loyal customers. This way when oil price drops and economy booms, people will pump more gas -- at the parking lot of WalMart.
Is this smart? However, if you study carefully of Murphy's stock price, you will find it fluctuates a lot. I did a short-term calculation on return pattern. It is very hard to make money with 6 months of investment window. What it says is "Do not speculate on my stock. Go away!" I learned it in a hard way, bought at peaks twice. I am only make 10% off of it so far. It's long term tend however is very strong, rising more than 30% a year. I will tell you if I indeed make that kind of money in the years to come...
--Steve
posted by Steve at 5:19 PM
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