I've been thinking about your Wall Street author and I wonder if this just comes down to expertise? REITs are a niche market so my expectation is that a generalist may not spend enough time on it to gain in depth knowledge like we see from writers like you. So they see a large wobble in prices and it looks scary because they don't have the insight to know if that's temporary volatility or actual long term impairment.
In O&G I think the driver is different. It's a niche of its own (but a really big niche), but the shadow of the climate change narrative looms over it, and people who ought to know better get caught up in it. In Feb 2020 the President of BP promised to cut oil production 40% by 2030 and replace that income with wind and solar and biofuel. What I considered to be a lunatic decision was actually made by a guy name Looney. Five years hence and Auchincloss, Looney's replacement, is divesting BP of renewables and doubling down on O&G. So if the President of BP can get convinced that renewables are the future, I imagine many wall street analysts are similarly persuaded, making O&G a scary market.
I think you make good points, David. My only push back is that there is nothing unique to O&G about senior managers buying narratives and creating major losses for shareholders. But does that make all stocks treacherous? My take is not inherently, but that quality of management judgement does matter.
“This is despite the reality that much of the time bonds are a pretty stupid investment. They have productive purposes, but my preference was to lock in high yields in late 2023 by purchasing single-premium lifetime annuities.”
I am retired and have one baby bond (TRINZ) and no annuities. I will relook at my lone bond (rate is 7.86%) and take a look at annuities. Never have looked annuities. Now may be the wrong time as rates have declined.
My one concern with the bond is I own 1500 shares and their daily trading volume is only around 10K.
Baby bonds are rather specialized. For some investors they work as a way to get good yields while assuring cash availability. It is buying lower-yielding bonds just to avoid portfolio volatility that strikes me as a dumb thing to do.
I've been thinking about your Wall Street author and I wonder if this just comes down to expertise? REITs are a niche market so my expectation is that a generalist may not spend enough time on it to gain in depth knowledge like we see from writers like you. So they see a large wobble in prices and it looks scary because they don't have the insight to know if that's temporary volatility or actual long term impairment.
In O&G I think the driver is different. It's a niche of its own (but a really big niche), but the shadow of the climate change narrative looms over it, and people who ought to know better get caught up in it. In Feb 2020 the President of BP promised to cut oil production 40% by 2030 and replace that income with wind and solar and biofuel. What I considered to be a lunatic decision was actually made by a guy name Looney. Five years hence and Auchincloss, Looney's replacement, is divesting BP of renewables and doubling down on O&G. So if the President of BP can get convinced that renewables are the future, I imagine many wall street analysts are similarly persuaded, making O&G a scary market.
I think you make good points, David. My only push back is that there is nothing unique to O&G about senior managers buying narratives and creating major losses for shareholders. But does that make all stocks treacherous? My take is not inherently, but that quality of management judgement does matter.
Very interesting comment:
“This is despite the reality that much of the time bonds are a pretty stupid investment. They have productive purposes, but my preference was to lock in high yields in late 2023 by purchasing single-premium lifetime annuities.”
I am retired and have one baby bond (TRINZ) and no annuities. I will relook at my lone bond (rate is 7.86%) and take a look at annuities. Never have looked annuities. Now may be the wrong time as rates have declined.
My one concern with the bond is I own 1500 shares and their daily trading volume is only around 10K.
Baby bonds are rather specialized. For some investors they work as a way to get good yields while assuring cash availability. It is buying lower-yielding bonds just to avoid portfolio volatility that strikes me as a dumb thing to do.
Thank you. That makes sense.