Inside Russia Today: counterweight to the mainstream media, or Putin’s mouthpiece? ( New Statesman)
The bizarre world of petrol pricing: How it’s decided what motorists pay at the pumps (This is Money)
The biggest investment mistakes of the last 20 years (Trustnet)
Inequality rising in wake of crisis (OECD Insights)
Why austerity may be wrecking the recovery (Maclean’s)
European car sales post first rise in 19 months (Guardian)
Escaping liquidity traps: Lessons from the UK’s 1930s escape (Vox)
The U.S. crude production is estimated to reach 7.4 million bbl/d this year and 8.2 million bbl/d in 2014 according to EIA. However gasoline consumption alone is projected to be 8.68 million barrels per day. When other products of crude oil such as jet fuel are added the daily consumption far exceeds production making the country a net importer of oil.
However in the past few years, production of oil from Shale rock has increased dramatically. Today U.S. Shale oil production accounts for a significant portion of the total U.S. oil production and even impacts the global oil output.
From a recent report on Shale oil industry in AXA Investment Managers:
The scale and pace of the development are already big enough to modify parts of the US economy. It channelled US$133.7bn worth of investments between 2008 and 2012,1 and hundreds of thousands of jobs in North Dakota and Texas. The result is an unprecedented push in crude oil production, reaching almost 2mbpd (million barrel per day) according to the latest data (Exhibit 2). According to EIA’s central scenario, US shale gas should culminate around 3mbpd by 2020, bringing total US oil output to 8mbpd (10mbpd according to the most bullish estimates, e.g. by BP). Today, US shale oil already represents a very significant 2.2% of global oil output.
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Whether this surge will continue, fall off or even accelerate remains however an open question.
Source: Shale fuels (part 2) – US oil: local benefits, global effects, 25th April 2013, AXA Investment Managers
Related ETN:
iPath S&P GSCI Crude Oil TR Index ETN (OIL)
Disclosure: No Positions
Related:
US becoming energy kingpin (The Hindu Business Line)
“Sell in May and go away” is one of the popular Wall Street strategies. According to this concept, an investors is better-off selling his or her stock holdings in the month of May and then buying back in late in November. When trading volumes are traditionally low during the hot summer months as traders and fund managers head off to the beaches or the golf courses stocks tend to languish go nowhere. In theory, following this strategy an investors can avoid the travails of the direction-less markets. However the strategy has both supporters and haters.
From a 2012 article debunking this theory:
Larry Swedroe, head of research at Buckingham Asset Management, ran the numbers a few years ago using 30-day Treasurys during the off months, and says the strategy is bunk.
He looked at returns through 2007 from six start dates since 1950. “Sell in May” beat “buy and hold” if you started investing in 1960, 1970 and 2000, but not if you started in 1950, 1980 or 1990.
“It’s pure randomness,” Swedroe says. “How would you ever know when to start?”
Then there is the problem with using averages to say anything meaningful about stocks. If you know the average temperature for a month stretching back decades, you can pretty much guess how hot or cold that month will be this year.
But that’s not true with stocks. They move too widely above and below their averages in most years, and in most subsets of years, for those numbers to be used to predict where they’re heading.
Ken Fisher of money manager Fisher Investments says “Sell in May” is “garbage” precisely for this reason. He gives the example of September, which has dropped an average 0.72 percent since 1926. But the month has had many big up and down moves over 85 years. He says if you remove just two of the worst Septembers, stocks break even for the month.
“The average is made up of extremes,” says Fisher, who devotes a chapter skewering “Sell in May” in “Debunkery,” his book on investing myths. “If you steer by averages, you’re going to get thrown off.”
Source: Why ‘Sell In May’ Doesn’t Work, Huffington Post
However a recent chart post in Canada’s Maclean’s magazine shows that the strategy does work based on investment returns in the Dow Jones Industrials Average:
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Source: ‘Sell in May then go away.’ It really works, Maclean’s
While traders may follow this concept most investors can ignore it. It would be foolish for an investor to liquidate the entire portfolio in May and then buy back the same stocks later. Some of the issues that such investors should be aware of include taxes on any capital gains realized, losing out on dividends when stocks are not held, losing the “Qualified” dividends status, trading costs, etc.
The answer to my title question is “Sell in May and go away” may work for traders but not investors. This is especially true for long-term investors who are not swayed by the short-term gyrations of the market.
Related ETFs:
Disclosure: No Positions
Last December I wrote an article about the countries that are vulnerable due to a slowdown in the Chinese economy. The latest edition of Bloomberg BusinessWeek has a short article discussing the same topic:
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Source: Bloomberg BusinessWeek
It is interesting that the tiny city state of Singapore appears in the above list. Though the country does not any natural resources that China needs, it is a major manufacturing center for electronic goods. It is also a main trading hub due its port and location.
Two Singapore banks DBS Group Holdings Ltd and United Overseas Bank Ltd trade on the OTC markets. Here is a chart showing the 5-year and long-term return of these banks:
5-Year Return:
Click to enlarge
Long-term Return:
Source: Yahoo Finance
1.Company: DBS Group Holdings Ltd (DBSDY)
Current Dividend Yield: 3.17%
Market Cap: $34.7 B
2.Company: United Overseas Bank Ltd (UOVEY)
Current Dividend Yield: 3.20%
Market Cap: $27.9 B
While recently DBS has performed well, in the long run United Overseas has performed better.
Disclosure: No Positions