Friday was an ugly day in the market for those with exposure to oil and gas stocks or anything related to it.
The S&P 500 was down 0.5% and Toronto was down 1.2%.
Lower oil prices hit the Toronto market hard. I have always been clear that I have no ability to predict oil prices. It seems there are some people who, also having no such ability, nevertheless thought and claimed that they had that ability. Jeff Rubin threw away a very lucrative career as chief economist at CIBC World Markets in order to be free to go forth and warn the world that oils was going to get WAY more expensive. On a quick Google search I find the following: “In April 2008, Jeff Rubin, chief economist at CIBC World Markets, predicted a barrel of oil would cost $225 by 2012. With oil at $118, it was a controversial call.” In 2009 he quit his big job in order to publish his book predicting “peak oil”.
Well at least Jeff had the courage of his predictions. He was wrong but honorable. With the current lower oil prices I am sure we will hear from many who will claim to have predicted it. Many will also jump on the band wagon and predict prices to go lower.
Again, I can’t predict oil prices. I have often mentioned in the posts below that lower oil prices were a risk to the Alberta economy. I did not predict it but I noted the risk.
My approach to investment over the years has not been to avoid risk. It has been more an approach of accepting risk. In particular I accept short term risk when I think the long term outlook for a company is solid.
While my own account saw losses in the last two days, I am still ahead by 11.9% this year which is not a bad result.
Back to Friday’s stock movements…
Melcor was down 6.5% to $21.51. With the lower price I (perhaps in an act of stubbornness) added modestly to my position at $22.10. And I placed an order to buy a bit more at $21.10. Our latest update on the stock indicated that it looked very good based on its numbers but specifically mentioned the risks associated with oil prices and the Alberta economy. I am comfortable holding it, but it is not without risk. Other notable declines, in stocks on our list, were CN rail down 4.4% and Stantec down 1.8%.
U.S. stocks fared better. Walmart was up 3.0% to $87.54
Costco continued its winning ways, up 1.7% to $142.12.
The drop in the Canadian dollar on Friday also pushed up the value of American stocks when measured in Canadian dollars.