Roger Montgomery talks stocks with Ross Greenwood
Ross Greenwood and Roger Montgomery speak about the business of oil… think of it as ‘good oil’. Listen to Podcast.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
David E
:
A very interesting discussion. I felt all the hairs on the back of my neck stand up! It does seem this is the direction we are heading.
Chris
:
Hi Roger and fellow bloggers,
I also hold the view that (in the long run) oil prices are bound to head higher. Therefore, I have been keen on buying oil for quite some time. The problem/question I pose to you however is this…
What is the best way to invest in oil?
Personally I am not very keen on buying stocks that produce oil.
This is because I don’t believe there are any high quality oil producing stocks that are trading at significant discounts to IV (I have only looked at the ASX, but given commodity prices of late I am going to assume the situation will be the same on other markets).
We all know about Matrix (thanks Roger) who will no doubt benefit from rising oil prices. But aside from MCE (and other oil producing stocks) does anyone have any thoughts as to how one can gain exposure to the price of oil?
Ideally I’d like to invest in oil directly. The only 3 ways that I know how to accomplish this are as follows.
1. buy barrels of oil (my garage isn’t big enough for this)
2. Buy oil futures contracts or
3. Buy an etf that tracks the price of oil (eg. USO which is listed on the NYSE).
The problems I have with buying futures contracts is that they expire, and if you wish to buy a futures contract that reflects current oil prices you need to buy one of the closer months…This means that if you want to invest in oil longer term you need to constantly roll your positions over to the next month. And this obviously is not ideal. Aside from the trading fees there is the obvious issue of tax, and of course it would be inconvenient.
Because of these issues with futures contracts I started to explore ETFs that track the price of oil. If anyone else has considered ETFs that track the price of oil I would be delighted to hear your feedback/comments on what you found. Earlier I mentioned the ETF USO as it seemed to be the best option available…USO invests in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges – therefore one investment in this ETF and they do all the trading in futures contracts for you.
Perhaps someone here may know of another way to gain exposure to the price of oil without buying oil stocks. If so I would appreciate any feedback.
Thanks in advance and well done to all for the wonderful insights and comments you have left on this blog.
Chris.
Joab Soh
:
Hi Roger,
Just curious, any chance you can provide abit more insight as to why you think “this year is harder than last year?
My initial thoughts are that share prices has caught up to the intrinsic value of the A1s discussed here, and it could be harder to find new A1s that are at trading a deep discount.
Also, I agree with Ashley. I tend to miss your session with Ross Greenwood too, so posting the podcast would be fantastic.
Thanks.
Roger Montgomery
:
Hi Joab,
Your initial thoughts are spot on. It is much harder to find good value and when I find value, the margins of safety are much slimmer. Having said that I have found a few things worth buying.
Henry
:
Hi Roger,
Please, please post that few things you mentioned, I am desperate for new good stuff at the moment, my cash just sit in the bank and doing nothing. Gecko said money never sleep, mine does. I am feel very uncomfortable. Please, please Roger, thank you very much in advance.
Darren F
:
Hi Guys,
It is very frustrating at the moment with value shrinking on a lot of the quality stocks out there. I’m currently sat on 25% cash, patience is needed currently. Stocks I own such as CCP, CCV, FGE, EZL and SGH have run really hard lately and I’m reluctant to add to these positions.
Two stocks I’m looking at the moment are:
FFI – Looks like a good little company in WA. Latest result was poor but appeared to be a land valuation downgrade with the underlying business still performing well.
IMF- Appears good value on broker forecasts but has a bit of a messy earnings history.
Hopefully the upcoming reporting season will stir things up a bit and throw up some bargains.
Ashley Little
:
Hi Roger,
I would very much like it if you could post all your Ross Greenwood talks like this.
I keep forgetting to tune in and always miss it
Thanks