Daily Market Blog: Oil Spoil
"Two of the big oil companies reported numbers on Friday. The lower oil price has been telling with Exxon Mobil's revenue dropping 33.4% YoY and their EPS dropping 51%! Chevron's revenue dropped to $40 billion from $57 billion the same time last year but their EPS was down a staggering 89.9%!"
To market to market to buy a fat pig. The news all over the financial channels this morning is the reopening of the Athens stock exchange, it has been closed for 5 weeks due to all the uncertainty that surrounded Greece getting and accepting a bailout. Unlike the Lisbon stock exchange that only has a handful of companies (78 to be exact), the Athens exchange has 258 listed companies. As you would imagine there has been a very big sell off, it is currently down 23%! The market pays a premium on listed stocks due to liquidity, the ease of getting your cash out. There are many factors that determine the value of a company but consider that private companies normally trade around 3 - 6 times their earnings, where public companies normally trade around 10 - 20 times their earnings. It makes sense that the market gives a premium to liquidity, how long does it take to get your cash out of a property? In my experience it is between 2 - 3 months and you pay an estate agent around 5%!
This is the sage of Omaha's (Buffett) view on stock markets, "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for ten years.". With TV, Twitter and news agencies always bombarding us with what the stock market is doing and the ease at which we can see what our portfolio did over the last 30mins, it is very difficult for investors to ignore the short term noise of the market and only focus on the company and its long term prospects. I remember it being a difficult mental shift from short term fixation to being okay with not worrying about the share price fluctuations over the short run. Here is another quote I found, "Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.". Here are a whole bunch more, they make for very interesting reading - 101 "Hand-picked" Warren Buffett Quotes On Investing.