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Should I invest in XOM?
With Tillerson getting nominated, I think that Exxon stock might pop up a lot not necessarily because of legitimate rational choices but because of investor psychology. If you look at Dick Cheney's tenure as VP and Halliburton stock, it popped up 937% from 5.03 (1/18/02) to 52.16 (6/27/08). I'm a bit biased perhaps in saying this as a Republican, but Halliburton still got contracts under Clinton and they definitely did not get a lot of contracts under Bush to justify an almost 1000% increase in stock price. I think the culprit here was investor psychology- people thought Cheney would look out for Halliburton's interests and bought the stock.
I think the same may be true for ExxonMobil in this case. If Tillerson gets nominated, he may or may not pass things favorable to Exxon's agenda, but investors will buy the stock nevertheless. Now what's the catch here?
First off, the guy isn't even nominated yet. He's gotten the support of Bush Jr., who said he's a good guy, but there's still a lot of uncertainty. Hawkish Republicans like Rubio, Graham, and McCain are skeptical of his ties to Russia and if Trump ties to play Tillerson as a hawk he could lose support from Rand Paul, who sits on the Senate Foreign Relations Committee, and perhaps others.
Second, Trump clearly has a pro-drilling agenda. He wants to drill more, but is that necessarily good for oil companies? More domestic drilling should increase oil supplies and that could put pressure on oil staying in the fifties and could be matched by increases from OPEC to defend market share against a guy like Trump, who said that he wanted to use Sherman anti-trust laws against OPEC.
What do you guys think? Did I miss the rally after he got picked and wait it out until the hearings start and we get more information, should I pick it up now before the price gets any higher off of investor psychology as we get closer to hearings, or should i avoid it altogether?
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Someone reply, I'd like to know too.
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There's no way the value of the company doesn't increase if Tillerson gets through. So yes, you're correct there.
However, Exxom is still an oil company, and its stock moves in a highly correlated way with oil prices. That won't change as long as they're in the oil business.
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>>1705940
I was just planning on holding it for a little bit, perhaps 4-5 months, and then making a decision on what to do once we start seeing the influence of oil prices. Exxon seems to be well positioned in the event of a low oil price environment though, they have a lot of business in chemicals and refining, more so than other energy giants (to my knowledge).
Would you recommend this strategy, i.e. buying until Tillerson gets nominated?
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>>1705945
I would.
If you really want to double down, buy calls on XOM that expire next Friday.
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>>1705946
Gotcha. Thanks for the information anon.
I did some more reading and I think it's very likely he'll be nominated. He just said he'd separate from Exxon and Rand said he'll keep an open mind. I don't doubt that Trump will be able to cut a deal with Rubio, McCain, and Graham on appointing Tillerson, since he seems to be doing well politically so far. Plus, finding a new Secretary of State pick is going to be difficult, considering Gingrich has backed out, Rudy has got conflicts of interest, Bolton is a little too hawkish for Trump's taste (went against him on the hacking thing, for instance), and Corker wouldn't scrap the Iran Deal, which Trump made a big deal about.
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>>1705950
>http://www.nasdaq.com/symbol/xom/option-chain/170113C00088500-xom-call
>http://www.nasdaq.com/symbol/xom/option-chain/170113C00090500-xom-call
You're welcome neet
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>>1705950
They'll bend the knee. Tillerson is a sweet talker, and the Republicans know that they still need to be on Trump's good side. Didn't you see how quickly they gave in once Trump tweeted about them cutting the ethics committee? They're his bitch, through and through.
Let us know how much money you make next week.
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OP don't do it, gas won't even be used within the next hundred years. Invest in something guaranteed like death and taxes. Check out $STON...2nd largest funeral services stock AND it pays 14% annual dividends.
At the height of the recession, it crashed at low 9.00s...it's now 9.29. Very oversold, and it's a business that no one will try to cheap out, baby boomers will die out by 2035. Excellent value indeed.
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^ to further reinforce my argument
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>>1706213
>Investing on a 100 year timeframe unironically
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