Posts filed under “Investing”

Exploration versus Share Buybacks ?

"Exxon Mobil spent more money in 2005 buying
back stock than it did on capital spending, exploration and research
and development."

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I don’t believe in windfall profit taxes; No one subsidized my major integrated oil holdings when they did diddly for years other than pay a nice dividend.

Sheesh. When you read quotes like the above, you gotta think to yourself: "What the Hell were these idiots thinking?" They are just begging for Congress — and both sides of the aisle — to whack them, and good.

Goodbye oil subsidies, hello alternative energy tax cuts.

Lee Raymond has a good rap re: his stewardship of XOM — although it was kinda hard not to make money in the energy business the past few years.

Can we talk about having a tin ear for public sentiment and political realities . . .

Xom_5_year

Floyd Norris of the NYT reports:

in the wake of Exxon Mobil’s report last week that in 2005 it spent more money buying back stock than it did on capital spending, exploration and research and development.

If money is not invested in oil and alternative energies, then high oil prices are far more likely to continue as fewer resources become available. They are likely to continue in any case unless growth halts in India and China.

Exxon Mobil’s reluctance to invest may simply reflect its conviction that the current high oil prices cannot last, that they are sure to come down soon. If that happens, those who invest now may look foolish as projects that take years to complete become uneconomical before they begin producing.

But it may also reflect the way its chief executive’s compensation assures that he will become very wealthy so long as the company does not collapse. Rising share prices are nice, but not necessary.

Exxon Mobil has not yet released total 2005 compensation figures for Mr. Raymond, who stepped down as Exxon’s chief executive at the end of the year. But we know he earned $38.1 million in 2004, with 550,000 shares of stock accounting for 74 percent of that.

Instead of windfall profit taxes, expect to see some sort of tax penalty for when share buybacks or dividends exceeds  exploration and R&D.

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Disclosure: Long BP, COP  (and for long enough that the ownership came via Amoco (BP took them over) and Phillips (Conoco took them over) 

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Source:
Perhaps Exxon Really Needs Stock Options
By FLOYD NORRIS
Published: February 10, 2006
http://select.nytimes.com/2006/02/10/business/10norris.html

Category: Commodities, Investing, Markets

Anticipating Consumer Slow Downs

Category: Consumer Spending, Investing, Wages & Income

Consumer Spending Slowdowns and Bear Markets

Category: Consumer Spending, Investing, Markets

Sourcing the Greenspan Chatter

This is the article that the Greenspan quote came from that popped the market today; I don’t know how accurate it is (holographic image?) but

Gold price riding high on fear of terrorism, says Greenspan
Leo Lewis, Tokyo
February 09, 2006
http://tinyurl.com/98gdp

Excerpt:

"ALAN Greenspan, who stepped
down last week as chairman of the US Federal Reserve after 18 1/2 years, has
blamed the threat of terrorism for the high gold price, in his first private
sector speech since being let off the leash of officialdom.

According to
members of his audience of international investors – watching a holographic
image in Tokyo as he spoke in New York – Greenspan said the high cost of gold
did not reflect inflation or the strength of commodities, but rather a fear
among investors of a major geopolitical conflict. There were people who believed
that a nuclear weapon could be detonated within five years, the former American
central bank supremo said.

The low probability of such an event occurring would not necessarily avert a
spike in the gold price, he added.

Greenspan went on to discuss a range of topics, including the problems
created by a lack of investment in refining capacity by the oil industry. He
said this failure by the oil majors meant that the era of cheap energy was
almost surely over.

The former Fed chairman is also said to have indulged in a moment of
self-criticism over the central bank’s failure to prevent the market bubble in
the late 1990s.

That may explain Gold’s $20 whackage yesterday, but what about all the rest of the metals and commodities?

Also, if you missed this, you MUST read it:

GREENSPAN SENDS MIXED SIGNALS IN FIRST DAY AT HOME
Former Fed Chief’s Inscrutable Statements Baffle Wife
http://www.borowitzreport.com/archive_rpt.asp?rec=1307&srch=

Its a hoot!

and on the chance the article disappears, I’ll archive it after the jump . . .

Read More

Category: Federal Reserve, Inflation, Investing

The Risk to Equities from Rising Rates

Category: Federal Reserve, Fixed Income/Interest Rates, Investing

It’s (Still) a Small (Cap) World

Category: Investing, Markets

Top Ticking Real Estate is Different Than Stocks

Category: Investing, Markets, Psychology, Real Estate, Trading

Bulls Looking for a Cinderella Scenario

Category: Economy, Investing, Markets, Technical Analysis

The Power of Compounding

Category: Investing

4th Year a Charm? A Look at Oversimplified Predictions

Category: Apprenticed Investor, Investing, Markets