I'm ready to invest.
I think this is the "buy low" time. At least, it is close.
I want to invest in my local economy.
Which company right now looks like the best Oklahoma investment?
Please explain your answers and include any other local companies that I should look at as well...
TYVMIA.
Devon
I really don't have an explanation except to say that I've been told by people in that business that they are well-managed and conservative with their money, so they know how to survive the ups and downs of the oil field. Good luck!
"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
- Fred Bastiat
For a long term investment, Devon (65.69 today, 54.40 - 127.43 the past year) for the reasons stated above.
For a short term "hope it goes up to cash out and profit take", Chesapeake (closed at 15.00 today) has more volatility which could cause a spike in the market to be a money making opportunity. It has ranged from 11.99 to 74.00 in the past year.
Devon
(it's my daughter's name) She's a drama queen, but a pretty good kid for a 15 yr old......
Sold some CHK stock just in the nick of time, thank God. Devon is the stronger company, if you can afford the stock, no sure how high it will go. CHK is affordable, and very well may rise again with the increase in clean fuel alternatives. The problem with CHK is that they are so highly leveraged.
That can lead to volatility, which CAN lead to profit taking if you time the buy/sell correctly, and a little luck which is what stock market investing is pretty much all about. At between 15-16 a share it can't go down "too much" compared to a 60-70 stock like Devon, the floor is just much shallower and if you have a decent sized investment in it you probably would be checking on it every few hours to minimize the possibility of the bottom falling out of it. I definitely wouldn't put a huge amount in there but keep a small portion as a "flexible" investment...but I also view investing as money that you can "throw away" since it is about the same odds as Vegas. Especially in these market conditions, just like Vegas, there is great opportunity to win...and lose in the market right now.Originally Posted by Ace
My little piece of advice to you would be to check the ROE (internal return on equity) figure for both. That's a VERY good indicator of how the company is managed.
Otherwise...buy it and forget it.
"throw away money" is a good plan/attitude to have. I read a funny (well, maybe not so funny) article recently. It compared a guy who collected aluminum cans for the past 5 years was making more profit than some investors in the market.
A well thought out plan is to have numerous stocks in a variety of interests. Some companies like Johnson and Johnson, or similar companies, that make everyday products (toilet paper, soap) seem to stay steady. People will always need and buy those things.
These two are related. High leverage isn't really a problem as long as you can service the debt, and it can really pump up your return on equity numbers if done correctly.
Example of how this works:
Imagine you have a project that costs $100 to complete. Upon completion, you will receive $110.
Imagine you fund this project with no debt, that is to say -- 100% equity. Your profit in this case will be $10, and your return on equity (ROE) will be 10%.
Now imagine you fund this project with $90 of debt at 6% interest and $10 of equity. You pay back $90(1.06)=$95.40 at the end of the period, have $14.60 left. Equity holders paid in $10, so your ROE is $4.60/$10=46%.
On the other hand, if you end up having problems servicing the debt, you can end up wiping the equity holder's stake out.
Leverage, in essence, is a multiplier for equity holders -- it magnifies both gains and losses. Whether this is something you want in your portfolio is up to you to determine.
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