Marathon Oil Increased

By on March 6, 2020

MROToday cash in the SMA Portfolio was used to increase the allocation in Marathon Oil (MRO). MRO was purchased at $7.39 and its allocation was increased from 0.3% to 0.5%.

Today’s OPEC meeting did not result in an agreement to cut production which devastated the entire energy complex. Exploration and production, MLPs and the service sector went into a freefall I’ve never seen in my lifetime. It looks like capitulation. Unfortunately, I made a big move in this sector over the past month just when its relative underperformance accelerated. Now having no cash all I can do is hope for a rebound. This doesn’t appear very likely in the near term.

The natural tendency after a big decline is to give up on a sector.

Here is some history from my personal observation and experience. SPDR S&P Oil & Gas Exploration & Production ETF (XOP) holds 58 different positions in the strongest entities in the U. S. energy complex (Apache, ExxonMobil, Chevron, Hess, Pioneer Natural Resources, Marathon Petroleum etc.). On July 9, 2018, in another discretionary account I sold shares of XOP at $44.50, booking a nice gain. Today XOP closed at $12.91. On June 16, 2014, XOP traded at $83.30. XOP is down 85% over the past 5 1/2 years.

My point is that the energy sector is extremely volatile. In my opinion, it is too late to give up on energy. In fact, it seems to me the energy sector is the perfect contrarian play at this very moment. I recall the utilities sector was universally hated back in the fall of 2002. This was the point in which utilties began a multi-year bull market. Energy feels the same way to me now.

Disclaimer: It is very challenging to outperform a buy and hold strategy. Historically, investors have found themselves well-served over the long-term by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Information presented is based on analysis of past data and assessments by the Tactical Timing System model. Future performance may not reflect past performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented.

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