Ken Fisher

Ten roads to riches…and a better world

Ten roads to riches…and a better world

Not everyone will get rich, but most people can, says investing legend Ken Fisher, they just don't know how. Here are ten ways to do it.

Buy oil giants and this high-yielding blue chip

Buy oil giants and this high-yielding blue chip
Oil investors should know what drives the market…and it's not OPEC, argues Ken Fisher. The investing legend also tips one of the biggest UK companies around.
We're past peak OPEC
To fathom oil prices - and gauge energy firms' earnings and the North Sea's economic prospects - don't fuss over OPEC. Fathom America's shale industry instead. 
So many see this wrong. Every rumor about OPEC production cuts spurs hundreds of headlines, speculating over the price impact. Hard to know why, but I suspect it's an historical bias, a leftover legacy of the late 20th century. 
First there was the Arab oil embargo, which caused supply shortages and soaring prices. Then came  the 1980s, 1990s and 2000s' "peak oil" fears as US production dwindled and everyone feared we'd run out of crude. Saudi Arabia, then the world's swing producer, could effectively control global supply growth, pumping more or less depending on whether it wanted to nab market share or boost prices. 
Their price influence was often overrated, but now that's even truer. Last decade's high prices spurred a flood of technology investment into horizontal drilling and hydraulic fracturing as American firms sought to exploit massive shale oil reserves. The oil wasn't easy to access, and extraction costs were high, but record-high oil prices made it profitable. Oil rig count soared and US production skyrocketed, ultimately creating a global supply glut that whacked prices hard. Without US shale, Brent crude doesn't fall 75% from June 23, 2014 through February 11, 2016. 
America's new oil era created another multi-headed, multi-corporate swing producer, answering only to price signals - not cartel or government directives. OPEC? Neutered. Crude initially rose after the cartel's much-ballyhooed November 30th Russian deal to cut production, but the rally lasted just two months. Since February 2, Brent is down 6.3%. America's benchmark, WTI, is about even with its November 30 price. 
Many pinpoint OPEC. Wrong! Though members are tightening, progress on cuts isn't great. Initial reports suggested about 94% compliance with pledged cuts. More recent reports from Reuters peg it at 82%. Now headlines dwell on whether they'll extend the cuts into 2017's second half.
But OPEC isn't the reason global oil supply, which briefly dipped in 2016, is rising again. America is responsible! US inventories hit record highs for four straight weeks through early March. Active rig count has nearly doubled since 2016 lows. 
A funny thing happened over the last two and a half years: With oil prices low and firms desperate for profits, they got more efficient, devising cheaper ways to get more oil. For instance, firms figured out "dead" wells weren't really dead, and if you went away and came back, you could re-claim more oil - no new exploration or drilling required. Cheaper! Breakeven prices have fallen across America's major shale formations, reaching as low as $30 per barrel in Texas. WTI is $49.47 a barrel. Low by historical standards, but profitable. 
Prices are marvelous motivators. As they stabilized last year, producers locked in higher prices with futures contracts, added rigs and started pumping away. Some firms tapped the "fracklog" of wells drilled before oil's crash - but had never tapped. Others used new 3D seismic imaging technology to cheaply discover new reserves and started drilling. America's shalers are now nimble and quick, and slow-moving OPEC is no match.
For Britain, the upshot is probably a struggling North Sea. Sorry. Most projects there have breakeven prices near $60 per barrel, forcing producers to cut back and get lean even as America ramps up. Where US drilling activity and oilfield investment rose in Q4, they fell in Britain. Mining output (which includes oil) fell -7% quarter-on-quarter. Oil dragged UK business investment negative. 
This also radically changes the calculus for Nicola Sturgeon's quest for a second Scottish referendum. Last time, high oil was a boon for Scotland's finances and a rallying point for the independence campaign. This time, cheap oil makes independence extra-risky.  As for your portfolio, Britain's higher extraction costs probably make US refiners and vertically integrated giants a better buy than UK Energy firms. 
And globally? Since oil flipped from an economic headwind to a tailwind in America, growth is speeding up, giving the world a nice push. Bull markets don't end when the world is accelerating, as it is today. Keep owning stocks like these:
Cloud computing seems in clear skies, great for Salesforce.com. Don't expect it to show material earnings soon - or for that to stop its stock. Revenue growth will propel it. For stocks like this net earnings are less critical than growth plus fat operating margins plowed back into more growth - which are fully 70%. As it crosses $10 billion in revenue in its January 2018 fiscal year, it should emerge a halo stock like Amazon has been off and on for years.
Some big drug stocks didn't have a great 2016, but hang tough. Before America's Obamacare gasps its last they'll shine. Improving in that realm is Britain's own GlaxoSmithkline, as its new respiratory drugs breathe life into a stock selling at 14 times my 2017 earnings estimate with a 5% dividend yield.

Oil investors should know what drives the market…and it's not OPEC, argues Ken Fisher. The investing legend also tips one of the biggest UK companies around.

Ken Fisher: Why CAPE is useless

Ken Fisher: Why CAPE is useless

With animal spirits stirring and confidence growing, investing legend Ken Fisher says ignore the famous CAPE ratio. Be ready for the 'melt-up' by owning stocks like these.

'I heard it in the news, so it must be true': Fisher's financial mythbusters

'I heard it in the news, so it must be true': Fisher's financial mythbusters

Reading news tells you what everyone is focused on, but to be successful you should know something others don't, Ken Fisher explains.

Busting the myth: Equities can't rise when the world is so scary

Busting the myth: Equities can't rise when the world is so scary

Capital markets are resilient because humanity is resilient, argues investing legend Ken Fisher. Those who bet against that have been proven wrong, time and again.

Why the time to own these stocks is now

Why the time to own these stocks is now

Wall Street legend Ken Fisher has a new investment idea, but buy before everyone else gets wise, he urges. As usual there are also two share tips to play the theme.

Must equities crash when they outpace GDP?

Must equities crash when they outpace GDP?

Equities can, should and probably will continue annualising a higher rate of return than GDP growth. Ken Fisher explains why that makes sense.

Investing legend on why stocks should soar in 2017

Investing legend on why stocks should soar in 2017

Don't get left behind as scepticism finally gives way to animal spirits, urges billionaire investor Ken Fisher. The uber-bull makes a great case for further share price gains.

Volatility the biggest risk investors face in 2017

Volatility the biggest risk investors face in 2017

Volatility is the biggest pothole in the path to mouthwatering returns, warns Ken Fisher, but interest rate risk, inflation risk and political risk shouldn't be underestimated either.

Don't trumpet Trump - trumpet the bull market

Don't trumpet Trump - trumpet the bull market gridlock congress share prices

Stocks will be just fine with Trump, as the nearly eight-year bull market marches on, argues investing legend Ken Fisher. He has two share tips for you, too.

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