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“It’s the Most Profitable Energy Company in the World… And You’ve Never Heard of It”

Sleuthing the Oxford Club tease ... "Why a Shocking Announcement Could Triple the Share Price by Year’s End..."

By Travis Johnson, Stock Gumshoe, February 13, 2013

OK, there’s two statements that really caught the eye of Gumshoe readers in this latest teaser pitch from the Oxford Club — first, that they say it’s the “most profitable energy company in the world” … and second, that they say it will triple by the end of the year thanks to a “shocking announcement.”

But if I’m being honest with myself, I have to tell you that the reason I had to cover this piece today because the subject line of the ad read, “I bet you can’t name this company.”

To which I feel professionally bound to respond, in my inimitably mature manner, “can so!”

So let’s get on it, shall we?

The ad is signed by James Boxley Cooke, aiming to get you to join the Oxford Club for $79. Here’s the pitch about what a spectacular and top-secret company this is:

“In short, a certain energy company, a business that I estimate not one in 20,000 Americans can even name, is about to make a major announcement that will launch one of the most explosive stock run-ups in recent history.

“If I told you the name of the company right now, you would likely have no clue what I was talking about.

“And yet, according to CNN, this company is nearly 12 times more profitable than Toyota… three times more profitable than WalMart… four times more profitable than ConocoPhillips.

“It’s more profitable than Royal Dutch Shell, Exxon Mobil, BP and Chevron.

“And I’m talking bottom line profits here, not growth rate.

“Furthermore, this company manages to make more money than all these industry giants, on just a fraction of the revenue.

“It might just be the world’s most profitable company.”

Some details?

“According to their June 2012 annual report, they operate more than 6,988 wells producing natural gas, with reserves worth an astonishing $299 billion. They run 6,151 oil-producing wells. They own the largest gas transportation network in the world. They’ve installed 81 power facilities generating 37 gigawatts of power.

“They export more natural gas to Europe than any other company… And they own nearly a fifth of all worldwide supplies of natural gas.

“On top of that, they just rewarded shareholders with by far the biggest dividend increase in company history.”

And the ad says that for “one specific reason,” a “weird anomaly,” this fabulous company is three times cheaper than the competition. So who wouldn’t want to learn about something like that, right?

They also, of course, make absurd promises — such as that you might be able to “fund your entire retirement on just one stock.” That may sometimes end up being true for patient and persistent investors, but it’s certainly not something anyone should ever plan on … or promote.

They give a few examples of past wins they’ve had in their recommendations, stocks that doubled or tripled, and that’s just lovely — but of course, one stock that doubles or triples can’t “fund your retirement” unless you do something foolish like putting half your nest egg into that one stock…. and yes, like every other newsletter, I’m sure there are Oxford Club ideas over the years that they confidently expected to triple which instead fell by 50% or more (in our teaser tracking spreadsheets do have a couple 100%+ winners over the last few years like TAXI and KOG, but they also promoted possible 1,000%+ gains for a stock that turned out to be a real turkey in 2009).

Here’s another little excerpt from the long spiel about all the stuff this company does:

“Why Nobody Has Even Heard of (Let Alone Owns) This Stock… Yet

“The energy stock I’ve been talking about is a virtual baby in the energy business. Its first stock offering was less than 20 years ago.

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“By comparison, Exxon Mobil’s origins go back nearly 150 years to the days of Standard Oil.

“But while Exxon Mobil, Royal Dutch Shell, BP and others enjoyed the benefit of a major head start, things have changed dramatically over the last few years.

“In 2012, this company’s oil exploration budget alone jumped to $6.1 billion. It will increase to $23 billion over the next three years.

“They’re opening an average of more than two new oil-producing wells every week… with 755 new oil producing wells coming online in 2011 alone.

“The firm operates gas and oil exploration projects in the United Kingdom, Vietnam, Bolivia, Russia, Algeria, Kuwait and more. As a result, they’ve set record highs for increases in gas reserves.

“The company now controls 18% of global supply. That’s approximately 35.6 trillion cubic meters, valued at around $300 billion….

“By dominating its markets, quickly expanding across the globe and consistently developing new resources, this company has created perhaps the greatest profit machine in the history of modern industry…..

“Earnings per share leapt 141%. Net profit jumped 141%. Dividend per share is up an astonishing 133%.

“Bottom line profits were nearly $45 billion. By comparison, Royal Dutch Shell had $30 billion in profits….

“Their current profit margins of 27.21% are more than double the industry average of 11.76%.”

And we hear from some outside sources, too, to help us believe that the Oxford folks aren’t just making this up:

“One of the few major analysts covering it called it a ‘mega-cheap valuation.’

“‘With the valuation insanely cheap at less than 2.7 times earnings, the stock will double as investors believe [this company] should be trading at double the current P/E multiple,’ they said.

Forbes has called it the one ‘company investors cannot ignore.’ Adding, ‘What makes [this company] a buy is its position in the natural gas market, its massive reserves, and regional demand for the only clean burning fossil fuel around.'”

And what’s the reason that the stock is going to suddenly triple and become favored by the market? The short answer is, “it’s going to get a US listing” … here’s the longer explanation from the ad:

“To … bring the stock up to where it rightfully belongs, company executives have finally started loosening the strings.

“They now trade on the London Stock Exchange. They also have an ADR listed with The Bank of New York Mellon. Shares are traded on the over-the-counter market on the Nasdaq….

The Major Announcement… And Why it Could Triple Your Money

“This company has dominated almost every major market it’s gone after. Europe, Japan, India, China… You name it.

“But now, they’re about to go after another market…

“For the first time in company history, they’ve decided to enter the North and Latin American markets. Reports indicate they’ll target “a number of countries there, including, primarily, the United States.”

“Not only will Americans start seeing this company on billboards, TV ads and trucking gas and oil down the highways, but they’re about to see the company name on the front page of every financial newspaper across the country.

“Here’s why…

“In preparation for this big move into North America, our sources indicate that this company will soon make the shocking announcement that it will be listed on the New York Stock Exchange, the world’s deepest and most liquid market.

“When this announcement hits the mainstream media, the stock will go roaring up the charts.”

Well, that’s a long littany of clues, and a lot of hype teasing the “most profitable company in the world.” So who is it?

This is, as some of you may have guessed, the Russian gas giant Gazprom (GZPD in London, OGZPY for the sponsored US ADR on the pink sheets). Gazprom’s oil subsidiary, Gazprom Neft, is also publicly traded, by the way (GAZ in London, GZPFY on the OTCQX in the US), but this teaser appears to be for the parent (Gazprom owns more than 90% of Gazprom Neft).

And what’s the “weird anomaly” that makes Gazprom so much cheaper, by most standard valuation measures, than other major oil and gas companies? Well, my guess would be that it’s the 50.002% ownership by the Russian Federation, which has strategic imperatives that aren’t necessarily the same as outside shareholders (Gazprom is one of Russia’s “National Champions” — companies that are expected not only to grow and be profitable but to benefit the Russian national interest). About 28% of the shares trade outside of Russia, in ADRs in London and NY mostly, and those shareholders are all quite aware, I’m sure, that Gazprom is controlled by Vladimir Putin and his government.

The plus side of that is, Russia won’t take Gazprom over and de-privatize it or throw the CEO in jail as they’ve done with private companies run by upstart oligarchs in the past … but that’s only because it’s not really private to begin with since the Russia government already has more than 50% of the shares and can therefore do pretty much anything they want with the company.

There are a lot of state oil companies in the world, including some that have partially privatized and kept a large government ownership, and I don’t necessarily object to all of these as a matter of course — there are some, including Petrobras (PBR) and Statoil (STO) that I’ve invested in over the years, too, and both of those have effective 50%+ control by the government, as do, I presume, the Chinese majors like PetroChina (PTR), though Chinese state ownership always seems a bit murkier. PBR, STO and PTR all trade at substantial premiums to Gazprom, which is partly a reflection of the operational opportunities and efficiencies of those companies and partly, I presume, a reflection of the relative investor concern over government interference from China, Norway and Brasil compared to Russia. Petrobras, by the way, is also a recent cautionary tale for state oil investors — they are still a huge and regionally dominant company, with large discoveries, but they are pressured on prices domestically and also strategically directed to invest heavily and rapidly in their deepwater offshore projects that are incredibly expensive (not that this is a bad strategy, but the costs are impacting near-term earnings and driving up debt).

The other risk, coming into investors minds more recently, is that Gazprom does also have some operational challenges — challenges that are leading them to invest very aggressively both in Russia and overseas to build their supplies. They went cash-flow negative in their last report (though they did have good earnings growth, thanks in large part to currency exchange rates), and reported a lower 2012 dividend than folks were expecting, but have still been growing quite nicely.

I can’t fully analyze a company this big for you in the few minutes we have together today, but the concern seems largely to be two-fold: Gas prices and demand have been down in Europe, which is Gazprom’s largest export market thanks to their easy pipeline access, with Europeans demanding lower prices now; and Gazprom is spending a LOT of money to develop fields and expand production both at home and abroad. So yes, the company is dirt-cheap, probably absurdly so, and pays a solid dividend that beats most oil companies (the trailing PE really is under 3, and dividend yield is around 6%) but there are reasons for it to be cheaper than most of the big oil companies. Whether or not it should be this much cheaper is, of course, your call to make — it is, after all, your money.

We’ve seen somewhat similar teases over the years for the most independent large Russian oil company, Lukoil (LUKOY for the ADRs), and though Lukoil has generally moved up pretty well over the years it has not closed the discount gap — it has moved up about the same as most oil companies have over the last five years, and is still trading at a PE ratio below 5, cheaper than pretty much any big energy company in the world (except for Gazprom, of course). So the fact that it’s cheap doesn’t mean it will stop being cheap anytime in the foreseeable future — Lukoil and Gazprom both have reserves, cash flow, earnings, etc. that should give them better valuations, but they also have challenges and political overhangs that could also give them even lower valuations, there’s no rule that says a cheap company has to become less-cheap on any given timeframe, particularly if the company is cheap for real and persistent reasons.

The biggest reason for the cheap valuation of Gazprom, I would argue, is the political overhang and the state control — and I can’t imagine that going away, though it does wax and wane in terms of the importance it holds in the minds of investors. A New York listing for Gazprom would very likely help the stock, at least in the short term, but I have heard no rumors or reports of that happening other than this ad from the Oxford Club, and frankly I think it’s still unlikely given Vladimir Putin’s focus on building Moscow into more of a financial center and strengthening the Moscow Stock Exchange (which is going public in an upcoming IPO) — I suspect that Putin will want Gazprom, Russia’s largest company, to trade more actively in Moscow.

It’s possible that Gazprom could get a listing on the NYSE, I don’t know, but if it does it might just take some of the volume from London and I can’t imagine that they would issue new shares that dilute the government’s control. That’s just my opinion, of course. I don’t think that would be anywhere near enough of a push to get the stock to trade at, say, seven times earnings instead of three times earnings — for that, we would need investors to revalue Russia in general and to change the way they discount Gazprom for being a “national champion.”

The bit from the tease about Gazprom tackling the US included a quote from an article, but that was a Russian article about the potential for Gazprom to export LNG to the US and Mexico. That might happen, but the more likely push from that is Gazprom partnering with Pemex to help them boost gas production in the Gulf of Mexico — shipping LNG from Russia to Mexico and the US would just be stupid. Gas is worth far more in Seoul, Tokyo, or even Rome or London than it is anywhere in the Americas, and US pipeline supplies of cheap gas from our booming shale regions are likely to depress investment demand for gas production in Mexico.

The “major analyst” they quote as calling Gazprom “Mega-Cheap” seems to be a Seeking Alpha contributor, though certainly other analysts have noted that it’s at a very low valuation — that SeekingAlpha article is here if you’d like to read the bull case, which is basically that the shares will double because investors will close the PE gap between Gazprom and other energy majors.

And the bullish Forbes quote is from a contributor who wrote a bullish article back in 2011, you can see that here. And yes, Gazprom is probably the one Russian company investors “cannot ignore”, but that’s also largely because it’s so freaking huge — Gazprom is 8% of the most widely traded Russia ETF (the Market Vextors RSX), and is a far larger holdings in other funds that aim to represent the Russian market like ERUS (19% Gazprom) or RBL (17% Gazprom).

If you want a less optimistic take, Reuters had a pretty good brief article here covering Gazprom’s most recent earnings, including quotes from some analysts who have concerns over capital spending and efficiency. There has also been recent concern about Russia loosening up the monopoly that Gazprom has over gas, partly to spur faster investment in LNG export facilities (an area where they are about as far behind the gas-exporting world as the US).

So there you have it — Gazprom’s cheap, no argument there. The Oxford Club folks seem to think it’s going to triple this year because folks will realize they’re too cheap and they’ll get a NY listing. I have invested in a few Russian companies over the years and own one now, but I can’t say that I know this company particularly well and I don’t really have any interest in buying a Russian commodity producer, even one as cheap as Gazprom — but that’s just me. What do you think? Let us know with a comment below.

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lodgeag
Member
lodgeag
February 13, 2013 1:37 pm

Also this, from Reuters yesterday:
‘A Kremlin energy commission will
consider a request on Wednesday from a Gazprom rival
for rights to export liquefied natural gas, chipping away at the
state’s gas export monopoly which could lead to broader reform.’

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dave
Guest
dave
February 13, 2013 1:57 pm

Travis; Thanks for all the articles. They are great. I had some direct experience of the management of GazProm some 15 years back and I echo your thoughts. They are a lumbering, bureaucratic monster that have Putin’s hand on the tiller. They blunder about threatening their customers ( Ukraine for example ) and seem not to realise that Germany et al can see an analogy when it is demonstrated to them. Their resources are enormous and they have superb infrastructure into their captive markets but shareholder value is a crumpled paper in the boardroom.

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paul rossi
paul rossi
February 17, 2013 10:56 am
Reply to  dave

And who is that biotech?

Dick
Guest
Dick
February 13, 2013 2:49 pm

Well if I want to triple my money I’d rather bet on a small biotech that promises it will be able to grow my hair back.

Ventureshadow
Guest
Ventureshadow
July 19, 2013 1:59 pm
Reply to  Dick

Don’t you already have enough hair on your back?

Bud
Member
Bud
February 13, 2013 2:55 pm

I delete 90% of my financial emails but love to read yours. Keep it up!

jax
Guest
jax
February 14, 2013 4:25 pm
Reply to  Bud

ditto that

SageNot
Guest
SageNot
February 13, 2013 3:10 pm

Actually, LUKOY was primed to bust out in 2008, but got cut in half instead. It’s slow recovery still hasn’t made up for that 2008 loss. Once Europe becomes customers of our shale oil & gas industry, these Russian giants w/b fighting to keep their share of the export trade. I wouldn’t be surprised if Mexico discovers a few shale formations in the near future. WHAT PEAK OIL???

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ELISSA JUNG
Member
ELISSA JUNG
February 13, 2013 3:28 pm

WHY DO I FEEL AS THOUGH I SHOULD GO…GOBBLE,GOOBLE, GOBBLE!

Bob
Member
Bob
February 19, 2013 7:41 pm
Reply to  ELISSA JUNG

Gazprom may be a monopoly in Russia, but not in Europe or the world, where prices are set by world markets, not by Russia, and competition is plentiful, with Norway’s Statoil (also State owned) breathing down its back, followed by Libya, Algerian and Nigerian state-owned energy companies, and LNG deliveries increasing from multiple sources.

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hipockets
July 19, 2013 8:32 pm
Reply to  ELISSA JUNG

Just to be clear – is that “GOBBLE,GOOBLE, GOBBLE” as in, “This stock is a turkey,” or as in, “Fill up my plate – I’ll take all I can eat!”? :>)

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softbeaut
Member
softbeaut
February 13, 2013 4:01 pm

A view from the UK. Yes, I agree Travis & Dave this company has grown by using its monopoly and state backing to eat up its rivals in Russia (think of the government campaign against its targets like TNK -BP or Shell just as it was going to make a profit). It keeps secret its prices and bullies its clients (Ukraine is being charged for not using gas!) and it made itself the only pipeline into Europe, successfully blocking any others. Europe has switched away from Gazprom’s high prices so Gazprom has the choice to lose market share or lower prices.
Gazprom has not made its money using new technology or by introducing efficiencies or exploiting shale gas. It has made it by being a monopoly and in its own market it has absolute price control – domestic gas prices are higher than in the USA. If you look at its output figures they have fallen over quite a number of years. Typical monopoly behaviour – keep the price up by reducing the product. You could say that Gazprom, despite the state owning the controlling share, is so big it operates in its own interests. Gazprom effects the political landscape in Russia – it has managed to acquire enough assets to become the largest electric producer in Russia as well and has special tax exemptions.
It is not going to go away but shareholders are unlikely to see value despite Putin saying state companies should pay out 25% of profits. If there are successful competitors to Gazprom (like if other Russian companies are allowed to also export LNG) maybe they will have to lower prices and become more efficient. Keep watching but buy elsewhere.

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tomt
tomt
February 13, 2013 5:07 pm

All of what you say is key to this investment Travis, and why it IS, HAS BEEN, and may continue to be cheap. But the recent shifting of more funds into stocks, sentiment, yada yada, AND including a Wall Street launch, you have to consider if they can actually lure a lot of US money into Gasprom. Perhaps this will be easier than you or I think, now that buying momentum has been established, and a big gainer will generate the self fulfilling promotion needed to sail Gasprom all the way to “fairly valued multiples”.
Vladamir Putin is now president of the G20, Putin’s agenda to replace the dollar in its role as a world reserve currency was communicated in a letter he gave the G20 membership in their meeting last Fall. I think it was reported on Zero Hedge. What an irony this Gasprom fundraiser will appear to be if such a resolution were to be approved, say in the Fall G20 get together.

SigSilber
Guest
SigSilber
February 13, 2013 5:18 pm
olivan leach
February 14, 2013 1:29 pm
Reply to  SigSilber

Karen I am all so in my 60’s and I have been lucky enough to have started investing about 30 years ago. I started out letting the money guys do it for me and I never made enough to buy a setting hen with. My wife has one old fund that has not come back fro the 2000 crash. She hangs on for god knows why,but its hers alone so I just let old dogs lie. My advice is if you don’t have one get you a acct. with one of the cheap stock trader’s so your trading is cheap. Than look at place’s like Gumshoe to get ideals of what to buy. Do your home work and buy small ,100 share’s or less at first. Don’t make the mistake many do and only buy cheap stocks.Remember a $2.00 stock is that cheap for a reason. Don’t be afraid to sell if a stock starts falling for a reason. Good investing is not setting thinking a sinking ship will not sink. In the world of discount brokers you can all ways buy a stock back if you where wrong and sold to quick. Just don’t let the world pass you by because you are afraid to go buy a stock.
Good luck and go make some easy money,its better than being a greeter at wally world.

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investor101
Irregular
February 14, 2013 10:28 pm
Reply to  olivan leach

Thanks so much for your kind advise. I do have an Etrade account that I dipped my foot in the water with about 5 years ago, and believe me when I say I was tentative, never ever bought over 100 shares! Didn’t want to lose money. Surprisingly it has remained a little bit over what I have put in there. It was down during the bust in 2008-2009 but has come back up. I’m afraid I am a buy and hold type of person, could never be a day trader, that is way too nerve racking for me. I am so happy to have found this site and want to learn from all.

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George
July 20, 2013 2:18 pm
Reply to  investor101

There is a low risk way to make lots of income with minimum down side potential. I have been using it the last 10 years. This is the Municipal and industrial bond market. It is been possible to make 6% tax free with little risk of loss. It is a buy and hold strategy that works like a money printing press. I live very comfortable on this income stream and sleep well at night.

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B. J. Italian
Member
B. J. Italian
July 20, 2013 9:10 pm
Reply to  George

Do you have city of Detroit bonds?

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Byron Johnston
Member
Byron Johnston
July 22, 2013 12:31 am
Reply to  investor101

Think or swim from TDAmeriatrade offers an amazing piece of software for its clients.
It allows you to learn to trade using make-believe paper money to trade all the various markets… options; Forex; Stocks; Equities and Equities Options There are lots of education videos available.

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hipockets
July 19, 2013 4:45 pm
Reply to  SigSilber

Thanks, Sig, for the link to the post about OGZPY. It gives us a great perspective on both the negative and positive aspects about Russion energy policies.

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investor101
Irregular
February 13, 2013 8:24 pm

As a brand new member and trying to get an economics degree in a short amount of time in the school of hard knocks, I value very much the expert opinions I see represented here. I have so very much to learn. We are in our 60’s and thought we had positioned ourselves well enough to survive and leave some to our two sons. Now with all the unheaval I see and making nothing on what we have saved, I have become scared and don’t know what to do. I am tired of having our money with money managers (had 5) they have all made money and we have lost money. I should have bitten this bullet a long time ago, but will not chastise myself and just start where I am and try to make a difference. Most of our savings are in bonds at the moment and I want to get out of them, but my husband asks me where am I going to put it? I really don’t have the answers. I subscribed to all these different newsletters and I think most of them are all marketing hype and I am sick of if you want the answer to something subscribe to another newsletter! I was so happy to have found this website, maybe in time before it is too late I will get more clarity. Thanks for allowing me to learn from all of you. And no I would not be interested in this stock period! 🙂

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Penny
Penny
February 15, 2013 1:08 am
Reply to  investor101

I quite agree with you about this stock Karen, and I’ll add that I’m not too thrilled with Chinese stocks either.
Do be brave however and dip your toes in the stock market. You really can’t beat the sense of empowerment you get from being in charge of your own account (for better or for worse! But a lot cheaper worse!)
I took over my retirement accounts from the expensive stockbrokers in 2006 and consolidated them into one Schwab IRA . Trading fees were more expensive then but still so much cheaper than the awful fees I paid to the brokerage firms.
I have some favorite stocks on the conservative side of my Schwab account that I will buy more of when I get more cash: PG – Proctor & Gamble, KO – Coca Cola (like them even better since the stock split) and JNJ – Johnson & Johnson. They’re all dividend-paying stocks and I set them to have the dividends reinvested. (I don’t know if you can do that with E-trade and I believe you can’t with Scottrade). While I do think of them as buy-and-hold stocks, I still keep my eye on how they’re faring in the market.
I also have been happy with two foreign stocks: BNS Bank of Nova Scotia and SSL SASOL. They’re both dividend-paying stock but due to the way these foreign stocks are set up, I can’t get the dividends reinvested.
A fund I’ve been happy with is TGLDX Toqueville Gold Fund. I own gold stock too but those companies might be too volatile for your tastes.
I don’t buy stocks “at market price”; I use a limit price, even if it means I have to wait a few weeks before I get the price I want to pay (or don’t get it!), and I also set the timing to be “Good Until Canceled.”
Hope this helps!

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14gumshoe
14gumshoe
May 19, 2013 6:12 pm
Reply to  Penny

Scottrade is setting up a dividend reinvestment program…to be available in the
near future. Scottrade is my favorite online discount broker..it has one of the
easiest and consumer friendly web site; Ameritrade also offers reinvestment on
some stocks. I also use the DRIP option (direct reinvestment) offered by some
companies through their Transfer Agent…look on the company’s website for direct investment availability.
Personally, I do not invest in mutual funds….you pay a high investment fee, often
hidden, and you’re part of the crowd…not as easy to sell or know the funds price
except at the end of the day…whereas a stock’s price is always available.
except at the end of the day….

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Penny
Penny
May 20, 2013 2:18 am
Reply to  14gumshoe

Thanks for the info on Scottrade and dividend reinvesting, ML.
I have a (small) Roth IRA account there and am in the throes of rolling over an old 401k of my son’s into a Scottrade IRA for him. I’ve been researching what stock to buy for his account, bearing in mind that dividends couldn’t be reinvested. Now I might have to rethink!

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blackjack
blackjack
July 20, 2013 2:37 am
Reply to  Penny

YTD Return TGLDX
-42.66%

Penny
Penny
July 20, 2013 3:41 pm
Reply to  blackjack

I know – so sad about TGLDX. If only I’d had a crystal ball like the newsletter stock pushers; then I’d have known that gold stocks would have descended and I’d have sold TGLDX back then.
I still have 1/3 of my GFI shares too. More sadness. However, the other 2/3 I’ve sold at very nice prices over the years. However, I’ve been thinking about the comment somewhere in this thread about not being married to your shares. Maybe GFI has to go, but what to replace them with? Or do I wait all over again for gold and mining stocks to rise again? They’ve done it before.
Thanks, Travis, for pointing out how polite & helpful the comments are on the days’ articles. It’s so true and I always read them.
Thanks everyone for your courteous participation in this site.

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bmc123
bmc123
July 21, 2013 6:35 am
Reply to  Penny

Scottrade have a new service concerning dividends – called “FRIP”. You can find out about it here;
https://www.scottrade.com/online-brokerage/FRIP.html?icid=8|29|520|3

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Suzanne
Suzanne
February 15, 2013 5:31 pm
Reply to  investor101

Karen, I really feel with you and I admire your courage to take your finances into your hands. The more you learn about investing, the less you will be lead by the nose by promoters.
I am an old lady (77) and in my younger years I worked on Wall Street and have a formal education in security analysis. I would like to make a few comments that would make your task more manageble. I manage the retirement funds of my daughter, who is a busy corporate lady. I looked at her 401-K in 2009, and saw happened to it, so we decided to take it away from the company and invest it ourselves.
To find good companies is only the first step. You have to build a balanced portfolio to reduce the risk of all your investments getting a hit at the same time. Your investments have to be monitored constantly, because industries, politics, economic cycles, technology constantly change.
If you have portfolio of let’s say 25-30 investments, the monitoring will eat up your life.
The most practical way to get diversification is to use mutual funds. Of course, not all funds are created equal. I research funds on the Schwab website. They have an amazing website that lets me rank, sort, compare by scores of criteria almost all the funds you can buy in the US.
This gives you the benefit to have a professional monitor the holdings for you. It may be worth your time to get into their research website just to learn the the different metircs to evaluate investments in a quantitative manner. Next to each entry there is a little blue mark, if you click on it you get the explanation.

I use e-Trade for stock research. What I best like about them is that you can find out about insider trading. Not quite up to date, but often it gives you a general idea. This is my first step. If I see that the C-Suit has been heavy sellers all year, I save myself the trouble to look further.
Good luck to you.

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Alan L.
Member
July 20, 2013 3:03 pm
Reply to  Suzanne

Suzanne—Are you making money with your mutual fund investments? The statistics say that managed funds typically do worse than the market.

Kevin FitzGerrell
Member
Kevin FitzGerrell
July 21, 2013 6:13 am
Reply to  Alan L.

I’ve been pleased with my mutual fund investments. Most of mine are index funds with extremely low expenses (Vanguard), the rest are managed funds with relatively low expenses (Vanguard and Fool funds). On average both my index funds and managed funds have done what I wanted them to do – some track the market and some do better or worse than that market as a whole but provide a measure of diversification.

Bob
Guest
Bob
July 19, 2013 6:07 pm
Reply to  investor101

Karen, give this web site a perusal: http://www.betterinvesting.org/public/default.htm NAIC is a nonprofit club based (but you can join as an individual) stock selection educator that will teach you how to evaluate stocks on your own, or you can just select their monthly picks. The price is very reasonable, and they follow the same principals Buffett uses, having learned from the same mentor he learned from (Benjamin Graham).

Other than via mutual funds I was stuck with while investing for my 401K, I’ve never been inclined to buy bonds since retiring a few years ago.

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Alan L.
Member
July 20, 2013 3:08 pm
Reply to  Bob

Bob—One problem—-That url doesn’t seem to function.

Bob
Guest
Bob
July 21, 2013 1:15 am
Reply to  Alan L.

Yes, I see the link leads to a site down message, so try again in a few days or just do a search of Better Investing. Here is the problem as they put it:
Websites are Temporarily Down

Due to an extreme weather event in Southeast Michigan, the servers supporting the BetterInvesting and ICLUBcentral websites and data services are currently down due to power and internet availability issues.

We are investigating and will bring the sites up as soon as possible.
Thank you for your patience while we work through these issues.

hipockets
July 19, 2013 7:56 pm
Reply to  investor101

Hi, Karen —

As President Clinton was wont to say, “I feel your pain!” I was in your position about a year ago, and I feel like I wasted too much time and effort in getting started. Hope the following tome helps you a tad.

I agree with the other members about Scottrade ( http://www.scottrade.com ). The fees are reasonable: $7.00 per trade using their website, regardless of size of trade; and $0.00 or $17.00 for ETFs and Mutual Funds , depending on whether or not there is a load or built-in transaction fee. I think the minimum amount for a new account is $500.00.

They handle traditional or Roth IRAs, and there are no annual fees, setup fees, or termination fees.

Accounts have access to three research firms – S&P Capital IQ’s Stock Report, Thomson Reuters StockReport+, and Second Opinion Weekly Report. There is a relatively good charting service for technical analysis.

There is software called “Scottrade Elite” for more involved technical analysis. Personally I’m not into technical analysis. It’s too complicated for me.

They have a free dividend investment service where you can invest your dividends in stocks other than the one that gave you the dividend. It’s possible to invest all of your dividends (up to five, I think) in just one stock .

The people at their local branches are great resources for information about their services, but they cannot recommend specific stocks.

By the way – I’m not a Scottrade employee – I’m just a relatively satisfied customer.

Other sources I use, pretty much in order of importance, are

* http://stockgumshoe.com ( Of course! ) (It’s well worth the pittance for admittance to become an irregular member. There is a wealth of information in the comments by the membership, many of whom are experienced investors. The stocks talked about are frequently too esoteric for me, possibly because I’m still being educated but more probably because the stocks would seem to not be profitable in the relatively near future. However, I have discovered a few that I understand and are worth buying. )

* http://investorplace.com (tons of great articles and sometimes good recommendations. Be sure to do your own research on the stock being recommended.).

* http://www.fool.com (the commentary on individual stocks in the members section, which is free. I don’t recommend any of their paid services).

* http://www.zacks.com (has free up-to-date buy-hold-sell recommendations).

* http://navelliergrowth.investorplace.com/portfolio-grader/ (also has free up-to-date buy-hold-sell recommendations).

* http://finance.yahoo.com and http://www.google.com/finance (all kinds of information – news, charts, prices, company information, etc.

Some closing thoughts –
When deciding to buy a stock based on a recommendation, always research the stock and look for a confirmation, or better yet, confirmations, from other sources that the stock is a good investment.
Have only 5 or 6 stocks in your portfolio so that it’s easy to monitor their status. (Thanks, Alan!) Have another three or four researched so you can replace one in your portfolio if you think it’s necessary.

Be diversified. Have most of your stocks in different sectors, such as energy, consumer staples, healthcare, basic materials, industrial goods, transportation, etc.

At my age, (I’m old enough to be your father) I have to stick to well-known stocks with a history of good dividends and, hopefully, capital appreciation. Some candidates are McD, AT&T, JNJ, KO, VZ, INTC, and BA. (I’m not recommending them – do your own research)..

I have two items that I look at as safety cushions – VFINX, a Vanguard Index of the S&P 500, which pays a dividend, and BRK.B, which is Buffet’s poor man’s version of BRK.A. BRKA is over $178,000 per share, BRK.B is just over $100.00 per share.. It does not pay a dividend, but I feel the downside won’t be as bad as the market as a whole if the market tanks. So far the capital appreciation has been good for me.

If you take advantage of any “free” offers for news letters and stock recommendations, use a temporary email address in order to prevent a deluge of spam. http://getairmail.com/ is one that you can try.

Follow Warren Buffet’s advice – Invest in great companies at a fair price, not fair companies at great prices. Take a look at http://www.buffettsecrets.com/price-to-pay.htm and http://www.coattailinvestor.com/ .

Hope this helps!

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Alan Harris
Guest
Alan Harris
July 20, 2013 1:53 pm
Reply to  hipockets

As you sow, so shall ye reap. Great advice above and offered in the purest Gumshoe spirit. Like Travis, you have done your research, spoken your unbiased truth, added to the knowledge base expecting nothing in return.
Congratulations Hi Pockets on a well deserved hat tip from our mentor.
Alan

theaccusersgift
Guest
theaccusersgift
July 20, 2013 1:17 pm
Reply to  investor101

Hi Karen,
If you are short of time to manage a portfolio and rather spend your time looking for a part-time job for additonal income, check out the lazy portfolios at http://www.lazyportfolioadvice.com. That website is free and won’t attempt to sell you anything. It also contains links to other lazy portfolio websites.
Good luck!

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Buzz
Guest
Buzz
July 20, 2013 1:48 pm
Reply to  investor101

Karen,

I hope you’re still reading comments directed toward you. I found myself clicking here when Travis linked up to this particular comment section to show how useful reading them can be. I too will congratulate you on taking full responsibility for what is YOUR retirement. I do still use a financial planner myself, but I have one who is very inexpensive. However, through some of the sites others recommend (it sounds like Scottrade is the winner there), you can certainly build a portfolio hat will allow you to sleep well at night, and furthers your retirement goals.

A few quick things I wanted to mention; I also use Zack’s – a wealth of information available for research if you don’t mind getting a few emails every day trying to get you to subscribe to upgrades (which may or may not be worth the price, I’ve not subscribed to any). I also enjoy the Daily Reckoning, although you are really opening the floodgates on spam with that one, since you become a part of the massive Agora Financial mailing list. However, the ability to read Bill Bonner’s articles a couple of times a week is priceless. Try to search his stuff out on the web if you don’t want to subscribe. He’s a pretty savvy “big picture” guy who I find entertaining and intelligent. Morningstar has a free fund tracking service that allows you to see your funds’ ratings from them, as well as their performance over a set period of time – somewhat useful. And don’t rule out the very free MSN Stockscouter service. I find it handy to look at the rating to get a feel for what the general public’s feel for a stock is – a testing of the waters, if you will.

Once again, good luck, and stay connected with Travis for his excellent advice and analysis. Stock Gumshoe is a great service that really gives you an opportunity to find out things that would otherwise cost you a fair bit of cash to find out. And you get witty analysis along with it. A true win-win. Best of luck, and enjoy your investing future.

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Bruce
Member
Bruce
July 20, 2013 4:00 pm
Reply to  investor101

Hello Karen,
I too became disillusioned with my returns from an investment advisor ( an independent with LPL)
I decided to do some research and discovered i was in mediocre funds with high costs that seemed to benefit my advisor more than myself.
I moved everything to Fidelity. They have good research tools and many funds and Etfs trade for free.They also have portfolio tools to let you check for overall diversification.
i wouldn’t rule out all mutual funds. there are some good ones from Fidelity and Vanguard with no load and less than .75% annual fees.
Look at VDIGX for dividend growth or Villx for a balanced fund and Pondx for an income fund.
Do not buy any individual Chinese stocks. i learned this the hard way with PUDA.
You should always do you own research .If you take the time and use common sense you can have safe and steady returns without paying someone else 2% of your portfolio whether you are making or losing money.

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Solyom
Member
July 20, 2013 7:42 pm
Reply to  investor101

When I was in college (early 1960’s) and worked in the evening at the home office of a
brokerage firm I took a break once and went to have a beer with several account reps. One
said to all of us: ” I had a big transaction today; I made money, the firm made money and tow out three is not bad”. In the New Testament Matthew probably understood economics and
finance best. Matthew 24 cover this situation. Matthew 25 covers most of the others.
I suggest you read both chapters once weekly. Especially Matthew 25 whenever you are
going to make an important trade.

Kevin FitzGerrell
Member
Kevin FitzGerrell
July 21, 2013 6:46 am
Reply to  investor101

I’ve been pleased with Merrill Lynch for stocks and ETFs – I keep some cash in BofA and a linked investment account with Merrill Lynch so they give me 30 trades a month for free (I never use that many) and some pretty good research tools. I use Vanguard directly for funds and ETFs – no costs to buy or sell their products.
I recently reviewed my personal performance as an investor in individual stocks. I’d thought I’d done well with my stocks (and have certainly not done poorly), but especially for the last 4 years I would have had even better performance just putting the money I’ve allocated to stocks in a broad stock market ETF or fund (VTI or VTSAX) which was a bit disappointing to discover.

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Ann
Member
July 21, 2013 11:32 am
Reply to  investor101

Hi Karen,
you might also want to check this out if you want something other than/aswell as stocks
http://www.bankonyourself.com/category/retirement-plan-alternative

I found the Bank on yourself program the early part of 2011 and started putting the monies I had been using for my IRA (above and beyond my employer match ) into that. SO I still had a large amount of money still in the IRA and because of my age couldn’t get at it without all the penalties etc.
I was given some ‘good advice’ at the end of 2011 which led me to getting out of my Vanguard funds into a stable income fund’ cash’- this just before everything actually went UP-UP-UP…so I didn’t lose any money BUT I sure didn’t make any of the gains either. So I suppose that is LOST money…No advice when to get back in and with no confidence I hve been sitting on the sidelines. But now I’m of an age I will check into the Bank on yourself program and how to move into another of their ‘investments’- single premium.

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mwn560
Member
mwn560
January 22, 2014 12:03 pm
Reply to  investor101

I have been told that this is a stupid plan, (because it does not protect against inflation) however I have bought an annunity. As I age the house will pay off, the student loans for my kids will pay off. I might need less later on. Or have more. Unless inflation gets really bad and SSI is over. You being a new member I got to say, Travis and the think-o-lator are the best. The people commenting are great. They are a very smart crowd. I always like it better when he does the think-o-later, make’s it seem more magic like. I like that. The reason for the annunity is I think we might be Japan, A long period of deflation. I might be very wrong on this one, but it’s a done deal now. I keep a very small trading account , keep 10% stop losses on anything I buy. Because I’m bad at it. Half of being smart is knowing what your dumb at. Sometimes I will re-buy what I just lost 10% on and lose again. But sometimes I get lucky. Sometime’s I will come out ahead, it usally moves beyond all the loser’s. I keep trying, Travis keeps you moving in the right direction.

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dealerdeb1
September 25, 2014 7:19 am
Reply to  investor101

Welcome to the family. I started about 10 years ago doing my own investing [64] now because all brokers did was lose money and make nice commissions churning the account. That being said I READ all the teasers then get the real scoop from Travis. The reality since I joined here my portfolio has increased approx 15% per year and I am up many times that. The key is we will never have the education like he has but twe can get smarter. I started out as a buy and hold then learned there is a time to let go. Yes building dividend income is good for retirement but sometimes that great dividend champion becomes a laggard so moving the funds to another better performing one makes sense.good luck on your journey. We are all in the same boat albiet more or less money to invest

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thomas doepke
Member
thomas doepke
February 13, 2013 9:18 pm

great article on oxford club. I belong but have not got into anything because of your article’s. thanks for the insight and I also don’t want the company either.

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Eric Johnson
Member
Eric Johnson
February 13, 2013 10:15 pm

This is a nice assessment. Just a few short years ago most of us in this sector of the world were criticizing the ‘commies’ for having state run monopolies that were inefficient and bureaucratic. What’s changed in reality is….nothing. Gazprom is cheap for a reason. I certainly wouldn’t bet on it and certainly not because some mediocre analyst at a financial newsletter came up with an idea for which they had to hire a specialty copywriter whose focus is on hyperbole! If you were to take a survey of all of the investment newsletters out there with their ‘success rate’ on their reco’s, they would be dismal performers on the average. I saw some stats last year and the AVERAGE numbers for the success rate on reco’s was under 50% with the very top tier around 61%. Those aren’t good numbers. I’ve subscribed to newsletters in the past and I’ll say from experience that most of the time one is better off learning the skills to analyze businesses, investments and economic cycles and picking their own securities via the aid of Investors Business Daily or Value Line and following a discipline; Or do what I’ve done and deal in local 100% secured investments in first mortgage liens on income property for consistent and solid double digit (or at least high single digit) returns. Leaving one’s money in the hands of a “money manager” is a sure ticket to disappointment and possible travail. The best course is to learn, educate oneself & take the helm….but don’t take risk!
Eric J.
Bradenton, FL

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allenwil
allenwil
February 25, 2013 9:29 am
Reply to  Eric Johnson

EJ i don’t know about first mortage leins or where to obtain them if you would email me at justjc1@hotmail.com with some info. thanks allen

Wayne Hatcher
Member
Wayne Hatcher
February 13, 2013 10:25 pm

I believe that there are several stocks at the present time available on the US exchanges that offer a lot of up side potential over the next 1 to 5 years. One that comes to mind is Cal Dive International (DVR). A company that I feel is undervalued at $1.84 at this posting. I believe that things in the Middle East will explode (possibly this year) which will drive oil and gas prices to the moon temporarily. This will put pressure on the US government to release oil and gas permits more aggressively and issue permits to build ports for export faster. We will see (in my opinion) the kind of stocks mentioned earlier of good solid companies soar at that time. I might also add that investing in the right kind of ETFs as oil and gas prices rise will make loads of returns when the world realizes that we don’t need OPEC to supply all the gas and oil needed for many years to come and prices pull way back. With that, I would never invest in any company that a government controls and obviously has it’s own agenda and not the interest of investors in mind. Frankly, I’m looking forward to seeing what happens in the energy markets this year. I believe that there’s going to be a lot of money to be made right here at home.

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Dash Riprock
Guest
Dash Riprock
February 14, 2013 9:38 pm

Olivan Leach is a smart guy, and most likely an Investors Business Daily subscriber at one point in time. That is their philosophy, Buy into strong companies within current industry uptrends. Unless you are willing to oversee the market every hour it’s open, don’t bother with the day trading mentality. The obvious current boom is in natural gas stocks, and I recommend the pipeline transmission companies, as the producing companies are extracting 50% more gas than they can move to market. Go LONG on companies such as NI, EDP, WMB, RRC, COG, MWE, CQP, TGP, GLNG, EEP. avoid ETP.
We will become wealthy with patience and long holdings having these stocks and a few others I failed to mention . Oh BTW I live in the hotbed of Marcellus shale producing country in SW, PA. An amazing amount of investment here by RRC, MWE and more planned by NI, WMB. and others. The pipeline transmission companies are set to achieve large returns once they finish projects that will get gas to Gulf coast. RRC alone has raised it’s reserves to like 28 % higher than just a year ago. There are gas processing plants slated for the WV panhandle and a cracker plant by Shell Oil in Beaver Co. PA. They need to get the Utica gas out of Ohio across the Ohio river and sent south to the Gulf, which will highly benefit GLNG and TGP. Just so much money to be made in this industry, but not overnight. Go Long Be Happy.

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Bud Wood
Member
February 14, 2013 10:33 pm

I too have been investing for awhile and I like all these “tease” suggestions, now that I get them for a very modest “irregulars” subscription. The suggestions all sound great, but my big winners have been precious metals. With the currency wars, it seems that those winners will go and go. Got in when gold was $330/oz; now it’s $1,650/oz. I expect it to soften to, say, $1,400 or so, and then hit $2,000/oz this year. Haven’t seen any “teases” about precious metals, yet that’s what would interest me the most.

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Jan LeTellier
Member
Jan LeTellier
February 14, 2013 10:53 pm

I thorouhgly enjoy your analyses as I tend to believe the build up of these stocks. I am a housewife who decided I could guess as well as some broker, but could have made mistakes without you. Thank you.

olivan leach
February 14, 2013 11:30 pm

Karen I didn’t mean for you to get into day trading. Oh far from it. Day trading is a fools game. Buy and hold though as far as I see it went out the door when we have markets falling apart like we have the last few years. I just can’t see setting there and watching a big co. go down 50 ,90% and not selling. When you pay less than $10 to sell or buy it just don’t make me feel to well to not move on untill it gets better. As far as being afraid to loss money,we are all afraid to loss. It is called learning though and some times its a cheap education we are paying for. So its better to loss some times than to never know what we can do if we just set and wait to die in a broke pile.
Good luck Karen

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Bob
Member
Bob
February 19, 2013 7:31 pm
Reply to  olivan leach

Chinese major oil companies are all state owned corporations

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blufox
February 14, 2013 11:32 pm

I am definitely not interested in Russian investments and fairly cool to China as well. Not because I don’t believe one can be successful there but because I believe the Russian Oligargchy that controls oil and gas is something to avoid. In China one has to avoid the small companies and only deal with the Airlines, Bidu, Oil companies etc. as many of the small companies tend to be run in a dishonest fashion.

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Terrybots
Terrybots
February 16, 2013 4:03 am

Many thanks for your efforts – especially when you look at the Motley Fool’s teasers.
Especially the long lecture I listened too last week — what a waste of time — and I killed it before I got to denouement.

Grammy A
Member
Grammy A
February 16, 2013 8:05 pm

I don’t know how I came upon your website, but it is an absolute blessing. I had inquired after one newsletter and have since been absolutely inundated by constant pushing from every aspect. Each one stated they had the answer to my family’s future security. And with each newsletter I became more nervous. You’re intelligent and thorough analysis of these hyper pushing newsletters, have made me able to relax and understand what’s going on. I have since I canceled all but one and that one I’m waiting for their Blockbuster news so I can send it onto you and get the real truth. Thank you for sharing your ‘smarts’ in an easy-to-read and straightforward way. It has taken me a long time, I’m well into my 80s, but I’m finally learning to look more deeply into investments. I’ve always done that with people.

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