Oil price

[Abyss]

 

[Bumble]

Shell shares are being held up by the dividend they pay. At current prices (about £13) the dividend is 10%. Not too shabby when your bank is offering you 0.5% or less. The dividend may have to be cut, but Shell has a reputation for avoiding dividend cuts unless absolutely necessary. Even in 1999 when the price of oil crashed down to about $10, the dividend was not cut. If we have a prolonged recession and low oil prices persist for several years, the Shell price could drop further, but I would guess that if your investment time horizon is two years or more, Shell is not a bad stock at £13.

[KDave]

2 hours ago, Bumble said:

Shell shares are being held up by the dividend they pay. At current prices (about £13) the dividend is 10%. Not too shabby when your bank is offering you 0.5% or less. The dividend may have to be cut, but Shell has a reputation for avoiding dividend cuts unless absolutely necessary. Even in 1999 when the price of oil crashed down to about $10, the dividend was not cut. If we have a prolonged recession and low oil prices persist for several years, the Shell price could drop further, but I would guess that if your investment time horizon is two years or more, Shell is not a bad stock at £13.

It is cheap at these levels and it is possible we will not see £10 again but I was hoping for it as per expectations of another drop in the market. 

[Pipers]

22 hours ago, Oldun said:

 

 

11 hours ago, HawkHybrid said:

 

'and if this can happen in oil, it can certainly happen in gold'

I disagree with this. the only reason why it's happening in oil is

because physical storage of oil in such large quantities can be

problematic. for gold however where all of the worlds gold can

be stored inside of a large building, taking physical delivery will

unlikely ever be a problem.

 

HH

The difference is the following, on comex Gold can be settled in cash. This is for ,2 reasons 1 because there isn't enough gold 2   when the market is stretched under strain eg right now, this is the time when traders want to take delivery of Gold! 

Very few traders want to take oil at the end of the contract.  This time they were caught with there pants down! 

[Pipers]

3 hours ago, Abyss said:

 

I give it to him for the head line.  The Corona Correction!   

Dam that's good.  

[vand]

12 hours ago, Bumble said:

Shell shares are being held up by the dividend they pay. At current prices (about £13) the dividend is 10%. Not too shabby when your bank is offering you 0.5% or less. The dividend may have to be cut, but Shell has a reputation for avoiding dividend cuts unless absolutely necessary. Even in 1999 when the price of oil crashed down to about $10, the dividend was not cut. If we have a prolonged recession and low oil prices persist for several years, the Shell price could drop further, but I would guess that if your investment time horizon is two years or more, Shell is not a bad stock at £13.

Shell must surely suspend their dividend for at least a couple of quarters. 

I don't think it makes any sense to take on debt to fund dividend payouts.

[HawkHybrid]

11 hours ago, Pipers said:

 

The difference is the following, on comex Gold can be settled in cash. This is for ,2 reasons 1 because there isn't enough gold 2   when the market is stretched under strain eg right now, this is the time when traders want to take delivery of Gold! 

Very few traders want to take oil at the end of the contract.  This time they were caught with there pants down! 

 

this is a completely irrelevant point, as it's not the holder of the

comex contract who decides whether or not the contract is

settled in physical or cash.

the point I was making was that settling in physical is a problem

for some oil contract holders. settling in physical is unlikely a

problem for gold contract holders. therefore gold contract holders

will never sell into an expiring contract date at all cost(they can

simply hold onto the contract and have it settled).

 

HH

[Bumble]

I agree it is unwise for any company to take on debt just to pay its dividend. But Shell may be able to maintain the dividend by slashing its capital expenditure and possibly selling some non-core assets. It has already suspended its share buyback program. Maintaining a constant dividend is important for many large companies because it is necessary for their inclusion in funds of high-yielding stocks.

[KDave]

Shell has already announced it is not cutting the dividend. They have secured additional credit for this purpose its part of the business model, the issuing and buying back of shares is not as expensive as it look on paper, dividends are often reinvested and its how they keep investors throughout the long cycles, "you are being paid to absorb volatility over multi-year periods".

 

[KDave]

What is going on with the stock markets at moment it is complete disconnect with reality. Yesterday I read an article on seeking alpha that made me laugh, but raises the question, why? 

Gloabal pandemic. Bull market.

Economic depression. 28% rally.

22 days to sell off 30%, 24 days to rally 28.5% (half the losses) on the S&P 500. 

What are people thinking? 

[GoldenPhil]

29 minutes ago, KDave said:

What is going on with the stock markets at moment it is complete disconnect with reality. Yesterday I read an article on seeking alpha that made me laugh, but raises the question, why? 

Gloabal pandemic. Bull market.

Economic depression. 28% rally.

22 days to sell off 30%, 24 days to rally 28.5% (half the losses) on the S&P 500. 

What are people thinking? 

People think this is their big chance so rush in and buy. If this is the bottom they are smart if it's a cliff edge they will get hurt.

But retail buyers are unlikely to the main reason. I suspect it's all the government money that has been printed that is once again inflating the prices artificially.  Again big chance of a burst as ever printing money becomes less and less effective.  

[HelpingHands]

The Donald might've helped out by threatening to blow stuff up.

 

 

[Martlet]

1 hour ago, KDave said:

What are people thinking? 

They are thinking this will be a short technical recession.  Two quarters hit massive, then some normality in the 3rd.  I'm in that camp, though wary normality will return quite as before, its unlikely Q-on-Q falls will continue so growth recovery should be rapid. 

[KDave]

21 minutes ago, Martlet said:

They are thinking this will be a short technical recession.  Two quarters hit massive, then some normality in the 3rd.  I'm in that camp, though wary normality will return quite as before, its unlikely Q-on-Q falls will continue so growth recovery should be rapid. 

It is looking rather bullish! I need to look into this but I was told today that if the immediate rally is 55% of the losses, the bull market always resumes (historically). 

We have to ask though, who was selling during the 30% and who was buying the rally? 

My concern is I believe a lot of damage has been done to the real economy that is not yet being accounted. The market does appear somewhat disconnected. I am not sure about the Q3 recovery, that will be when the second wave of corona materialises if it happens.

[GoldenPhil]

44 minutes ago, KDave said:

It is looking rather bullish! I need to look into this but I was told today that if the immediate rally is 55% of the losses, the bull market always resumes (historically). 

We have to ask though, who was selling during the 30% and who was buying the rally? 

My concern is I believe a lot of damage has been done to the real economy that is not yet being accounted. The market does appear somewhat disconnected. I am not sure about the Q3 recovery, that will be when the second wave of corona materialises if it happens.

There are 3 options:

1. It goes up (in this case go long)

2. It flatline (do nothing)

3. It goes down (in this case go short) 

[HawkHybrid]

2 hours ago, KDave said:

What is going on with the stock markets at moment it is complete disconnect with reality. Yesterday I read an article on seeking alpha that made me laugh, but raises the question, why? 

Gloabal pandemic. Bull market.

Economic depression. 28% rally.

22 days to sell off 30%, 24 days to rally 28.5% (half the losses) on the S&P 500. 

What are people thinking? 

 

two steps forward, one step back(not necessarily in that order).

 

HH

[GoldenPhil]

I just picked up some oil. Wish me luck. 

[Bumble]

This is an interesting press release from Interactive Brokers. Some of their clients had leveraged long positions in oil on Monday and lost more than the entire amount of their accounts. As a result, Interactive Brokers has had to take a provisional loss of $88 million to cover the accounts that blew up. They are probably not the only broker this has happened to.

[Kookaburracollector]

11 minutes ago, Bumble said:

This is an interesting press release from Interactive Brokers. Some of their clients had leveraged long positions in oil on Monday and lost more than the entire amount of their accounts. As a result, Interactive Brokers has had to take a provisional loss of $88 million to cover the accounts that blew up. They are probably not the only broker this has happened to.

I wonder if the clients who were long will be pursued for the losses..I would be surprised if the broker doesn’t  go after their assets...and why oh why didn’t they have stop losses set (unless they held positions overnight I guess)...

[Oldun]

The rules have changed

https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2020/04/Chadv20-171.pdf

https://quant.stackexchange.com/questions/32863/bachelier-model-call-option-pricing-formula

Bachelier model replaces Brownian

https://en.wikipedia.org/wiki/Louis_Bachelier

 

[GoldenPhil]

3 hours ago, zhoutonged said:

It's up to the broker to set the margin requirement. I don't believe there is any other recourse after closing a clients position.

IG certainly goes after people if they have the assets and ability to pay. 

[Abyss]

Interactive Brokers Stuck With $88 Million Loss After Oil-Trading Clients Bust 

https://www.zerohedge.com/energy/interactive-brokers-stuck-88-million-loss-after-oil-trading-clients-bust

CNBC: "Across the industry, do you think there is going to be some really serious pain?"

Peterffy: "There is about another half a billion dollars of losses that somebody is sitting on... and I do not know who those folks are."

[KDave]

5 minutes ago, zhoutonged said:

It's funny you should mention IG because ironically given my username Monday morning was the first time in my life I have literally  been Zou Tonged, my IG account would you believe it. So my statement shows the position was closed 32 pips in the red, however there is also an account adjustment in my favour which settles my account at zero.

I will let you know if they "go after me" it doesn't look like they will be, but ill let you know if they do. Wish me luck!

Does the small print say "you investment can go below zero and you will owe us more capital than you invest". I didn't think so.

I doubt they can come after you but good luck.

[GoldenPhil]

2 hours ago, zhoutonged said:

It's funny you should mention IG because ironically given my username Monday morning was the first time in my life I have literally  been Zou Tonged, my IG account would you believe it. So my statement shows the position was closed 32 pips in the red, however there is also an account adjustment in my favour which settles my account at zero.

I will let you know if they "go after me" it doesn't look like they will be, but ill let you know if they do. Wish me luck!

Thanks for your honesty. I hope you are fine. Final paragraph is most concerning.

https://www.independent.co.uk/news/business/analysis-and-features/how-could-a-teacher-on-18000pa-lose-280000-spread-betting-10115157.html

 

[GoldenPhil]

I did. But their position in the article seems to be different.