Wednesday, July 18, 2012

Use the Internet to research investments

No one knows the future. No one.

That said, it is clear that some folk make more informed guesses than others. When you are investing you want to be among the informed.

Being adequately informed can be difficult. There's a lot of information out there and it is often in conflict. That said, start investing early in life and as your portfolio grows so will your abilities to discern good info from noise.

If you've been following my posts over the past few days, you will know I've been buying the western Canada oil/gas producer Penn West. I've averaged down my cost to own PWT to the point that I now have an exit point that is well within the target price of almost all analysts.

Yesterday I pushed my wife into the oil space by buying her a nice chunk of Penn West. At the time, I thought PWT would gain on the day and she would make a nice bit of change by selling before market close. This didn't happen. The stock dropped and only recovered late in the day. She ended up holding PWT.

This morning I did a little more research into oil prices. This is so very easy today thanks to the Internet. I read a number of reports similar to this one published by J.P. Morgan:

Oil prices have taken a beating in the last few months as euro-zone debt problems and bearish economic data from other major economies triggered concerns that demand for oil may fall. But sentiment has improved with the latest rebound in both West Texas Intermediate and Brent crudes, suggesting the bottom has already been reached. 

Will oil prices continue to firm up? In the short term, who knows? Will oil prices go higher in the near future? I think so. And so apparently does J.P. Morgan.
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By the way, a better investment for my wife would have been ARC Resources Ltd. (ARX). This stock is part of the ScotiaMcLeod Canadian Core Portfolio. I have allowed myself to get too focused on Penn West. Getting too focused is always a danger and usually a mistake. ARX jumped 1.34 percent yesterday and it would have been a better fit in my wife's portfolio. ARX yields 5.1 percent.

When I do get an opportunity to sell my wife's PWT, I'll probably keep a very small percentage. It does offer a fine dividend. I'll take another small chunk of her money and buy some ARX if it is still selling at a discount to its target price.

And a final add: After the open today, PWT had dropped more than two percent while ARX had climbed almost a full percent. Enough said.

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