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John Gilluly  

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  • It's Time To Buy The Oil Panic Of 2014 [View article]
    I read a quote from the Shell Oil CEO in which he expressed exasperation with the $80BL they've sunk into fracking thus far without much ($) to show for the investment. He admitted that they had not been that successful with it. Shell has cut some of their fracking projects for 2015, electing to stick with what they do best, conventional oil.
    Dec 18, 2014. 06:23 PM | Likes Like |Link to Comment
  • It's Time To Buy The Oil Panic Of 2014 [View article]
    I hope it doesn't fall that low. That is Financial Crisis lows. Meanwhile, the Dow is putting in two 80% up days in a row here. Quite a disconnect if you ask me. I don't recall the Dow putting in new highs in March, 2009. That is how weird this downturn in oil is getting. A 2-3% over-supply in production cutting the price of crude in half.
    Dec 18, 2014. 01:41 PM | Likes Like |Link to Comment
  • Oil: Why Do We Turn Good News Into Bad? [View article]
    You make some good points about energy efficiency vis a vis the current prices, and this looks like a good buying point for solar; but dumping on other SA authors in a cavalier manner in order to justify your sweeping generalizations is not appreciated.
    Dec 18, 2014. 12:21 PM | 4 Likes Like |Link to Comment
  • It's Time To Buy The Oil Panic Of 2014 [View article]
    UCO behaves normally, just like you would expect it to. It's the "short funds" that disintegrate on a daily basis. I fully expect UCO to be above 21 sometime a year from now.
    Dec 18, 2014. 09:09 AM | 2 Likes Like |Link to Comment
  • Gafisa: One Of The Cheapest Stocks In The World [View article]
    Back in for a spin at $1.45. It's market cap is now 10 cents a share less than its cash. That's CHEAP. But then, Gafisa specializes in selling on the cheap. Assets are being valued at 8 to 9 cents on the dollar. 0.24x Book. I would be great if someone proffered a buyout.
    Dec 18, 2014. 03:43 AM | Likes Like |Link to Comment
  • $60: Not A Reasonable Price For Oil [View article]
    I agree with Trade. An excellent, well-written article - with just the right amount of common sense illustrations to support the author's premise. I have written 3 recent SA articles over the last 5 days along the same lines.

    This is a panic, not a fundamental story. Reminds me a lot of
    the bond panic just two months ago. This fall is more about money pushing money down, than any fundamental story.

    What we have is 2008-in-reverse. Once the investing public sees the handwriting on this wall, there could be the mother of all short-squeezes by Friday.
    Dec 18, 2014. 12:37 AM | 7 Likes Like |Link to Comment
  • It's Time To Buy The Oil Panic Of 2014 [View article]
    I like round numbers, so in my case it is the share count for each purchase. A small investor could do 10 shares each time, or 50 or a 100 - depending on how he wanted to go. A larger investor could do more.

    You could also approach it the second way you discussed - $X.xx/per trade. The beauty of structuring it in either manner is an investor can adjust the trades to fit his way of doing things. The ultimate goal, of course, is to profit over time.

    I would allow for at least 15 buys.
    Dec 17, 2014. 07:34 PM | Likes Like |Link to Comment
  • Oil Doomsayers Were Wrong In 2009: 4 Reasons Why They Are Wrong Now [View article]
    Splendid article. Just splendid. You hit all the bases that I have written about in my recent articles (3) on SA. I own GASL - a leveraged index comprised of some of the best North American oil servicing stocks. On Tuesday, December 16th, at the open, it had fallen -96% from its June highs. It has since rallied 40% just in the last two trading days. I am approaching the crisis on 3 fronts: Emerging Markets (EDC), Brazil (BRZU); Crude oil as a commodity (BNO, UCO); and US Oil/Natgas (GASL).
    Dec 17, 2014. 07:28 PM | 2 Likes Like |Link to Comment
  • It's Time To Buy The Oil Panic Of 2014 [View article]
    I am approaching this in a simplistic manner. Gold is a storage of value. Oil is a cultural commodity that is the substrate of modern industrial society. Oil is truly ubiquitous and indispensable, fungible at any price. In terms of financial comparisons, Gold we store, oil we use.

    My reason for posting these charts was to pose a question, "Under what previous economic conditions did the ratio reach an extreme in the past? What are the correlations today?" In 20 years, I found 4 bear markets and recently, the European debt-crisis.

    Which follows with the second question, "How far into this drop are we?" If the oil/gold ratio is any indicator, at least 80% by my pencil.

    I accept 8 out of 10 as good odds. And if it goes lower from here - down to the Financial Crisis lows - say to odds of 9 out of 10, or even 9.5 out of 10 - these will be even better probabilities to entertain.

    Where will it bottom? When? That I don't know. But every tick lower from here gets me closer to that bottom and lowers my cost-basis as it falls.

    If you read my previous articles, you will see that I have used this pressure-cooker model to scale into positions before. This method sometimes took weeks, even months, to fulfill. But in the end, they all worked.

    I believe this particular trade will eventually be one of the best things I have ever done, and I am willing to "stick around" till it does. Lower from here only seasons the pot for a tastier soup in 2015.
    Dec 17, 2014. 06:22 PM | 8 Likes Like |Link to Comment
  • Crude Oil Is Trapped In A Bear Raid; Not Its Fundamentals [View article]
    Fritz, above $12. Look at final comments in most recent update for my view of the landscape going forward. I think a virtuous circle is about to begin for the larger players in the Oil Services E&P sector. Maybe we should stick around for that, and not just be traders with this? The greatest problem going forward could be just "sitting tight" and not meddling. Catching this knife has not been easy for the many who have suffered trying to front-run this one.

    Did you see that explosion of volume at the open this morning (Tuesday, Dec 16th)? January crude was under $54 at the time, having fallen all night (-4% on the day, again) but GASL quickly moved to +5%. Yesterday it tracked the collapse in crude lower. All the GASL buys have been in the same 50 cent range, and yet crude has dropped 10% in the 3-day interim. That's why I think the desire to own these stocks is replacing the fear of owning them. We are likely near a bottom. I don't really care at this point. I have enough fire-power to survive a drop all the way down to $2/share.

    My previous 2 articles yielded positive results, but I had to wait a long-time for the first one (6 months, +22%). The second one lasted 30 days (36%). My expectation for this trade is several months.
    Dec 16, 2014. 02:30 PM | Likes Like |Link to Comment
  • Crude Oil Is Trapped In A Bear Raid; Not Its Fundamentals [View article]
    Yes, me too. But what a harrowing adventure!
    Dec 16, 2014. 11:41 AM | Likes Like |Link to Comment
  • Crude Oil Is Trapped In A Bear Raid; Not Its Fundamentals [View article]
    Yes. And it was time-consuming. I worked on that for about an hour. What I wanted to say was, "BUY oil stocks now. This rivals the best of market busts".

    But I had to express that in a way that someone would look past the title and read the rest of the article. So I got halfway there. And it's worked out so so, maybe 4,000 readers will have read this by tomorrow evening. Timely articles that strike a nerve yield twice, three times that.

    The price of oil - in old time parlance - has become the victim of a "bear raid". It is an epic claw-down. But the fundamentals today are just as solid as they were in June, 2014.

    One theme that runs behind my recent articles (which also include trade recommendations) is attempting the "other side" of manias and profiting from them.

    My two previous articles were on volatility, and before that, short-selling the PLUG power mania in Springtime. PLUG power has to be one of the all-time casino stocks. Get a load of these profit margins (

    Manias, panics, bubbles - all create extremes in sentiment that are parabolic and short-lived. If one had the guts, going long the Russian stock market (RSX, RUSL) here would be almost a sure bet given the parabolic spike in the Ruble/Dollar pair and the almost supernatural stupidity of Vladimir Putin. This oil plunge has puked-up incredible bargains across the globe in EDC, BRZU, and many many others. It's hard to choose, there are so many.

    Investors should be rejoicing here, getting to pick up stocks in the oil patch at 20 cents to 50 cents on the dollar. CNBC's Armageddon talking-head army are very generous in the way they inadvertently create market panics and manias. They have replaced the Wall Street paper boy of Horatio Alger's day, "Read all about it! The world's going to hell in a hand-basket". Yeah, right.
    Dec 15, 2014. 01:54 AM | 2 Likes Like |Link to Comment
  • Crude Oil Is Trapped In A Bear Raid; Not Its Fundamentals [View article]

    Unless you're seeing something I'm not seeing on that 15yr chart I included in the article, there's LOTS of V-bottoms (3 to 5 days) and not too many "gradual bottoms".

    I would like to buy options on BNO but there is nothing past July'15. USO - however - has options out to 2017.

    After my brief (but terrfiying) experience with the oil patch here, Global demand seems to me somewhat "inelastic" when looked at from the mountaintop. Population increases and automobile sales increase crude demand on one hand, but that's tempered by fuel efficiency standards and renewables on the other hand that reduce it. To my secular eyes, oil demand is somewhat linear and predictable.

    But the "price" on the other hand, that's like a mad-hatter's rubber band - stretching up and pulling down - off of this relatively stable demand. The "stretch" - after a certain level of mania or despair - goes into "hyper-stretch" - and after that it's a waiting game on market psychology as to when the buyers or sellers will capitulate.

    There is nothing "fundamental" about oil under $70 and all the fundamental stories proffered by talking-heads to justify $45 oil are just Armageddon-speak. It's speculators jumping out of windows. And tax loss selling. That's what's got us to $57/BBL on WTIC.

    This is a carbon-copy (pardon the pun) of the October debacle that dropped the SPX 10% on an intraday basis in just 10 days. How'd that one work-out for Armageddon's Army? Not too well, huh?

    Looks like the Saudis agree with my basic premise in this article. See ( I read another article on SA about world global oil production, and the US Frackers are the main reason for the glut. If our drillers cool their heels for a few months, the ratio will go right back down and prices will rise again.

    At the end of the day, I think having lots of oil we didn't know we had is a good problem to have. I would rather we use the Saudi's cheap oil at our refineries and save US oil (a limited quantity) for much later in the game.
    Dec 15, 2014. 01:28 AM | 2 Likes Like |Link to Comment
  • The Black Bear Is Unleashed [View article]
    Yes, that is how I see it. I think the market is mis-calculating the Americans ability to handle market forces. Oil is fungible. You can sell a barrel in a minute. That's not like having a Florida condo wrapped around your neck in 2009-11.

    EVERY market bottom that I can see on Oil's 15 year chart is V-shaped. Nothing gradual about it. Straight up. Straight down.
    Dec 14, 2014. 08:41 PM | 4 Likes Like |Link to Comment
  • Gloomy Yield Curve [View article]
    Scott, I think bond rates and mortgage rates are going to stay right where they are for the remainder of the decade.

    See article I wrote for SA a year ago: I haven't seen much to change my opinion.
    Dec 14, 2014. 05:00 PM | Likes Like |Link to Comment