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Oil Stock Question

dxkj

Lifer
Feb 17, 2001
11,772
2
81
I have some XOM, and I was wondering if anyone else had oil stock, or knows anything about it.

I know jack squat about the stock market. My grandmother was moved into a nursing home, and gave away her XOM stock to the kids. (Im married, student, and this is about all the financial help ive gotten from my family to date).

My question is, should I just hang onto this longterm, or should I sell it sometime in the future (ie summer) when the prices are extremely high.
 

djNickb

Senior member
Oct 16, 2003
529
0
0
I would start by looking at some historical data on the stock to make some preliminary evaluations of the underlying company. The first thing I would do is to determine the volatility of the security over time.
 

dxkj

Lifer
Feb 17, 2001
11,772
2
81
Originally posted by: djNickb
I would start by looking at some historical data on the stock to make some preliminary evaluations of the underlying company. The first thing I would do is to determine the volatility of the security over time.
See, I dont understand most of those words :).

A year ago it was at 35, now its at 40. It was below 10 until late 1980's. Back in 2000 it was at 35, and it climbed to a max of 46 before bouncing around and dropping back down to 35. Its on its climb back up, but Im trying to decide if 45'ish would be a good point to sell at, or if because of oil issues it might climb to all time highs.


The last thing I want to do is hold onto it, check a few years from now, and find it down at 30 or something lower.
 

JBT

Lifer
Nov 28, 2001
12,095
0
76
well if the highest you have ever seen it is 46 and its 45 right now I'd probably sell!!! dependings on how much stock you have.
 

flot

Diamond Member
Feb 24, 2000
3,197
0
0
Ok, well, with 112 shares you're "only" talking about $4000.

You should worry less about the stock and more about what that money means / could mean to you. However you have to temper that against your general financial responsibility.

If you currently have $4000 of outstanding debt that you are paying more than 10% interest on... You should consider selling the stock and paying that off - IF you have the financial responsibility to not run that debt back up. (IE paying off a car loan with the $ is probably a "smarter" thing to do than paying off a credit card)

If you are looking to buy a house in the next few years, you may just want to let the money sit there and plan on using it towards your down payment.

I guess it all really depends on what your current financial situation is. Just remember that if it is $4000 now, will it make a huge difference to you if it is $5000 in a year? Or would you be better off just taking the $ now. Also remember that you're going to get taxed on it, so in all honesty it isn't even $4000.

BUT remember that even if the stock went up 50%... you'd only be talking about $6000. Is it worth the risk that the stock could DROP to $20 to hold onto it for that much longer?

PS: I'm not trying to trivialize $4000, that's a decent sum of money. However, if you had said you had $400,000 worth of stock, your risks would be much greater and your choices would have to reflect that. With $4000 you are never going to make a killing, unless you start investing it VERY aggressively and start buying penny stocks on the speculation that some day they will be $2-$3 stocks. It doesn't sounds like you're prepared to do that, so you should probably just take the $ while you've got it.


 

dxkj

Lifer
Feb 17, 2001
11,772
2
81
Originally posted by: flot
Ok, well, with 112 shares you're "only" talking about $4000.

You should worry less about the stock and more about what that money means / could mean to you. However you have to temper that against your general financial responsibility.

If you currently have $4000 of outstanding debt that you are paying more than 10% interest on... You should consider selling the stock and paying that off - IF you have the financial responsibility to not run that debt back up. (IE paying off a car loan with the $ is probably a "smarter" thing to do than paying off a credit card)

If you are looking to buy a house in the next few years, you may just want to let the money sit there and plan on using it towards your down payment.

I guess it all really depends on what your current financial situation is. Just remember that if it is $4000 now, will it make a huge difference to you if it is $5000 in a year? Or would you be better off just taking the $ now. Also remember that you're going to get taxed on it, so in all honesty it isn't even $4000.

BUT remember that even if the stock went up 50%... you'd only be talking about $6000. Is it worth the risk that the stock could DROP to $20 to hold onto it for that much longer?

PS: I'm not trying to trivialize $4000, that's a decent sum of money. However, if you had said you had $400,000 worth of stock, your risks would be much greater and your choices would have to reflect that. With $4000 you are never going to make a killing, unless you start investing it VERY aggressively and start buying penny stocks on the speculation that some day they will be $2-$3 stocks. It doesn't sounds like you're prepared to do that, so you should probably just take the $ while you've got it.

Current financial Situation:

Credit cards: 300/20,000 (We pay them off each month)
Savings Account: 3,800
Mutual Funds: 4050 (Originally invested 6k, waiting for it to come back up)
Checking: 2,000
CD: 1,100
XOM: 40x112/share

EDIT: Forgot to add

STudent Loans: $35,000 (at ~ 2.2% interest rate)

I dont need the money now, but I dont know jack about stocks so i have no clue if it is more likely to rise or fall.



 

flot

Diamond Member
Feb 24, 2000
3,197
0
0
Sounds like you're in reasonably good shape financially.

Look at it this way - it would be *remarkable* if the stock rose 50% and just as surprising if the stock declined 50%. It would be reasonable to assume it will hover somewhere around its current levels for the next year or two.

However, in any scenario, you're dealing with $2000/ $4000 / $6000. Not really a big deal, either you've gained or lost $2000 even under the extreme cases. Either use it as a start as getting into investing (and buy some books / do some research) or just dump it and take the $ and look at it like some free money. My personal opinion is that XOM isn't really worth keeping since I don't see it rising dramatically... and $4000 is about the bare minimum that you can trade stocks with in general, since the risk/return is hard to justify. (I'd say $5000 to $10,000 would be preferred, because then you can still make relatively "safe" investments and still see a satisfying profit)
 

dxkj

Lifer
Feb 17, 2001
11,772
2
81
Originally posted by: flot
Sounds like you're in reasonably good shape financially.

Look at it this way - it would be *remarkable* if the stock rose 50% and just as surprising if the stock declined 50%. It would be reasonable to assume it will hover somewhere around its current levels for the next year or two.

However, in any scenario, you're dealing with $2000/ $4000 / $6000. Not really a big deal, either you've gained or lost $2000 even under the extreme cases. Either use it as a start as getting into investing (and buy some books / do some research) or just dump it and take the $ and look at it like some free money. My personal opinion is that XOM isn't really worth keeping since I don't see it rising dramatically... and $4000 is about the bare minimum that you can trade stocks with in general, since the risk/return is hard to justify. (I'd say $5000 to $10,000 would be preferred, because then you can still make relatively "safe" investments and still see a satisfying profit)
I have no clue about the stock market, so me selling the 4k and investing it in anything besides a CD account would be disastrous :)
 

glenn1

Lifer
Sep 6, 2000
25,388
1,013
126
I have some XOM, and I was wondering if anyone else had oil stock, or knows anything about it.

I know jack squat about the stock market. My grandmother was moved into a nursing home, and gave away her XOM stock to the kids. (Im married, student, and this is about all the financial help ive gotten from my family to date).

My question is, should I just hang onto this longterm, or should I sell it sometime in the future (ie summer) when the prices are extremely high.
You're fine. Hold onto it unless you need the money. You're getting a 2.4% yield on XOM right now, the only thing i would do is deposit the certificated shares into the DRIP (Dividend Reinvestment Program) administered by XOM so you can reinvest your divs, much better use of the cash flow than getting a check DRIP Investor
 

richardycc

Diamond Member
Apr 29, 2001
5,720
1
81
For you, it might be good to hold on to them, as they pay divdend, 25cents/share every quarter, roughly about 2ish%. It is better than a regular saving account.

for me, I'd sell them and buy other stock, like FBR. ;)

rich
 

dxkj

Lifer
Feb 17, 2001
11,772
2
81
but for Dividen reinvesting, doesnt it make more sense to take those dividends and stick them in some other stock, being somewhat more diverse?
 

Hector13

Golden Member
Apr 4, 2000
1,694
0
0
Originally posted by: richardycc
For you, it might be good to hold on to them, as they pay divdend, 25cents/share every quarter, roughly about 2ish%. It is better than a regular saving account.

rich
except for the fact that his principle is at risk with XOM vs. a savings account. If I were you (the OP), I would sell the shares and put the money in another mutual fund (either the one you already have or a nice broad index fund). You'll get instant diversification that way.
 

tm37

Lifer
Jan 24, 2001
12,436
1
0
You should be able to use the gift exemption and not pay anytaxes on that BUT there may be Capital Gains taxes due.

If you grandma bought the stock at 1 dollar and then gave it to you then your cost basis would only be 112 buck. HEr gift goes of the cost basis and the you would have to pay capgains on the gift.
 

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