In a recent article, the author shares a personal anecdote about his six-year-old daughter’s emotional rollercoaster during a basketball practice, drawing parallels to the unpredictable nature of the stock market. He reflects on the challenges of parenting a young child and likens her mood swings to the volatile swings seen in certain stocks. The author mentions the importance of enjoying the good moments and persevering through the bad, highlighting the unpredictability that comes with both parenting and investing.
The author introduces the concept of contrarian investing, where investors embrace chaos and look for opportunities in market downturns. He discusses the potential for profit in buying refineries that have recently experienced significant drops in stock price, comparing them to children having emotional outbursts on the basketball court. This contrarian approach involves betting on stocks that have already pulled back while others are chasing popular trends, such as artificial intelligence.
The article focuses on Phillips 66 (PSX), a refinery stock that has dropped 21% from its April highs, presenting an opportunity for investors to capitalize on its potential rebound. The author explains the dynamics of refineries, which differ from energy producers, and highlights the boom and bust cycles that can occur due to various factors such as the cost of oil and economic activity. Despite the volatility, Phillips 66 has maintained a strong dividend growth over the past decade, providing stability for investors.
The author also mentions Valero Energy (VLO), another refinery stock that has experienced a decline in its dividend growth in recent years. However, Valero is considered a key player in the refining industry and could rally alongside other refinery stocks in the future. The article suggests that both Phillips and Valero are attractive options for investors looking to capitalize on potential rebounds in the refining sector, following their recent downturns.
The author emphasizes the potential for quick gains in refinery stocks, especially as crude oil prices have risen above $80 per barrel, potentially boosting profitability for companies like Phillips and Valero. The article concludes by highlighting the opportunity for investors to bet on these talented refinery stocks that have been experiencing setbacks since April, suggesting that now may be an optimal time to invest in their potential rebounds.
In summary, the author’s article offers a unique perspective on investing, drawing parallels between parenting a young child and navigating the ups and downs of the stock market. By embracing contrarian investing strategies and considering opportunities in the refining sector, investors may find potential for profit in companies like Phillips 66 and Valero Energy. While volatility may be prevalent in these stocks, the author suggests that investing in their rebounds could lead to significant gains in the future.
