The Rockefellers Called The Top In Oil

Oil related stocks have been a terrible investment for years now. A booming U.S. shale industry, increased uptake in alternative energy sources (wind, solar), and soaring demand for electric vehicles (see Tesla) have no doubt put a dent in the commodity and related stocks.

Who could have seen this coming? How about the family that created the industry in the first place: the Rockefellers. In late 2014, the Rockefellers began the process of divesting their charity funds of Exxon Mobil, the successor of Standard Oil.

The Rockefeller Family Sold Their Exxon Position Right Near the top

Since then, shares of Exxon Mobil have lost 38% in value. 

The Rockefellers called the top in oil. Full stop. 

And they won't be calling a bottom. The rising trend of ESG investing, in combination with oil divestiture across endowment funds and pensions, makes the oil industry uninvestable. 

Technically, shares of Exxon Mobil still have plenty of room to fall. The stock started the new decade by decisively breaking below a 35 year trend line. And the classic principle in technical analysis of old support becoming new resistance suggests a downward price target range of $45 - $55. This represents downside potential of -8% to -25%.  

This technical analysis chart shows exxon's price action over the past thirty years

The bearish trifecta of rising oil production from U.S. shale producers, the rise of alternative energy, and the growing movement to divest oil related investments across endowment funds and pensions makes this sector a hard avoid for long term investment portfolios. The opportunity cost is too high to ignore. 

Oil stocks are a value trap.This ratio, measuring the relative out/under performance of energy sector to S&P, is down another 5% since this tweet. 

The Rockefellers Called The Top In Oil


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