Sell ExxonMobil (XOM)

09/16/2009 1:24 pm EST


Jim Jubak

Founder and Editor,

When I added ExxonMobil (NYSE: XOM) to Jubak’s Picks on December 23, 2008, I thought it was a reasonable way to balance risk and reward. The stock was a good way to reach for some upside return in case the global economy—and oil prices—rebounded more quickly than I expected in 2009, while at the same time using ExxonMobil’s dividend to give me some protection against the risk that oil prices would tumble further.

For much of 2009, the stock lagged the market, but I was content to collect my dividend while waiting for the shares to get moving. But recently, ExxonMobil has also started to lag the rest of the energy sector. For example, from my December 23 purchase until September 16, XOM lost 7.18% (excluding dividends). Devon Energy (NYSE: DVN), a stock without the downside protection of an ExxonMobil, is up 14% in that period. Almost all of Devon Energy’s outperformance has come since August 1. In my September 15 post, I laid out the case for shifting some of your portfolio into the probable winners in the next stage of the rally. (There is likely to be a relatively mild 10% or so correction between this stage and the next.)

One way to do that, I noted, was to shift from defensive energy plays to more offensive energy plays. Today, I’m exiting my position in ExxonMobil (XOM), so I can redeploy that money into a more offensive-minded energy play. I’ll make that buy later this week.

Without dividends, my loss on these shares of ExxonMobil since I added them to Jubak’s Picks is 7.18%. With dividends, the loss is 5.53%. (Full disclosure: I will sell my personal position in ExxonMobil three days after this post goes up.)

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