One of the overwhelming requests I got in a video and I said, OK, let me know.

What you want me to analyze were to analyze oil stocks and let me give you just welcomes razor investment thesis on this.

When you invest with thin sectors with tail winds, even if you make mistakes, those might get corrected by the structural tailwind.

Oil has a lot of headwinds, so you must be very, very careful when you invest in oil stocks.

I am long on oil stock.

Unlock a natural gas stocks, but the price earnings ratio I bought was free.

That saves me from mistakes.

In any case, I've made an analysis off the oil sector fundamentals, the companies that most the critical issues.

And I really think if you're invested in or think about that, this will be a really, really valuable video.

Also for sector analysis, stock analysis subscribe to this channel and click that notification bell.

So let's start with 10 key things You must know before investing in oil stocks from the bull bear cases how to invest went to invest.

When will we hit the bottom?

What are the forces that work in the field and what you have to keep in mind.

What are the fundamentals?

What you have to keep in mind to make low risk, high reward investments.

Let's start with this report that I have published on my stock market research platform, and I think it will really be interested also for those who are not subscribe to my stock market research platform.

If you want to check more about that, please check the links in the description below.

So there was an overwhelming request to look at oil stocks.

I did that and to the virgin situation.

When it comes to oil is the following, most of us still use it on a daily basis as the number of electrical cars on the road is still minimal and slowly gaining traction.

But sentiment related to climate change emissions oil, fossil fuels, laws, et cetera is strongly turning against oil, and therefore there might be a structure shift ahead, and that's the risk reward.

When it comes to investing in.

You have to see what will be the impact of that structural shift ahead, and that's something very important because you don't want to end up like those that invested in horse farms in the United States, the number of horses went down, what, 80 85% over 60 years?

That's not a positive trend.

To invest in similarly toe use something more contemporary.

Cole, if we look at Cole, has reached Speak goal in 2014 demand but off already the investments.

The E.

T.

F.

Cole is down 80% since 2011 as the structural er had.

Winds prevail and mistakes easily compound and you lose a lot of money.

That's the risk reward, and that's the risk reward.

We have to also be careful when it comes to oil.

It probably will not be like cold, but we have to look for potential oversupply, the supply and demand in the sector, how that fits a specific investment.

Put that into perspective and then something very important.

OK, we see a structure or shift, but those that are in the industry don't see CEO there.

In Woods from the Q four earnings conference call off, Exxon said, We know the man will continue to grow, driven by rising population, economic growth and higher standards off living, and they're preparing so all the stocks that I looked, the investor print presentations, all our prepaying for growth, growth, growth, growth, growth.

The key is who will be right?

We don't know.

Nobody knows we will see in the future.

But when you're investing you have to be investing away that if you're wrong, you lose little or you don't lose.

If you're right, you make a lot off money.

Exxon.

If they're wrong, they will lose a lot of money.

And that's the risk reward.

Also, when it comes to investing, we don't know the future, but we can estimate risk and reward.

So what's the current situation with oil?

Well later discussed The longer term situation We have the Corona virus virus.

China is current ING shutdown declining and oil is consequently also falling.

Tow 50 Daura lt's a barrel.

That range will seek our develops over time, but it shows how weak oil prices are.

And then we have to compare the potential oil prices against the structure headwinds that might or might not come in relation to water.

The company's projecting and we have already seen a structure or shift when it comes to oil.

2014 prices above 100 Goldman Sachs projecting 200 oil.

But then oversupply from shale oil and bomb.

We're down to an average of 50 over the past year.

Sweet ups and downs.

There will always be absent downs when it comes to oil.

And to paraphrase J P.

Morgan, oil prices will always fluctuate.

Then we look at the forecast for the sector, and the U.

S Energy Information Administration is neutral, and most analysts are so neutral they don't expect any shocks.

Because if you're an analyst and you expect the shock, if you're wrong, you get fired if you are wrong and everybody else was wrong with you.

So there.

Nobody predicts a shock, but there is a shock.

Yeah, it's okay then it's okay.

So keep that in mind when analyzing and reading reports from institutions and other parties related parties, so takeaway is okay.

Volatility equals opportunity.

But in order to lower your risk and increase your return, you need to focus on the fundamentals.

And what are the fundamentals?

Whatever the price is, whether the production cost is something we'll discuss now, most agencies also always wrong in predictions.

If we look at what that was predicted over time, 2018 prediction was 60.

Then it went up to 80 then now again between 60 and 80.

Now the predictions will probably be around 50.

But then nobody knows if we look at this great chart from Mackenzie, they say if the man stays stable 60 to 70 oil price per barrel If there is sluggish demand Gross.

60.

If there is structural shift that comes earlier below 50 to 40.

But if there is a supply gaps, then we are at 90.

So they even don't know what will happen.

And that's the uncertainty.

You have to invest if you want low risk, then you buy a producer that makes money no matter what.

No matter when was the price that is on the first quarter off the cost curve and then you see okay, whatever happens, I make my dividends.

I make my money.

Even if we see oil at 40 due to technology disruption and then on the predictions, we have to see OK, who is going to take market share from oil?

Road transport cars are consuming less and less.

Even electrical cars are consuming less chemicals used less black sticks more recycling.

Aviation planes are consuming less and less, even if there is more and more aviation.

So that's something probably will grow.

But road Transport might contract.

My Marine Marine transport might also contract and who loses the most loses the most exposed.

The highest producer with highest marginal costs, which is shale oil and deep water offshore producer.

So if you have the company that invest in such projects, no, it's risky.

If oil prices goto 80 90 their margins will explode and stock prices will explode.

But if oil prices stick to 50 those might go bankrupt.

The stock not the oil Well, because somebody else.

If went, things go bankrupt, the well gets taken over and then starts producing again when it's profitable to do so.

So that's very interesting in how things work on B coil, will it be 2040 a.

Samper.

The quill a B 2020 will be a 2025.

I think that the Internet, the information we have is much, much faster is moving much, much faster than many expect, and therefore also people's consciousness is moving in different ways, so it's very risky to assess where will this go.

Most analysts and most business school always trained in a linear way because linear is what you can explain to others.

You can look smart, but I don't know, and I expect anything.

And I try to invest in a way that I expect whatever and then see how my investment would feet.

Whatever solar is growing, everything is growing.

Oil is expected to definitely decline.

But when that's a big question, and that's a question that nobody knows the answer you can all see.

Okay, what are my guys doing in relation to what's going on?

The positives are for guests, so more demand for guests if oil well, shell oil, deep water go bankrupt or stop producing, they're producing last guess, and we might see great jumps up in gas prices, which is always very interesting to see how those things move.

As always, if you invest alongside structural, Dale wins, you can be or you are being very well rewarded for taking the structure of headwinds risk price earnings ratio of free that I invested in my gas company, for example.

Then you can see how to play that risk and reward, Then something very important this oil investment sentiment.

BlackRock lost 90 billion on oil and coal, and they joined the 41 trillion investor climate campaign.

So if those investors that have a lot of assets under management stop investing in such stocks, you know what will happen to tow the stock.

So that's another risk.

Simply common cess, since risk too assess.

Goldman also downgrades Accent to sell because they don't see the company.

Will er earn the return on capital?

It projects off 15%.

They learn half off that.

Thus the stock will be much, much cheaper.

So if you really want to invest in oil, wait for the sentiment to be extremely negative.

We have just a small slowdown in China or oil is already at 50.

What if there is an important global recession that eventually will come us in recession Europe in a recession, then you are oil at 30 20 and then you can peek the very, very cheap stocks.

And that's also why I made this analysis published on my stock market research.

Bread from the knowledge will sit there and then when the right time comes, you would buy those bargains because everybody will paint the whole sector with same brush, and then you'll buy those bargains on the cheap because many will go bankrupt.

It's a cyclical supply, and demand will balance even out again.

And then you'll make a lot of money on a cyclical we discussed.

Peter Lynch will discuss Peter Lynch in the coming weekend, howto on went toe by secretaries from his book, so that will be very interesting.

And then the sentiment is still negative.

Madman is Jim Cramer is done with fossil fuels, but I think somehow this is just the beginning.

So my friend, not yet not yet focus on the fundamentals, not the relative story.

Yes, stocks have hide yields have price earnings ratio that are lower but focus on the long term cash flows, the long term investments necessary The long term fundamentals that are there, you see, also bi racial 14 is still okay.

Not that low p ratio five would be much more attractive.

But then again, you have to see what are the things.

2019 was higher oil prices than 2020.

So you have to see whether stocks like Shell, for example, will be able to keep the dividend or not.

And what would you do if the stock falls?

Maur?

Would you be happy buying Maur surviving with just eight years off reserves to produce so they'll have to invest a lot, And then it's always a risk.

So I don't like high risk, high reward or high risk medium reward investments.

I prefer when there is low risk.

High reward.

I looked a little bit off shell.

They're expected return on average capital employed.

The will is to be above 12% but they are not reaching it now.

It was 7% in 2019.

So how can they reach 15% in 2025 especially if oil prices go down?

If they don't reach it?

Similarly, as X on their expectations and Goldman Sachs is downgrading, then it will be a big, big mess.

And then we have a lot of cap packs for two billion and on 400 billion in revenues, just a small change in oil.

It raises older cash flows for dividends, but the kep X remains so there is a lot too much risk for me on those thin margins.

Anything can happen.

Shell can double in the next six months, but I'm looking at the risk reward.

I don't know what will materialize, but I don't like taking those risks.

Also very risky projects.

Everybody from the majors.

Global majors expect 65 average 70 oil prices, and they're investing based on that.

Russians expect 50 and Saudi Aram Aram Cho has simply the cheapest everything on production.

They have a base dividend.

Also, that's why their market cap is almost two trillion.

But look at their return on average capital employed this 40% and all the other companies have 15 hope for 15 Shelf has 7% which is insane.

The difference in margins and the natural advantages companies have so always think about the market.

Who is the boss in the sector?

Then compare what you have with what they have and then see how your interests are aligned with the boss in the sector, which is Russia.

For now.

This is very interesting.

Look, a totals investor presentation and you see solar panels.

It's nothing off their revenue, but everybody is going force.

I'll clean 00 whatever, but then again, they're producing oil and so they can paint a picture.

Whatever they want, but it is oil stocks and whatever they try, it's probably a waste of money.

We know what is the return on investment on this?

We know the competition, so it's not 40% that Saudi Aramco chess.

So be very careful with death.

Then again, check the management.

Caesar CEOs are always salesmen.

They are hired to sell their story like we have seen excellent saying how growth for oil is for the next decades.

Then who is the owner of the company?

Sinopec just issued news a lot of new stocks with discount screwing current shareholders.

So that's something.

Also have tow watch.