Even Big Companies Get Caught Up
CNN Money posted an article that says the Exxon Mobil group is flush with cash and waiting to buy up a smaller rival. Yes, Exxon Mobil is the company that has petrol stations with the Esso as well as Mobil brand.
What Exxon did was to hold back their investments when almost all oil companies around the world were tripping over themselves to increase production when oil prices shot up. Many such companies end up paying exorbitant prices to get leases and other equipment needed to bring crude to market.
As a result of not following the crowd (contrarian approach), the company is sitting on nearly $40 billion in cash reserves. With the amount of cash, plus the fact that crude oil prices have dropped significantly, Exxon is targeting oil firms that are now deep in debt and stuck with expensive projects. They would be able to buy such companies cheaply.
The same thing can be said of investments. Many people join the crowd versus sticking to their own (financial) plan. And because of that, many are hurting. I wonder about the other big oil companies though. Didn’t they see it coming or because emotion got the better of the management staff, they threw caution out of the window and join the crowd?
Last, THINK! It is easy to get caught up in a frenzy of fear. Either the fear of losing out the opportunity to make money or fear to losing money. So use your brain to think.