Yo Pit Crazies,
I sold every oil stock I own.
Exxon trades at an all-time high. So does every major oil company, and crude sits close to its own high. I’ve ridden that trade with Frank since 2021, and Exxon has gone up five or sixfold from where we got in. At some point you take the dough. So I sit on a pile of cash, and on election day Garrett asked me what I plan to do with it.
You can watch the replay of the event here or read what I said live below.
Where the oil money goes next
I don’t think oil stays up here. The day after the election I expect the gloves to come off between Trump and Iran, because he wants a quicker resolution to the conflict. That makes December puts on Exxon look fairly good to me. I figure it trades back to 160 or lower by December, and as oil prices drop, the oil stocks drop with them.
Place number one for the cash: midstream. I love Kinder Morgan (KMI) and Energy Transfer (ET). They pulled back a little as bond yields rose, and as you get older those dividends start to look pretty good. The pipelines also benefit from the bigger story. The US looks set to become the preeminent supplier of oil and gas to the globe after this conflict. That appears to be the plan now, and it helps every domestic producer.
Next, my Sibyl screen. Sibyl does a good job of looking for stocks everybody didn’t like, and funny enough, Google appeared at the bottom of the list today. First time I’ve ever seen a Mag Seven name down there. The one I care about more: Booz Allen Hamilton (BAH). This traded as a $200 stock. It went down to about 75, like it’s over, right? And it’s not over. Not by a long shot.
Accenture already had its run this year. Booz Allen hasn’t, because it keeps a lower profile. Even when you have AI and the prompts, you still want somebody to help you with it. I don’t see how that business changes.
Sibyl picked it out in August. The stock sits at 88 now, and when it trends, it tends to trend very long. I’d like to see more institutional open interest, since it trades a little thin, but the signal held up. Easiest way in: the January 2028 110 call. It doesn’t trade like a five-day stock. You sit in it and let the narrative play out. Does that make sense to everybody?
Fire sale prices and a lotto ticket
The drone names never appeared on my scanner because they ran hot all year. Now they do. AeroVironment (AVAV), Red Cat (RCAT) and Kratos (KTOS) all showed up on Sibyl, and I own all three. The Ukrainians make a million drones a month. Drones represent the future, and they also offer the most cost-effective way to do what the military needs to do, so the funding will loosen up. Election uncertainty knocked these down to fire sale prices. Sometimes you’ve got to jump in a little while the uncertainty still hangs around.
I also still hold shares of Intercontinental Exchange (ICE). Securitization happens no matter who wins today, and no way do the exchanges let it go by. They own the New York Stock Exchange now. They’ll create tokens, trade 24 hours, invent new things to trade, even securitize betting markets, as long as it all stays under their house with secure clearing behind it. Participants want to see that. No hanky-panky. ICE gives you the vanilla way to play an inevitable ride higher.
And the VIX drops after elections. Cheapy lotto tickets: the UVXY November 18 17 puts, around 35 cents. I expect them to go to at least a buck. The election ends, the Anthropic IPO comes and goes, and the holidays follow. Good volatility-killing events, all happening at relatively the same time.
Tomorrow we get graded. Day three of Midterm Money Multiplier puts the real result up against every call on this board, mine included, and then each of us names the one stock we’d buy first for the run into 2027.
Hopefully this was helpful,
AG