WWII 082: Idea Generation for new investors, cost differences between coal and offshore oil drilling, when do options expire

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Main Topic: Idea Generation for New Investors

I’m a proponent of following a progression when learning how to invest. My recommended progression is:

1. Learn business valuation

2. Master Idea Generation

3. Idea Management Systems

4. Portfolio Management

This episode is about the second important skill to master, idea generation.

Here is a link to my full article on the topic of idea generation.


Ask JB: Differences between the cost of coal mining and offshore drilling

with the long term decline of coal, due to advancements in renewables and cheaper processing of natural gas.. most experts agree that coal isn't coming back.

why then, do analysts keep insisting that we are only at the "bottom of a cycle" with regards to off-shore oil? wouldn't oil share the same inevitable fate of coal?

I'm writing this while being invested in ESV, down 35%, and reading and taking advice such as "stockpiling" on it's way down and being ensured that we're at the bottom (though the bottom used to be $6, we're back down another 5% today). just wondering if anyone else is getting mixed signals bw analysts and reality.

JB SAYS: This is really the million dollar question. If we look at supply in fossil fuels, there is still an oversupply situation. Normally, lower prices would spur demand that would soak up the oversupply, but there is little evidence for that happening. With OPEC continuing to cap production of oil, the situation hasn’t really improved.Off-shore oil is the most expensive in the industry, so off shore will take longer to spring back than on-shore.

To make matters worse for the offshore and coal industries, the technology that is used in today’s onshore wells makes them far more efficient than off-shore can really ever be.

The more oil recovered, the more natural gas, which means abundant, cleaner, safer cheap fuel for the power-plants that the coal industry was supplying. Low natural gas prices has caused more and more power generation capacity being built around natural gas, not coal.

Some coal is used in metals, so there will still be some demand for it, but is is actually possible that the hay day for coal has passed. Not so much because of renewables, but because of the abundance of natural gas, at least in this country

Hey all, if I have an upcoming option that expires on the 23rd, does that mean it expires at the end of 23rd or when the market opens on the 23rd?

JB Says: Interesting question. The option will be unexpired until it is “settled” which means all activity has been booked. Normally this would mean 4pm eastern time when the market closes, but it may be possible to exercise up until it is settled, which may be the next day. You can try to exercise up until 5:30pm ET withs some success.

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About the Author

Jeremy Scott Bailey is an investor, author, entrepreneur and host of the "What Works In Investing?" podcast now available on iTunes. He is founder and Chief Investment Officer of Burgeón Group, Inc. an investment advisory firm that provides portfolio management services to families and individuals.

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