Is the market trend of CNOOC (00883) over?

As my top holding stock, when I made a large purchase at the beginning of the year, almost no one copied my homework. After it rose by more than 60% in the second half of the year, a large number of speculators started to chase and copy, and then several major pullbacks recently have basically trapped them. I received many private messages asking what to do.

My only answer is: tough luck.
 

In my trading, I set the buy and sell points before purchasing, so I ignore all meaningless short-term news, whether positive or negative.

Your trading, however, is probably just about seeing a rise and trying to make a quick buck, failing to do so, and then refusing to admit it, hoping to find someone to predict the future for you, telling you that new highs are just around the corner.

Different strategies lead to different mindsets.

My money, my rules; your money, your rules. I choose to continue sitting tight because the stock hasn’t delivered the value I expected; if your quick buck attempt fails, you should cut your losses in time, instead of lying to yourself that you’re also into value investing and just asking for advice...

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However, even some genuine value investors are panicking—why has it dropped so much? What exactly happened?
 

If we must find a reason, it has to be: "The responsibility lies entirely with the U.S."

After the U.S. CPI data was released, traders scaled back their bets on a significant Fed rate cut in September, leading to a short-term rise in the dollar index and Treasury yields, while U.S. stock futures dipped briefly. The unexpected increase in August’s U.S. core inflation was mainly due to accelerating housing costs, while the rise in transportation services was seasonal.

The U.S. currently produces 50% more oil than Saudi Arabia. Only after the U.S. election concludes will oil stocks resume their upward trend (no matter who wins).

Politicians’ words are for gaining power, not for getting things done.

Common sense tells us that before the election concludes, the U.S. will likely keep oil prices low to control domestic inflation. Once the dust settles, the winner will revert to the usual "money-printing" playbook.

So, the second half of this year might be uneventful—just minor fluctuations in Brent crude around $70, leading to small ups and downs in oil stocks.

But what about the next 3-5 years?

With global inflation, it’s hard to imagine oil prices not rising. After all, they’ve stayed below $100 per barrel for decades, barely increasing, while global prices have kept climbing. This is one reason Buffett bought oil stocks—he’s looking 5 years ahead.

I don’t look as far ahead as Buffett—3 years is my limit—but the logic is similar. That’s why I didn’t reduce my holdings even when the stock price was a bit high. Mainly because selling wouldn’t leave me with better alternatives, and holding too much cash is a recipe for mistakes, as many of you have likely experienced.

So, long-term outlook for CNOOC H: If oil prices rise alongside strong earnings, the stock will eventually hit new highs. If oil prices don’t rise (they won’t fall further, as that would push many companies below cost), steady earnings growth and share buybacks will still drive the stock to new highs.
 

When will new highs come?

No idea. In the meantime, just relax and collect dividends.

Today, CNOOC H went ex-dividend, and the payout will take a while. Combined with the pending dividend from China Coal H and the one received in June, my cash position will grow further, roughly by about 1.5%, creating more room for maneuvers.

These two stocks make up nearly 70% of my Chinese equity holdings. By doing nothing, I’ve outperformed 95% of Tonghuashun users. Making money through value investing is that simple—and boring.

Perhaps that’s why most people refuse to follow suit, opting instead to lose money through reckless trading.

As Buffett said: Nobody wants to get rich slowly.

But I do. I ain’t nobody.$CNOOC(00883.HK)