It's helpful to have a wizened veteran around to deal with turbulent markets, but sometimes, palliative words are not what the situation requires. I'm talking about action, not reaction.
And that's where Christmas media and investing often diverge. There's not always a happy ending in the stock market, and no fat man is coming down the chimney to save your portfolio. Santa may be old and wise, but he -- and his namesake year-end rally -- are not going to save your portfolio.
So that's where a little alternative thinking comes into play. Yes, an alternative to waiting for a 3% or 5% Santa Claus rally and instead positioning one's portfolio for potentially astronomical returns. But to do that, one must concentrate on a holiday ... just not Christmas.
Yes, I'm referring to a Festivus for the rest of us. The Feats of Strength and the Airing of Grievances all celebrated under the omnipresent Festivus pole.
It's a total alternative to Christmas, and it got me thinking about an alternative to the usual "what to do in 2016" investing columns. I wrote mine last week for Real Money.
But this column is about something different. I am airing grievances about the price of crude oil and its impact on exploration and production stocks. Oil prices -- as measured by West Texas Intermediate futures -- fell to $37.70 per barrel Monday, and they simply can't remain there. There is no place in the U.S. where a barrel of oil can be drilled and produced for under $40.
So we can all marvel at OPEC's machinations and watch the speculators try to destroy an industry, but the simple fact remains, if oil stayed at this level, eventually there would be no oil produced. That's not going to happen.
So, the Feats of Strength entail buying a basket of smaller E&Ps and holding them for a five-year period. They're not going to get any cheaper. Really, bankruptcy is the only other option. And that may happen to some on the list below, but if you buy all 10, the 500% returns will outweigh the belly-ups (100% losses) in a five-year time frame.
It's a risky strategy, but it's the best trade I've seen since the crisis. I've gotten to know managements at every one of these companies and, believe me, they are fighting like hell to survive. It's likely some won't, but most will, and this grouping will make you a lot of money as crude oil and natural gas prices revert to normal levels.
It won't take a Festivus miracle, just patience on your part.
Here's my list of 10 E&P stocks to buy now. Many would now be considered microcaps after the beating this group has taken. Again, some are likely to fail, but the ones that don't will produce asymmetric returns.
EnerJex Resources (ENRJ)
Energy XXI (EXXI)
Evolution Petroleum (EPM)
Gastar Exploration (GST)
Goodrich Petroleum (GDP)
Lilis Energy (LLEX)
Magnum Hunter Resources (MHR)
PDC Energy (PDCE)
Torchlight Energy (TRCH)
Victory Energy (VYEY)
Happy early Festivus!