Subject: Re: considering coat tailing OXY
I have been buying OXY this year and it's now one of my bigger positions outside of Berkshire and FTSE 100 index. I am not in a position to be investing in oil and do not understand it they way Texirish does for example, or Buffett obviously. All I know is Buffett and Munger like oil and I'm happy to copy that move. I appreciate it is a bet on oil prices and that is probably unknowable.

There is a nice video compilation online of all of Buffett and Munger previous oil comments, worth watching.

From a my own no nothing perspective:

I believe OXY is between 7 and 10 times earnings at current oil prices. That feels like pretty good value.

If I'm going to own an oil company, I want it to be a US company. (Look at small UK oil companies since the Labour government came to power - they have been hammered - as the government decided to cut them off at the knees to help with the environment. Which is an odd decision, as the UK will just have to buy more foreign oil and the reduction in supply form the North Sea will have zero impact on global oil prices).

In the very long term as Munger has said many times - the world needs oil. It's used for almost everything and it's not going away for centuries. The supply of oil is finite and for environmental reasons there will be less drilling. It has also forced the prices of oil companies down as pension funds etc are told not to own it. My understanding is that Buffett and Munger expect higher oil prices in the very long term. I like that idea and how it fits will my preference for investing in things I can just sit back and never sell.

I should know more about Occidental's reserves - just because oil will be around forever, they need to own a lot of it. My understanding is that Occidental owns a lot of oil and has been adding to their assets and they have engineering skills to extract it. I expect others and Buffett know this to be the case but I don't. I am just copying Buffett.

Occidental also has to stay in business for the long term. They have done a lot of deals over recent years and have debt but Buffett clearly likes management's approach to capital allocation (e.g. clear the debt, pay dividends and buy back stock at good prices and will not do any wild exploration type work).

Obviously, Buffett's only to major investments in the past few years were buying Berkshire when it was cheap and buying Occidental. He is selling a lot of other things. I wonder if he sees Occidental as a hedge against higher oil prices for Berkshire. Indeed I am aware that even if my own purchases of OXY work out great, it may be that I am paying much higher living costs. There is also a possibility that the geo political situation gets out of hand. If Israel attacks Iran's oil assets, or nuclear facilities, that may not be good for any of us. If the US and UK and Saudi Arabia get drawn into a war against Iran and its allies and meanwhile China takes Taiwan, while its allies are busy in the Middle East and Ukraine, we might see much higher oil prices much sooner than we think.

Lots of outcomes possible but OXY looks like a good bet compared to other things currently. Although I am very aware that Buffett and Munger both considered themselves not to have been good oil investors. I imagine that's because, oil prices, like the economy and interest rates are impossible to predict.

Meanwhile there are people out there buying shares in companies like Microstrategy! OXY does not seem like a huge gamble in comparison.