Postcards: Paging Warren Buffett... Please Report to Occidental Shareholders Meeting

The adage goes that you trade a trend until it breaks. That trend appears to have arrived. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: Paging Warren Buffett... Please Report to Occidental Shareholders Meeting]( The adage goes that you trade a trend until it breaks. That trend appears to have arrived. [Garrett {NAME}](floridarepublic) Sep 11 floridarepublic   [READ IN APP](   But when the lights are turning 'round, and wheels are rolling on the ground That day I'll burn this whole place down, when the circus comes to town. Los Lobos, [When the Circus Comes to Town]( Dear Fellow Expat: For the last two years, I’ve had a trade that I’ve loved more than anyone. [It was Warren Buffett’s Occidental (OXY) trade using put spreads](. For the last two years, Buffett has been buying Occidental repeatedly any time the stock hovered near $56. We called that range the [Buffett Buy Zone](. But now… Occidental is in a free fall with the rest of the oil and gas upstream sector. And Buffett hasn’t been acquiring shares. What gives? Has the trade finally broken? Or has a new opportunity emerged… But first… a market update The Bull Trap Cometh And… there it is. Remember what I said on Monday? You have to be aware of this pattern [when the signal goes negative](. That short-term recovery - over two days - was part of a bull trap. It was short covering, with many traders thinking the worst was over. It’s never over… until we hit oversold. We are still red across the board, with energy taking a beating this morning. We are looking for the resumption of lower highs and lower lows. That’s hows it goes… If I had to guess, the trend will continue into the Fed meeting, and then the captain of the Good Ship Transitory will get people hopeful again. Remember, the Treasury’s still got a ton of money to pump into the system through December… and we’re just waiting for China to wake up and prevent a revolution from homeowners. All Quiet at the Berkshire Fair Back to our regularly scheduled program… Berkshire Hathaway currently owns roughly 29% of Occidental. Buffett was enamored by the story of an oil and gas producer who would benefit from many emissions calculations. He raved about CEO Vicki Hollub (who also bought a sizeable share of the stock in the $55 range at the onset of 2022. But the recent decision not to support the stock - as he continues to build a massive cash pile - likely says something more about the current state of affairs in the global economy than it does about Occidental itself. Berkshire’s average share price is somewhere in the $54 range. U.S. WTI crude prices have dropped to $65 once again - as global demand faces renewed challenges. European demand is weak. Brent crude sits at under $70. And everyone still fails to talk about the real elephant in the room: China’s deflationary spiral. As I’ve noted, conditions remind us of late 2015, when the Chinese markets melted down, fueling a larger decline in U.S. equity markets. What followed [was the Shanghai Accord,]( where central banks helped stabilize the system and supported equity markets with ample liquidity. It feels that the same sort of effort is coming - as China has no choice but to engage in ample stimulus to help stabilize its conditions. Meanwhile, oil prices were up around $76 just two weeks ago. At the time, markets cheered that OPEC wouldn’t increase its production soon. While oil prices increased somewhat, professional traders saw the writing on the wall. We’re oversupplied in the market, and there are profound economic challenges. But here’s the thing—this period when panic starts will present rare buying opportunities that come only a few years later. There’s a wall of stimulus in the pipeline… that’s how the system works now. Oversold on Occidental Thanks to a small EIA inventory build, oil feels like it is finally moving into oversold territory. And right now, Occidental is deeply oversold. Its Relative Strength Index (RSI) is 20.6 (which measures price momentum), while its Money Flow Index is now under 28 (which measures volume and price momentum). For the RSI, a score of 30 is considered oversold. So this is quite a move lower. But the sharp downturn in crude prices has pushed great companies like Occidental, Diamondback (FANG), Permian Resources (PR), and Crescent Energy (CRGY) into bargain bin contrarian buys. There could be additional pain in the coming weeks, but this appears to be more economically related (combined with broader questions about China and Europe) than it is around anything else. Already, we’ve seen several energy insiders start to load up on their own stocks. The big buys included Carlos Slim at PBF Energy (PBF), executives from Blackstone Minerals (BSM), and a great long-term name in Crescent. [These are the top energy buys among insiders in the last 10 days.]( I think it’s just a matter of time before you see Berkshire’s name at the top again. And at that point… it will be time to resume the trade. Occidental still has a $71 average price target on Wall Street, and there’s little reason to think this company won’t drastically improve its financial conditions in the years ahead. [Remember… we track them every day over at Republic Insider.]( Stay patient… and… Stay positive, Garrett {NAME} Secretary of Finance Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()