Where the World is Going - Investment ImplicationsI decided to start a new thread since the previous one, while being excellent with great views by many here was getting difficult to follow. At least for an old guy like me.
With that as background, my underlying thesis is pretty basic. Over the decades, i have made my money and money for my clients when I was in "the Business" by trying to see where the world was going and then find companies that were moving in that direction and not investing in companies who were fighting against change.
So let's look at SU as an investment for the long run.
At best they are going to spend billions over the next few years just to keep their production of oil the same as it is now since the base plant will be out of oil in around 10 years. On the refinery side, there will be more EVs due in part to Government mandates and legislation. These EVs will fill up their tanks by some percentage at home and not at a gas station where ICE cars currently get filled up. On the petrochemical side, more and more businesses are looking to replace oil based products with something else.
When you look at it from this perspective, IMO it hard to make the case that a company like SU will outperform most other companies unless the price of oil skyrockets and even in that senario we would have high inflation and a recession. In the last 5 recessions in the US, the oil price dropped by 30-40% on average.
There has been some discussion here about startups failing. That is very true, but some have done very well. 20 years ago Google was a startup. But more importantly, there are big companies that are making changes which will significantly improve their bottom lines. A while ago I mentioned WM and what they are doing with RNG from their landfills. With much less investment than SU will be doing to replace oil production lost from the Base Plant, WM will be doubling their FCF over the next five years. Other companies in the same sector are doing similar things across the globe. This is going to make these companies more valuable as time goes on.
The world is also moving to dispatchable electricity production (read localized off grid) as grid failures become more common and are predicted to become even more common. This is literally a trillion dollar market world-wide and where the private company that I have invested in is focussed with their new patented technology. But they are not alone in finding solutions to future electrical grid problems. Businesses here have huge growth potential.
I could go on but as my wondeful wife would say - "Stop preaching!"
So frankly, if some of you want to close your eyes to these possibilities and are not willing to do the work to seek out companies which have much higher future growth prospects than companies like SU that's totally up to you. I have made a lot of money over the years by simply keeping an open mind to possibiltiies.