Black Swan 2012 Stock Picks
The Black Swan event that could occur this year would be a conflict with Iran and the Western World. Gasoline and oil prices could skyrocket and the corporations that power 'war machines' could profit. That means shares of Exxon Mobil (XOM), Raytheon Company. (RTN), Chevron (CVX), Boeing Co. (BA), and Halliburton (HAL) could climb in the coming months.
Today (Feb 8th) Iran let the world know they are capable of carrying out military strikes on U.S. interests all around the globe if provoked. America has tried to force Tehran to stop sensitive nuclear work by imposing sanctions targeting Iran's central bank and giving U.S. banks new powers to freeze Iranian government assets. Iran's ambassador to Moscow said today the U.S. would be making a serious mistake, akin to suicide, if it risked a military strike on OPEC's No. 2 oil exporter.
Nassim Nicholas Taleb's describes a 'Black Swan Event' as a surprise (to the observer) and has a major impact. After the fact, the event is rationalized by hindsight. A war erupting between Iran, America, Isreal and possibly others could be such an event. Russia has gone on record opposing further U.N. Security Council sanctions over Tehran's nuclear program and has sharply criticized U.S. and European Union sanctions.
The knee jerk reaction from equities would at first be a major correction, but not all stocks would plunge back to 2008 lows. WallStNation speculates the winners very well could be Exxon Mobil (XOM), Raytheon Company. (RTN), Chevron (CVX), Boeing Co. (BA), and Halliburton (HAL). Share prices for the stocks mentioned: Exxon $85, Raytheon $49.78, CVX $106.76, Boeing $75.46, HAL $37.02.
How high will oil prices climb if such an event happened, $150 a barrel? How much for a gallon of gasoline in the U.S., $5, or even $10? Its seems ridiculous to conceive but there too many unknowns that could spur a chain reaction to cause extreme oil and gas prices.
War Stocks that will benefit are RTN, BA, and HAL.
Oil/Gas stocks to benefit XOM, CVX, and HAL.
How about that, HAL makes both cuts. Halliburton Co (HAL) shares have traded between $27.21 and $57.77 and today closed at $37.02. That puts the company at a respectable P/E Ratio of 11.3 and EPS of 3.08. Its no secret Halliburton made a tremendous profit from the Iraq War, what's to say that doesn't happen again with a possible Iran conflict?
Let's hope for all parties involved that diplomacy prevails and no conflict arises from Iran. No one wants to go to war. But if we do, why not invest in the companies that will benefit from our misery?