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IBDvalueinvestin (98.63)

Lets see who can answer this question?



March 17, 2009 – Comments (2) | RELATED TICKERS: DOW

Back when Oil was soaring professionals were saying don't buy chemical stocks because they have large amounts of need for energy. Thus higher oil will hurt their profits.

Well DOW was at $40's when oil was $100+

Now oil at $48 and DOW is at $7.99


Either the professionals were lieing out of their mouths or DOW is going BK?

2 Comments – Post Your Own

#1) On March 17, 2009 at 3:26 PM, whereaminow (< 20) wrote:

Or the "professionals" are completely clueless, which is why they don't run their own businesses.

Just thinking out loud.

David in Qatar

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#2) On March 17, 2009 at 3:31 PM, Schmacko (92.84) wrote:

DOW was sunk when their deal in Kuwait fell through.  They needed money from that to make their aquisition of Rohm Haas go smoothly.  It didn't which led to a legal battle (probably costly) and the aquisitin going through anyway.  So you have a significant drop in money that would have been coming in from the kuwaitis followed by a large increase in debt burder, which has caused them to get their debt rating cut, which will raise the costs of their borrowing that they'll need to do to roll over their ever growing debt, and they cut their dividend to try and shore up the balance sheet.... and you get this domino effect of never ending bad news for the company.

Chemical companies are still hurting.  Dupont is down over 50% in a year but DOW specifically dropping over 80% really has a lot to do with things no necessarily related to the price of oil. 


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