In this blog post from June 7, 2008, I wanted to refute a newsletter writer’s suggestion to buy Exxon Mobil stock. His premise was that since they make so much money, benefit is bound to trickle down to the shareholder. Then Exxon was about $86.75, today it closed about $79.75.

Problem?

Exxon posted record profits yet again, but did not meet analysts expectations (note the bolding on analysts). Stock tanked. Oil is down from it’s nose bleed heights, but still way above where it was a year ago, and Exxon Mobil stock is significantly lower now than it was a year ago (peaked around $96).

Do these profits end up in investor’s hands? Well, Exxon has increased the dividend over time, but even at today’s ridiculously low price, the yield on the shares is a paltry 1.9%. If you were an unlucky buyer most any time in the past 12 months - it’s sitting just off the 52 week low - you would be much better off had you left your money in any respectable money market fund.

When oil goes down, Exxon goes down. When the market goes down (Exxon is in the DJIA and the S&P), Exxon goes down. When oil goes up, Exxon goes down because, as a gasoline refiner, it’s cost of goods is rising. It just can’t win. The rare times it goes up more than $2 per share in a day it (like it did earlier this week) it almost always falls by an even larger amount with a week (like it did one day later).

And to top it off, the analysts are always disappointed by the record or near record earnings.

If you want to profit from energy, my advice is to subscribe to Casey Energy Opportunities instead of looking to giants like Exxon Mobil to make you rich.