October 08, 2023
Listen to Podcast Episode:
On Friday October 6, ExxonMobil made overtures to acquire Pioneer Natural Resources (PXD).
Suze: October 8, 2023, Welcome everybody to the Women and Money podcast as well as everybody smart enough to listen, Suze O, here and before I begin today's Suze school, I just have to note that October 8th is a really, really important date in my life
Suze: because it was on October 8th actually in 1926
Suze: 97 years ago,
Suze: that a woman by the name of Louise Lynn Hay was born
Suze: and I always loved that because my middle name is Lynn and I always felt like, oh, I have the same name kind of as Louise Hay. And if you don't know who she was because she died on August 30th 2017. She was a serious pioneer in the world of self transformation.
Suze: In 1984. She wrote a book called You Can Heal Your Life. And isn't that what we all want? We want to be able to heal our lives so that we're happy so that we're healthy. So that we feel whole.
Suze: And that book went on to sell over 35 million copies. Now, that is an extraordinary amount of books that makes her one of the best selling authors of all time. But also in 1984 at the same time, she published You Can Heal Your Life. She founded Hay House Publishing.
Suze: And as you know, over the years you have heard me talk about hey house publishing, they published my very last book, the ultimate Retirement guide for 50 plus. They are now the publisher of the must have documents and they have just been such a vital part of my life. And Louise was an incredible part of my life.
Suze: I had the great good fortune of being with her so many times. So today is a day
Suze: that we all have to honor because today is the day that this woman was born and changed the lives of millions and millions of people for the best. All right. So now we go to Suze School today. Suze School is an interesting one
Suze: because it may not apply right now to all of you, but it applies to many, many of you who have listened to me over the past three years when in March of 2020 I started to talk about energy stocks. But on today's podcast, I'm going to concentrate on Pioneer Natural Resources symbol is PXD.
Suze: And the reason that I'm concentrating on PXD today is because Friday.
Suze: October 6th.
Suze: There was an announcement that ExxonMobil wants to acquire, which means wants to buy PXD for $60 billion. You saw a jump
Suze: from the day before October 5th where PXD was trading at $213 a share all the way up to $237 a share where it closed on Friday.
Suze: So what that means to all of you is that depending on what happens with this deal, ExxonMobil will acquire PXD, which means that whatever share price they decide on and nobody knows your shares will go from PXD
Suze: to ExxonMobil, depending on the price that they get for PXD as well as what Exxon is trading for at the time.
Suze: Now, I want you to put a pin in this for a second
Suze: and I want you to go back in your head and if you haven't heard this podcast, I want you to go back to that podcast that was on February 3rd of this year 2023 where I was giving an example of when you switch from one stock to another stock because you will get actually more money on the dividend.
Suze: And at the time, the example that I gave was coming out of Chevron,
Suze: which was $169.50 at the time
Suze: selling that
Suze: especially if it is in your retirement account and buying PXD, which was at $220 at the time and how you can make so much more in dividends and income. If you did that,
Suze: I want you also to remember that the point of why I wanted you to buy pxd as well as Devon. But we're sticking with PXD right now was because of the dividend.
Suze: And I kept saying to all of you do not pay attention if PXD goes up or it goes down. Obviously, you could dollar cost average, especially if it goes down, but do not pay attention to the price of PXD because the reason that you've purchased it was for the dividend. And now I'm getting emails from many of you saying your heart is broken
Suze: because if they take the stock, you're gonna lose that amount of dividend and what should you do? And now you're all confused.
Suze: Listen to me closely.
Suze: There is a deal on the table
Suze: now, I don't know what's going to happen with that deal. I'll know more on Monday and possibly do a pop up podcast about it or wait until Thursday as to what we really think about the deal.
Suze: But for many of you, not all of you but many of you because you did dollar cost average because you were smart about it.
Suze: You have made a serious profit in PXD. Many of you have a cost basis on PXD because you're writing me of $170 a share. Many of you have a cost basis of $200 a share. And many of you, because you did not dollar cost average as I asked you to do, you're at $280 a share and you're sitting at a loss here.
Suze: Now, the reason that it's very difficult for me to tell you exactly what you should do. Take out your Suze notebooks right now.
Suze: The reason that it's difficult for me to tell you exactly what you should do is I don't know if you own PXD within a retirement account. So if you were to sell it, there is no tax ramifications whatsoever.
Suze: If it's outside of a retirement account, I do not know when you bought it. So I don't know if you sold it today or actually on Monday, when the markets open again, I don't know if you sold it, if it would be a short term gain,
Suze: which means it would be taxed to you as ordinary income. Whatever your gain on the stock would be, it's added to your income and taxed as ordinary income. Or if you've held it now for over a year and you would be taxed as capital gains. And for many of you that have income of $44,000 a year or less,
Suze: no matter what, if you sold it as a capital gain, you held it over a year, you would pay 0% in capital gains tax. So it is impossible for me to know what you should do in your particular situation
Suze: based on when you bought it, what your taxes are going to be. Is it in a retirement account? Is it not and so forth? But here's what I do know
Suze: when we did this, we did it for the dividend. We did not do it to become part of ExxonMobil, which is one of the largest energy conglomerates out there.
Suze: And their current dividend, which is at 91 cents a quarter per share
Suze: is equal to only 3.40% on your money.
Suze: I want you not to get confused because many of you are figuring this incorrectly. So I'm going to give you an example of why I would not want you to be converting to ExxonMobil to get the dividend there. I think there are better things for you to do with this money if this deal goes through
Suze: than to just let it convert and now you own ExxonMobil. That is not something I would want you to do.
Suze: Now, the confusion comes in how all of you are figuring this out. A lot of you are figuring well, if they buy you out and it's now at $237 a share and that's what they give you and you are converting it to ExxonMobil at $107 a share
Suze: that you're gonna have double the amount of shares. So in essence, you'll still have the same dividend that PXD is paying you. I hope you follow that. But in case you didn't, I want to give you an example of why that thinking is absolutely wrong.
Suze: So I need you to write this down. Now, I understand that this is technical and I understand that many of you are on your walk this morning going oh, I can't deal with this and you're just gonna shut this off. You cannot shut off your financial future.
Suze: You cannot shut out things that might happen to you with another stock that you may be in. You have got to understand how this works. So I don't care that this is confusing for you or maybe this is hard for you. What you have to understand is every single one of you has the ability, including Katie
Suze: has the ability to sit down, think about this so that you can make decisions on your own. Now, you may feel like my voice right now is sounding angry. It's not my voice. Hopefully has a lot of encouragement in it
Suze: because I do want you to be the masters of your own financial destiny. I do want you to be able to heal your financial life.
Suze: I want you to understand how to make decisions like this because what if I wasn't here right now to talk to you about this? Where would you go? Who would you know that you can trust? And I know you can trust me because I have nothing to gain from it one way or the other.
Suze: So here happens to be the example that I am going to give you. Now, I have to use the example of a Roth IRA here, as many of you have written me and you have said, Suze, I bought PXD in my Roth IRA account. That was the only money I had.
Suze: So now what should I do? So again, I'm going to use this example is if you did it in a Roth IRA, if you didn't do it in a Roth retirement account, you might need the help of a CPA or your accountant just to figure out how much tax you would owe on this if you did sell. All right. So
Suze: let's just say that you invested $10,000 in a Roth IRA in PXD.
Suze: And let's say over the time that you had invested this $10,000 you were dollar cost averaging,
Suze: you bought some higher, some lower. But now you have an average price of $200 a share and you own 50 shares.
Suze: So you invested $10,000. Your cost is $200 a share and you own 50 shares right now as we speak.
Suze: PXD is at $237 a share.
Suze: You have 50 shares. That means your $10,000 has grown to $11,850. Write it down.
Suze: That is an $1850 gain or an 18.5% return on your money.
Suze: What we haven't included in that return are the extraordinary dividends that pxd has given you over the time that you have owned it.
Suze: But that's ok. They've given you those dividends. We don't even need to calculate that. But this has been for most of you, a tremendous investment
Suze: as of Friday, ExxonMobil closed at $107 a share.
Suze: If they were to take you over right now,
Suze: if their cost is $107 a share for ExxonMobil,
Suze: you now have 50 shares at $237 a share. You would end up with 110 shares of ExxonMobil. 110 shares times $107 a share is the $11,850 of what you have in current value of PXD.
Suze: So for all of you to figure out how many shares you would get, write this down,
Suze: you would look at the current value of PXD, $237 times the number of shares you own. And that would give you how much you have invested in PXD, what it's worth right now.
Suze: And you would divide that by $107 the close of Friday just to give you an idea. And I don't know this is what the final numbers are going to be, but just to give you an idea of how many shares you would end up with ExxonMobil? Are you following me? It is not that difficult. Ok.
Suze: Now, what you have to remember is that ExxonMobil pays 91 cents a share a quarter or $3.64 a year in dividends.
Suze: In this example,
Suze: if you had 110 shares of ExxonMobil,
Suze: when it converts, if this deal goes through, you would have $400 a year in dividends.
Suze: Now, many of you are saying, well, truthfully, that's not so bad, Suze, because I invested $10,000. Now, I'm going to get $400 a year.
Suze: So that's a 4% return on my money. Not so bad. If you are thinking this way, no, that is not how you should be thinking about this because if you're thinking about it this way, you missed the entire point of the podcast that I gave on February 3rd of this year,
Suze: it is not what you originally invested. It's what is that investment worth to you right now? Because if you were to sell, you could take that $11,850 invested in a three month T bill right now, which is paying approximately 5.5%.
Suze: And if it continues to pay that, and it well, very well could even pay more than that over this year. That's $651 a year. Versus $400 a year in dividends, which is $251 more than what you would be getting in ExxonMobil.
Suze: Now, I know a lot of you may say, but Suze, you keep saying oil is gonna go up, everything's gonna happen. Maybe we need to be in an oil company. Yeah, maybe so. But maybe there's better ones to be in at this point in time than ExxonMobil. Or maybe
Suze: there is a better dividend paying stock that you can be in all together that pays you 5.46% on your money and has a big possibility for growth. But we'll get to that in another second here.
Suze: The reason that I want you at this point in time to be a little bit more careful is when something like this is happening
Suze: and listen, if it doesn't happen, then I'm leaving you right in PXD, you're gonna stay right there. But it is very probable that if this does not go through, you will see PXD absolutely fall dramatically at that point in time. Remember it was at $189 a share in March of this year.
Suze: It was at $199 a share in May 31st of this year, it was at $213 a share the day before this happened.
Suze: So you have to decide, do you want to take this price? Now, lock it in
Suze: and be ok or if it doesn't go through, are you happy with the dividends? And you don't care if it goes up and down in value because it absolutely will. But one of the reasons that I'm wanting you possibly to be more secure is this,
Suze: oh boy, you know,
Suze: every time I turn on the TV, and I see the news, it starts to make me crazy
Suze: because it's very, very difficult to make wise financial decisions in a very disruptive environment on every level in this world. Today.
Suze: On Saturday, Israel officially announced that they were at war.
Suze: We have a country where it seems almost every single industry
Suze: is about to go on strike or ready to go on strike.
Suze: Right? We have floods in New York City in Hong Kong all over the world. We have salt water polluting the fresh water of New Orleans. And so they're not going to have drinking water sooner than later. We have drought, we have everything going on. It seems that we have more and more disagreements
Suze: with China and Russia which is very dangerous, who knows what's going to happen with Ukraine because we happen to have a congress that now is at war with one another. We have one party where they have war within their own party. How do you make decisions when there is war within our political parties?
Suze: And we have all these unknown effects in every possible way with artificial intelligence and how it's going to affect the jobs and everything and therefore how does that affect our debt and our deficits when we're living at a time where our income does not meet the debt that we owe on a national level. And it's just more chaotic
Suze: than I've seen in a long, long time
Suze: So, you know, I thought about naming this podcast, how to heal your financial life in honor of Louise Hay. Because how do you heal your financial life? How do you do things that bring security to you in an insecure point of time?
Suze: And I'm not saying to get out of the stock market. I'm not saying not to dollar cost average very slowly into it.
Suze: But I have also been saying there's nothing wrong if you are feeling insecure,
Suze: therefore, you are not achieving the goal of money, which is security. There is nothing wrong with taking moves right now to make yourself feel secure.
Suze: And one of those moves just might be until we see what's happening. There's nothing wrong with going into a three month treasury bill or a six month treasury bill. I still want you to stay absolutely liquid and short term with the majority of your money that you want safe and sound.
Suze: Yes. Again, I'm repeating, I've talked about 20 year, 10 year, 30 year treasury bonds, but I've said dip your toe in which means with such little amounts of money that those amounts would be insignificant there will be a time and I keep telling you this, that I will say let's go for it.
Suze: I have no doubt that it is an absolute probability that we could see 2030 year bonds in the 5% or 6% or higher area.
Suze: And then we'll know the move we should make. In the meantime, for those of you who have dipped your toe into the 30 year bonds as I have as interest rates go up, you will see the price of those bonds plummeting right now.
Suze: But remember you did not buy them for that reason, they will go up and down in value. Exactly like PXD did, it went up, it went down, it went up and it went down and here we are because you did dollar cost average or you bought it at the right time, whatever it may be, you're going to be making money on it and you made a lot of money on it because of the dividend.
Suze: Who cares if you're making 4.1% 4.3% 4.54 0.95%. When you average those all together, it will be a nice interest rate. And when interest rates eventually come down,
Suze: that when you will see the price of those long term bonds skyrocket on you. So don't look at the loss right now that you will have on your statements if you happen to stick your toe into a 30 year bond, it will be significant
Suze: but it will be equally significant when interest rates start to go down. That is why I want your safe money either in money market funds paying 4.5%. But the truth is why get 4.5% when you could get 5.5% on a three month treasury.
Suze: So go with a three month treasury or a six month treasury because again, they are guaranteed by the credit authority of the United States government and they're still the safest things out there for those of you who may want a little bit long term. You don't wanna keep redoing everything every three months or six months. All right, you wanna do a one year or two year certificate of deposit
Suze: because you think treasuries are too complicated. All right, you can do that as well. I don't have a problem with that,
Suze: but I'm just telling you my overall philosophy right now,
Suze: some of you
Suze: obviously can look at what you have and let's just say you are outside of a retirement account and you happen to have PXD
Suze: and you have that as a game. But you also have Devon, which is at a loss. You might want to consider here selling both of them
Suze: so that you could take the loss of Devon against your gain of PXD.
Suze: And then if you want, if you wait 30 days with Devon, you could buy back in at these prices right here. Just a thought. Or maybe you find another dividend paying stock which doesn't have anything to do with the oil industry right now.
Suze: And that is a great place to invest because maybe it has something to do with our aging population, skilled nursing facilities. And you might want to look up the Care Trust Reit symbol is CTRE
Suze: the dividend yield. There is at 5.46%. They have raised their dividends, which happened to be 28 cents a share again, selling right now at $20.86 a share. And they have raised their dividend every year since 2014. And it happens to be a dividend paying stock where there isn't controversy about it. You're not in the oil industry
Suze: and it's given you a little bit more of a diversification again. It's almost selling and it's year high. So there's nothing wrong with you dollar cost averaging into that. But there are other choices out there. The idea I just gave you outside of a retirement account. If you are thinking about selling PXD and you have a gain in it,
Suze: it is possible that you have another stock that you have a loss in, that's outside of your retirement account.
Suze: And you could sell the stock that you have a loss in
Suze: and then offset that gain in PXD with the loss of the stock or stocks. Maybe that you have sold.
Suze: If you like the stocks that you have sold, you can buy back into them in 30 days
Suze: and then you own them again. But remember because of the 30 day tax loss rules, if you have a stock that you sell for a loss,
Suze: you cannot buy it back for 30 days. And if you buy it back before them, then the loss is no longer counted against any gains. Something for all of you to think about this might be a strategy for some of you who have Devon at a significant loss. You're writing me and you're saying you're down 30% in Devon.
Suze: Well, if you have PXD, outside of a retirement account, you have Devon, for instance, outside of a retirement account, you might want to sell both of them offset your gain in PXD with your loss in Devon.
Suze: And then in 30 days, if you want possibly buy back into Devon or another oil stock, if you so wish
Suze: now I get once again, most likely your heads are spinning, but stop them right now from spinning. They don't have to spin.
Suze: This is a very logical and easy way for you to figure out what you should do at this point in time.
Suze: Again, I have a feeling that this deal very well may go through.
Suze: There's no way for me to know where PXD stock is going to go at this moment in time
Suze: because this is Sunday, it may go higher tomorrow, it may go lower. But as soon as I get an update on this, I will post it on the women and money community app or maybe do a pop up podcast. All right, everybody. How is that for how to heal your financial life. You heal your financial life by understanding
Suze: that you have the capability,
Suze: you have the ability, you have the brains, you have what it takes to understand everything with who you are and what you have. You just have to really have faith in yourself. And one way you can accomplish that and help this totally
Suze: screwed up world that we seem to be living in right now is by simply repeating every single day to day. Wherever I go, I will create a more peaceful,
Suze: joyful and loving world. Don't you think we need a more peaceful, joyful and loving world right now?
Suze: I do. And if you do that,
Suze: I promise you you will be unstoppable. See you Thursday. Bye bye.
Get your savings going with Alliant Credit Union: https://bit.ly/3rg0Yio
Get Suze’s special offers for podcast listeners at suzeorman.com/offer
Join Suze’s Women & Money Community for FREE and ASK SUZE your questions which may just end up on her podcast!
To ask Suze a question, download by following one of these links: