Exxon, one of the largest and most profitable oil companies in the world, has been a staple in many investment portfolios for decades. Its consistent dividend payments, financial strength, and dominance in the oil industry have made it a go-to stock for income investors and long-term growth seekers alike. However, as with any company, there comes a time when it’s wise to take profits and reassess the investment.

Recently, we sold our entire Exxon position at $131, citing concerns over an oil glut that has been plaguing the market. While Exxon has been a great stock in the past, we believe it’s overbought at current levels and will only lose value as the glut is priced in. By selling our position now, we can avoid potential losses and wait for a better entry point in the future.

So, why do we think there’s an oil glut? In simple terms, the global demand for oil has not kept pace with the supply, leading to a surplus of crude oil on the market. This oversupply has put downward pressure on prices, making it difficult for companies like Exxon to maintain their profitability.

But don’t just take our word for it! The International Energy Agency (IEA) has also sounded the alarm on the oil glut. In its latest report, the IEA noted that global oil demand grew at its slowest pace in three years, while supply increased at a faster rate. This imbalance is expected to continue in the near term, further exacerbating the glut.

Now, you may be thinking, “But wait, Exxon has been paying consistent dividends and has a strong balance sheet! How can it be overbought?” And you’re right, those are certainly positives for any investor. However, we believe that the stock has become overvalued in light of the current market conditions.

When will we reload? Only when the oil glut is priced in and the market returns to a state of balance. This could take several months or even years, but we’re willing to be patient and wait for the right entry point. In the meantime, we’ll keep a close eye on market developments and adjust our portfolio accordingly.