"If it pleases you I would appreciate an update on Royal Dutch, your largest long-term holding. Yesterday's [Ed: Tuesday's] commentary started off with a discussion about the Autonomies and how the timing of purchases (buy low, sell high) is difficult etc. I have owned Royal Dutch for over two years now with an eye on the very long term. I have watched its yield rise and valuation contract. I have also noticed outside strength in recent weeks since its short term bottom in recent months. From a technical standpoint (absent its sympathy to Europe) what does your experience (we call it gut in the U.S.) tell you about its prospects from right here in a softening global tape? I am thinking about buying more and am getting nervous it has begun a long march higher."

David Fuller's view I hold RDSB, quoted in Sterling and suspect that you hold RDS/B quoted in US Dollars. The different chart pictures reflect the sometimes varying performance of GBP/USD, although this has been mostly rangebound in recent years.

I hold RDSB because it represents value, trading at a single figure PER, currently estimated at 8.75 on the forward valuation and yields about 5.25%. The performance has been dull in recent years because Shell is in the generally out of favour resources sector during a lengthy period of slow global GDP growth. Additionally, oil shares are not politically correct if you wish to see a move away from fossil fuels.

Therefore, I was pleased to see this Bloomberg report yesterday: Harvard Won't Divest From Fossil Fuels, Faust Says. I was also amused, although I assume this Dr Faust is not a reincarnation. We holders of oil shares may be regarded as Faustian by militant environmentalists but I will try to live with that.


Tactically, at today's low multiple and 5%+ yield, while also trading at the lower side of its broad range, I think Shell is a buy for the medium to longer-term. I would not worry too much if it breaks down temporarily, either due to a soft overall market, an item of disappointing news, or gamesmanship by large institutional players who might try to shake out weak holders so that they can buy Shell even more cheaply.