Professor Elam

Weekend October 2 2020

Socionomics stipulates that internally generated mood drives social action. It is unremembered and constantly fluctuating.

The result of this is that society is continually making the same mistakes made generations before and after, again and again.

This graph of Marathon's acquisition of Andeavor makes the point.

Follow the time line

Green arrow – the price of crude oil has been climbing for several years, peaking at $110 see lower panel driving MRO to  37.50.

June 2017 Tesoro changes its name to reflect its new acquistion, now it owns ten refineries

https://www.ogj.com/general-interest/article/17289029/tesoro-to-change-name-to-andeavor

April 2018 Marathon acquires Andeavor, the latter having spent tens of thousands of dollars to change its name from Tesoro to Andeavor, all that money is now wasted accomplishing nothing

https://www.cspdailynews.com/mergers-acquisitions/marathon-petroleum-completes-andeavor-acquisition

Here is an excerpt from the article

Now look at what has happened. MRO has fallen from 37.50 to  7.50 ,one might thing they would be on alert, but no

MRO stock price rebounds to  $20 and the company goes on a buying spree, spending $23 BILLION

Here is an excerpt from this article

The deal geographically diversifies their combined refining portfolio. San Antonio-based Andeavor's refineries in California, the midcontinent and the Pacific Northwest complement Findlay, Ohio-based MPC's existing Gulf Coast and Midwest refining footprint. The combined company will be the No. 1 U.S. refiner by capacity and a top-five refiner globally, with a throughput capacity of more than 3 million barrels per day across 16 refineries.

This of course is exactly the wrong  thing to do at the worst time, an intermediate market top

A socionomist would have realized this without the benefit of retrospective analysis as price had rebounded amid mood born of a counter trend rally

Today Fall 2020 Marathon lays off 12,000

This excerpt is in contrast to the elation of having acquired these refineries just a couple of years back.

Here is a classic example of a firm expanding at the intermediate top,when it was clear the stock price and industry were in downtrends, and then laying off the same workers it paid big bucks to hire just two to three years ago.