How to Trade Like a Rockefeller

Before Bill Gates and Warren Buffett, there were John D. Rockefeller and Andrew Carnegie. It's hard to imagine that, by 1900, these two men controlled most of the oil and steel in the world.

The wealth John D. Rockefeller left behind is still being managed and invested through the family office that he and his son set up, Rockefeller Financial Services.

Check out the Stockpickr portfolio and you'll see that the Rockefellers haven't left their oil roots behind. Rather, it's probably the most comprehensive oil-infused portfolio I've ever seen. The Rockefellers clearly believe in peak oil theory, and they are putting their money behind it full force.

For most of the second half of the 19th century, the U.S. controlled the oil markets even more tightly than Saudi Arabia, Nigeria, Norway, Iran and a few others combined do now. Places like Oil City, Titusville and Pithole -- all located in the state of Pennsylvania -- were awash in the stuff. Oil City was home to the headquarters of motor oil company Quaker State, which is now part of Royal Dutch Shell(RDSB Quote).

John D. Rockefeller created his fabulous wealth by controlling not only the production of oil, but also the distribution of it. He did this by maintaining control of the railroads and by marketing it through his Standard Oil Trust company.

Rockefeller was a one-man OPEC, with total pricing power over oil. In 1904, Standard Oil controlled 91% of oil production and 85% of oil product sales in the U.S. Think of OPEC owning not only most of the oil in the world but also every gas station, and you'll get the idea.

(On a related note, I'd like to know your opinions on where oil is headed, and whether you believe we're living in a world that is slowly going to run out of oil within the next 50 years. Reply to the question that follows by clicking on the "Answer Here" link.)

	Do you think oil will hit $100 within the next year? Answer Here

The U.S. government, in one of its anti-monopoly crusades, broke up Standard Oil in 1911. Pieces of it make up parts of familiar companies, such as Exxon Mobil(XOM Quote), Chevron(CVX Quote), ConocoPhillips(COP Quote) and British Petroleum(BP Quote).

If the entire Standard Oil company was still together, the combined entity (and the wealth of the Rockefellers) would be over $1 trillion dollars. This, combined with the exodus of various Rockefellers who wanted to follow other pursuits such as philanthropy and politics -- such as Nelson Rockefeller, who became governor of New York and vice president of the United States under President Ford, and John D. Rockefeller IV, who is the Junior Senator from West Virginia -- diluted the Rockefeller wealth.

Even though it's far from the Bill Gates level, it remains substantial. Rockefeller Financial Services, the family investment trust, controls a portfolio worth $2.6 billion.

Weatherford(WFT Quote) is one of the largest holdings of Rockefeller Financial Services. Weatherford provides equipment and services used by larger oil companies for the drilling and production of oil and natural gas wells. The company trades at just 10 times EBITDA (earnings before interest, taxes, depreciation and amortization) and has a forward price-to-earnings ratio of just 12. The company has been on a tear lately, and analysts are expecting more growth:

Weatherford (WFT)

Weatherford is also owned by Clarium Capital, run by PayPal founder Peter Thiel -- another proponent of peak oil theory. In addition, the stock appears in Stockpickr portfolios Hedge Against Every Risk the U.S. Could Face With One Holding and Insider Buying: Eating Their Own Cooking.