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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: megazoo who wrote (1252)8/18/1997 10:57:00 PM
From: Gary D   of 42834
 
>>But Investor2, isn't it true that in the early to mid 70's the oil-stocks were outdistancing every thing else in the stock market<<

SXB, I agree that long term fundamentals look promising for oil and gas producers and service industries--especially multinationals. The developing world will continue to consume more and more. At the same time, world politics is now such that substantial non-mideast supplies can be developed and put online in the coming years (with western $ and expertise)--creating great opportunities for astute businesses. I work in the sector and a large chunk of my portfolio is there too.

But in the next recession or bear market I'm expecting this area to be just as vulnerable as the rest of the market--unless the recession is caused or accompanied by a sharp rise in energy prices--a situation which probably would not develop for at least several years unless the Mideast supply is interrupted. Furthermore, a really bad US recession could cause a ripple effect throughout the world and substantially reduce the rate of growth of demand, impacting energy prices and margins. With reduced prices, much of the exploration activity would be curtailed. Remember what happened to exploration and production in the late 80's?

Best regards, Gary
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