Libby,
You wrote, "maybe some of "the normal rules" for evaluating cyclicals might be somewhat altered?"
Please remember I was simply responding to your post about feeling safe when buying low p/e stocks, and explaining that p/e's work just about in reverse for cyclicals.
Cyclicals won't change, they'll simply run in cycles, forever, one supposes. The only question we need to ask is, "How high is high?" or, more simply, where is the end of this particular cycle? I don't know that it's here at 122 or even at 165 in the next 6 months. That's not the way I think (or can think). I'm a limited biped. What I think is: it was a lot safer to buy OSX stocks when OSX was 45 than now when it's 128 or 124 or 122. For the next 3 months, I think you'll do better to buy OSX stocks at the low end of a 108-132 trading range and selling them at the upper range. Today's price is a selling range price, imho.
As for the end of the cycle, you have to look at so many different things that it makes your head spin. OPEC, inventories, rig counts, world economy, gas injections, conservation, capex. As we all know, it's an art, not a science.
Good luck,
Kb |
