Pretty funny read (for a major house equity strategist)...
I think his call on gas is ill-advised, bordering on clownish, though:
We have been particularly strong on the natural gas complex, believing there was/is a secular problem created by 20 years of underinvestment. We still feel this way and think that the recent price weakness in natural gas is a "head fake" driven by the anticipated outsized injection figures, which is giving the illusion that inventories will return to normal in time for the 2001/2002 winter. We don’t believe it! Moreover, you can buy electricity off of the “grid” for roughly $55 per hour. Or, you can produce it using oil for about $45 per hour. But if you use natural gas, the cost per hour falls into the $20s (approximately $22/hour). We think using a dollar cost averaging “in” strategy for this complex over the next three months will prove rewarding come next Christmas. We also like the healthcare complex, but prefer names that are down and out, hopefully where a lot of the price risk has been removed.
I think he's right in the long term (over a year). In the short term gas is going down, based on the "outsized injection figures" that he dismisses. Gas is being produced, and demand is dropping...not just from the power companies, but from industrial users. The cure for $8-$10 natural gas IS $8-$10 natural gas...
In the longer term, we'll get depletion and dropping production, so if one were dollar cost averaging VERY gradually (ie, over 6-12 months), they'd probably do well. |
