Art B - the O&G sector needs to boost DIVIDENDS !
In this environment DIVIDENDS are the key for the oilpatch.
The Oilpatch is viewed by 90%+ of all Institutional Investors as one of the most cyclical of cyclicals...a rent 'em - but, never own them sector.
Given the OSX is in 70's with present Oil Prices and with War in Iraq looming - then what I've been saying for some time is true - ie:
...a sluggish Global Economy ALWAYS trumps high present commodity prices.
OSX 76 is realatively cheap... but, where will the OSX be at DOW 6500 ? - or if we don't go into Iraq and the Global Slowdown escalates into 2003 and we see $14 Oil ?
The only way that the Oilpatch is going to get and MAINTAIN longterm Institutional Ownership, or higher shareprice levels in this market environment; is to increase and maintain DIVIDENDS at higher levels.
Let Exxon, or Apache et al - start paying 5-6-7% Dividends in this market environment and they won't be treated like Red Headed Cylical Step Children any longer.
2-3% won't cut it. 5-6-7% will attract the Institutions AND Mr. & Mrs. Main Street.
Turn that Cash Flow back to the shareholders via DIVIDENDS.
DIVIDENDS should be the subject du jour and the Mantra at every Energy Conferemce.
Intersting thought for the Mega-Bears...Bob Brinker on his CNBC TV debut cited the S&P's trailing earnings as something in the $24/$25 range - down from $50 at the peak of the bubble.
Given historic PE muliples, let alone the poor global economy and event-driven risks looming everywhere - would/should a PE of 10-15 shock anyone ?
Let's split the difference and use a PE of 12.
12 x $25 = S&P 300.
Given the continual lowered guidance, continued Bankruptcies and the still highly questionable "quality of earnings and accounting" in the US Markets... is a "Show Me" attitude of only assigning a historically tried and tested PE multiple of 12-15 to "trailing" versus blue sky "estimated" earnings (that keep getting missed,or guided lower) in this negative, if not at least uncertain corporate earnings environment - really irrational ?
Is David Tice's call for S&P 300 "really" irrational ? - or will Mr. Market & Mrs. History - teach yet another generation of investors a very harsh and cruel lesson ?
Is the Bear in the top of the 9th inning, or merely in the bottom of the 4th and just getting warmed up ?
DOW 7500 walked like Capitulation, looked like Capitulation and smelled like Capitulation... but was it "the" Capitulation, or just "a" Capitulation... as in "just a-nother in a coming series of more to come" ?
Can Capitulation, or a Bear Market end at what is still an "irrationally exuberant" valuation multiple in any other decade in US Market history ?
Maybe "averaging in" still works - but, that we just need to "widen" our price points to average in at (vbg)...
- maybe begin at S&P 800, then again at 500 and then again if we see David Tice's S&P 300 ?
I'm exercising the PATIENCE of Job here...
CASH is King in my house.
35% Gold/Silver
10% mixed longs; drugs/energy/value plays...
55% Cash - and only willing to add to gold/pm stocks or, average in with 10-15% increments at each new Capitulation Level... waiting for the MOABO...but, beginning to think that it will take more "time" than most think... and will not be a "technical" event, or even perhaps not even an "event driven" occurence... but, rather will be an EXHAUSTION(key word & concept there imho) that occurs only over TIME - only after a long series of Capitulations and where "the" bottom actually only occurs after everyone stops buying event driven blow off capitulations and we truly arrive at both a time and a place to where the mainstream on mainstreet, literally is no longer interested in stocks and when people stop asking if its the bottom... a time and place where the CNBC-mania has finally digressed to a 5 minute nightly market recap and not 18 hour per day coverage & analysis ?
When you can ask 10 people on the Street and when none of them know who Mario Gabelli, James Cramer, or Maria Bartiromo is and when daytrading and daytraders have become a distant memory...then and only then; perhaps we'll have finally reached a bottom (vbg) ~
...looks like a banded trading range of DOW 7500-9000ish imho; untill more event driven crisis, or continued earnings weakness slowly grind us to yet another lower trading range... maybe DOW 6500-8000 is the next level ?
NIKKEI not looking good; Dollar pounded again; let Foreign Repatriation begin... as I think that is what will take us to the next lower trading range... and then perhaps the final range of DOW 5000 - 6500 will come off an event driven - Rogue Wave event... bioterrorism, dirty nuke lobbed into Israel from Saddam, or a Derivatives meltdown from JPM & company...
Can't imagine anyone sleeping well without 15-20% PM's here and at least 40-50% cash... have to admit buying the 7500 capitulation is/was and will continue to be tempting... and maybe justified... I really think that the only safe entry method on the longside here is via greatly widening those "average in" pricepoints and that is all that one can do - given historic valuations and the historic market transition we are undergoing; let alone factoring in all the geopolitical risk that is on the horizon...
A great time to catch up on all the other things in life and I'm no longer watching the market 24 x 7... got my GTC limits out there for gold/pm's and selected value plays long... waiting to re-short any rally thru DOW 9200 and realizing that this one is about "time" and it's going to take a while before we see too many HIGH REWARD - LOW RISK opps return...
Ciao` |
