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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Big Dog who started this subject3/10/2003 7:52:47 PM
From: quehubo  Read Replies (1) of 206179
 
From Marshall Adkins

With the Iraqi war imminent, the biggest concerns of today’s energy investor is the fear that the energy stock prices are likely to move down in sympathy with lower, post war, oil prices. While intuition would suggest that declining oil prices would have a negative impact on oilservice stocks that may not be the case this time around. Since so many investors are waiting on the sideline until oil prices come down, we believe that energy stock prices will actually move up with lower oil prices. History is on our side. During the last Iraqi invasion, oilservice stocks increased by 25% in the face of a 15% decline in oil prices the five weeks following the UN invasion. We think this “buy on rumor sell on news” mentality will likely repeat itself in the case that U.S. forces once again roll into Iraq. Taken at face value this is a relatively simple look at what might happen to oilservice stocks in the event of a war and lower oil
prices. Clearly, many of the underlying fundamentals for this industry have changed significantly over the past decade not the least of which this is now more a natural gas-driven industry than an oil driven industry. That being said, we believe many of the other macro
factors for the industry would suggest oilservice stocks are likely to move meaningfully higher regardless of actions taken against Iraq. Again, we believe the most important factor is that natural gas has become the key driver of oilservice activity and fundamentals for gas
have never looked better for energy investors. The bottom line however, is that those waiting to buy the stocks on news of an invasion could miss out on significant upside these stocks could post in the coming weeks as many investors try to squeeze through a small
opening.
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