Big Dog's Boom Boom Room Message Board

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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: CommanderCricket who wrote (97094)	2/23/2008 12:37:04 AM
From: energyplay	Read Replies (1) of 206306

Let's look at the big economic picture from the viewpoint of a mutual fund manager / pension fund that needs to invest in the stock market. Financials make up 30% or more of the market value of stocks. And every week, there is a nasty new surprise related to sub-prime and liquidity etc. So you take the new money and buy bonds - government bonds. Sooner of later you have too much in bonds and must buy some stocks Tech stocks ? that's over. Gold miners ? not enough good stocks - besides, your tin foil hat is at home. Consumer stocks - in a recession ? How about oil and gas, especially when the new accounting rules will show the real book value as much higher than the stock price. Most of these stock pay some sort of dividend, which provides downside protection and helps returns. You will be very prudent, and buy a $50 oil stock which has $150 of reserves, has high cash flow, has paid their debt down or has cash, and pays dividends. After we get through the end of April, when almost all the bad news will be out, I think oil and gas will get higher P/E multiples, and energy will become a bigger part of stock market value.

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