I added some SU at 32.4$ to my larger DVN starting position. I still like DVN better but I like SU as a leverged bet for crude with a good risk reward imo. LT, I see some of the canadian oil sand plays like CNQ, SU etc. getting taken out by the supermajors.
Short term, my thinking is to gravitate from financial assets into more hard assets. I like crude because unlike with gold, whatever get's produced also get's consumed and overall it's going to be harder and more expensive to replace it.
Bernanke pretty much sold out the US$ when he said that interest rates are going to be low until 2012. it's becoming more and more a clownbuck <g>. A few weeks ago, plays like SU were pretty expensive, now they trade at PE ~10. I'd rather own an asset like SU or DVN with a PE of 10, then a bank with questionable quality on the asset side with the same PE.
Some banks are probably good bet's like JPM, WFC or PNC. Maybe even BAC is a good bet, but it's more of a crapshot. My concern with life insurers is that the low interest rates make it harder for them to meet return targets. how are they going to earn high single digit returns to meet the return objectives (and sometimes promises/liabilities like annuities that are on their books) with low single digit interest rates? It's not possible unless they take risk and that is not what regulators or customer want either. I have yet to read a analyst or industry analysis that shows the LT impact on this. Short term, strong bond prices (=low interest rates) mean rising book value but then what? I don't know - otherwise I probably would buy some MET, which is the best of the crop and benefits from the flight to quality, imo.
Sorry for the somewhat convoluted and long post but i do want to put some thoughts on display here. |
