Twick, you're welcome here on this board. A good place to start in investing in the drillers is to decide on your timeframe of investment - day, week, month, or year. We have two months of terrible bear market and we are only technically fresh out of a bottom. I feel pretty comfortable saying that the average driller will rise 30% from today's close sometimes in 1998. The unknown is timing. We may get there in a shot in January, though there is no indication of that as of yet; or we may not get there until the end of 1998. So if you think 30% gain is good in 1998, investing in the drillers makes all the sense.
As to picking some names, decide if you want the smaller float, high beta drillers or the bigger-capped, lower beta drillers. Leadership changes from time to time among the drillers but as a group they move in tandem over time. You may want to get a feel for the extend of recent price adjustment to decide on the beta. Check out post #4636 for a reference. Second, understand the differences between the deepwater, shallow water, land, vessel, fabricator, tube, and seismic plays. The fundamentals are similar but with subtle differences.
It pays to follow some technical analysis to predict the price movement of the drillers. 1997 was characterized by a period of steady uptrend with many short term cycles sandwiched by two terrible downward spirals. Pull out a one year chart and you will understand why. TA works especially well in the normal phase of the uptrend and could help get one out of trouble in advance of a major downtrend. Visit this board often as we talk about everything from TA to FA. There are several experienced industry old hats here to soothe the pain during down markets as well. Good luck. |
