My turn to disagree.
It seems to make sense that the more oil that is produced then the more that needs to be found. This works out in the very long-term because eventually reserves are exhausted and further exploration is required. At the same time oil prices should be rising too. In the near-term, and particularly in areas where the costs per barrel are not the most favorable (ie. N. America), exploration should fluctuate according to the long-term outlook for oil prices. Assuming the outlook has improved, then we can anticipate greater amounts of exploration than if future oil prices were still declining.
It's also important to match the time frame of the type of exploration with the oil price time frame. For example, deepwater projects take longer to develop and are therefore concerned with oil prices much further out than land-based projects.
Having said all that, I believe it is important to know what moves the stock prices. Let's assume that you're holding RIG and you're correctly convinced that the recent drop in oil has absolutely no effect on revenue/earnings growth. Well, I would say that's nice and important to know, but you need to focus on what moves your share price. The fact is that significant moves in cude oil prices have a weighty effect on share prices in this sector. And any conditions that cause oil prices to rise are definitely bullish for these stocks. You can't argue with what moves the market, and therefore, Michael Burke is wrong on this one.
007
PS Paul Levy, you are wrong to dismiss TA as worthless. You are not wrong in choosing not to use TA, for you can be successful with or without TA. However, some are successful using purely TA, and that wouldn't be possible in the long-term if TA were worthless. You are wrong to say that TA is not proven, because some people even use highly developed mathematical TA systems that have been proven to consistently beat the market. In any case, any particular TA tool that I use doesn't have to be right most of the time to be helpful, because I don't base my trading decisions on any one factor alone.
It's no accident that you profess long-term holding. Those that make money on pure FA tend to hold long-term and those that make money on pure TA tend to trade short-term.
Do whatever you like, but realize that there are a lot of ways to make money in the market. |
