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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: jbe who wrote (22628)5/21/1998 3:10:00 PM
From: Czechsinthemail  Read Replies (1) of 95453
 
Big oil has a big advantage in that these companies have refining and marketing operations that can profit enormously off the margins of low crude and relatively high gasoline prices. Check out the Noesis report on West Coast gasoline:
oil-gasoline.com
There is some tendency for index funds to outperform because of the major cash flows into these stocks even while others are being sold. This has generally favored large cap companies over small and mid cap. There is a lot of discussion about the two-tier market and whether the large cap companies have become so fundamentally overvalued that they now carry much higher risk relative to their appreciation potential.
Paul Chambers, the oil analyst for Lehman, has made the point that oil service companies have been bid up relative to drillers so may carry more downside risk and less upside potential. My thought is that if many land rigs are being stacked, that portion of their business related to land drilling may be vulnerable.
Your point on the tax considerations is well taken. For most, buying these companies when they are down and hurting and then holding for a long time is likely to work well, but trading is likely to take you out of the market when it makes a move and then doesn't go back down. Eventually it will.
Baird
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