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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: waverider who wrote (23654)6/8/1998 7:30:00 PM
From: Grommit  Read Replies (1) of 95453
 
It retrospect it is quite easy to play the patch, isn't it?

Stocks are linked to oil price no matter what is said. The amateurs here and there said than oil would not go below ____ (pick a number). We heard from industry professionals (CEOs and such) via Conf Calls and press releases saying that even at $__ oil, they would not cut their E&P budgets. We heard from scientists and economists saying long term oil prices will rise due to depletion and demand. Everyone full of shit, some not intentionally.

Now why are these stocks linked to oil prices? Because ultimately oil prices pay the bills. Even if E&P budgets would not be cut at $xx, when the price falls to x+3, the risk is higher. Because at $x-1 (or even at $x if the professionals were too optimistic) things happen. People get nervous. If this is your belief, you get out until you see oil production and stockpiles reverse.

If you believe the conspiracy theories, that the institutions got out and told their buddies and are all playing chicken to see who will call the bottom and dive back in first. That it will be a scramble when the big boys buy back in. If you optimistically view it this way, you do not want to miss it, so you hang around and die a slow one. Waiting. A random turnaround, it seems. Takes no intelligence, just patience. The problem is, this outcome could be miles away. And the signals are unclear. False positives and assorted head fakes.

Maybe it ain't so easy. ;o)

But I am sure sharpening my investing claws on this scratching post of a sector. Broke a few also.
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