MSB:
...I don't know if being in the right place at the right time is so good if it is not by design. Being flexible without changing directions as the wind blows is fundamentally important I believe.
I think one can be rewarded for sticking to ones guns in the face of adversity, but there does come a time (if one is sane or is to survive...) that you have to abandon your gameplan if it is just not working...I believe alot of money is lost by abandoning a strategy or philosophy too early. Some seem to change as often as the wind changes directions. Trying to time entrys & exits in general versus what I firmly believe is a proven concept that simple buying and holding will be superior in ''most'' circumstances to market ''timing'' for most investors
Obviously in retrospect, I should have went to cash earlier, but I ultimately did; going in & out a few times. However; now that we are at a much different level of value fundamentally.; the core philosophy of averaging down has much less downside . We are at book values, pure asset values and at cash flow valuations where the downside is limited. The recent fund buying last friday, the mergers & buyouts starting along with substantial company buybacks and insider buys - are things that weren't happening in June. While being in cash or waiting for a clear and substantiated momenteum turn before investing a pennny here can just not be criticized; conversely - the absolute pure values and allmost certain dramatic degree of upside here can not be intelligently denied either... It simply boils down to what philosophy one is comfortable with, what degree of risk vs. reward one is willing to accept & what ones goals are...
I simply believe that as evidenced by last friday's massive inflows of cash, that the funds & traders have their fingers on the trigger just looking for a reason to pour cash into the oilpatch. We did not see this type of buying in June/July either. With upward moves of 15-20% virtually accross the board and 30-40% ''pops'' in stocks like MDCO; I just think that if you're not in here doing some buying - you face the impossible task of answering these questions on when do I buy & when do I sell ...
If we get another huge Institutional buy in like last friday - do I buy in on a 20% pop ?
Or, do I wait for a small dip after the 20% pop ?
But, what if there is not a ''dip'' to buy on and we see some positive OPEC cut numbers and we get another 15% run up and all the media is once again screaming - buy the oilpatch (like last friday) - do I judge this as a suckers rally or a head fake rally, or do I again wait for a dip to buy on ? - but what if a dip doesn't come again ? - did I just miss a 40% run ?
What if I bought on the initial run up from here and then we get a 7-15% pull back off of a 20% run - should I exit again off a pullback ? - but what if it is just a normal pullback and is immediately followed by a solid leg upward ? Then I am faced with buying on a 20% run up, selling on a dip, then buying back more expensively once again on the next leg upward ?
....my point is that one could going insane trying to read technical indicators - which get immediately thrown out the window here on any major middle east news, OPEC or API #'s either good or bad etc. Trying to ''time'' this sector is virtually impossible. The scenario of buying high and selling low is virtually guaranteed in trying to time from here... However; If one through his own research determines intrinsic values where they are comfortable holding a stock longterm through sector gyrations - I say buy - with 40-60% of funds now; saving the additional 40-60% of funds to average down 2 times or so... on 20% corrections downward from here. Does anyone really think the stallwart stocks here like EVI, SLB, RIG, RON have over 40% downside ? We have reached a level where asset values, book values and cash flow company values come into play. Singing the song of - ''that was what everyone was saying in June'' is not valid; this is a non-thinking, emotional reaction to a mathematical/logical question. There comes a time when the firesale asset values appear. Also the E&P sector which is even more tied to the price of crude or natural gas has stabilized - this is a key point as well as the huge pent up drilling demand and their shear necessity of generating cash flow, exercising leases and even some have noted that it is now profitable to the extent that the lower dayrates will off set lower product prices...
I was a little hard on Mike from La. but, he was a little hard on the authors of 2 neutral, logical and fundamentally sound pieces... Where papi riqi presented an intelligent and logical discourse on being Bearish - our La. buddy Mike (is that Louisianna or left coast Los Angeles? - in Louisianna don't they take you out in the swamp for talking like that 'bout the oil bidness ?)) presented the posterboy example of irrational emotionality in the face of logic...
|
