O/T John C; - 2 points for you...<VBG>.
<< You've called more bottoms than a dirty old man getting
a lap dance. >>
...what can I say ! ...
Seriously; It's not you're being negative on the sector that I disagree with; it's your ''reasoning''. Using SLB's 10 year chart low as a bottom prediction, just isn't valid. Most companies in this industry are not the same companies as 10 years ago. SLB is in new industry niches, has acquired entire companies, and virtually has more cash today than its market cap of 10 years ago !
Companies have acquired assets and grown to a degree that comparing them to themselves 10 years ago, is not comparing them to the same company imho.
Even the analysts who are short here; use appprox 45% of net asset values as a pure bottom that they would assign these companys. Multiples of cash flow, %'s of net asset value etc. are more contemporary, valid and proper valuations to use in calling either a top or a bottom than the charts ! This is why these companies are no longer going down dramatically on bad news. ie: SII, GLM, and RDC. There are a multitude of signs that finally just not those Bullish on Energy see this as a bottom, but finally those who were bearish do as well; - this is the major difference here ...
The difference between you and I John; is that I both won and lost in the Oilpatch War of 1998, but I learned from both my wins and my losses. I did not take a ''once burned, never to return'' attitude towards the sector. Historically, this is a powerfull ''bet'' - in that virtually any commodity, or commodity oriented sector that is at a 10 year low, usually far outpaces the overall market in the ensuing year or two. We also have stories here in the consolidation, down/right - sizing and in the tremendous leaps forward in technology. The oilpatch companies may be becoming some of the most efficient and lean & mean companies in Industry.
Bottomline; in the near future, even into the face of this being a historically negative year in the oilpatch; demand and use for Crude grows ! It did not go down this year - Asian, Russian & Global crisis aside; use and demand went UP in 1998-9 ! This is nothing more than buying a sector at a historically low valuation. I was only a little bit early; as none other than Abbey J-Cohen, Bear Stearns head of Research and about 30 other formerly bearish analysts have just now gone ''bullish'' on energy. In a nutshell; the risk vs. reward percentages just do not get any better than this.
Where is anyone going to put their money in 1999 ? Add together one of the ''headiest'' markets in history and one of the largest inflows of cash in history; and it doesn't take too much exuberance to be bullish on energy going into 1999...
good luck |
