Spend some time on the thread "semi equipment stocks: buy
when blood is running in the streets".
SLB and RIG will survive in my opinion, but I dont
think blood is really running yet. There is still hope.
It will be crushed before this is over. The downgrades
and estimate cuts are going to cause the forward
PEs of the sector to rise. My own take is that only
these currently low PEs have been keeping out more
sellers. They will sell, earnings will drop further.
And until some 6 months or so prior to a recovery that
we can all see (strong evidence of Asia rebound, for
example), this sector is going to be pummelled.
The semi equip have been thru this. Read the thread.
Start at the beginning. Follow the analysis, the
hope, the belief that it was truly a bottom (even my
own posts), and then the shock when the losses of
quality companies, industry leaders, began to mount
and the prices that we all would have sworn were
bottoms were cut in half or more as the big players
finally stampeded.
I learned a lot from that. I love RIG and SLB. They
are the two stocks I would pick in this sector above
all others -- RIG for its pure deep water technical
excellence, and SLB as the bellweather.
But not now. Picking the bottom is a fools game.
In my opinion, this is not it. Not when estimates are
falling, rigs are being idled, and there is not one
reason to believe oil will recover.
For those of you who care, I have no shorts in this
or any sector, and dont own these stocks. I intend to
own the two I mentioned at some point.
But like I said. Not now. The knife is falling.
Someone is going to get cut. True you could buy now
and in 10 years you will probably have made good money.
In my view, if you wait, keep doing due diligence, and
let the knife hit the floor and lie there a while
you will do even better.
J |
