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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Mike from La. who wrote (36327)1/30/1999 7:02:00 PM
From: JungleInvestor  Read Replies (1) of 95453
 
Mike, the answer to the first question on your quiz is: Miguel Angel Rodriguez is the president of Costa Rica (hopefully you will not disqualify me for living there). I also hope that Chavez can be a leader for the oil nations in achieving production cutbacks that stick. However, I would never make an investment decision on what OPEC or the weather will do. You had a post a day or two ago that hit the nail on the head. The supply will be cut dramatically due to the large number of shut-ins and drastic reduction in oil company expenditures. The demand will also increase with the resurgence of Asian growth (ex-Japan) most probably in this first half of this year. As you pointed out, there will be an intersection of supply and demand that will push oil prices significantly higher - probably sooner rather than later. Recent API data is very encouraging (oil inventories are only slightly higher than a year ago). The world-wide decrease in interest rates last year will most probably result in a surge in the money supply, and a corresponding surge in the price of oil, in the second half of the year (look also for an increase in the price of gold). These are the reasons that I'm investing in the oil services sector. My favorite stock is VTS (a third of my portfolio), followed by PGO. They are both excellent companies selling at substantial discounts to their future earning power. My thought is that when the price of oil does rise significantly, the first expenditure oil companies would likely increase is for seismic data and VTS and PGO's earnings should pick up rapidly (do you have any thoughts on this thesis?).
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